Lease Extension Onerous Ground Rent

Liability doubling ground rent clauses and hybrid clauses which include doubling of ground rent are deemed to be unusual and onerous. I m negotiating the purchase of a leasehold flat and have found that the lease contains a very onerous ground rent clause. The latter is less so and more publicity has surrounded the 10 year doubling ground rents.

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Escape the ground rent trap deed of variation or lease extension.

Lease extension onerous ground rent. The lease itself is nice and long. These can lead to very high ground rents at the end of the term and make extending the lease or buying the freehold prohibitive. If a ground rent of 8000 per annum linked to the rpi was imposed on a flat many might think that is onerous. Recently developers have come forward with offers to change ground rent provisions to make them less onerous.

Buyers of leasehold properties ought to be actively advised about the possibility of enfranchisement. This means that the cost of buying the freehold or extending the lease can become unaffordable. The ground rent is more than 250 per annum or more than 1000 per annum in london. Another potentially onerous ground rent clause is when the ground rent may start off as a modest amount but then be recalculated on the basis of a rent review date using a complicated formula where the basis of the calculation is the market value of the property.

Assured tenancies under the housing act 1988. Onerous lease terms in existing leases. The following are just some of the issues associated with ground rent in leasehold property. Perhaps the most radical suggestion coming out of the report is that it would be legally possible for the government to introduce legislation to retrospectively remove onerous ground rents in existing leases.

When the freehold is purchased the ground rent problem drops away completely and on a lease extension the ground rent is effectively reduced to nil. The marriage value only enters the cost after lease falling below 80 years which is over 20 years away. So waiting 2 years before seeking statutory 90 years lease extension is not going to change the cost much. Onerous ground rents are those that double every 5 10 15 years or are linked in some way to the value of the flat.

Your flat is only 6 years from start of lease and you still have another 19 years to go before the ground rent rises to 300 p a. Despite being referred to as a long lease if your lease meets certain conditions namely. To determine whether a ground rent is onerous it needs to be considered in the context of the premium paid for the lease and the market value of the property if it had a nil rent. These problems can all lead to potential claims against the purchasers solicitors.

The ground rent is set as a percentage of the flat s value and when it s next assessed in 14 years time the ground rent could be silly money easily over 2 000pa. For example taylor wimpey are offering to change the lease terms on properties they have sold so that rather than the ground rent doubling every ten years it.