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 this article, Leasehold Property Specialist Niki Adkins 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.
How much does a deed of variation for £250 ground rent cost?
A deed of variation likely won’t cost you anything if you do it by yourself. However, if you use a solicitor (which we would advise) then there will be legal costs.
You don’t necessarily need to use a solicitor to draft your DoV, yet we highly recommend it.
A solicitor can ensure that a DoV is drafted legally and correctly and that the right procedures are followed to make it valid.
A deed of variation can be a complex document so, if you were to draft it yourself, you may get it wrong and need a solicitor to look over it anyway which could end up slowing proceedings down.
The legal costs for a ground rent deed of variation can vary depending on certain factors, including how long it takes for you and the landlord to come to an agreement.
As leaseholder, you will be responsible for these legal costs as you are the one who wishes to initiate a change in the lease terms; not the landlord.
To get a deed of variation quote, you can call our Leasehold Property Team on 01202 499255 for a free initial chat.
More on deeds of variation for ground rent
We’ve written a much more detailed and comprehensive article on this topic, which looks at other options for reducing ground rent (including lease extension) as well as a further breakdown of costs.
You can read that article here.
Deed of Variation Solicitors
Our specialist deed of variation solicitors are based in the Bournemouth, Christchurch, Poole and Ringwood areas, but are experienced in helping clients nationally.
We’d be happy to give you some specific advice on your situation and assist you in drafting a deed of variation.
Please don’t hesitate to contact our team. We offer a free initial chat for all new clients. Call us on 01202 499255 or fill out the form at the top of this page.
Hi Tim, thank you for your comment.
A landlord may agree to a DoV to reduce ground rent for a number of reasons.
However, if they do refuse to grant the 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.
Both you and your landlord will likely have to agree to this deed of variation for it to come into force
Isn't this the key point? Why would a landlord who is entitled to say £400/yr Ground Rent agree to reduce it (and kepp it reduced) below £250 potentially for up to 999 years when sub £250 would be a peppercorn level?
It's like turkeys voting for Christmas - it simply won't happen!