Doubling ground rent every 25 years on a leasehold flat - should this be a dealbreaker?

[FTBHelp2022]

I am going through the process of purchasing a leasehold flat in London. I've found some concerning details about the ground rent, even though there are 990 years left on the lease

Under the terms of my lease agreement, the ground rent is currently £350.00 per annum and rises as follows:

£350 for the first 25 years of the Term;

£700 for the next 25 years of the Term;

£1,400 for the next 25 years of the Term;

£2,800 for the next 25 years of the Term;

£5,600 for the next 25 years of the Term; and

£11,200 for the remainder of the Term.

Considering the recent legislation reducing ground rents of new build flats to peppercorn values, should I avoid the purchase of this flat completely? I'm worried about the resale value...

yes, that would definitely be a dealbreaker for me.

This isn’t about what the ground rent would be the equivalent of in 15 years time, it’s what lenders (and therefore potential buyers) think of it if OP sells or re-mortgages.

What does your conveyancer say OP?

What does your conveyancer say OP and will your lender (if you need one) lend with that ground rent clause?

If this is a new build the chances of it still being standing in 150 years is zero.

I'm surprised that the lease is a 999 year one with ground rent terms like that - usually 999 year leases are given out with a share of freehold, which comes with peppercorn rent.

The lack of sinking fund would be a serious red flag for me too. There are big changes in fire safety legislation coming through as of today and they are all going to cost leaseholders money. If you don't have any reserves that's going to involve a cash call to all leaseholders which will be an additional burden. Likewise what happens when you need external redecorations / lift modernisation done?

Don't touch it.

If there is no sinking/reserve fund you might suddenly get hit with a big repair bill that residents will have to cover.

The doubling ground rent clause will put off many buyers as you have already identified, especially if they can just go for another flat that does not have the same clauses in the lease.

In general I would say avoid leasehold full stop and always go for a flat with at least a share of freehold or a house, even if that means having to move a bit further away.

I had a leasehold flat in London and we had constant issues with service charges going up sharply every year and maintenance not being done correctly although hefty ''management fees'' were always included in the service charge. It also had a doubling ground rent and 99 year lease. I can tell you I was delighted to sell it and move on...

I'm in Greater London and have a friend living locally who lives in a gorgeous penthouse period apartment. Due to a change in circumstances, she's had to put the flat on the market and despite being a stunning property, no one is making offers because of the service charge (£4000 a year) and ground rent (£800). She's been on the market for just under a year and has even tried to multiple agent listing option. She's still waiting for an offer.

It wasn’t extended to 999 years 10ish years ago was it? Freeholders often increased the ground rent like that when extending leases then.