Flat with ground rent linked to house prices

Pagw

Hello, I've recently had an offer on a flat accepted and just found out the lease terms for the ground rent - it's currently £250 and set to increase in line with the Halifax house price index at 25 year intervals. I've not come across a ground rent being linked to property values before. It's a bit concerning because ONS data finds that house prices have been rising at 8.5%/yr on average over the last 50 years, so if that continued the ground rent would increase by a factor of 7.5 every 25 years (which is faster than doubling every 10 years, which many people are now wary of). However, equity in the property would also increase in that case (though, local price rises may be lower than the national average). I was wondering has anyone here had experience with property with ground rent linked to national property values? Has anyone tried to get a mortgage on such a property and succeeded or failed? I'm aware that an application could be made to extend the lease and remove the ground rent, with a premium payable to cover future ground rent payments - does anyone have any idea how increases linked to future house prices would be valued?

davidmcn

It makes more sense to link it to property prices than to general inflation indices or just to have it doubling irrespective of what inflation is doing.

princeofpounds

What happens if the Halifax index disappears?

davidmcn

princeofpounds said:

What happens if the Halifax index disappears?

Generally such clauses will say that a similar index is substituted for it.