Leasehold- should I pull out

[noloh1]

In January I put an offer in on a house. At the time of the offer, the agent advised that the property was leasehold and the vendor wanted everyone to know before offers were accepted. At this point, I didn’t look into it too much, which I should have done, and my offer was accepted.
The leasehold has 200+ years left on it. It is 250 per annum, which doubles every 25 years.
In 13 years, it will double to 500.
From what I’ve seen online, this has legal implications, could make selling the house difficult and if three months ground rent are missed, they have the power to repossess.
This has now made me feel uneasy, and I’m wondering whether to cut my losses and pull out. I feel bad for the vendor for not looking into this in January.
My solicitor tells me this is totally normal. But I don’t think I trust them. My brother is also buying a house with a similar leasehold and his solicitor has advised not exchanging until a deed of variation is in place.
What would you do? Is this totally normal, or should I walk away?

It's totally normal, go ahead and enjoy your property!

Personally I wouldn't buy a leasehold house. Why doesn't it come with the freehold? Also this will make it harder to sell when you move on.

From posts I've read on here before some areas in the country have leasehold houses with pepper corn ground rents as standard. I personally wouldn't buy a leasehold house as where I am they are definitely not standard (but I did buy a leasehold flat - and a share of freehold).

You need a deed of variation if you want to go ahead. It can be completed the same day as your purchase if you add the right clauses to your contract.

I had a similar issue with a flat. I'm not sure if it's the same with houses.
But my solicitor said once ground rent got above £250 a year the lease would become an AST meaning you could be evicted if you don't pay the ground rent which makes getting a mortgage difficult.
It's a higher amount in London though. Think £1,000 year.
It's interesting your solicitor isn't concerned were they able to explain that?

@MinnieMountain

You need a deed of variation if you want to go ahead. It can be completed the same day as your purchase if you add the right clauses to your contract.

Just out of interest, why is a deed of variation needed?

I thought these doubling ground rents were going to be abolished or did I misread the articles..??

I’m not sure if they are abolished going forward. This house isn’t a new build.

If you are outside of London then the ground rent is high. Ours was £80 per annum on a 220k flat. Does depend on the value of the house you are buying though. Is there a service charge payable too?

If you are buying with a mortgage, they may have something to say about it.

I’d be trying to find who the freeholder is and if they are difficult to deal with - ours was known to be a complete pain.

@kirinm because IF you get the freeholder to agree, the ground rent can be changed to something sensible that all lenders will accept.

OP - yes, you should pull out if you're outside London (unless the price you've agreed reflects the "blight" that these types of properties suffer from i.e. the price is low & allows you to buy the freehold or some other solution).

This is the dangerous type of leasehold (compared to long leasehold where there is a fixed, peppercorn ground rent).

There are already some lenders who won't lend on "doubling" ground rent properties, so purchasers are put off. Reforms are coming, but noone really knows when they'll kick in and whether they'll be applied retrospectively.

You need to ask your solicitor to look at the Housing Act 1988 (if they haven't already). There are detrimental legal implications if the ground rent is more than £250 outside of London (£1000 in London).

A deed of variation, which usually just changes a doubling ground rent like this one to one which increases in line with RPI, won't necessarily help. As the ground rent is £250 already, any increase triggers the legal implications of going over £250.

I

A deed of variation can do whatever the parties agree. The escalation clause can be removed, which would work in this case.

A deed of variation can do whatever the parties agree. The escalation clause can be removed, which would work in this case

I agree, but not many freeholders are likely to offer a complete removal of the escalation clause.

Also, its worth remembering OP that it's not the vendor who can offer to agree a deed of variation, its the freeholder. Unless therefore the vendor's solicitors have contacted the freeholder and got that agreement, they can't offer it to you as part of your purchase.