Should I Buy A Flat With Ground Rent Over £250?

should i buy a flat with ground rent over £250

If you’ve stumbled across this blog you’re likely going through the purchase of a flat or other leasehold property and you’ve suddenly been stung with this issue, right?

Purchasing a flat, a leasehold property creates many more caveats, and issues as opposed to purchasing a house. As I’ve spoken about before, flats are a brilliant investment opportunity for single buyers, those wanting to get a step onto the property ladder and investment opportunities due to the generally lower property prices.

However, whilst you may think flats are a better option, you need to be fully versed on everything the lease pertains before going one step further with the purchase. There are many additional costs that coming with owning a flat.

I purchased my first home, a flat 5 years ago and I have learnt the very costly mistakes and the difficulties at selling the flat which is why I want to be able to educate and stop others from making the same mistakes that can affect your future, saleability of the flat and your disposable income.

It was only when I was selling my flat, in fact 3 months in when I thought we were due to exchange that the issue surrounding the £250 ground rent issue arose. This was the first time myself, and my mortgage adviser had been made aware of this issue and one that is becoming, and is affecting thousands of people across the country.

In this article, I explain the £250 ground rent issue outside of London, what this means, what can be done if you own a flat with ground rent in excess of this, and whether you should consider buying a flat on the market with a ground rent of £250 or more.

What Is The Issue With Ground Rent Over £250?

There has been fresh focus within the legal property sector on the issue of ground rent levels which, if they fall within certain levels prescribed by the Housing Act 1987 (‘the 1987 Act’) could mean that a long lease may be considered as an assured shorthold tenancy (‘AST’).

For a tenancy/lease to treated as an AST, the following conditions have to be met: (a) The tenant/leaseholder is an individual (not a company); (b) The property is the tenant/leaseholder’s only or principal home; and (c) The tenancy/lease is not one of the exceptions set out in the 1988 Act.

Long leases are not one of the exceptions listed in the 1988 Act. However, the 1988 Act provides that a tenancy/lease cannot be an AST if it is for a rent lower than £250.00. p.a. (£1,000.00 in London) or higher than £100,000.00. Therefore, if you breached the covenant by defaulting on your rental payments, the landlord could obtain possession of your Property (i.e. terminate your lease) by following the procedure set out in the 1988 Act.

Most leases have a forfeiture provision (which allows a landlord to terminate the lease if you breach any of the terms) and if the landlord seeks possession of the Property by a court order on one of the grounds set out in the 1988 Act, there is no right to apply for relief. 

Whilst you might be thinking this is not an issue because I have no problem paying my ground rent on time, this becomes an issue for your mortgage lender. The lender does not know you, or necessarily trust and take your word for the fact that you will pay the ground rent. So, say if you didn’t pay your ground rent within the demand date, the landlord could potentially take possession of the flat, leaving your lender with nothing to recoup their money. Due to this, lenders have become more wary and will simply not lend for flats with a ground rent which already exceeds £250 outside of London, or £1,000 in London.

However, this is only one side of the story. The other issue with the ground rent already being at this level is what the terms in the lease state for future increases to the ground rent. Some leases state that ground rent is to be doubled every 10 years, whilst some will increase with the current rate of RPI at that time. The latter is generally favoured more by lenders. If you are purchasing somewhere with a ground rent of £150 but it is set to double every 10 years, then this becomes an issue because within 10 years (or less depending on the year of increase) your ground rent will already exceed the £250 figure, and it will keep doubling every 10 years there forth. Most mortgage lenders state that the ground rent should be no more than 0.1% of the property price. With a ground rent which doubles every ten years, this will duly become more than 0.1% of the property price over time.

Can I Still Buy A Flat With Ground Rent Over £250?

Whilst mortgage lenders are very wary and will not lend on a flat with ground rent exceeding £250, this does not mean that they won’t lend full stop, but you will need to meet certain conditions for the sale to go through. These conditions will need to be met by the seller of the flat and there are a number of different ways that getting through this rent loophole can be achieved.

Deed of Variation

A deed of variation of the lease is the most enviable and first port of call that your solicitor will ask your seller for. A deed of variation involves making legal changes to the lease which would cap your ground rent at its current level, and stop it rising in the future. The deed of variation protects not only the lender, but yourself too. A deed of variation can cost the seller thousands of pounds though, so often it is not actually an option for many sellers. There are other ways around this.

Another thing that can be done in deed of variation is by extending the lease. Using the statutory powers to extend the length of the lease and reduce the ground rent to a peppercorn (No, we’re not talking spices. This means being reduced to a small or insignificant amount of ground rent). This can only be done if the seller has owned the property for 2 years. There is no guarantee the landlord will accept this request though, and a premium will be made payable due to the amount of ground rent that the landlord will miss out on over the years.

