Ground Rent - Advice

chrisw99 · 10-11-2009, 16:42

Can someone explain to me what exactly Ground Rent is?

We bought our house in 2002, and 6 months later got a letter asking for a cheque for £4 for the ground rent. I queried this with the estate agent/solicitor and they just said "oh yeah, thats the ground rent you've got to pay it every 6 months" but never really explained why.

I'm fine with £4 every 6 months, but it just seems so small and piddling to have to write a cheque. Apart from the ground rent every 6 months I haven't written a cheque in years.

I tried writing a letter to the address the ground rent goes to (a PO box) asking if I could set up direct debit, or even pay a few years in advance so I don't have to bother with £4 cheques twice a year, but never got any reply.

Funny thing is, I asked around at work and most people here who have houses don't pay ground rent or haven't even heard of it.

Can anyone clear this up? Why am I paying it, what's it for, and do I have to just put up with paying it every 6 months for ever???

Kent32 · 10-11-2009, 16:45

Google is your friend <<- Clicky

dsdjm · 10-11-2009, 16:58

Far more common in respect of leasehold flats of course; but it's not unheard of for houses to be leasehold. The lease is what has a value that can be transferred when you buy or sell; and then whoever "owns" the lease is responsible to the landowner for the "ground rent"; which is basically what it says on the tin - "rent".

My parent's link-detached house is on a 999 year lease and is subject to an annual ground rent of £12.

Keefy-boy · 10-11-2009, 17:24

non-payment of ground rent can lead to forfeiture of your lease!

jude1979 · 10-11-2009, 17:59

Is there any communal areas you may have to pay towards? I used to live in a house and we owned a 23rd of a lake. All 23 houses that backed onto the lake had to pay £13 a month towards its upkeep.

Is there no telephone number on the letter? What is the company called?

HollyC · 10-11-2009, 21:27

Quote:

Originally Posted by jude1979

Is there any communal areas you may have to pay towards? I used to live in a house and we owned a 23rd of a lake. All 23 houses that backed onto the lake had to pay £13 a month towards its upkeep.

Is there no telephone number on the letter? What is the company called?

Ground rent is nothing to do with communal area charges.

As dsdjm says, it is 'exactly what is says on the tin'. You could send your landlord a cheque for whatever amount you like, and send a covering letter explaining exactly what the cheque is for (e.g. send £40 and explain that you are paying the ground rent in advance for the next 5 years. You might continue to receive rent demands, but they should state that the invoice is already paid.)

wiggis · 10-11-2009, 21:31

Quote:

Originally Posted by chrisw99

Can someone explain to me what exactly Ground Rent is?

I owned a house once which had a garage in a block of garages. The house was freehold, and the garage was mine too, but the land the garage was built on carried a Ground Rent charge. Basically, it meant that at some point in the future, the land reverts ownership to the landlord, and he would be entitled to flatten the garages and build more houses, etc.

Your solicitor should have pointed out the fact that ground rent was payable during the conveyance and purchase of the house. No way should it have come as a surprise to you ..... I'd be having a word with my solicitor if it was me.

Roger More · 10-11-2009, 22:45

Quote:

Originally Posted by jude1979

Is there any communal areas you may have to pay towards?

good lord! is there any?

LCDMAN · 11-11-2009, 12:21

Quote:

Originally Posted by chrisw99

Can someone explain to me what exactly Ground Rent is?

Funny thing is, I asked around at work and most people here who have houses don't pay ground rent or haven't even heard of it.

Can anyone clear this up? Why am I paying it, what's it for, and do I have to just put up with paying it every 6 months for ever???

It's exactly what it says it is! Rent payable for the lease of the ground that your property is built on.

My Uncle has been paying 1 Guinea per year (£1 & 1 shilling, or decimal equivalent) ground rent for his house for over 50 years! It's paid to an agent, but I believe ultimately it goes to an old lady in a care home on the south coast somewhere. Her father originally built the 50 or so properties on that road many years ago (c1900's), and they all had 999 year leases from that time. She inherited the leases, and the annual ground rent they generate. I guess at the time 50 guineas a year was a nice income for no work.

Surprised your solicitor didn't tell you about this when you bought the place. You (or your bank!) may own the building, but you don't own the land it's built on.

