Flat Purchase - Escalating Ground Rent

akorn77

Tom99 wrote: »

You can buy out the ground rent after 2yrs or immediately if the seller has owned the flat for 2yrs so I would not place any value on what the freeholder says. If you try and negotiate something outside the statutory process in all likelihood the freeholder will take for a mug and charge more than you might otherwise pay.

My colleague asked a solicitor he knows and the solicitor said the Freeholder has the right to say No, with regards to changing the terms of the ground rent. However it can be disputed via courts which is likely to be an expensive and lengthy process.

Does this sound correct?

Edit: Just asked my old solicitor, he echoed what you said. Do a lease extension, and change terms of the ground rent but it will cost money. He told me to ask a surveyor to understand how much it would cost

Tom99

akorn77 wrote: »

My colleague asked a solicitor he knows and the solicitor said the Freeholder has the right to say No, with regards to changing the terms of the ground rent. However it can be disputed via courts which is likely to be an expensive and lengthy process.

Does this sound correct?

Edit: Just asked my old solicitor, he echoed what you said. Do a lease extension, and change terms of the ground rent but it will cost money. He told me to ask a surveyor to understand how much it would cost

Correct. The freeholder cannot prevent you from buying out the ground rent and extending the lease by 90yrs but they can dispute the price and force referral of the price to a 3rd party tribunal.
In your case with the reversion so far away the price paid is going to be wholly based on the ground rent so the only variable in the calculation is going to be the discount rate and exactly how you take into account the future ground rent increases.

akorn77

Tom99 wrote: »

Correct. The freeholder cannot prevent you from buying out the ground rent and extending the lease by 90yrs but they can dispute the price and force referral of the price to a 3rd party tribunal.
In your case with the reversion so far away the price paid is going to be wholly based on the ground rent so the only variable in the calculation is going to be the discount rate and exactly how you take into account the future ground rent increases.

Thanks Tom, appreciate your input. It's certainly helped clear things up for me. My solicitor recommended that I try and ask for a discount, due to the future cost of changing the terms.

I don't suppose you know the mathematical calculations one would need to use to calculate this? Or if you know a super rough figure on how much something like this would cost (based on the figures on OP)?

I punched into a lease extension calculator and it said £5-6k to increase the lease but obviously doesn't account for escalating ground rent in that calculation. I'd probably hazard a guess and add another 5-10k on and say its going to cost 15k

Tom99

akorn77 wrote: »

Thanks Tom, appreciate your input. It's certainly helped clear things up for me. My solicitor recommended that I try and ask for a discount, due to the future cost of changing the terms.

I don't suppose you know the mathematical calculations one would need to use to calculate this? Or if you know a super rough figure on how much something like this would cost (based on the figures on OP)?

I punched into a lease extension calculator and it said £5-6k to increase the lease but obviously doesn't account for escalating ground rent in that calculation. I'd probably hazard a guess and add another 5-10k on and say its going to cost 15k

See my post 18 above, you would need to employ a surveyor if you want a more accurate figure. You need to find out if the ground rent continues to double throughout the term or whether only for the 1st ??years.

AdrianC

akorn77 wrote: »

I'm not a fan of leases but in central london its hard to find decent Share of Freehold flats, that also come with secure parking.

Don't forget that large swathes of central London are part of large estates, so there'll be a headlease in the way. The actual freeholder may well ultimately be the Duke of Wherever.

akorn77

Tom99 wrote: »

See my post 18 above, you would need to employ a surveyor if you want a more accurate figure. You need to find out if the ground rent continues to double throughout the term or whether only for the 1st ??years.

Vendor apparently checked and the lease doesn't say anything about it stopping at any point. So it continues for the next 236 years.

AdrianC wrote: »

Don't forget that large swathes of central London are part of large estates, so there'll be a headlease in the way. The actual freeholder may well ultimately be the Duke of Wherever.

If there was - how does this impact the situation?

AdrianC

akorn77 wrote: »

If there was - how does this impact the situation?

It doesn't. A lease is still a lease. I'm merely explaining why there's relatively few share-of-freehold flats in central London.