Buying - London Flat Ground Rent Clause – Reviewed every 5 years according to RPI – Onerous?

ajj078

Hi all,

I've had an offer accepted on a flat in London but the Lender (HSBC) will not lend as it currently has a £250 Ground Rent that will increase vs the RPi index every 5 years.
Is it worth trying another lender or should I walk away? It's a 125 year lease with 108 year remaining.

I am also trying to calculate approximately how much it would cost me in 2 years to extend Under the 1993 Leasehold Reform Act to add 90 years and reduce Ground Rent to peppercorn. The online calculators do not factor in escalating ground rents so I’m not clear on what RPI index factor would be applied.

Lease details below:
1)    The initial rent means the sum of £250 per annum

2)    Review date means each fifth anniversary

3)    Review period means a period beginning on any review date and ending on the day before the next review date thereafter

4)    The rent for the review period is to be the initial rent plus the amount which bears the same proportion of the initial rent as the increase bears the base figure

5)    The index means the all items index figure of Retail Prices

6)    The increase means the amount by which the index for the month preceding the relevant review date exceeds the base figure

K_S

@ajj078 Limited to the mortgage aspect - based on the limited info in your post, you'll almost certainly have multiple mainstream lending options unless there are other significant issues with the lease and/or it's an exceptionally low-value flat.

user1977

Lenders' policies from the UK Lending Handbook are here:

https://lendershandbook.ukfinance.org.uk/lenders-handbook/englandandwales/question-list/1852/

so it appears HSBC's problem isn't the fact it's linked to RPI (think that's generally acceptable), but the fact the reviews are more often than every 10 years.