I do know of people who have negotiated a price to buy their lease, but you need to be able to make contact with the leaseholder to do this.

horseychick28 · 11-11-2009, 13:35

Our house is on a 999 year lease and we pay £18 a year, we have been offered the freehold for £3K though so it may be worth asking about that???

I love Ellie · 11-11-2009, 14:15

I lived in a conversion flat. It was an old Victorian house, converted into 10 flats.

6 out of the 10 flats had a share of the freehold. The 4 other flats would pay ground rent and this would be shared out between the 6 of us. I'd get a cheque for £66.66 each year, from my neighbours!

Keefy-boy · 11-11-2009, 15:54

Quote:

Originally Posted by horseychick28

Our house is on a 999 year lease and we pay £18 a year, we have been offered the freehold for £3K though so it may be worth asking about that???

that sounds very expensive. is that for the freehold of just your property? unless it has development potential that seems high. there are formulae to value a freehold by calculating the capitalisation value of the ground rent. £250 would be nearer the mark for a long to run lease yielding that amount of ground rent.

horseychick28 · 11-11-2009, 16:28

Quote:

Originally Posted by Keefy-boy

that sounds very expensive. is that for the freehold of just your property? unless it has development potential that seems high. there are formulae to value a freehold by calculating the capitalisation value of the ground rent. £250 would be nearer the mark for a long to run lease yielding that amount of ground rent.

That's interesting, when we were buying this place the solicitor offered us the freehold through the agents for 3K - I've actually just found an old letter with the paperwork for the house which offered it to the previous occupants for £800 so I'm glad we said no now!!!

10-11-2009, 16:42	#1
chrisw99 Forum Member Join Date: Sep 2002 Location: Cheshire Services: Sky+ HD, Sky BB Mid Posts: 718	Ground Rent Can someone explain to me what exactly Ground Rent is? We bought our house in 2002, and 6 months later got a letter asking for a cheque for £4 for the ground rent. I queried this with the estate agent/solicitor and they just said "oh yeah, thats the ground rent you've got to pay it every 6 months" but never really explained why. I'm fine with £4 every 6 months, but it just seems so small and piddling to have to write a cheque. Apart from the ground rent every 6 months I haven't written a cheque in years. I tried writing a letter to the address the ground rent goes to (a PO box) asking if I could set up direct debit, or even pay a few years in advance so I don't have to bother with £4 cheques twice a year, but never got any reply. Funny thing is, I asked around at work and most people here who have houses don't pay ground rent or haven't even heard of it. Can anyone clear this up? Why am I paying it, what's it for, and do I have to just put up with paying it every 6 months for ever???

10-11-2009, 16:45	#2
Kent32 Forum Member Join Date: Oct 2009 Posts: 30	Google is your friend <<- Clicky

10-11-2009, 16:58	#3
dsdjm Forum Member Join Date: Nov 2005 Posts: 1,035	Far more common in respect of leasehold flats of course; but it's not unheard of for houses to be leasehold. The lease is what has a value that can be transferred when you buy or sell; and then whoever "owns" the lease is responsible to the landowner for the "ground rent"; which is basically what it says on the tin - "rent". My parent's link-detached house is on a 999 year lease and is subject to an annual ground rent of £12.

10-11-2009, 17:24	#4
Keefy-boy Forum Member Join Date: Oct 2006 Location: Brighton, UK Services: SKY HD Posts: 3,147	non-payment of ground rent can lead to forfeiture of your lease!

10-11-2009, 17:59	#5
jude1979 Forum Member Join Date: Jan 2007 Posts: 1,477	Is there any communal areas you may have to pay towards? I used to live in a house and we owned a 23rd of a lake. All 23 houses that backed onto the lake had to pay £13 a month towards its upkeep. Is there no telephone number on the letter? What is the company called?

11-11-2009, 13:35	#10
horseychick28 Forum Member Join Date: Feb 2006 Posts: 1,287	Our house is on a 999 year lease and we pay £18 a year, we have been offered the freehold for £3K though so it may be worth asking about that???

11-11-2009, 14:15	#11
I love Ellie Forum Member Join Date: Mar 2008 Posts: 3,157	I lived in a conversion flat. It was an old Victorian house, converted into 10 flats. 6 out of the 10 flats had a share of the freehold. The 4 other flats would pay ground rent and this would be shared out between the 6 of us. I'd get a cheque for £66.66 each year, from my neighbours!