Ground rent/property value question

[rlw]

I'm selling a flat where the ground rent increases every five years. Currently, £250 pa, rising to £500pa for the next ten years. I have always thought that this was likely to put off potential purchasers as, in the long term, the rent would be stupidly high.

My purchaser has asked the freeholder for a deed of variation to limit the ground rent to £250pa for the duration of the lease - some 490 years.

The freeholder has agreed to this but is asking for £6k up front (plus costs of course).

I may, or may not, be asked to contribute to this payment in order to complete the transaction and I have told my solicitor that I would be willing to go 50/50 on the up front payment if pushed.

Question: I think that limiting the ground rent to £250pa for the next, nearly, 500 years will add to the value of the property as it will be easier to sell in future. Yes or no?

[springfan62]

I believe Mortgage companies do not like these escalating ground rents and many would refuse to lend on the current terms so yes it is likely to make the flat more sellable in future.

[joropug]

I had £480pa rising every 10 years with inflation.

No mortgage company would touch it - Deed of variation to limit it to £249 (£250 seemed to be the sticking point - £1,000 if in london) was £11k!!!!!

Did a full lease extension for about £17k in the end, extra 90 years at the time and peppercorn ground rent. Sold it 2.5years after it was first listed. had about 6 buyers in total fail to buy it.

The lease extension done properly was worth it as the years were fine, but not high, 93 if i remember rightly. The buyer saw the value in it, we got more than we expected as a result.

[OutInTheShed]

Try looking at it from the other side.

If you had an escalating ground rent income as part of your pension plan, what kind of value would you put on it?