Ground Rent review - crazy increase!!

NotebookA5

Elderly parent has a privately owned assisted living flat - this is leasehold. Already paying high service charges and ground rent - but following a ground rent review they have increased the payments by 125%!!  The review was expected - as it is detailed in the lease - but an increase from £365pa to £822pa for this is scandalous. They are signposting to the ONS site for the calculation - but you need to be a financial expert to try to decipher that!  Any similar experiences or thoughts on how to challenge this before I ring a solicitor! Thanks.

user1977

There aren't going to grounds for challenge if it's simply following the formula agreed in the lease. You hardly need to be an economics expert to work out an indexation increase, it's basic arithmetic.

daveyjp

This may be simpler than ONS:

https://www.bankofengland.co.uk/monetary-policy/inflation/inflation-calculator

Entering the figures given shows it is almost 35 years since the last review.

NotebookA5

daveyjp - thank you for taking the time to respond - very useful - I found in lease it is based on RPI - all items rather than CPI, but very useful tool for future reference. It is actually 23 years since flats built and this appears to be the first main review.
user1977 - thank you for taking the time to respond - I totally understand that the grounds for challenge are limited if it is stipulated in the lease - and that at a 23 year review point an increase is to be expected - however bearing in mind the recent legislation on new leases it doesn't seem morally right for such a large increase - particularly when it applies to accommodation for elderly vulnerable individuals - however most of these organisations are only interested in profit and have no moral compass. I also accept that the arithmetic is 'basic' - but only once you have negotiated a complex lease and by trial an error the 'interactive' element of the ONS charts. 

anselld

ONS:

RPI March 2025 395.3

RPI March 2002 174.5

365 * 395.3 / 174.5 = 826.85

So it would seem accurate.   The only odd thing is why has the increase come all at once after 23 years?  What does the lease say about the review periods?

DullGreyGuy

If it was exactly 23 years then RPI since 2002 would be 129% or an effective 3.7% per annum 

Given you say your parents are of an older age they presumably fully remembered the RPI being nearly 20% per annum in the 80s so will have known what could have happened

NotebookA5 said:

daveyjp - thank you for taking the time to respond - very useful - I found in lease it is based on RPI - all items rather than CPI, but very useful tool for future reference. It is actually 23 years since flats built and this appears to be the first main review.
user1977 - thank you for taking the time to respond - I totally understand that the grounds for challenge are limited if it is stipulated in the lease - and that at a 23 year review point an increase is to be expected - however bearing in mind the recent legislation on new leases it doesn't seem morally right for such a large increase - particularly when it applies to accommodation for elderly vulnerable individuals - however most of these organisations are only interested in profit and have no moral compass. I also accept that the arithmetic is 'basic' - but only once you have negotiated a complex lease and by trial an error the 'interactive' element of the ONS charts. 

Legislation doesnt apply retrospectively, or at least very rarely. The fact you can't do something today doesnt mean you can penalise those that did the same thing in the past when not only was it legal but common practice. 

Presumably your parents weren't as old or vulnerable 23 years ago when they were choosing to buy the property. If they were who in the family were supporting them in their decisions? Certainly ground rent and its escalation will have been something that was drawn out and something they should have considered. Indeed having lived through the 80s and 90s when RPI was much higher than it has been in the last 20 years they should be surprised it's lower than what predictions at the time would have said. 

user1977

NotebookA5 said:

I totally understand that the grounds for challenge are limited if it is stipulated in the lease

Non-existent rather than limited. Presumably they got advice at the time they bought and were happy to sign up? What's inherently unfair about the ground rent catching up with inflation once in a while? At least there's an objective index applied to it rather than the ones which e.g. double every 10 years no matter what is happening to prices.