Indemnity Insurance Policy

Whilst an indemnity insurance policy will NOT protect the buyer, it will protect the mortgage lender and whilst lending terms vary from lender to lender, most will find this acceptable and will lend on this basis.

The type of indemnity policy is called a forfeiture of lease insurance. This provides a lender with additional protection against financial losses that they could suffer in the event of the landlord forfeiting the lease, which is the security for a loan that they have provided. This would mean that even if the leaseholder didn’t pay their ground rent on time, the lender would be protected from the landlord forfeiting the lease.

Taking out this indemnity against the lease is by far the cheapest and most amenable way of avoiding this ground rent issue. The indemnity policy is drafted by the purchasers solicitors before being sent to the lender for approval. This indemnity policy is charged to the seller and can be anywhere between £50-£100, generally.

Should I Buy A Flat With Ground Rent Over £250?

I can only speak this from personal experience and weigh up the above scenarios regarding buying a flat with ground rent over £250. There are still thousands of flats on the market with levels of ground rent lower than this.

However, you need to be made aware of these ground rent provisions and terms of the lease before going any further as this is not something you want to find out when you are two months deep into purchasing the property.

So, what if you are in the process of purchasing your dream property with a ground rent of £250 and just get made aware of this?

Firstly, it is completely dependant on the seller whether they will do a deed a variation or will instead offer an indemnity policy. Remember, this is only if your lender would even accept an indemnity – they will usually only lend on specific conditions.

Some deed of variations can cost the seller between £600-£800, however, this is extremely unusual. Landlords are unregulated which means they can charge whatever they like. It could have cost me thousands of pounds to get a deed of variation.

As an idea, I was quoted £2,400 + premium. The bad news is that you are not made aware of what the premium is until you pay the initial amount of money, I was told that in some cases it has been £10,000, some £14,000. This is because they need an indication of the likely premium for extending the lease/ or varying the lease, based on the ground rent they will be missing out on. This holds so much risk for the seller too if you were to pull out. BUT, this is the best way, and in my opinion the only way if I was to do things now with purchasing a flat with a ground rent over £250 because it protects the lender, and YOU.

You also need to ensure that the flat you are purchasing is sellable and doesn’t have a lease with a defect, which this represents. Also, it protects you from astronomical ground rent hikes that can cause issues with your finances in the future. You need to protect yourself and if the buyer isn’t willing to offer a deed of variation, I would tread very carefully. No matter how much you love the property, sometimes you have to walk away from something that doesn’t stack up.

One thing to note is that thousands of leaseholders are currently being affected by this issue. In my opinion, leaseholders are only being made aware of this issue as they are selling the property.

The Leasehold Reform (Ground Rent) Bill is still progressing through the House of Commons, however, this bill which is due to reduce ground rent to a peppercorn rate will not be retrospective. On leases that have been created before the bill, ground rent can still be charged at uncapped levels.

The King’s Speech in November 2023 outlined a number of proposals to help leaseholders, one being the capping of ground rent, however, it was not clear what this level would be. Passing a bill and it becoming law can take years, whilst there is hope for the future, law is still law and there is no way around this issue unless you do a lease extension or DOV.

Flats make up a huge part of our housing economy, as well as being a foot onto the ladder for many single people and first time buyers. Because of this there is growing pressure on the Government to change the law to remove this issue with ground rent. This is ongoing and has been delayed due to COVID, so as time goes on here’s to hoping that a more widespread legislation will apply to all ground rent charges.

As a leaseholder who owned a flat and has now sold it with a £250 ground rent and experienced these issues, if you ever need any advice then please do get in touch.

I must advise I am not a legal expert but have been guided throughout this process by solicitors and have learnt this information first hand.

I cannot recommend enough joining the Facebook group National Leasehold Campaign which is a wealth of information relating to this issue.

Before You Go…

If you’re trying to buy a flat with ground rent over £250, I would strongly recommend also taking a look at my post on why I would never buy leasehold again. A leasehold property is wrought with issues and it’s worth researching and learning as much as you can before committing to what essentially is a lease agreement for a flat you don’t technically own…

Why I would never buy a leasehold property again

Photo of author


Nicole Sage

Nicole Sage is the founder of Sleek-chic Interiors and is a highly experienced interiors writer and skilled home renovator who has a passion for all things design. She has been featured as an authority at Pinterest, Ideal Home, Daily Mail and in countless other interviews. For 8 years, Nicole has written, observed key interior trends, renovated and undertaken interior short courses at the renown KLC school where she has gained her grounding interior design principles. With a keen eye for detail and a love of creativity, she shares her expertise on the latest interior trends, practical DIY tutorials, and styling inspiration to help others transform their homes into stunning spaces. With a commitment to delivering informative and engaging content, Nicole inspires and empowers readers to explore their own unique sense of style and create beautiful, personalised interiors. Contact her at for interiors advice, colour questions and any commentary.

