Ground Rent Housing Act 1988

WillWRS

Hello,

I was wondering if anyone could assist?

We are in the process of selling our leasehold flat. We had a lease extended in 2017 to 125 years and today there is a 121 years remaining. There is a clause in our lease that the ground rent will be £250pa and will double every 20 years which would be capped at £2000pa. 

We have had confirmation that our buyers lender accepts the lease terms and will lend the money for their mortgage.  However, the buyers solicitor is questioning the ground rent as at some point it will double to over £250 (16 years to be precise) which will then make the lease over the housing act threshold. We live outside of London as well.

The buyers solicitor has requested that we get a deed of variation to cap the ground rent at £250pa only during the whole duration of the lease. Is this something that anyone else has experienced or does this seem a big ask from the buyers solicitor? We have no idea how much it will cost even if the freeholder will entertain our request which is also a doubt. I am not sure if the sale will proceed without the deed of variation but it seems most lenders will accept our lease terms even if the ground rent exceeds £250pa in 16 years time. 

We have spoken to a number of solicitors and they have said the ground rent exceeding £250.00 is something they wouldn't have flagged as we do have a cap of £2000. I have also spoken to our management company to see if they have had this request before and they have also said no. It makes us think this isn't exactly necessary to have a cap at £250 during the whole 125 lease term. Any advise is appreciated. 

Thanks, 

eddddy

There's no right or wrong answer.

Your buyers seem to be unhappy with the current ground rent agreement. If that means they'll walk away, it's a problem.

If they're just 'taking a punt' to see what you say, but have no intention of walking away, it's not a problem.



If you want some reassuring things to say to your buyers, you could try things like:

• This is a recognised 'loophole' in the Housing Act, and the government are already talking about closing it in the planned leasehold reform legislation. So it's very likely that the problem will disappear will within the next 16 years.

• Under the current legislation, the buyers can do a statutory lease extension that would reduce the ground rent to zero (and add 90 years to the lease making it 211 years)

• The government are also talking about giving leaseholders the option to buy-out their ground rent (i.e. reducing it to zero) in the planned leasehold reform legislation, which should materialise well within the next 16 years.