5 yearly Rent Reviews

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    5 yearly Rent Reviews

    Hi Guys,

    I have a small leasehold flat in Southend On sea, i have attempted to sell the flat on a number of occasions recently and we have got very close to completion only for the proposed buyers to pull out and their conveyancers advising them not to purchase the property due to the lease stating that there are 5 year rent reviews. The ground rent is currently £350 per annum. by all accounts mortgage companies won't lend on properties with this stipulation in the lease. I bought this flat 15 years ago and i haven't really been keeping any eye on any changes that could ward off mortgage companies lending. The property was recent;ty valued at £105k. Could you pleaser advise me what my next course of action is? Can I/should I look into extending the lease and then request that the freeholder change the duration of when the rent is reviewed? Thank you kindly. G


    #2
    Ok i am no expert on this one but why would the freeholder change the clause which gives them a guaranteed position to increase the ground rent ? It is to their advantage...... When you say it can be reviewed, does it say anything about it going up a certain percentage or similar ?

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      #3
      What does the review clause actually say? Every 5 years, it's increased by £10 for example is very different to every 5 years it's increased by 10% compounded.
      I am not a lawyer, nor am I licensed to provide any regulated advice. None of my posts should be treated as legal or financial advice.

      I do not answer questions through private messages which should be posted publicly on the forum.

      Comment


        #4
        If you want to sell it quickly then auction may be your best bet, if there are clauses which prevent the "normal" buyer from getting it. How long is your current lease, you need to weigh up the cost of the extension to the value it will bring to the property.

        Alternatively you could try and buy the freeholder, with the other leaseholders, that way any increases will be returned back to you, making the property more attractive to buyers..... but you would need to get the majority of leaseholders to want to do it as well.

        Comment


          #5
          Originally posted by boomshanka25 View Post
          Hi Guys,

          I have a small leasehold flat in Southend On sea, i have attempted to sell the flat on a number of occasions recently and we have got very close to completion only for the proposed buyers to pull out and their conveyancers advising them not to purchase the property due to the lease stating that there are 5 year rent reviews. The ground rent is currently £350 per annum. by all accounts mortgage companies won't lend on properties with this stipulation in the lease. I bought this flat 15 years ago and i haven't really been keeping any eye on any changes that could ward off mortgage companies lending. The property was recent;ty valued at £105k. Could you pleaser advise me what my next course of action is? Can I/should I look into extending the lease and then request that the freeholder change the duration of when the rent is reviewed? Thank you kindly. G
          Just go for lease extension and expunge the ground rent, there are various calculators online that will give you an idea of cost.

          Comment


            #6
            Apologies guys, lease has 111 years left.

            Comment


              #7
              Originally posted by boomshanka25 View Post
              Apologies guys, lease has 111 years left.
              You should still qualify for statutory 90 year extension at nil ground rent.

              Comment


                #8
                Ordinarily this type of rent should have resulted in the value of your flat being some £5k to £7.5k lower than a flat with a much lower ground rent

                the hysteria over ground rents now makes this flat almost impossible to sell to a buyer requiring mortgage finance - so mortgage underwriters and the leasehold campaign groups have done nothing to help the many lessees with the type of ground rent term the OP has - a ground rent which is a bit on the toppy side - that’s all that’s wrong with it - it’s not the end of the world - it’s 96p per day or 40p per day more than is usual - the cost of can of Coca Cola

                A statutory claim will remove the ground rent and make the term 201 years and cost £9.5k plus costs - approach the freeholder and see if you can do an informal deal but if that is not possible make a statutory claim

                Comment


                  #9
                  I suggest you contact the CMA and ask for their advice .

                  https://www.gov.uk/government/news/c...r-leaseholders

                  Comment


                    #10
                    Thanks guys, very kind and helpful of you.

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