47 thoughts on “Should I Buy A Flat With Ground Rent Over £250?”

  1. My son is looking to buy a flat which is costing £130,000 and has 118 years left on the lease. The ground rent is £250 for the first 25 years and will double every 25 years after that, so by the end of the term and the 25 years preceding it, the ground rent will be £4000 a year. He wants to take the risk, I am more cautious and think he should pull out. In your experience and with that scenario, what would you do? Doubling every 25 years is significantly better than doubling every 10 years, but even so, it seems like a lot to pay just for the privilege of living in the flat.

    • Hi Nicola, the length of the lease of the flat is good but the ground rent is quite alarming (Is it outside of London?), if he is taking out a mortgage then I don’t think the mortgage lender would lend on this basis until the seller had carried out a dead of variation or lease extension. I would also wait until the leasehold reform in June as there may be news about existing leases with onerous ground rent charges. However, this also doesn’t rid the service charge issue, service charges are uncapped and can continue to rise over the years. In my personal experience I would steer clear and buy a small house instead. I would also recommend asking in the National Leasehold Campaign Facebook group, lots of great advice in there! Best wishes, Nicole.

  2. With the new Act coming in only being for new builds, will this go against buyers who are buying a flat with an existing lease? Personally I think they should of helped those people first but anyway. I am currently having to ask for a deed of variation but I am really worried that I will be waiting ages for them to say no. Is it just a case of just wait and see?

    • Hi Ruth, yes, so anyone buying into an existing lease will be unaffected by the new changes for new builds unfortunately. The second part of the leasehold reform has currently been shelved by the government, but there is hope in the near future it will abolish ground rent which obviously doesn’t help your situation for now. I completely agree with you. The seller will have been made aware of the issues and they are unlikely to shift the property without a deed of variation or lease extension now. I would hold out for either of these routes, but it is a waiting game – I’d put pressure on the solicitors to get a response to you if the days are rolling on. Keeping my fingers crossed for you, and let me know if you need anything else! Thanks, Nicole.

      • Hi Nicole,

        This article was so helpful. I’m in a it of a situation…

        I have had an offer accepted on a flat in Romford, 240k. Lease remaining is 105 years, ground rent 150. The ground rent doubles every 25 years (next doubling in 2028)

        I’m in two minds, my bank may request a DOV but even still, am wondering if its still worth it. I’m a first time buyer and have been really keen to get on the ladder as have been paying rent for years!! However, don’t want to make a decision out of that want and need and just that.

        It’s also a 1 bed flat, which does give me space but wondering if I should hold out for a few years to afford something more, however, something else to factor in is the alarming rise of interest rates!! I am not planning to stay there for life as hope to start a family within 5 years too. So will either sell or rent out if I can afford to.

        I’d really appreciate your thoughts!!

        • Morning Raymond, so pleased it was a helpful read, and so sorry you’re going through this now. I think there are two ways you can look at this;

          1) Long term – if you have visions to rent out in the future and then purchase another property then it would be worthwhile, ground rent is currently low and it’s likely that by 2028 the leasehold reform may have scrapped ground rent by then, although it’s already been delayed by 3 years! Just be mindful that when you near the 80 year mark a lease extension can cost thousands of pounds, the less time left the lease the less saleable and attractive it is. But if you see this as a long term thing that you can factor this in.

          2) For a short term basis/sell in a couple of years I would likely walk away from this because you are going to have future saleability issues UNLESS the current seller now does a DOV for you or they do a lease extension, this is a better option because it reduces ground rent to a peppercorn rather than capping it at the current £150 and it adds an extra 90 years to the lease. If you can push them to do either then it puts you in a much better position financially, and you know you’ll have minimal issues if you want to sell in the short term.

          It’s a really difficult one! I would request the DOV as suggested and see what the seller says, as it’s unlikely they’ll be able to shift their flat without doing this – if they say no then I would walk away regardless, it will save you so much stress and money! Good luck!!



  3. daughter has offered on a maisonette
    £250 per year ground rent
    £75 per month service charge
    her mortgage advisor is saying that the lender wont lend
    any advice please ?
    she is so stressed
    does her solicitor need to speak to the vendors solicitor ?

    thank you

    • So sorry she’s going through this now. I’d initially go back to the mortgage advisor to find out what the mortgage lenders would accept i.e indemnity policy, or would they need a deed of variation from the vendor to approve the mortgage. Once you have that info you have the ammunition to go through the solicitors and request this from the vendors solicitors. Hopefully they can come to a resolution with your daughter and move forward with it. If it doesn’t stack up it’s just one of those that is best walking away from. Hope that helps and good luck, thanks, Nicole.

