Ground rent sellers guide

We hope you find the following guide useful, which includes explanations of the common jargon you’ll come across.

Just get in touch if you have any questions. We know the property sector inside out and are happy to help.

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Ground rents - Your guide

Why sell your ground rent?

Managing a Freehold ground rent can be a lot of work for little return. Often the capital tied up here can be better spent elsewhere. The most common reasons for ground rent sales are to:

  • avoid the time and trouble of collecting and chasing up low rent amounts
  • be free of the legal red tape and administrative burden of being a Freeholder
  • forget about the worry of insuring another property and carrying out repairs
  • remove yourself from the financial risks a Freeholder faces
  • realise your ground rent value and invest this elsewhere

We buy ground rents from a wide range of people, from all walks of life, including individuals who have inherited a ground rent and the unexpected responsibilities that come with this.

When should I sell my ground rent?

There really isn’t a concrete answer. Ground rents are like any asset; their value can go up and down over time. The best advice we can give is to get a free ground rent appraisal from us. You’ll then be in a good position to make the right decision for you.

Information to have to hand

To help speed up the sale, it’s useful if you have the following information when enquiring:

the current ground rent payable

the address of the property and the lease or title if available

If not, don’t worry. We can get copies of all the necessary paperwork from the Land Registry.

Key steps to selling your ground rent

Although it’s a formal, legal process, selling your ground rent to us is quick and straightforward, as it’s something we do daily. We have the experts in house to take care of every matter.

There are five simple stages.

1
Freeholder (landlord or ground rent owner) enquires and supplies requested details
2
Gateway Ground Rents makes an instant offer
3
Landlord accepts the ground rent offer
4
The relevant legal Notices are served on the leaseholders
5
If the leaseholders do not buy we will complete shortly after the notices expire with the money being paid to you on completion

Jargon buster

If you’re unsure of anything to do with selling your ground rent, our expert team is here to advise.

01702 600 010

info@groundrents.co.uk

Common parts

The communal areas of a building, which are commonly the responsibility of the Freeholder to maintain. These might include a shared entrance hall, staircase and outside space, as well as exterior walls and the roof.

Freehold

Owning the Freehold means owning the property and the land it stands on outright, including the ground rent. Your name will be recorded in the Land Registry as ‘Freeholder’, owning the ‘title absolute’. Freeholders are usually responsible for maintaining the common parts of a building, unless the leaseholders have claimed their Right to Manage (RTM) or the obligations have been transferred to a Residents’ Management Company (RMC).

Ground Rent

A fee, often charged annually, which a leaseholder must pay to a Freeholder as a condition of the lease. A lease should set out how this ground rent amount is paid, if and when it can be increased and what happens if it isn’t paid. A Freeholder must ask for the ground rent officially, in a prescribed format. Ground rent is also used as a general term to represent the Freehold title and any associated rights and obligations.

Leasehold

Holding a lease – a contract – from the Freeholder (or landlord) to use the land a property sits on for a certain number of years. Leaseholders normally pay an annual ground rent to the Freeholder for this right. A lease will also state who’s responsible for buildings insurance and maintenance.

Landlord & Tenant Act 1987, Section 5 Notice

This is the formal paperwork (Notice) that must be served on leaseholders by the Freeholder before the ground rent is sold to a third party. The Notice gives the leaseholders the first right of refusal to buy the ground rent. This is relatively straightforward. At Gateway Ground Rents, our legal department takes care of all the paperwork for you.

Landlord & Tenant Act 1987, Section 6 Notice

This is the formal paperwork (Notice) that leaseholders must serve on their Freeholder if they wish to take up the offer to purchase the ground rent (following on from the Section 5 Notice, above). Over half of the leaseholders must agree to make this purchase and nominate a person or company to handle this.

Landlord & Tenant Act 1987, Section 18 Information Notice

This is the formal paperwork (Notice) served on leaseholders by a third-party purchaser of the ground rent if there is a possibility that the Section 5 Notice procedure (see above) has not been followed correctly.

Leasehold Reform, Housing & Urban Development Act 1993

A legal act that gives leaseholders of qualifying buildings the right to purchase their Freeholder¹s interests, commonly known as enfranchisement.

Right to manage (RTM)

Under the Commonhold & Leasehold Reform Act 2002 leaseholders of qualifying buildings have the statutory right to take over the management of their property from their Freeholder or landlord by setting up a special, RTM company. The landlord will still own the building, but pass on the management of it.

Section 166 (Ground Rent Notices)

Section 166 of the Commonhold and Leasehold Reform Act 2002 states that leaseholders do not have to make rent payments unless the Freeholder has sent them the formal Notice in a certain format, with the correct information. This information includes the amount to be paid, when this is to be paid and the date of payment set out in the lease. Until the Notice is served correctly, rent payment can be withheld. This is an important document that many Freeholders are unaware of.