In my colleague Niki’s article, she explained why higher / increasing ground rents are an issue for leaseholders.
We are speaking to a lot of leaseholders about their ground rent issues as they are finding it difficult to either sell or re-mortgage their flat with their existing ground rents.
In most situations, we recommend that leaseholders approach their freeholder to see if they will willingly reduce their ground rent via a ‘deed of variation’.
Can I start a deed of variation without a solicitor?
Yes, you can approach your freeholder initially without a lawyer’s assistance to gauge their response.
Making this initial contact yourself will help to save money in the initial stages.
How to vary ground rent – your options
Initially you can approach your freeholder, as mentioned above, to see whether they would be willing to enter into a deed of variation to amend your current ground rent.
If they say ‘yes’ – great!
The freeholder would usually require you to cover the legal fees and pay a ‘price’ to compensate them for the ground rent that they will no longer receive.
Can a freeholder refuse a deed of variation?
Yes, the are not obliged to agree.
If your freeholder refuses to grant a deed of variation, or the terms they propose are unreasonable, then you can potentially use the ‘statutory lease extension’ route as your back-up plan.
Whilst you may not require a lease extension as such, a statutory lease extension would reduce your ground rent to a peppercorn (nothing at all).
It’s somewhat of a sledgehammer to crack a nut; but it does what you need.
If you’re considering your lease extension options, please get in touch with us. We offer a free initial chat for all new clients where we can discuss your specific circumstances and help guide you.
Set out below is some useful information to help you contact your freeholder and to limit your legal fees as much as you can.
How do I contact my freeholder?
Have a look at your most recent ground rent or service charge demand you have received, as this should provide you with contact details for the freeholder and/or their managing agents.
If a managing agent manages your building, then it might be sensible to contact them in the first instance.
Deed of Variation: What should I be cautious of?
If your freeholder is willing to grant a deed of variation, they will likely require you to pay their fees up front in respect of calculating their ‘quote’ or obtaining valuation advice in order to calculate the appropriate ‘price’. This is quite usual and reasonable.
However, it is important that, before you pay any money to your freeholder, you find out what amendments they are willing to make to your ground rent.
You don’t want to pay anything to them, only to find out that they will only vary your ground rent to something that still isn’t suitable.
In the full article, I prvide a template offer letterand discss yur next steps. Read the full article here.