  4. Thank you, Nicole, this is really helpful and very grateful for the information you have shared. I am halfway through buying my first flat (old at 47!) and have come across this issue with the ground rent already being £350 pa. I want a deed of variation but the solicitor for the seller has said this will not be granted. It pains me as I cannot now see me affording another mortgage (give the current circumstances) and going back to look for another property, either way I probably will have to pull out.

    • Hi Martin, so glad you found it useful, and so sorry you’re going through this now. It’s such a catch 22 situation, the reality is that the vendor of the property you’re selling is never going to be able to shift that property without a deed of variation of lease extension, even cash buyers are steering clear as it will cause them future saleability issues. If they don’t budge on the DOV, the hardest, but arguably best thing you can do is walk away, you might not have a mortgage from doing so in the short term, but you won’t have the stress and be out of pocket for it. Good luck!

  5. Thanks for this great article. We are mid-way purchasing a 2 bed flat with a 125GBP ground rent but due for first-time assessment next year and the calculation on the lease states increase will be ‘in line with increased cost of building and price index’ (Block of 45 flats with 125 year lease started in 2002)
    Our solicitor has asked for a lease variation from the seller as she says this is worst type of calculation as too vague. There is a management company – will they let us know if other flats in the block have had a successful lease variation?

    • So glad you found it helpful! This is an interesting one, as they say it’s the worst as it’s not tangible like a doubling clause or in line with RPI.

      The management company probably wouldn’t give you access to this information, but the seller will need to have the contact with them in regards to the lease variation. From my experience when I was requested this, I asked the management company if they normally granted lease variations on ground rent basis to which they said yes we have done many lease variations, so if you’re able to get the seller to start the communication you should be able to find out. If they say no to a lease variation, then a lease extension will be possible and in my eyes this is actually the better option as it will add 90 extra years to the lease and reduce ground rent to a peppercorn (nominal value such as a £1). Hope this helps and good luck!

  6. Hi,

    Just wanted to get you advice we are buying a flat and the current ground rent is £250 rising with RPI in 7 years we have managed to get a deed of Variation in which they have agreed to forfeiture rights of taking the property off of us if we were to miss payments but they won’t vary the ground rent. Are we ok to move forward with this as this does protect us and the banks? What’s yours opinion?

    • Hi Jemma, thanks for your message. I would personally walk away from this because the issue with rising ground rent is still present and will cause you saleability issues in the future, if they had also capped the ground rent at £250 as part of the deed of variation this would have been fine, but it leaves you open to escalating ground rent in the future. If you are comfortable with the rising ground rent and have no plans to sell in the near future then as you say, it does protect both yourself and the lender at this time. Good luck! Nicole.

  7. Hi,
    I hope you can help – I am selling a flat where the ground rent sits at £300 per year. The lease has 87 years remaining.
    We have a cash buyer however their solicitor will not follow through with the sale unless the ground rent is reduced to £250 or lower.
    The leaseholder will not change this so I fear we may be forced to extend the lease and reduce the ground rent this way.
    Is it normal for a solicitor to refuse to proceed with the purchase despite it being a cash buyer?
    Thank you

    • Hi Tom, this is a really unusual one, especially as it’s a cash buyer. It’s likely that the solicitor is heavily influencing on this, are you able to get direct contact with the purchaser at all? I found this really helped my situation as solicitors are notorious for these obstacles even if the buyer wants to proceed. This may also be because the lease is nearing the 80 year mark where a lease extension is required. See if you can speak directly with the purchaser, I’d ask the estate agents if you can be put in touch. Hoping you can get somewhere without having to do a lease extension, a lease extension is a better process than the deed of variation though (capping ground rent) as reduces ground rent to a peppercorn (nominal amount eg £1) adds 90 years onto the lease and costs are very similar to a deed of variation. Thanks, Nicole.

  8. Hi, great article but found it a bit too late. I purchased a flat earlier in the year with 168 years remaining on the lease for £200k. It has a ground rent of £350 per annum and increases with RPI every 10 years (next in 2029). Barclays allowed the mortgage using Indemnity policy.

    What are your thoughts, do you have any recommendations to protect myself in the future. Should I look to try and extend lease now to get the peppercorn ground rent, or just hold off and wait for a future law change. Will this affect me remortgaging when my fix comes to an end?

    • Hi Matt, sorry to hear about your dilemma with this. If you’re not planning on selling in the next few years I personally wouldn’t do anything as I do think future law changes will filter through, they’ve been shelved currently but it will come, it’s just not knowing the exact date of that. If you want to sell relatively soon, then a lease extension is the best bet as you won’t be able to sell without this now (unless to a cash buyer who doesn’t care), it’s a huge expense though so unless you’re wanting to move soon I’d wait, save your money and hope that ground rent will be abolished soon. Hope that helps! Thanks, Nicole.

