11:13 AM, 28th March 2022, About 2 months ago 16
I’d be extremely grateful for the benefit of your expertise regarding:
(a) the interpretation/enforceability of what is either a poorly or craftily worded ground rent review clause in a 999-year lease on a flat
(b) the remit of the expert surveyor in dispute resolution (eg can they simply ignore the formula in the lease for the ground rent review and assign a “fair” ground rent?)
(c) possibility/practicality of bringing a section 42 claim under the 1993 act in order to stop the ground rent on a 999-year lease eventually becoming extortionate when only a few decades have expired?
(d) any other available remedies (other than hoping the promised Act that addresses all injustices in Ground Rents in existing leases comes along soon).
The clause in question states “The Rent shall be subject to review on each twenty-first anniversary of the Commencement Date and shall then be the sum of the Rent plus such sum as shall be the difference (in percentage terms) between the Review Value of the Block and the First Value of the Block…..”
What happens when the 2nd review comes up?
From a common-sense logical point of view what ought to happen is that either the original Rent is uprated by the percentage increase in between the First (ie original) value of the block and the 2nd Review (or the Rent resulting from the first review should be uprated by the percentage increase in value between the first and second reviews).
Now, it would be completely unjust, but suppose they take the Rent from the first review and uprate that by the percentage increase between the original value and the 2nd review. And then at the 3rd review use the rent from the 2nd review uprated by the percentage increase between the original value and the 3rd review. Ultimately you end up with something far worse than ground rents doubling every 10 years which has made many properties difficult to mortgage/sell.
There is a reference to the cap formula, but have read elsewhere cannot assume will still apply.
There is the potential for the lessee to dispute the reviewed rent and to come to an agreement with the lessor and failing that an “Expert Surveyor” be appointed to decide (not arbitrate), which presumably would now mean the RICS Dispute Resolution Service.
I wondered whether the “Expert Surveyor” has authority to simply assess what they judge to be a “fair” valuation of the ground rent for the property concerned in prevailing market conditions or are they in any way hamstrung by a potentially unfair formula in the lease and they simply assess the new values to be fed into it?
If they do assess a fair ground rent fairly on prevailing market conditions is there any sign that this has been influenced by the passing of the Leasehold Reform (Ground Rent) Act or for that matter generally keep to under £250 (outside London) which I understand can otherwise cause potential problems with mortgaging/selling.
Is it possible/practical to bring a section 42 claim under the 1993 act in order to stop the ground rent on a 999-year lease eventually becoming extortionate when only a few decades have expired?
If so would the extortionate future ground rent trying to avoid substantially inflate the cost of doing this (as presumably the lessor would argue they should be compensated for this loss of considerable future income)?
Are there any other legal recourses available? (other than hoping the promised Act that addresses all injustices in Ground Rents in existing leases comes along soon).
Many thanks for reading and really appreciate your thoughts.
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