Ground rent that is above £250 can cause serious issues for you as a leaseholder.
For example, £250+ ground rent can make you more vulnerable to eviction and can even make it difficult to sell the property.
In his first article at the firm, Leasehold Property Specialist Jason Grimster outlines what happens when ground rent exceeds £250 and explains what you can do about it.
What happens when ground rent exceeds £250?
If your ground rent is over £250 per annum, then you might face some issues.
Firstly, if your ground rent is above this £250 threshold (or £1000 in London) and you fall into 3 months of ground rent arrears (debt) then your landlord has the right to repossess the property.
This repossession would occur under Ground 8 of the Housing Act 1988 and cannot be refused by the Court. You’d essentially have no choice but to hand the property back to the landlord.
Secondly, and because of the latter, lenders are unlikely to lend on properties that have ground rent over £250 or doubling ground rent.
This means that you may struggle to get a mortgage, remortgage a property and even sell your home.
Related Article: Why are increased ground rents such an issue for leaseholders?
Ground rent over £250 – What can I do?
Although a Ground Rent Act has been introduced to combat the above issues, the act only applies to new leases granted from 30th June 2022.
If your lease was granted before this date, you may still face these issues.
But what can you do about it? Well, the most prominent option for dealing with ground rent over £250 is to get a deed of variation.
How to get a deed of variation for ground rent over £250
A deed of variation (DoV) is a contract which allows you to change the terms of the lease.
In this situation, a deed of variation could be used to reduce the cost of ground rent from £250 or even remove ground rent entirely.
Both you and your landlord will likely have to agree to this deed of variation for it to come into force.