  9. Hi, really useful article thank you.

    I’m currently selling a leasehold flat with a ground rent if £252. This issue has reared its head as my buyer’s solicitor is requesting a deed of variation.

    The freeholder has stated they would not accept a deed of variation.

    My buyer is a cash purchase. So whilst I understand legal advice likely given by their solicitor regarding any future sale as well as the risk of the rent increasing. However, is there any precedent for agreeing with the purchaser, either a reduction in sale price to compensate but avoid delays or any kind of indemnity to the individual?

    With there being no mortgage lender in the equation this feels excessive to me. The ground rent has increased from £226pa to £252pa in the last decade for context.

    • Hi Josh, sorry to hear you’re going through this now. Can you speak to the estate agent to see if you can get direct contact with the purchaser? I found this was my lifeline as things were taking so long with solicitors. As it’s a cash buyer it would only be an issue for them if they want to sell in the next few years as it will be an inherited problem, but realistically a cash buyer should be the most favourable in this situation. Try and get direct contact so you can nail down what the problem is for them and come to a solution. An indemnity policy for the ground rent remains with the property so that is an option too and costs between £50-£100. Hope that helps and good luck! Thanks, Nicole.

  10. Hi Nicole,

    Really helpful article! Thanks for this.

    We are halfway through buying a flat, and the ground rent is currently £300 per year. The ground rent is reviewed every 20 years and will increase according to the block value. It is due to be reviewed next year. The original value of the flat was roughly £300,000, about 0.1% of the property’s value, so it might increase to a similar level now.
    The flat is outside of London, so as it is over £250 per year, it looks like it should be an assured shorthold tenancy. However, we are looking to purchase this flat for £400,000, so currently, the ground rent is less than 0.1% of the property’s value. As such, the seller’s solicitors say they won’t get a deed of variation as one isn’t needed.

    I have a few questions:
    If the ground rent is over £250 but under 0.1% of the property’s value, is it still an assured shorthold tenancy?
    From what we’ve read, this is becoming more of an issue for Lenders, so given the vague terms of increasing ground rent, should we walk away from the property if we cannot get a deed of variation?

    • Hi Tom, really glad it was helpful and sorry to hear you’re going through the same thing now. This is an interesting one, I believe it is either if ground rent is already over £250 or if ground rent is more than 0.1% that it become an AST (usually applies if flats are sub 100k for example), your lender may accept an indemnity policy but this isn’t going to protect you and the purchaser. If they will not provide a deed of variation to cap ground rent or a lease extension (this reduces ground rent to a peppercorn and extends lease by 90 years and is a more favourable option over a DOV) then I would personally walk away as you will inherit the same problem which could cost you thousands to rectify in the future. Hope that helps somewhat and good luck! Thanks, Nicole.

  11. Hi Nicole,
    We are buying a 260k 2 bed flat, with 300 ground rent (until 2044) and 102 years left on lease. Not in London. I understand you need to own a flat for 2 years before you can request a lease extension and get peppercorn ground rent. What steps can the seller take to start the process so we don’t have to wait the 2 years? We are ‘happy’ to pay the sellers costs but the freehold company has bad reviews and asks for pre-paid forms and seems obstructive. Is a Section 42 enough or do they need to get a survey and additional legal advice? The seller thinks we crazy for making a fuss (we are paying cash) but your advice indicates it may be hard to sell. Any tips?

    • Hi Tam, thanks for your message. As far as I am aware a section 42 should be enough, and you don’t even need to go through with it if you don’t want to. Some people start this process to safeguard the flat just in case ground rent was to be eradicated in the near future, but also if it’s still an issue they can act on completing the full lease extension. Dealing with leaseholders can be tricky and I have heard of some that demand money in advance for it. It’s a really difficult one, but unless the ground rent is eradicated in the near future with the government it would remain impossible to sell to anyone who needs a mortgage so you are doing the right thing to start proceedings. I would also recommend posting this question in the national leasehold campaign group on Facebook as I’m sure there will be someone who has been in a similar position; I hope this helps and good luck! Best wishes, Nicole.

