Ground Rents New Leases
Before you have your leases drawn up you need to make sure you are including some important points in the lease that will increase the value of the freehold. You can do this without affecting the saleability of the flats.
There is no point in having leases that pay a peppercorn ground rent and this basically reduces the value of the freehold to virtually nothing. In other words unless for some reason you have no choice but to charge a peppercorn ground rent.
Creating New 99 Year Leases
Many leases used to be drawn up for a term of 99 years which from a freeholders point of view is great as it means that the lease will need extending at some point in the not too distant future. The lease will be harder to sell as it approaches 80 years and there is a good chance that the freeholder will receive a payment for a lease extension. Unfortunately from a landlords point of view most leaseholders will insist on leases of 125 years which is fair enough. This enable them to live int he flat for 10 years and sell it without worrying about a lease extension.
Creating New 125 Year Leases
When creating new leases it is probably fair to say that most leases nowadays are drawn up for a term of 125 years. These are probably the most leases that we come across and what most of our ground rent investors have in their portfolio. There is no need for you to go beyond 125 years as this reduces the value of the freehold and nobody benefits from this apart from the leaseholders. When creating new leases it is considered that 125 years is fair to freeholders and leaseholders.