Onerous ground rent clause – is it capped?

Onerous ground rent clause – is it capped?

9:47 AM, 5th May 2023, About 10 months ago

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Hello, I have come across a few leases now which have the ground rent clause: “The rent shall be subject to review on each twenty-first anniversary of the commencement date.

And then shall (if appropriate) be increased to such sum as is the same percentage of the review value of the block but so that such reviewed rent shall never equal or exceed such a sum as would in appropriate circumstances create an inhibition on the premium capable of being charged on an assignment of the demised premises in the same manner as set out in section 127 and schedule 18 part ii of the rent act 1977 as amended by section 78 of the housing act 1980 or any amending or similar legislation in which case the rent shall be £1 less than the sum which would otherwise be charged”

I have previously been advised that this wording does not cap the ground rent at £249/£999 and that the lease can still convert to AST once the £250 / £1,000 pa threshold is reached.

Since that advice, I have had two solicitors state that the wording does cap the ground rent and that it meets UK Finance requirements. I have searched for evidence to back this up, but cannot find anything.

Can anyone from Property118 point me in the direction of where the position is confirmed?

TIA,

Nadine


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