Ground rent review every 5 years, needs to be 10 years?

messyjessy7

We recently had an offer accepted on a flat and a mortgage approved. We started the searches and our solicitor has picked up in the lease details the ground rent is to be reviewed every 5 years. Our lenders policy is that this needs to be every 10 years maximum and the lease would need to be amended by the freeholder for the purchase to go through. Please can anyone who have been through this experience before let me know how they proceeded and if it was resolved? How likely is the freeholder to be to make this change?

bouicca21

Even every 10 years is troubling.  Run.

propertyhunter

When you say reviewed, what do you mean? I assume it goes up. If so, how much does it increase by? 

People get nervous at 15 years, so I'd not even entertain this purchase unless the freeholder allows a deed of variation to reduce the ground rent to peppercorn. The amount of time that takes is as long as a piece of string. 

I assume you mean your lender means 10 years minimum. I'd not buy this property unless you can amend the terms of the lease. 

eddddy

How much does it increase every 5 years? Is it by RPI?

Changing to increases every 10 years is a worse deal for the freeholder. But the freeholder might agree if somebody offers them a chunk of money.

If the freeholder is a bit 'unkind' and they realise that this issue is blocking a sale - they might think they've got people 'over a barrel' - and ask for a stupidly large chunk of money to do this.

Either way, there might be £1000 or more in legal fees to pay.

Or the freeholder might be disinterested and refuse to discuss it.

messyjessy7

Sorry, I meant the lender policy is that the ground rent needs to be every 10 years minimum. 

And yes, it’s by RPI, not doubling. 

Slithery

Find a different lender?

Sandtree

Find a different lender is more likely to be cheaper 

Not only is the legal fees (you'll be paying the freeholder's and your own) but almost certainly the freeholder will want a substantial chunk of change to cover their future lost revenue to entertain the idea which is unlikely to materially change the future value of the property when you move on.

messyjessy7

Thank you all for your advice, it’s really helpful. I will let you know what happens next.