We’d like to remind Forumites to please avoid political debate on the Forum.
This is to keep it a safe and useful space for MoneySaving discussions. Threads that are – or become – political in nature may be removed in line with the Forum’s rules. Thank you for your understanding.
PLEASE READ BEFORE POSTING: Hello Forumites! In order to help keep the Forum a useful, safe and friendly place for our users, discussions around non-MoneySaving matters are not permitted per the Forum rules. While we understand that mentioning house prices may sometimes be relevant to a user's specific MoneySaving situation, we ask that you please avoid veering into broad, general debates about the market, the economy and politics, as these can unfortunately lead to abusive or hateful behaviour. Threads that are found to have derailed into wider discussions may be removed. Users who repeatedly disregard this may have their Forum account banned. Please also avoid posting personally identifiable information, including links to your own online property listing which may reveal your address. Thank you for your understanding.
📨 Have you signed up to the Forum's new Email Digest yet? Get a selection of trending threads sent straight to your inbox daily, weekly or monthly!
The Forum now has a brand new text editor, adding a bunch of handy features to use when creating posts. Read more in our how-to guide
Solicitor unhappy with escalating ground rent - help!
Comments
-
Doubling every 25 equates to an annual inflation of 2.8%.
It is not a mortgage issue and it is not a problem for most buyers, it is just that there is hysteria about "doubling ground rents" at the moment.
It is not worth the cost and the delay of doing the legals for a variation even if the freeholder agrees. You can always kill off the ground rent at a later date through a statutory lease extension if you really want to.
Your Solicitor's advice to pull out is way OTT. It is a minor annoyance at worst.0 -
TrickyDicky101 wrote: »On the basis of what you've stated, the GR does not even seem to keep pace with long term inflation (let's assume it's the BoE's target rate of 2%) so I personally don't think it is at all onerous.
Has your solicitor explained why she feels it is a no-no?
It was on the grounds that my lender wouldn't give me the money (since quashed by my mortgage adviser) and that it would be hard to sell in the future. It was my plan to live there for a couple of years and then begin negotiating for a lease extension and any amendments anyway so it may well never be a problem.
I looked at inflation rates and long term trends and came to the same conclusion, that this might end up being cheaper - I believe it's just the optics that are the problem - people might see figures and dislike them but throw a small percentage on there and people don't care.0 -
Doubling every 25 equates to an annual inflation of 2.8%.
It is not a mortgage issue and it is not a problem for most buyers, it is just that there is hysteria about "doubling ground rents" at the moment.
It is not worth the cost and the delay of doing the legals for a variation even if the freeholder agrees. You can always kill off the ground rent at a later date through a statutory lease extension if you really want to.
I've read this a lot as well, I really do feel there's an element of hysteria out there due to some truly awful deals but this just seems like it's not a big problem. I've been in a tizz all day about this and am very much enjoying reading and taking on board different perceptions of the issues while drinking a nice glass of red. Trying hard to relax!0 -
Doubling every 25 equates to an annual inflation of 2.8%.
It is not a mortgage issue and it is not a problem for most buyers, it is just that there is hysteria about "doubling ground rents" at the moment.
It is not worth the cost and the delay of doing the legals for a variation even if the freeholder agrees. You can always kill off the ground rent at a later date through a statutory lease extension if you really want to.
Your Solicitor's advice to pull out is way OTT. It is a minor annoyance at worst.
No it doesn't - the GR stays level for 25 years at which it doubles. That is not the same as an annualised 2.8% rate.0 -
How long is the lease? In 350 years the rent will be £1.6million per year. Sounds that that’s too far away to worry about but it’s going to cause you two issues in the mean time. 1. If you want to remortgage then you may have trouble finding a lender. I’ve heard of some refusing to lend on a ground rent that doubles every 25 years (e.g. Barclays). 2. When you want to sell in the future then any solicitor doing their job properly will give your buyer the same advice as you have had. That will put off some buyers and so it might be harder for you to sell. Does your solicitor think that getting it changed will be a simple process? Is there a risk that the freeholder could say no? If it will be straight forward then maybe you could do it after you have bought the place? Good luck whatever you decide.0
-
TrickyDicky101 wrote: »No it doesn't - the GR stays level for 25 years at which it doubles. That is not the same as an annualised 2.8% rate.
Not precisely, no. The actual equivalent rate would be slightly less than 2.8% but for the purposes of deciding if it is onerous or not it is a close approximation.0 -
It's 125 year lease from 2005 so more than 10 years left at £100 and then doubles every 25 years or until the leasehold is renogtiated and extended.0
-
As the lease is 125 years it feels like it shouldn’t be too big a deal then. As you say it would need extending before the GR ever got too high and could be dealt with then0
-
Well here is a different perspective - within 10 years at the first doubling, that ground rent is going to be very high compared to the value of the flat (even if property values increase). Proportionately, my current ground rent is similar, but increases are capped so that it will never go above £1000 a year. That’s because the Housing Act 1988 turns anything in London with ground rent of over £1000 a year into an AST. Outside London the level is far lower, £250 if I remember correctly.
Of course the law may change, but how far up the list of priorities do you think that will be?
You can if course buy an extension to the lease and get rid of ground rent altogether - but it will cost you.0
This discussion has been closed.
Confirm your email address to Create Threads and Reply
Categories
- All Categories
- 354K Banking & Borrowing
- 254.3K Reduce Debt & Boost Income
- 455.3K Spending & Discounts
- 247K Work, Benefits & Business
- 603.6K Mortgages, Homes & Bills
- 178.3K Life & Family
- 261.2K Travel & Transport
- 1.5M Hobbies & Leisure
- 16.1K Discuss & Feedback
- 37.7K Read-Only Boards