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jonewer

Is This Possible

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Buy a freehold at auction on the cheap....... say £10k for the freehold of three flats carved out of one old house... then massively increase ground rent ..... owners cant afford it...... have to sell..... cant sell due to massive ground rent.... then buy the flat at bargain basement prices.

Possible? Or is there a limit to how much you can ramp up the gorund rent?

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Buy a freehold at auction on the cheap....... say £10k for the freehold of three flats carved out of one old house... then massively increase ground rent ..... owners cant afford it...... have to sell..... cant sell due to massive ground rent.... then buy the flat at bargain basement prices.

Possible? Or is there a limit to how much you can ramp up the gorund rent?

I think that there are legal requirements - its a 100 year contract generally. The only place that it can be done is to increase the service charges, but if these are increased without good reason the government introduced legislation about 6 years ago that gave the lessees massively increased powers to have this aspect of the arrangement judicially reviewed.

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The ground rent is set out in the terms of the lease. When it expires, you negotiate a new lease with the leaseholders but I doubt you can raise it to 'unreasonable' levels. Rules may be different for commercial premises as opposed to residential though :rolleyes:

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Google long leasehold and you will find a vast area of statute and case law. If my memory serves the Lands Tribunal tends to set a modern ground rent @7% of site value but I am not up to date in this area.

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I looked into this a few years ago - as a way of protecting myself from unscrupulous freeholders.

The property owner can complain to an onbudsman if you ramp up the cost of the lease. The onbudsman will decide what is fair and what is not......so although you could try it, I doubt that you would be able to see the plan through.

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In my (limited) experience it's set at the beginning of the lease - so for a 99 year lease it might be set at (say) 250pa for the first 33 years; 750 for the next 33 and 1500 for the final. That certainly used to be the case back in the 70s, it might have been changed by the massive inflation in the 70s for new leases created; though the old ones would still be tied to the original.

The difficulty of controlling service charges are one reason why I've never been willing to touch leasehold flats with a bargepole.

Edited by cartimandua51

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I'm not sure how as it happened long before I moved in, but under certain circumstances, the lease can transfer to the leaseholders if more than a specific number want that to be the case.

The place I'm living in is owned by a 'company' with 8 £1 shares, each owned by the leaseholders on the flats. The ground rent is £1/year. There are service charges, but our 'company' (in the loosest possible sense of the word - we meet perhaps once a year) can choose the level of service we want and who we contract the management of the flats and the accountancy out to. All in all, we pay under £40 a month.

As I said, I've no idea how this was set up, but if it wasn't the case, and some 4rsehole like yourself came in and tried to jack up the 'ground rent', I'd certainly look into it, as would most people. It's definitely possible, as previous OOs of my place achieved it. Not saying what you're planning wouldn't work, but I'd be very careful about it.

Edited by impatient_mug

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I'm not sure how as it happened long before I moved in, but under certain circumstances, the lease can transfer to the leaseholders if more than a specific number want that to be the case.

Some info here, sounds like anyone trying the OP's plan will come seriously unstuck :P

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  • 395 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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