Lease on maisonette - Advice urgently needed?!? BTL

NameUnavailable

The current lease has 97 years remaining but you say the vendor extended this a couple of year ago? It sounds like they made an arrangement directly with the freeholder, rather than the more formal route which would zero the ground rent as said (and would probably have resulted in a longer lease).

If you keep the property for more than about 10 years you will really want to think about extending the lease again at that time, and if you go down the formal route you would usually add another 99 years and the ground rent would no longer apply.

The government are currently looking at some leasehold reforms, apparently making it easier and less costly to extend a lease.

Xxadele92xx

Thanks for all of your replies. Ideally I want the ground rent at Zero, but my solicitor thinks this purchase is a bad idea (I work with him - he is an old school solicitor - as in approaching 70 yrs old). So now I have mixed feelings about this purchase after reading these comments. Do you think I should tell the vendor to get the lease sorted first? 

eddddy

Xxadele92xx said:

Do you think I should tell the vendor to get the lease sorted first? 

From your wording, I'm not sure if you've understood the issue.

It's more a case of telling the vendor to ask the freeholder if they would consider 'selling' a lease variation that reduces the ground rent to zero, and if so, see if the freeholder will sell it at a reasonable price.

(It's a bit like me telling somebody that they must buy your car. If you don't want to sell your car, nobody can force you to sell it. Or if you decide to ask £50k for your car, nobody can force you to sell it for less.)


Edit to add...
The only thing the vendor can (probably) 'force' is a statutory lease extension - typically that might take 6 to 18 months, with fees of £2k to £4k plus the lease extension cost.

Xxadele92xx

Still waiting for a response from the bank to date. As we are buying this property as a BTL when we viewed I noticed the boiler had not been serviced since 2014. The property has not been lived in for 2 years but this means there is a boiler installed that was used for 4 years without being looked at. My solicitor requested the vendor to pay for a service but they have told us they are not willing to do that. My solicitor has said we may wish to have it serviced prior to exchange??? Why would I pay for a service on someone else's boiler?!

Slithery

It's not a legal requirement to have a boiler serviced in a residential property. If you want one then you pay for it.

eddddy

Xxadele92xx said:

My solicitor has said we may wish to have it serviced prior to exchange??? Why would I pay for a service on someone else's boiler?!

So that the gas engineer who services it can tell you whether it's safe, and whether it works.

If it's unsafe or doesn't work, and maybe needs replacing, you have the option to reduce your offer to cover the costs if you haven't exchanged contracts.

NameUnavailable

Xxadele92xx said:

Still waiting for a response from the bank to date. As we are buying this property as a BTL when we viewed I noticed the boiler had not been serviced since 2014. The property has not been lived in for 2 years but this means there is a boiler installed that was used for 4 years without being looked at. My solicitor requested the vendor to pay for a service but they have told us they are not willing to do that. My solicitor has said we may wish to have it serviced prior to exchange??? Why would I pay for a service on someone else's boiler?!

Ask your solicitor?

I would get a suitably qualified plumber to check the system and report back to you. You should probably get the electrics checked as well as this is a BTL rather than a property you are going to live in.

Xxadele92xx

Update - our mortgage provider came back with a response to the doubling ground rent today. My solicitor said the mortgage provider is "passing the book" and just quoting back at him what it says in their Lender’s Handbook (which he had already read before writing to them). My solicitor has then said to me via email "I do have to say that I consider that an increase in ground rent to over £250 pa albeit in 46 year’s time would materially affect the value.  I will let you know what they say.". IMO - he is trying to get the bank to back out of lending? In 46 years time would £300 PA be a problem for ground rent in terms of inflation? I really am thinking of pulling out now at this stage.

eddddy

Xxadele92xx said:

 In 46 years time would £300 PA be a problem for ground rent in terms of inflation? 

The issue isn't really connected to inflation - it's related to the Housing Act 1988.

If the Ground Rent is over £250 a year, the Housing Act 1988 treats the lease as an Assured Tenancy...

SCHEDULE 1
Tenancies Which Cannot be Assured Tenancies
3A A tenancy—
(b) under which the rent payable for the time being is payable at a rate of, if the dwelling-house is in Greater London, £1,000 or less a year and, if it is elsewhere, £250 or less a year.

Link: https://www.legislation.gov.uk/ukpga/1988/50/schedule/1

It depends whether that section of the Housing Act is reformed. There is currently some discussion about reforming it.

(But mortgage lenders are usually happy to lend anyway, if Indemnity Insurance is taken out.)

Xxadele92xx

Okay so today I've been researching who owns the leasehold... and they went into liquidation in March!!! If i wanted to extend the lease or write to them regarding reducing the ground rent - who would I contact?