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Ground Rent Doubles Every Ten Years

A

Anon Private

Member
Hello,

I am thinking of buying a leasehold flat for my permanent residence.
The estate agent told me that some building societies will not grant mortgages when ground rent doubles every ten years ( as stated in the lease).

The agent also told me that many properties had sold where this was not an issue.

Hence, it MIGHT be problematic when selling.

Do you think that I need to consider this when purchasing the flat.

Thanks

UK resident
 
R

realdeals

Active Member
This is something which the government are looking into as more and mroe housebuilders are doing this. I have seen issues when people plan to leave property for their children only to find they are potentially leaving them a major liability with ground rents doubling every 10 years and the properties proving difficult to sell.
 
A

Anon Private

Member
I am only thinking of buying for myself. But if I decided to sell, it could create a problem. So it looks like it is a factor that I should consider
 
N

nmb

Well-Known Member
This is the hidden cost of purchasing some properties - if you plan to pass your property to your children you could be landing them with a liability rather than an asset.
 
A

Anon Private

Member
I don't have children.

I was only thinking of a possible problem should I decide to sell, and would be buyers seeking mortgages. Evidently, this is a problem faced by a few purchasers but not by most.
 
R

realdeals

Active Member
From what I read in the press it is going to become more of a problem going forward, hence the reason why the government is going to investigate further.
 
K

kchiggs

Member
I think there is a right to buy the lease you might want to look into that.
 
N

nmb

Well-Known Member
Is there a formula for buying a lease on your property or is it simply a negotiation process?
 
K

kchiggs

Member
Pretty sure it is a formula as long as you meet all requirements.
 
L

Longterminvestor

Administrator
Is there a legal obligation on the leaseholder to sell if the property owner is in a position to make an offer?
 
K

kchiggs

Member
I believe so at least in the UK as long as the property owner meets all the conditions (owner-occupier might be one of them) google leaseholder right to buy.
 
R

realdeals

Active Member
This may not be a problem in the short term but what about the longer term? What happens if you wish to pass this onto your family in the future? In 20, 30, 40 or 50 years time we could be talking some significant numbers for ground rent!
 
L

Longterminvestor

Administrator
It will be interesting to see what the government do with this issue. They cant really restrict ground rent rises as that would be against the whole idea of a free market - will they maybe ensure that all future new builds come with the freehold as standard?
 
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