Residential Lease Length And Ground Rent Pitfalls11th May 2016
There are plenty of smart new modern blocks of flats being built in and around Bournemouth and Poole to meet rising demand for residential property.
Buying a brand new flat typically used to mean a 99-year term as standard. Many buyers regard this as the norm but these days it is not enough.
Some mortgage lenders now look negatively at leases with 90 years left to run. So it is far better to think about 125 years for a new lease instead.
But it’s not just about the length of lease on a property. You also need to look hard at the terms of the ground rent.
In Bournemouth and the surrounding areas a fixed rate nominal rent – perhaps £50 or £100 annually – has been common for many flats.
And many Bournemouth freeholders/developers still think along these lines.
But now some London and Brighton landlords who own blocks in the Bournemouth area are letting flats on leases with a relatively low initial annual ground rent (such as £150 annually) that will increase (perhaps even double) over time (such as every 25 years).
Expect more Bournemouth-based freeholders to follow suit when issuing new leases for their blocks.
For expert legal advice on leases and freeholds, contact Coles Miller’s specialist Residential Leasehold Property solicitors. We help clients all over the country.
Our Residential Leasehold team liaises closely with the firm’s residential conveyancing solicitors to provide a seamless service for clients buying or selling flats.
For expert legal advice on residential lease length, ground rents and freeholds, contact Coles Miller Associate Matthew Lewis, head of the Residential Leasehold department, 01202 355697.