Ground Rents New Leases


Housebuilders Ground Rents

If you have recently built a block of flats and would like some advice on how to maximise the value of your ground rents we can help you.

Obviously you need to consider the terms of the lease and ensure that the lease terms don’t impede the sale of the flats. However there are very simple ground rent increases that you can insert that will increase the value of the freehold once the flats have been sold off..

Increases Every 25 Years

For example it is now quite common to increase your ground rents more regularly than every twenty five years and fixing the increases to keep up with the retail prices index. Many leases are now drawn up in this way and increases the value of the ground rents and certainly makes them easier to sell.

Avoid Peppercorn Ground Rents At All Costs

If the leases have already been drawn up and the flats have been sold there is nothing you can do to change the terms of the leases so care should be taken before having them drawn up. Many solicitors will have a standard format for drawing up leases that do landlords no favours at all. For example they will draw up leases for 999 years and with no ground rent increases. Some leases are also drawn up with a peppercorn ground rent which renders the ground rents worthless. No investor is going to buy a peppercorn ground rent with a lease of 999 years.

As a housebuilder of many sites across the Uk I can honestly say that having an expert advise you on how to draft your leases will definitely help to maximise the value of your freeholds.

Residents Management Associations

Other important points to consider is whether or not you want to set up a residents management company. It may seem like a good idea to pass the responsibility of the insurance and management onto the residents association but it will lower the value of your ground rents.

Many ground rent investors want to do their own management and insurance and will pay for this. If you would like to discuss any of the above please get in touch with us.