Ground rent is acceptable up to 0.2% or £2,000 whichever is the lower of the property value. Please note, if however, the ground rent is over £250 (or £1,000 in London) or will end up over these figures in the future, under the Housing Act 1988 they are treated as “Assured Tenancies”. This means that if the ground rent falls more than 3 months into arrears a landlord has a mandatory ground for an order for possession. In order to proceed we will require a Deed of variation prior to completion.
A service charge together with ground rent is allowable up to 1.5% p.a. of the property value based on the valuer/AVM valuation.
Where the Ground rent or service charge increases by more than CPI or RPI or the review period for ground rent is more frequent than every 10 years, applications will not be acceptable.
Where the management company responsible for the Estate rent charge is not owned by the homeowners, a maximum cap of 0.1% or £1,000 whichever is the lower of the market value of the property with an increase mechanism limiting any rises to a Government index measure for inflation (e.g., RPI or other similar index) is required for the case to be considered.
Any service, estate charges and ground rent costs will be included in the affordability calculations.