purchase ground rent?

emjayjee

Hi,

Been looking at buying a place, and also come across some sales of "ground rent", e.g.

"A Freehold Ground Rent Investment secured upon a Detached Building arranged to provide Fifteen Self-Contained Flats together with a Further Room which is Fully Vacant

Tenancies
Each flat is subject to a lease for a term of 125 years from 1st September 2001 (thus having approximately 118 years unexpired) at a total ground rent of xxxxx per annum subject to fixed uplifts every 25 years.
NB: The Lesees have NOT elected to take up their rights of pre-emption."

What does it mean? Does it mean you only get rent on the property that are occupied only? What would your responsibilities be?

thanks

silvercar

You would own the freehold. For flats this would mean appointing management agents or maintaining the block yourself. You or the managing agents would have to issue maintainance bills for each flat and manage any repairs and problems.

You would be entitled to the ground rent for each flat.

Additionally you would receive a payment when any leaseholder wanted to extend the lease.

By the sound of it that further room would be yours or you could lease it to someone (possible one of the other leaseholders) or rent it out. Subject to planning permission you could convert it into a studio flat depending on its size.

For houses it is simpler, you collect the ground rent and payment when the leaseholder (person that "owns" the house) wants an extended lease. Quids in when a leasholder wants to buy the freehold from you and has allowed the lease to become short.

Mutton_Geoff

Does it mean you only get rent on the property that are occupied only?

No, the flats would always be owned by somebody whether they were vacant or not. Ground rent is payable by the owner, so you'd always get your rent.

In my last leasehold flat there were freeholder charges for all sorts of things, £100 just to write a letter agreeing to change the windows for example. The company that owned the freehold there actually owned hundreds of similar freeholds and made it their main business and source of income.

emjayjee

Thanks for replies

If the lesees are already paying a service charge - presumably to a management company - would that mean the management company would look after the repairs, decoration, lifts, etc?

Or because of a new freeholder, that management company agreement is dissolved and the new owner would need to set up a new company or find another company.

If there is a management company in place - is there any responsibilities from the freeholder - e.g. ongoing base fee, etc?

Thanks in advance