Ground Rent Escalation

Chizza

Morning Everyone
First time post here, think I am posting this on the right place so can delete if not but just wanted to see if anyone has had an issue with that I am faced with. 

I am selling a flat that has a 125 year lease from 2006 with a starting Ground rent that doubles every 25 years. 

My buyer has had their mortgage declined as this escalation was considered onerous (still think I am spelling that wrong!)

I fully get that 5, 10, 15 or 20 year doubling may be an issue but I had always thought that 25 seemed Fairly usual. Not the best I know but enough to decline a mortgage for?

I know I can extend the lease by 90 years to remove the Ground Rent or do a Deed of Variation but both will have a cost and are time consuming. 

Anyone seen a decline for this lease structure or have any advice?

Bit of an assay for my first post so apologies but any views gladly appreciated 

Cheers

K_S

@ChizzaA 25-year doubling ground-rent clause, on its own should not be a showstopper on its own.

Plenty of lenders are ok with considering flats with a ground rent that doubles no more frequently than 20/21 years.

Unfortunately, as a seller there's only a limited amount of influence you have on what lender the buyer uses.

Chizza

Thanks for the reply, did seem OK from what I read so all very strange. Would like to know if there is something I am missing but all out my control as you say. 

K_S

Chizza said:

Thanks for the reply, did seem OK from what I read so all very strange. Would like to know if there is something I am missing but all out my control as you say. 

@chizza Sorry if it wasn't clear from my email, different lenders will have different approaches. Some might have a blanket no to doubling-GR while others adopt a more pragmatic approach.

In addition to how frequently the GR doubles, other aspects of the lease and property (specifically the location) may also play a part in the lender decision making.

Chizza

Thanks all clear, I did check the lender in questions UK Finance Handbook and every 25 years was in tolerance but maybe there was something specific to the area as you say.   

onemouseplace

No advice, but I would be very interested in the replies as I am in the early stages of selling our flat with the exact same clause (and lease length and starting date) - I suspect this was fairly standard practice at the time.  

Hopefully it will get resolved for you.

Chizza

Will post an update on here when I know more, hope all goes well with your sale.