Leasehold house - Doubling of ground rent every 25yrs

inspectorperez

https://commonslibrary.parliament.uk/leasehold-reform-in-england-and-wales/

You might find this link interesting.

To answer your question I believe it is the 2023/2024 session which would start in May 2023 if I am not mistaken

Jonboy_1984

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!

Worth bearing in mind that once they have owned for 2 years they can likely carry out a statutory lease extension and take the ground rent to peppercorn and extend lease for 90 years on same terms.

(There are legal fees and a premium to pay for it and it would be worth looking at the process now for an idea of how much it would cost)

The leasehold reform bill has been grinding on for years through parliament.

LegallyLandlord

I used to own a flat where Adriatic owned the freehold on the development. Luckily we had bought the freehold for our block, and I got asked the same questions about the 25 year ground rent clause when I sold earlier this year. Luckily not relevant as the freehold on our block was no longer with Adriatic. 

I must say these doubling ground rent clauses are the biggest scam ever! 

Adriatic gave undertakings about doubling clauses of up to 20 years only, not 25 years  - see here https://theindependentlandlord.com/resources/property-investors-glossary/ground-rent/

But I think it is worth asking to cap the increases. 

There is also a risk if the rent is over £250 outside of London, it will be considered an Assure Shorthold Tenancy. Not proven law, but something arguable. 

Worth kicking up a fuss. If they don’t budge, complain to the CMA and your MP

ironlady2022

LegallyLandlord said:

I used to own a flat where Adriatic owned the freehold on the development. Luckily we had bought the freehold for our block, and I got asked the same questions about the 25 year ground rent clause when I sold earlier this year. Luckily not relevant as the freehold on our block was no longer with Adriatic. 

I must say these doubling ground rent clauses are the biggest scam ever! 

Adriatic gave undertakings about doubling clauses of up to 20 years only, not 25 years  - see here https://theindependentlandlord.com/resources/property-investors-glossary/ground-rent/

But I think it is worth asking to cap the increases. 

There is also a risk if the rent is over £250 outside of London, it will be considered an Assure Shorthold Tenancy. Not proven law, but something arguable. 

Worth kicking up a fuss. If they don’t budge, complain to the CMA and your MP

Wish i had time to kick up a fuss. I've read on a local forum that Adriatic have said they will not repossess but unwilling to vary lease. And if this wants varying, including their fee and Sol, it's £600+vat. So i think i know what might be coming up. It's ridiculous really. 

ironlady2022

Just to complete this thread. After 15 working days, got an answer from the Buyer and the deed of variation is not required. It was a joyous moment!