The ground rent issue

Miranda25

MultiFuelBurner said:

Miranda25 said:

MultiFuelBurner said:

I would buy a house asap. Never regretted making that decision. Yes the first three years were tough but worth it.

Far too many pitfalls with flats

you would buy a house in less desirable area instead of buying a flat in area you really like?

500% yes I would never start property buying with a flat over a house.

Plus you budget is decent enough to be on a mainline in with lots of posh amenities.

But everyone is different. What you seem to be unable to do is make your own decision like another thread maker here that has £174k in the bank but can find a property.

Yes I cannot make a decision, that's why came to the forum.

Miranda25

MultiFuelBurner said:

I would buy a house asap. Never regretted making that decision. Yes the first three years were tough but worth it.

Far too many pitfalls with flats

and the house should be minimum 2-bedroom as 1-bedroom house could be hard to sell in the future?
and should be with a garden as without garden could be hard to sell in the future?

Miranda25

https://www.investopedia.com/personal-finance/how-set-budget-your-first-home/

is it the same rule for the UK please? as my mortgage payments would be higher than 28% of gross income. does it mean I cannot afford a property?

user1977

Miranda25 said:

https://www.investopedia.com/personal-finance/how-set-budget-your-first-home/

is it the same rule for the UK please? as my mortgage payments would be higher than 28% of gross income. does it mean I cannot afford a property?

Why are you looking at American websites? Just about nothing on them is going to be relevant here. Completely different market for mortgages and everything else.

lis1320

We were in the process of buying a flat back in March which had 900+ years left on the lease and the ground rent was £250 a year. The estate agents did not know (or didn’t want to share) that the ground rent doubled every 25 years, which was coming up. In a couple years time, the ground rent was going to be £500.

The lender was not happy with this as outside of London, ground rent being above £250 a year makes the property assured short hold tenancy. The seller wanted to provide indemnity insurance which would satisfy the lender but still left us with increasing ground rent. We decided to pull out as we didn’t want to have problems selling the flat in the future.

Miranda25

lis1320 said:

We were in the process of buying a flat back in March which had 900+ years left on the lease and the ground rent was £250 a year. The estate agents did not know (or didn’t want to share) that the ground rent doubled every 25 years, which was coming up. In a couple years time, the ground rent was going to be £500.

The lender was not happy with this as outside of London, ground rent being above £250 a year makes the property assured short hold tenancy. The seller wanted to provide indemnity insurance which would satisfy the lender but still left us with increasing ground rent. We decided to pull out as we didn’t want to have problems selling the flat in the future.

Yes this is exactly what I am thinking now. Why would I have all these problems in several years time if I can prevent it now?

By looking at Rightmove, not so many properties have peppercorn rent or no ground rent at all.
Even if ground rent advertised in London as Ground Rent: £320 P/A (as an example), it still does not work for me as it would reach £1000 in three years time. But I am planning to live there longer than 3 years.

Should it be only our problems? Maybe sellers can also do something about it to make sure that flats are saleable.

Thank you for sharing.

lis1320

@Miranda25 The sellers can apply for a variation of lease to reduce the ground rent, but the freeholder doesn’t have to agree and even if they do, the seller would potentially have to pay out thousands of pounds to make this happen. Our seller didn’t want to go down this route and offered indemnity insurance, which wasn’t enough for us. Our solicitor also suggested us getting a lease extension after 2 years of ownership, which would reduce the ground rent, however with the lease being 900+ years, this seemed unlikely.

Many leaseholders are hoping the government comes up with a solution, though I’m not sure how much can be done about older leases which were signed and accepted as they were.

We’ve since found a house that we exchanged contracts for recently, and now realise losing the flat was a blessing in disguise. 

Miranda25

lis1320 said:

@Miranda25 The sellers can apply for a variation of lease to reduce the ground rent, but the freeholder doesn’t have to agree and even if they do, the seller would potentially have to pay out thousands of pounds to make this happen. Our seller didn’t want to go down this route and offered indemnity insurance, which wasn’t enough for us. Our solicitor also suggested us getting a lease extension after 2 years of ownership, which would reduce the ground rent, however with the lease being 900+ years, this seemed unlikely.

Many leaseholders are hoping the government comes up with a solution, though I’m not sure how much can be done about older leases which were signed and accepted as they were.

We’ve since found a house that we exchanged contracts for recently, and now realise losing the flat was a blessing in disguise. 

You lose something, you find something :-))

MultiFuelBurner

Miranda25 said:

MultiFuelBurner said:

I would buy a house asap. Never regretted making that decision. Yes the first three years were tough but worth it.

Far too many pitfalls with flats

and the house should be minimum 2-bedroom as 1-bedroom house could be hard to sell in the future?
and should be with a garden as without garden could be hard to sell in the future?

The house should have as many features as you can afford. Our first end of terrace 2 bed had 2 parking spaces, a garage in a block and a garden. It doubled in value when we came to sell. 

Don't get me wrong the first few years were tough but so worth it.

Miranda25

MultiFuelBurner said:

Miranda25 said:

MultiFuelBurner said:

I would buy a house asap. Never regretted making that decision. Yes the first three years were tough but worth it.

Far too many pitfalls with flats

and the house should be minimum 2-bedroom as 1-bedroom house could be hard to sell in the future?
and should be with a garden as without garden could be hard to sell in the future?

The house should have as many features as you can afford. Our first end of terrace 2 bed had 2 parking spaces, a garage in a block and a garden. It doubled in value when we came to sell. 

Don't get me wrong the first few years were tough but so worth it.

where it was (doubled in value)? if I can ask. is it commutable to london?
actually it could happen in many areas depends on how long you owned the house.