  12. Hi Nicole, I’m so glad to have stumbled upon your website! I really hope that you can offer me some insight. My partner and I are first time buyers and in the process of buying a flat (outside of London). The ground rent is currently at £250 and is due to be reviewed in 6 years time. Our lender doesn’t have an issue with it, so the freeholder has refused a DOV. We’ve asked them to reconsider as our concern is when we come to sell (which we would probably look to do in around 5 years) but I’m not too hopeful. The lease has 106 years left. Do you think our best option is to ask the seller to start the process of a statutory lease extension and then we take it over? and negotiate costs with the seller? Thanks, Alex

    • Hi Alex, so glad you found it helpful and really sorry you’re in this situation now. Firstly, excellent news the lender has no issues, as it’s not often the case. Yes, I would definitely be inclined for them to start a formal lease extension and then pass across to yourself, this will make your life so much easier when you eventually come to sell, it will reduce ground rent to a peppercorn (nominal fee) and it will make your flat very attractive to purchasers. Also, a much better route than a DOV. They might not be willing to budge, but you need to protect yourself from future issues which will you will encounter. Good luck, Nicole!

  13. Hi Nicole. I’m currently looking at buying a flat (outside London) for £190000 with 107 years left on the lease. However the ground rent is £40.00 per year and the provisional information i’ve had from the estate agents is that the review period is every 1000 years.

    When ever you read anything about the ground rent doubling period and how it may cause issues with remortgaging/selling the property in the future it always refers (and gives examples) to doubling periods of 5, 10, 20 or 25 years .
    Therefore if the review period is every 1000 years, would this still cause an issue in the future? (as theoretically it’s still doubling but not for a very long time)

    Would be interested to know your thoughts


    • Hi Richard, thanks for your message. Yes, you’re right, doubling ground rent is a big issue, but this is generally when it is every 10 or 25 years. 1000 years isn’t likely to cause any issue as this wouldn’t fall within any mortgage terms with your lenders – seems like very favourable terms. I personally wouldn’t see this as an issue, and it’s likely that with the leasehold reform that ground rent will eventually be scrapped. Good luck! Thanks, Nicole

  14. Hi Nicola

    Thank you for the blog posts and videos, much appreciated. I’m a first time buyer and currently buying a leasehold flat as a cash buyer – very fortunate with an inheritance. My solicitor has raised the issue of an onerous ground rent clause where the grount rent rises every 21 years based on the percentage uplift in the block of flats between each 21 year review period. My solicitor has recommended that I ask the sellers for a deed of variation to remove the escalation clause and fix the ground rent below £250 and this is what I have done. I am waiting to hear whether the sellers will go ahead with this, if they do not I will pull out of the purchase.

    My question is, if I am able to fix the ground rent, do you still it’s worth me investing in the leashold flat? From what you have said there can be issues with service charges rising, unexpected bills and costs for forms to sell the flat. But overall, do you think these costs would be outweighed by the added value I would get from leaving my current rental, where I am paying an extortionate £1,100 a month for a 2 bed flat? With my own flat, of course I wouldn’t pay any rent at all and so I’d be saving about £13,000 per year. Freehold properties at the moment in my area are in the region of £350,000+, so are essentially unaffordable without taking out a mortgage which I don’t really want to do if I don’t need to given the high interest rates now being charged.

    Kind regards

    • Hi David, thanks for your message. Great to hear you have a good solicitor behind you and that’s definitely the best approach to have with a flat with ground rent over £250, walk away if they can’t do a DOV or lease extension (that will reduce the ground rent to a peppercorn).

      As the ground rent issue will be solved for you if they accept a DOV, it will make your flat more attractive in the future if you choose to sell, and by which point with the leasehold reform, ground rent may eventually be scrapped for existing leases.

      Rising service charges can be an issue, if you know the name of the freeholder it’s worth doing a google search about them just to see what other leaseholders say about them, plus take a look at what the service charges are like for now which will be presented to you in the management pack. Leasehold flats can become more expensive on a monthly basis than a mortgage of a freehold house, but because you will be mortgage free it’s actually a worthwhile solution for you, plus, flats will go up in value over the following years. If you do come to sell the flat, just account for the extra money that will be required for the LPE1 form and management pack. Hope that helps and good luck, thanks, Nicole.

  15. Hi Nicole thanks so much for your sharing on this I’m just going through this at the moment and feeling extremely stressed. I found a property in London 2b 2b selling price at £435k then I’m freaked out by the service charge and ground rent around 4.2k service charge and 1k ground rent at the mo! I raised this with everyone the property agent says this is all very standard they have sold so many in the past years without any issue. The broker seems fine with it he doesn’t think the lender will have any issue with that why? Is ground rent over 1k common in London? The solicitor is also not being very helpful either! The only reason I’m buying this is it seems a good property that I like it is close to my kid’s new school the price seems reasonable . Should I walk away or shall I ask for cap on ground rent but that might take long even if the seller accepts? I have time pressure on moving in as well it’s already May school starts in September!
    Really appreciate your reply on this . Thank you!

