How much for ground rent? What about spare car park space?

by Readers Question

13:03 PM, 30th April 2015
About 4 years ago

How much for ground rent? What about spare car park space?

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How much for ground rent? What about spare car park space?

I am a freeholder of a block of 17 apartments and the lease is from 1/1/99 for 125 years.

Ground rent for each flat is £200.00 per annum rising to £400 on 1/1 2024 then doubled on 2048 every 24 years thereafter.

A. I would like to know what is a fair market value

B. I have additional car park spaces as well. I would like to know is I sell the ground rent can I keep freehold of the unallocated car park and sell the freehold?

P.S If anyone has the details of a solicitor dealing with ground rent, I would be very grateful.

Kamrancar



Comments

Neil Patterson

13:19 PM, 30th April 2015
About 4 years ago

Hi Jonathan,

I would try Roger Hardwick of Brethertons Solicitors if I was you.

You can see his members profile here >> http://www.property118.com/member/?id=449

I would struggle to give you advice on the other I am afraid.

matchmade

15:23 PM, 30th April 2015
About 4 years ago

Query A: The classic answer is that fair value is whatever someone is prepared to pay and what the seller is prepared to accept. I would offer the freehold with associated ground rents to several companies and see what they offer you.

I considered this question myself a couple of years ago: I own the freehold of four flats with ground rents totalling £950 p.a., increasing every 10 years (I forget by how much, but it's a standard figure). One of the many ground rent purchase companies in existence offered me a lump sum of 14 years' rent, i.e. £13,300. I thought this was pretty feeble. The capital needed for an annuity of £950 for, say 25 years of retirement, is £18,800 (with Aviva, for example), and that isn't even index-linked. Ground rent, in contrast, goes up over time, can be passed on to your spouse or children, and will keep paying out for another 109 years in your case, unless the tenants buy out the freehold. I know the comparison between ground rents and annuities isn't an exact one, but I decided to keep the freehold, and treat it as a little top-up pension for all the members of my family.

Query B: your solicitor needs to check the terms of the leases. I suspect the parking is an integral part of the leases, the freehold, and the ground rent, so if you tried to split up the ground rent into two parts - one for the flats, and another for parking - you would struggle to achieve this. Think of the situation from the tenants' point of view: the parking is a vital and integral part of the value of their flats, so they are not going to be at all happy if you try to alter the leases.

Tony Lilleystone

17:30 PM, 30th April 2015
About 4 years ago

Bear in mind that you may first have to offer the freehold to the existing leaseholders under the Right of First Refusal provisions of the Landlord & Tenant Act 1987. (See the advice on the Leasehold Advisory Service website for more information http://www.lease-advice.org/publications/documents/document.asp?item=16 )

Regarding the valuation I would assume that a competent surveyor should be able to provide this (for a fee.) But I have noticed that freehold reversions (aka ground rents) are often included in the large auction sales conducted by various major auctioneers so perhaps it would be worth approaching a few of these companies to see what they say. I don't know whether you would necessarily get a better price that way but I imagine that the sort of investors who would be interested in such properties keep a regular eye on these auction sales.

If your freehold title includes some parking spaces which are not specifically included in the leases or subject to rights of parking for the leaseholders then by all means you could keep them or sell them separately. Your solicitor will need to be aware of this when dealing with the sale, and it would be necessary to have a proper scale plan attached to the sale transfer, but that is no great problem.

Any solicitor who handles conveyancing work, or a licensed conveyancer, should be able to deal with such a sale. The best thing to do is to contact a few firms, preferably speak to a partner or qualified person, explain what you want and get a quote. (Don't bother with online quotes, those are only for ordinary property sales/purchases.) Then choose a firm you are happy with.

Kamran Khazai

8:46 AM, 7th May 2015
About 4 years ago

Thank you all for your answers ,

Kind regards
Kamran


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