Leasehold house - Doubling of ground rent every 25yrs

trevormax

A fairly small amount in my opinion, less than many peoples monthly energy bills these days. It would be a shame if you lost the purchase over this because your lender wont consider bending their rules. I hope you are able to get this situation sorted.

ironlady2022

trevormax said:

A fairly small amount in my opinion, less than many peoples monthly energy bills these days. It would be a shame if you lost the purchase over this because your lender wont consider bending their rules. I hope you are able to get this situation sorted.

It is my Buyer's Lender. But yes, a shame cos lender's guide book is available. 

ironlady2022

Query been with Lender since 25th Oct. No update today. My mortgage runs out 27/11 with a few weeks extension. This is nail biting stuff. What is the turn around time on customer service with HSBC/First Direct? 

ironlady2022

If the bank needs an indemnity policy. Who should take this out and pay? Buyer/myself? 

eddddy

ironlady2022 said:

If the bank needs an indemnity policy. Who should take this out and pay? Buyer/myself? 

There's no rule about who should pay. It's down to negotiation between you and the buyer.

But it depends what the problem is. You can't get an indemnity policy that deals with doubling ground rent.

However, if the issue is that the ground rent can go over £250 (and the property is outside London), you can get an indemnity policy that deals with that.


(The reply from the management company relates to doubling ground rent. If the real issue is ground rent going over £250, somebody has asked the management company the wrong question.)

ironlady2022

eddddy said:

ironlady2022 said:

If the bank needs an indemnity policy. Who should take this out and pay? Buyer/myself? 

There's no rule about who should pay. It's down to negotiation between you and the buyer.

But it depends what the problem is. You can't get an indemnity policy that deals with doubling ground rent.

However, if the issue is that the ground rent can go over £250 (and the property is outside London), you can get an indemnity policy that deals with that.


(The reply from the management company relates to doubling ground rent. If the real issue is ground rent going over £250, somebody has asked the management company the wrong question.)

I don't know exactly the question that was asked. But I've found out today it is Santander that is their Lender and in the handbook, I feel the result could be they need an indemnity policy to cover the part where it goes over the £250 as it is outside of London.

Where would one get this type of policy? Sounds very specific. 

eddddy

ironlady2022 said:

I don't know exactly the question that was asked. But I've found out today it is Santander that is their Lender and in the handbook, I feel the result could be they need an indemnity policy to cover the part where it goes over the £250 as it is outside of London.

Where would one get this type of policy? Sounds very specific. 

Conveyancing solicitors arrange indemnity policies - and they'd know where to get them. They're not available to consumers.


But indemnity insurance will only protect the lender, and not the buyer - so the buyer might still be a bit nervous.

But like I say - if going over £250 is the issue, it doesn't sound like the freeholder's agent realise this.

ironlady2022

eddddy said:

ironlady2022 said:

I don't know exactly the question that was asked. But I've found out today it is Santander that is their Lender and in the handbook, I feel the result could be they need an indemnity policy to cover the part where it goes over the £250 as it is outside of London.

Where would one get this type of policy? Sounds very specific. 

Conveyancing solicitors arrange indemnity policies - and they'd know where to get them. They're not available to consumers.


But indemnity insurance will only protect the lender, and not the buyer - so the buyer might still be a bit nervous.

But like I say - if going over £250 is the issue, it doesn't sound like the freeholder's agent realise this.

Makes sense. 

Buyer fully understands and does not take anything extra, this is purely down to their Lender now. 

The Agent/Freeholder argues that its in line with inflation which it is. So although shouldn't go over £250, this is really dated and needs to be updated. 

inspectorperez

Interesting reading this thread.

My son is purchasing a leasehold apartment with a ground rent of £200p.a. Lease states that it is reviewed every 15 years. Base year is 2007 and review is based on uplift in "All Items" section of Consumer Price Index. Index will take place 1 January 2023 and I calculate the revised amount to be £350ish, therefore exceeding the £250 threshold for outside of London.

This definitely takes the lease into Assured Tenancy rules and we are just now pondering if this is a dealbreaker or should we await passing of new legislation which is due in next Parliamentary Sitting and which will deal with this situation. Needless to say mortgage award only runs to end of this month.

Decisions decisions!

ironlady2022

inspectorperez said:

Interesting reading this thread.

My son is purchasing a leasehold apartment with a ground rent of £200p.a. Lease states that it is reviewed every 15 years. Base year is 2007 and review is based on uplift in "All Items" section of Consumer Price Index. Index will take place 1 January 2023 and I calculate the revised amount to be £350ish, therefore exceeding the £250 threshold for outside of London.

This definitely takes the lease into Assured Tenancy rules and we are just now pondering if this is a dealbreaker or should we await passing of new legislation which is due in next Parliamentary Sitting and which will deal with this situation. Needless to say mortgage award only runs to end of this month.

Decisions decisions!

I think the diff is, for every 15yr review you are not sure what it could go up to.

Mine is doubling every 25yrs and it can be calculated that it is within normal inflation.

When you say next parliament sitting, when is this due please?