    • Morning Jocelyn, I’m so sorry to hear you’re going through this now. If ground rent exceeds 1K this becomes a problem, but even £1k is being considered an issue with lenders as it’s at the bottom end of the spectrum for lenders. Yes, so realistically a cap on the ground rent with a deed of variation can take some months to complete and it can cost in the thousands which the seller would have to be willing to pay for. From the costs you have mentioned, I would personally walk away from it and save yourself from the stress and money in the future. Service charges will continue increasing year on year with inflation and that’s already a huge annual service charge – freeholders are unregulated so they can pretty much charge what they like. Hope this helps somewhat and good luck! Nicole

  16. Hi Nicole

    Thank you for your article.

    We purchased our flat outside of London ( in Nov 2022 at a cost of 220K) with a ground rent of £250 per annum which is reviewed every 10 years and moves in line with RPI (I found this information yesterday when i reviewed the lease). It’s a 999 year lease that started in 2016 so the first review is in 2026.
    I asked our solicitor about the ground rent as I couldn’t see it on financial statements that were provided at the time of purchasing. I wish I can say that I was asking because I understood the risks, but I was only asking as it was absent. After a bit of back and forward between the solicitors we received an email saying that ground rent was never paid to or requested by the freeholder and that they were not planning on asking for any in the future. Good news I thought 1 less thing to worry about.
    However, during our first month in our new place we received a letter from freeholder offering the sale of the freehold for the block (12 flats) for £57,000. As we had just moved, with all the stresses and excitement it got forgotten and put in a drawer.
    Yesterday we received another letter informing us that a new company had bought the freehold and information regarding future payments will follow in another letter shortly. This new letter promoted me to reread our lease and do multiple web searches and lead me to your weebsite. Why do you think a company would buy ( I say buy I don’t know what was paid) the freehold if in the near future ground rent will be (hopefully) abolished?
    We are planning on staying in our flat for 4 years then either selling or renting it out. Fingers crossed policy changes in that time.
    I would love to hear your thoughts on our situation and why a company would pay to become a freeholder in June 2023 if reform was around the corner.

    • Good morning Thomas, I used to think the exact same thing about freeholders until I needed to make amends to the lease when I was selling. Freeholders make an astronomical amount of money when leaseholders need to make amends to leases such as pet requests, alterations to property, extension of leases etc which can run into tens of thousands of pounds, so even without the ground rent monies, they’ll still always make money. They also aren’t regulated so seemingly charge whatever they like. Fingers crossed lease reform is on there way though as removing the ground rent issue will make it much easier to sell, hope that helps! Nicole

  17. Hi Nicole! Thanks for this great, informative article! I am looking to purchase outside London and the ground rent is £280 and my offer was £262,000. My mortgage broker is saying this won’t cause any issues as lenders will accept if ground rent is less than 0.2% (mine comes out to 0.10687%). There is also a rent review clause, so every 5 years rent is reviewed based on RPI. So my solicitor said the lease is defective and it makes it an AST. My solicitors have said they can’t advise on this. Solicitors have requested indemnity insurance to be paid for by the sellers, but I guess this isn’t enough.

    So from your article I think DOV or lease extension would be the only options here? My questions were why is lease extension a better route than a DOV? In my letter from my solicitor they said that some lenders might not lend on properties where ground rent is a peppercorn as it’s preferred to have a decent ground rent so that the “lessor has continuing interest in the property”. And would a DOV help with the resellability of the property (would it still be “applicable” to the new owners)? This would be my first property so I’d probably like to stay for a few years then hopefully rent it out rather than sell, but I wouldn’t want to be stuck with a property I could never really sell. Would love to get your thoughts!

    • Hi Sharon, this is an interesting one, indemnity insurance won’t protect you from reselling so I wouldn’t accept this for the ground rent issue. Lease extension is generally better because they both cost a similar amount of money, yet the lease extension also adds an extra 90 years onto the lease, whereas a DOV usually just caps ground rent and you don’t add anything to the length of the lease. Interesting about the peppercorn ground rent as all lease extensions have this now, but yes, a DOV stays with the lease so it would be passed over to the owner when you sell, and this shouldn’t cause any issues selling in the future. Hope that helps and good luck!

  18. Dear Nicole
    I found your article and video and comments from others extremely interesting, thank you for taking the time to highlight these issues. We have been stung by this as 5 months into buying a flat, my daughter had a ground rent issue that mortgage lenders would not accept and though seller was trying to get a lease extension she then lost her onward purchase in the process due to length of time it took, so pulled out of the sale.
    My question is we would like to view a property with £265 ground rent (property price – offers in excess of £225,000) they have reduced the price for a quick sale, now I am thinking if we are interested in this, should we steer clear unless they agree to do a lease extension and change ground rent to peppercorn ? Their lease apparently says that £265 is a capped ground rent.

