Solicitor Ground Rent Review Charge

nekr0mantik

Hello

Anyone currently buying leasehold property and have had solicitor tell them they need to do a ground rent review at £299+ VAT charge?

They said there is a risk that lender can withdraw mortgage between exchange and completion which makes me liable for buying the property without mortgage.

While this is true how likely is it? and do people think its worth paying the fee?

The lease for property has Ground Rent increase by ONS Price Index every 15 years. The bank said they wont lend if there is a ground rent doubling clause less then every 20 years. There is no doubling clause so no issue there and the solicitor is basing this on the Ground Rent Reform going on but the first part applies to new leases or new builds only. There maybe changes to existing leases in future but that wont happen for a while yet so I dont think there is a chance banks will stop lending on all existing leasehold properties unless ground rent is peppercorn.

Do people think its more likely then I think? ha

eddddy

What does the solicitor mean by doing a "ground rent review" - what work is the solicitor going to do?

Based on the info you've given, your "ground rent reviews" for your lease happen every 15 years (but your solicitor isn't involved with that).

According to the lease, is a "ground rent review" due soon?



It's a bit of a wild guess, but could it be be that...

• a "ground rent review" of the lease is due soon - and could potentially happen between exchange and completion?

• and the ground rent could increase to more than £250 (or £1,000 in London) - meaning you'll need indemnity insurance?

• And the indemnity insurance costs £299+vat?

user1977

Or by "review" do they just mean "our extra fee for thinking about and advising on the ground rent", assuming there's no actual rent review due now?

nekr0mantik

eddddy said:

What does the solicitor mean by doing a "ground rent review" - what work is the solicitor going to do?

Based on the info you've given, your "ground rent reviews" for your lease happen every 15 years (but your solicitor isn't involved with that).

According to the lease, is a "ground rent review" due soon?



It's a bit of a wild guess, but could it be be that...

• a "ground rent review" of the lease is due soon - and could potentially happen between exchange and completion?

• and the ground rent could increase to more than £250 (or £1,000 in London) - meaning you'll need indemnity insurance?

• And the indemnity insurance costs £299+vat?

So the letter they sent said they would talk to the bank and let them know the terms of the lease for ground rent increases and see what they say. Not sure what else they can do so £299 for that seems a lot as I can do that myself. Unless of course there is other things they can do but cant think of it.

The ground rent review for this property is not due for another 6 years.

nekr0mantik

user1977 said:

Or by "review" do they just mean "our extra fee for thinking about and advising on the ground rent", assuming there's no actual rent review due now?

yes that

user1977

nekr0mantik said:

user1977 said:

Or by "review" do they just mean "our extra fee for thinking about and advising on the ground rent", assuming there's no actual rent review due now?

yes that

It's confusing language to use, because a "rent review" is what you call the periodic increase in rent under a lease.

Is this on top of another additional fee for it being leasehold in the first place? It's rather steep merely for explaining to you what the clause says (which they'd have to do anyway for any lease) and perhaps checking with the lender that they're ok with the terms.

nekr0mantik

user1977 said:

nekr0mantik said:

user1977 said:

Or by "review" do they just mean "our extra fee for thinking about and advising on the ground rent", assuming there's no actual rent review due now?

yes that

It's confusing language to use, because a "rent review" is what you call the periodic increase in rent under a lease.

Is this on top of another additional fee for it being leasehold in the first place? It's rather steep merely for explaining to you what the clause says (which they'd have to do anyway for any lease) and perhaps checking with the lender that they're ok with the terms.

This is what it says:

Consideration and advice on the escalating Ground Rent provisions in the Lease involves additional work not originally envisaged when your estimate was given, as the leasehold and supporting paperwork would not have been in our possession. The additional work in this respect will attract a fee of no less than £195 + VAT. The additional work required in notifying your lender of the ground rent provisions, answering any queries they may have, informing you of their requirements and implementing the same to enable you to proceed to exchange and the drawdown of mortgage advice will be no less than £195 + VAT. These sums will be added to our final invoice

eddddy

nekr0mantik said:

This is what it says:

Consideration and advice on the escalating Ground Rent provisions in the Lease involves additional work not originally envisaged when your estimate was given, as the leasehold and supporting paperwork would not have been in our possession. The additional work in this respect will attract a fee of no less than £195 + VAT. The additional work required in notifying your lender of the ground rent provisions, answering any queries they may have, informing you of their requirements and implementing the same to enable you to proceed to exchange and the drawdown of mortgage advice will be no less than £195 + VAT. These sums will be added to our final invoice

That seems very expensive for the work involved.

Lots of leases have escalating ground rents, it's not particularly unusual. If they charge £400 extra for leases with escalating ground rents, I think they should have made that clear as part of their initial quote.

nekr0mantik

eddddy said:

nekr0mantik said:

This is what it says:

Consideration and advice on the escalating Ground Rent provisions in the Lease involves additional work not originally envisaged when your estimate was given, as the leasehold and supporting paperwork would not have been in our possession. The additional work in this respect will attract a fee of no less than £195 + VAT. The additional work required in notifying your lender of the ground rent provisions, answering any queries they may have, informing you of their requirements and implementing the same to enable you to proceed to exchange and the drawdown of mortgage advice will be no less than £195 + VAT. These sums will be added to our final invoice

That seems very expensive for the work involved.

Lots of leases have escalating ground rents, it's not particularly unusual. If they charge £400 extra for leases with escalating ground rents, I think they should have made that clear as part of their initial quote.

I will say I accept the risk and dont want you to do extra work and as its a legal requirement they can let them lender know the clause in the lease and thats it.

Also I applied to mortage via broker and my broker says he cant contact bank about that but I will see if I can contact myself and tell them the clause it has and if they have any problems with it.

Thrugelmir

nekr0mantik said:

eddddy said:

What does the solicitor mean by doing a "ground rent review" - what work is the solicitor going to do?

Based on the info you've given, your "ground rent reviews" for your lease happen every 15 years (but your solicitor isn't involved with that).

According to the lease, is a "ground rent review" due soon?



It's a bit of a wild guess, but could it be be that...

• a "ground rent review" of the lease is due soon - and could potentially happen between exchange and completion?

• and the ground rent could increase to more than £250 (or £1,000 in London) - meaning you'll need indemnity insurance?

• And the indemnity insurance costs £299+vat?

The ground rent review for this property is not due for another 6 years.

Still impacts the potential value of the lenders security which is the property. 

nekr0mantik

Thrugelmir said:

nekr0mantik said:

eddddy said:

What does the solicitor mean by doing a "ground rent review" - what work is the solicitor going to do?

Based on the info you've given, your "ground rent reviews" for your lease happen every 15 years (but your solicitor isn't involved with that).

According to the lease, is a "ground rent review" due soon?



It's a bit of a wild guess, but could it be be that...

• a "ground rent review" of the lease is due soon - and could potentially happen between exchange and completion?

• and the ground rent could increase to more than £250 (or £1,000 in London) - meaning you'll need indemnity insurance?

• And the indemnity insurance costs £299+vat?

The ground rent review for this property is not due for another 6 years.

Still impacts the potential value of the lenders security which is the property. 

True but the lender would base that on the exact clause and how much it would increase ground rent by. If the lender sees the clause of the increase and is not happy then I would suspect they would not give me the mortgage as they are being extra cautious ever since pandemic. But solicitor telling the lender the clause should not cost £400+ is what my thread is about.