RPI linked ground rent

m4tty80y

The property I am looking to buy used to have a doubling ground rent clause. The current owners have had it changed by a deed of variation to an index linked ground rent review. Having looked at the figures, it appears on the surface that the new ground rent clause is very good.

I don't want to be a pessimist but surely my assumption is wrong!

Here is what the lease says

"the rent for the first review and for each subsequent review period is to be calculated by multiplying the rent (currently 200) by the index figure for the month two months before the month in which the review date falls, then dividing the product by the base figure rounded up to the nearest ten pounds"

The rent is currently £200,
Assuming the review date is December 2019.
RPI for Oct 2019 was 290.4
RPI for Nov 2019 was 291.

According to the terms of my lease,

200x290.4 = 58080

58080 / 300 (291 rounded up to nearest 10) = 193.6

This means a decrease in ground rent? or it stays at £200?

Any help greatly appreciated!!!

Matt

eddddy

(I'll assume this isn't a wind-up!.)

First you have to read the lease to find a definition of 'base figure'.

Assuming the Ground Rent increases every 10 years, and a review is due in Dec 2019, I'll assume the lease was granted in Dec 2009.

So...

• Base figure is probably RPI index on Dec 2009 = 218
• Index figure for 2 months before review date Dec 2019 (RPI for Oct 2019) = 290.4

• So New Ground rent (Dec 219 onwards) = 200 * 290.4 / 218 = £266.42

Rounded up to nearest £10 = £270

m4tty80y

I can assure this isn't a wind up! What made you think it was?

Now that I know what the base figure is it now makes sense! You are right the base figure is RPI for dec 2009.
So for any subsequent rent reviews (Jan 2030, 2040 etc) the base figure will always remain as RPI for Dec 2009?