    • Hi Sue, thanks for your comment and I’m really glad you found it useful. If this is outside of London, I think this may still cause an issue because a flat becomes classed as an AST when the ground rent is over £250 which will cause lender issues, it seems strange that is has been capped at £265. I would probably steer clear of this unless they are willing to do a lease extension, good luck with your daughters search. Thanks, Nicole

  19. Hi Nicole,
    Great article and really useful to see information on ground rent presented so clearly.
    I’m a first time buyer and am very fortunate to be a cash buyer. I have had an offer accepted on a £180k flat outside London. It’s a beautiful flat – the only downside is the £600/year ground rent that increases every 10 years by £300 (next increment is in 3 years) and is capped at £4,000/year. I can afford the ground rent and service charge, but I’m stressed out wondering if I will ever be able to sell the property when the time comes. I know that there was a previous buyer who had pulled out of purchasing the property and wonder if it was related to the ground rent (I doubt the estate agent would be forthcoming about such details).
    I haven’t hired a solicitor yet and am wondering whether I should bother, or just walk away. I could ask a solicitor to engage with the seller to achieve a DOV or lease extension. But I’m not confident that the freeholder would engage favorably – they are a big outfit apparently. Another option would be to ask the seller to reduce the sale price, but this seems a bit underhand considering that I have already made an offer whilst knowing the ground rent. I suppose I could take the risk and hope for leasehold reform, but that seems to have stalled… Any advice you can offer would be much appreciated.

    • Good morning Peter, many thanks. As it stands, I would walk away as you will not be able to sell it with the ground rent, when it hits over £250 it is classed as a lease defect so if nothing changed with leasehold reform you would have to sell at a loss or do a lease extension/DOV. However, the King’s speech is on 7th November, so if you can wait until then and hear what is said, this will help inform you whether to proceed or not. There is speculation about what is being brought in, so well worth waiting until then. Good luck! Nicole

      • Hello Nicole. Thankyou so much for your reply – it mean so much.
        A quick update: I have advised the seller that I am not willing to purchase unless they approach the freeholder for a Deed of Variation to bring the ground rent below £250 p/a or agree to a reduced offer for the property that factors in the cost to facilitate a lease extension to reduce the ground rent to a peppercorn. I do feel slightly guilt that they are in a chain and I am the roadblock, but it is a huge investment and I refuse to inherit a liability.

        This webpage (and your honest responses) are hugely valuable. I cant than you enough.


  20. Hi Nicole,
    I’m currently in the process of buying a leasehold flat in London and finding it very frustrating. The ground rent is currently £150 a year but it increases every 25 years, so in 2080 it will go over £1,000. My solicitor says the sellers need to arrange a deed of variation and that I shouldn’t proceed without the deed of variation, but the sellers’ solicitor says that the DoV isn’t needed because it won’t go over £1,000 until 2080. The sellers’ solicitors also say that the DoV will take months, and I really don’t want to keep waiting. Is my solicitor being overly careful?
    The sellers are now saying that if I don’t accept it without a DoV, they will walk away from the sale because it’s taking too long. I really like the flat and I want to move out of renting as soon as possible, but I worry that if I go ahead without a DoV I’m going to struggle to sell the flat in future. My solicitor says that future buyers will have the same concerns and that it’s therefore on the seller to pay for the DoV rather than me.
    Reading your very helpful articles makes me think that I should avoid leasehold altogether, but it’s difficult to find a freehold flat in London… Any advice much appreciated!

    • Hi Caroline, sorry you’re going through this experience now, but glad you are doing your diligence on the situation. Yes, the DOV will take months to complete, but the seller is going to have the same issue if they walk away from you. I would personally not touch it unless they do a DOV or lease extension, as far as I’m aware the Kings speech today hasn’t passed anything about onerous ground rent levels, and if you are looking to sell in the next 3-5 years you will encounter the same problem, they are just trying to pass it off onto you. It’s a really tricky one because I know it’s super difficult in London. The stress and money won’t be worth it in a few years though, there are leasehold flats out there with peppercorn ground rents and long leases, but it may just take that bit longer to find them. Hope that helps and good luck! Nicole x

      • Hi Nicole, thanks so much for your reply – it’s really helpful and confirms what I have increasingly been thinking. Thanks too for recommending the leasehold Facebook group in your articles, it’s been super useful! I think that sadly this purchase will fall through and I need to start again and be a bit more careful – what is so frustrating is that you don’t find out these crucial things until weeks/months into the purchase process. Thanks again, much appreciated!

        • Hi Caroline, you’re so welcome, that Facebook group is such a wealth of info! I agree, it’s so frustrating, when I was selling my flat I found out 5 months later about the ground rent issues, the solicitor had never mentioned it to me before, I really think solicitors don’t seem to have enough knowledge of leasehold which makes it so difficult. You’re doing the right thing though and I hope the right one comes up for you soon! Nicole x


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