Leasehold purchase and ground rent fear?

Leasehold purchase and ground rent fear?

9:23 AM, 8th February 2018, About 6 years ago 24

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My daughter is about to exchange on the purchase of a new flat within a converted house.

The ground rent is £300 per annum increasing every 10 years by the prevailing inflation rate at the time.

I am aware of the scandal surrounding leases with ground rents doubling every 10 years as high lighted by our  friend Patrick Collins, I think,  from The Guardian.

I am just wondering whether an increase by inflation is really any better or should we just walk away and find a property with a more conventional ground rent arrangement?

I am aware that increasing ground rents every 10 years are the way things are going.



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Neil Patterson

9:26 AM, 8th February 2018, About 6 years ago

Hi Chris,
I am seeing inflation linked ground rents more and more frequently. I suppose it depends on the level of inflation which may or may not be related to the actual costs of the ground rent.

Ian Narbeth

9:56 AM, 8th February 2018, About 6 years ago

You need to check VERY carefully the precise wording of the clause. Also is "inflation" measured by reference to the Retail Prices Index (RPI) the Consumer Prices Index (CPI) or some other measure? RPI has traditionally been 0.5% to 1% per annum higher than CPI. This adds up over time. RPI is no longer accepted as a reliable national statistics though it is still used to increase train fares! RPI has increased by about 32% over the last 10 years whereas CPI increased by about 26%.
An increase by reference to "inflation" is better than doubling every 10 years. If you can, negotiate for a fixed ground rent.

Mark Alexander - Founder of Property118

9:59 AM, 8th February 2018, About 6 years ago

Hi Chris

I just did a quick search of the Property118 article Archive to see whether there has been any related "Readers Questions". It appear there was one quire recently, please see the link below.

Also see



terry sullivan

12:12 PM, 8th February 2018, About 6 years ago

run away? i would not buy leasehold ever again except with share of freehold and properly worded leases


12:38 PM, 8th February 2018, About 6 years ago

Reply to the comment left by terry sullivan at 08/02/2018 - 12:12
It's amazing how many highly educated professionals were taken in by the leasehold scandal (I am one!). But we used solicitors who were positioned as leasehold 'experts' (Powell Callen), but who were in league with the sellers, and failed to identify ground rent issues. In one lease, the ground rent was altered after we signed it, and we noticed only when it increased by more than we expected! Of course, Powell Callen conveniently went bust!

Never buy leasehold if you don't need to! If you do, check the ground rent and terms of the lease. Inflation increase every 10 years seems reasonable, but check whether you are on the hook for paying for other permissions e.g. sub-letting, changing your own carpets, having a pet, reselling! Those fees are the killers... and can make your leasehold 'home' unsaleable! You may even have a problem getting a mortgage!

To be honest, you may be better off renting than buying on leasehold!

Dennis Forrest

12:40 PM, 8th February 2018, About 6 years ago

Recently changed the doubling ground rent terms on one of my properties to something more affordable. Freeholder wanted to have 10 year RPI linked increases. I said no but have accepted a 30% increase every 10 years instead. This works out at 2.66% compound increase each year. You know where you are with fixed monetary increases. If you really believe the government can stick to its 2% long term inflation target then go ahead with the RPI linked ground rents.

Graham Bowcock

12:47 PM, 8th February 2018, About 6 years ago


A decent lawyer will explain the ground rent provisions clearly - not all do sadly (part of my business is ground rent collection for clients and there are a lot of surprised and disappointed people out there when it comes to paying ground rents).

Secondly, a decent valuer (or one with decent instructions) will factor in any rent reviews or other clauses. Being pragmatic, at the end of the day it's really all about value; a greater ongoing liability is worth less. It may be worth checking that the valuation report does consider it.

If the property is a flat you will struggle to get away from a ground rent, but if it's a new lease you may have some power of negotiation.


Ian Narbeth

12:59 PM, 8th February 2018, About 6 years ago

Reply to the comment left by Lou Valdini at 08/02/2018 - 12:38
"In one lease, the ground rent was altered after we signed it". If that is so, on what basis are you bound by it?

I am sorry for those caught with ground rents doubling every 10 years. One problem is that many of the unskilled juniors doing ultra cheap conveyancing in "specialist" conveyancing firms are as ignorant of compound arithmetic as their clients are. Add to that, in most cases clients don't read the lease and there is a problem waiting to happen. The lawyers should have done so and have reported on it (and probably advised not proceeding with the purchase) but .. pay peanuts and you get monkeys. Also, I suspect in a rising market buyers take the view they can find a bigger fool when they need to sell.

In most cases the problems are apparent on the face of the lease and can be spotted on a first read through. People should not assume a lease is "standard" or that because someone else has accepted it that it is OK.
Sorry for the lecture but you can't buy the best advice for the lowest cost.

Ian Cognito

13:27 PM, 8th February 2018, About 6 years ago

The principal of Ground Rent reviews every 10 years and being linked to inflation should hold no fears if you are comfortable with the level of Ground Rent today (along with projected Service Charge etc.).

To put things into context; based on annual inflation of 2%, the Ground Rent would grow every 10 years from £300, to £366, £446, £544, £662, and £807 after 50 years. The comparative figures for a doubling of Ground Rent every 10 years are £300, £600, £1,200, £2,400, £4,800, £9,600.


13:39 PM, 8th February 2018, About 6 years ago

Reply to the comment left by Ian Narbeth at 08/02/2018 - 12:59
000s paid high fees for the supposed expert legal advice!
We read the lease, which said £150 pa Ground Rent. We didn't believe we needed to read it again following Completion. We found it had been altered to £250 pa when the first increase came through, and it was more than we expected. We then checked the lease. This wasn't the only problem we had on our development. There was also an issue with demised parking spaces. We made a claim for that, and won, but the payout was dependent on all stakeholders agreeing the settlement, including mortgage providers and absentee landlords, and we couldn't get it. We haven't been able to do anything about the ground rent, but I wonder what would happen if we decided to pay based on our signed lease, and not the falsified lease!

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