Onerous Ground Rent?

user1977

From NatWest's requirements in the UK Lenders' Handbook:

"if the ground rent exceeds £250 per annum (£1000 per annum for London properties) you [ie the solicitor] must confirm that the terms of the lease in relation to the ground rent are acceptable. We can then approach the valuer to confirm whether the cost of the ground rent would affect property suitability and marketability."

MidCentury

kingstreet said:

The end result here is the surveyor will go out, mention the lease/charges in the report and until your solicitor obtains the terms and supplies them to you to provide to the surveyor, via the lender you'll not have an answer.

There is no mechanism for the surveyor to obtain lease details any other way.

Thank you @kingstreet , I was wondering how the surveyor would get a copy of the lease.

MidCentury

user1977 said:

From NatWest's requirements in the UK Lenders' Handbook:

"if the ground rent exceeds £250 per annum (£1000 per annum for London properties) you [ie the solicitor] must confirm that the terms of the lease in relation to the ground rent are acceptable. We can then approach the valuer to confirm whether the cost of the ground rent would affect property suitability and marketability."

Thank you for the info @user1977

Thing is, do they just mean if the rent exceeds £250 per annum now, or if it exceeds £250 at any time in the future? 

What worries me is that this seems to hinge on the opinion of my solicitor, if they consider the terms to be acceptable…If it is less than £250, which it is, are they obliged to pass comment? Will they have to inform me before they inform the lender if they think it is unacceptable? 

Slithery

MidCentury said:

Thing is, do they just mean if the rent exceeds £250 per annum now, or if it exceeds £250 at any time in the future? 

At the moment it's a problem if it will happen at any time in the future due to a loophole in the Housing Act.

MidCentury

Slithery said:

MidCentury said:

Thing is, do they just mean if the rent exceeds £250 per annum now, or if it exceeds £250 at any time in the future? 

At the moment it's a problem if it will happen at any time in the future due to a loophole in the Housing Act.

Thank you @Slithery, we are taking out a mortgage over 17 years, if it came to it, I wonder if we paid 17 years of ground rent up front, if it would satisfy the lender, as we couldn’t possibly get into Ground Rent arrears during the duration of the mortgage?

 I have read through the relevant section in the handbook that @user1977 posted the link to (thanks again, very handy!) and it seems NatWest are at least ok with the concept of escalating Ground Rent 

“ 5.14.9
We have no objection to a lease which contains provision for a periodic increase of the ground rent provided that the amount of the increased ground rent is fixed or can be readily established and is reasonable. If you consider any increase in the ground rent may materially affect the value of the property, you must report this to us (see part 2).”

Again, it appears to come down to the opinion of the solicitor, I guess.