Ground rent on a new lease

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    Ground rent on a new lease

    Hi All. First post, so apologies if this is inappropriate. Recently bought a flat with a little over 80 years on the lease and the freeholder has agreed to start negotiating despite not having owned the property for 2 years. They have proposed a ground rent increase of £5 per year, from about £100 currently until the end of the lease in 170 years. Obviously I am not going to be around at the end but is this rate of increase unreasonable or going to put off future buyers? In the early years it could be argued it is quite a strong increase, but in 20 years time, when the ground rent is about £200 p.a., that isn't such a strong percentage increase. Any thoughts anyone?

    #2
    The NPV of that stream of income at 6% is £3,238, to rid yourself of the rent in 10 years time would cost £4,120 and in 20 years time £5,002

    As the percentage increase falls over time I see it becoming less of an issue. The ground rent is unlikely to ever provoke a problem it seems reasonable


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      #3
      Thanks sgclacy, that's reassuring.

      Comment


        #4
        How much are you offering to pay for such a new lease including continued ground rent payment for 170 years ?

        This is an informal extension offer to you because the 170 years statutory extension includes .peppercorn ground rent.

        You should read a few of the Morning papers ( 21 Dec 2017) which reported the Housing Minister plans to reduce the cost of statutory lease extension.

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