Ground rent school boy error?

by Readers Question

13:27 PM, 29th March 2018
About 2 years ago

Ground rent school boy error?

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Ground rent school boy error?

Hi All, Ive made a bit of a school boy error here.

I have a small portfolio, and my last purchase around 4 years ago was a flat in South London had the following clause for the ground rent: Ground Rent £250 Reviewed every 10 years by a factor of 2 or by RPI whichever the greater. Term 99 years

At the time my solicitor did clearly point this out, however I decided due to the price and location I would still make the purchase. I must admit I look back now and do have some regret and am wondering what I should do as its beginning to concern me.

Please don’t answer with “well you should not have purchased” as I’m already down the line with this”; any thoughts/advice from experienced landlords would be greatly appreciated.

Thank you

Marcus



Comments

David Dorset

11:03 AM, 30th March 2018
About 2 years ago

Reply to the comment left by Marcus at 30/03/2018 - 09:20
I don't have much experience here but you need firstly to speak to a leasehold valuer rather than a solicitor. They are experts on leases and undertake the negotiations between you and your freeholder. I would have thought that any lease extension would need to take into account the potential loss for the freeholder and that would need to consider the clause about the ground rent uplift however i may be wrong.
If i were in your shoes i would definitely find a leasehold valuer and take his or her opinion on a way forward.
Hope you get it sorted.

Gary Nock

11:10 AM, 30th March 2018
About 2 years ago

BP Surrey

11:12 AM, 30th March 2018
About 2 years ago

I agree with Ian's points, the online calculators for buying the freehold or extending the leasehold for that matter are probably based on the ground rent increasing every 25 or every 33 years rather than doubling every 10 years. The calculators are only a rough guide in any event although you will probably be looking at the top end costings rather than the lower end due to the lease doubling every 10 years. The answer is, you won't know exactly how much it will cost until negotiations get underway.

BP Surrey

11:17 AM, 30th March 2018
About 2 years ago

Reply to the comment left by David Dorset at 30/03/2018 - 11:03
The leasehold valuer is a surveyor mentioned in my earlier post. If the solicitor can strike a deal at an acceptable level as per the going rates using an online calculator, you will save around 2k on surveyor costs.

David Dorset

11:23 AM, 30th March 2018
About 2 years ago

Reply to the comment left by BP Surrey at 30/03/2018 - 11:17
Yes but you will still need to pay the landlords survey costs. As long as your man is a dedicated leasehold valuer then happy days.

Marcus

11:25 AM, 30th March 2018
About 2 years ago

Reply to the comment left by David Atkins at 30/03/2018 - 10:20
Hi David,
There are 11 flats in the block - however 2 are being added to the top currently. The problem is, 2 are also being sold and im guessing others are let, so i have no idea who the other owners are; i dont live there, just rent out the flat.

Freda Blogs

12:15 PM, 30th March 2018
About 2 years ago

Reply to the comment left by David Dorset at 30/03/2018 - 11:23
David Dorset: A leasehold surveyor can also be a woman 😉.
The online calculators do not consider rent reviews, so most likely any figures you obtain will be misleading.
The freeholder will have a surveyor and you will be required to pay their costs for the valuation – depending on where in the country and the value of the flat you should expect to pay between £400 and £800 or so excl VAT. You should also get your own surveyor to do your valuation – assume the same amount.
After you have received the valuation, I recommend you ask your surveyor to negotiate with the freeholder’s surveyor; typically they will save their fees and considerably more in negotiating down the premium for you.
It may also be possible to do the negotiations on an informal basis without the need for the S42 Notice, that will save you a bit in legal fees.
This legislation can be a minefield, so it is worth paying for the right advice from an experienced professional in the field; that applies to your solicitor too – if the solicitor who did your conveyancing does not have the relevant experience within the firm, go elsewhere.

David Atkins

12:24 PM, 30th March 2018
About 2 years ago

Reply to the comment left by Marcus at 30/03/2018 - 11:25
If the freeholder is adding a further two flats then buying the freehold probably won’t be an option as he is showing a vested interest in keeping control of the block I’m not saying its not possible. You can get the names and addresses of all the other flat owners from the land registry property titles for £3 a go. You will then be able to see how many flats the freeholder owns (help in ascertaining if he could block your options). Lease extension - try the informal route first, write to the freeholder and see if they are open to dialogue. If not go the formal route but it is expensive.

Ian Cognito

12:56 PM, 30th March 2018
About 2 years ago

Reply to the comment left by David Atkins at 30/03/2018 - 12:24
I don't know why Marcus would pay to extend the lease when there is still 95 years remaining.

David Atkins

12:59 PM, 30th March 2018
About 2 years ago

Reply to the comment left by Ian Cognito at 30/03/2018 - 12:56
Because of the 1993 Act Marcus

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