Am I trapped?

Londonseller

Hi,
Two years ago we bought a leasehold maisonnette in a converted victorian house for £250,000. Due to unexpected personal reasons we are about to put the house on the market and leave London.
Our ground rent is £200 a year but doubles every 25 years. There is currently 123 years left on the lease.  I've been reading a lot about doubling ground rents and how lenders aren't offering mortgages.  Does this mean we will be unable to sell our home because of the doubling ground rent clause?

Many thanks

AdrianC

The issue is with 10yr-doubling.

25yr-doubling is historically below inflation.

NameUnavailable

When is it due to increase to £500? The problem is that at that time it becomes an AST and you have much weaker legal rights over your lease if the ground rent isn't paid - obviously not a problem if the ground rent IS paid, but mortgage lenders don't like it and some will refuse to lend even if the increase isn't due for another 11 or more years.

You won't know for sure until someone tries to buy it I guess. Alternatively get a lease extension (statutory process) and the ground rent is eliminated.

Londonseller

That's what I initially thought as well. I  read that people had mortgages withdrawn even for leases that doubled every 25 years. Santander seems to refuse any doubling ground rent clauses.

bouicca21

I thought the AST level in London was £1000?

Londonseller

That's right it is but I've come across this story  https://forums.moneysavingexpert.com/discussion/5985501/mortgage-offer-withdrawn   and it appears that Nationwide, Santander have banned doubling ground rent clauses. So now I'm really worried about being trapped in my current property.

NameUnavailable

bouicca21 said:

I thought the AST level in London was £1000?

Correct, greater London. I missed that the OP was in London. Regardless, some lenders will still have issues with doubling ground rent, illogical though it may be.

bouicca21

So now I’m worried too. My ground rent (flat in London) doubles every 30 years but is capped at £1,000.  Has it now become unmortgageable?

This is unlikely to be a problem for me unless the place has to be sold to pay for a care home, but it will obviously be a problem for my heirs.  I think it would cost about £10,000 to do a statutory extension and get rid of the ground rent altogether.  Not exactly cost effective since even if I were to live another 20 years (which is unlikely) I’d only be paying out a total of £5,000.  

kinger101

It's must a matter of finding a purchaser using a mortgage from the right lender, or a cash buyer.  You should be able to get the EA to help with screening buyers.  They'll be doing everything that can to get any buyer to see their broker anyway.

GDB2222

bouicca21 said:

So now I’m worried too. My ground rent (flat in London) doubles every 30 years but is capped at £1,000.  Has it now become unmortgageable?

This is unlikely to be a problem for me unless the place has to be sold to pay for a care home, but it will obviously be a problem for my heirs.  I think it would cost about £10,000 to do a statutory extension and get rid of the ground rent altogether.  Not exactly cost effective since even if I were to live another 20 years (which is unlikely) I’d only be paying out a total of £5,000.  

It might be nice to sort this out for your heirs, rather than leaving them with an unsaleable property?

AdrianC

bouicca21 said:

So now I’m worried too. My ground rent (flat in London) doubles every 30 years but is capped at £1,000.  Has it now become unmortgageable?

This is unlikely to be a problem for me unless the place has to be sold to pay for a care home, but it will obviously be a problem for my heirs.  I think it would cost about £10,000 to do a statutory extension and get rid of the ground rent altogether.  Not exactly cost effective since even if I were to live another 20 years (which is unlikely) I’d only be paying out a total of £5,000.  

£5k seems a small premium to make your property more easily sellable.