Has my ground rent review been calculated correctly?

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9:50 AM, 12th August 2020, About 4 years ago 12

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I am looking for some advice on whether ground rent review calculations have been carried out correctly. I have a lease for 125 years from 1 January 2006, within the particulars it states:

“the Commencement Date” 1st January 2006.
“the Rent” £200 per annum subject to review in accordance with clause 9.
“the Base Index” means the RP Index for the last published index figure immediately prior to the Commencement Date.
“the Review Date” shall mean each successive period of five years from the Commencement Date.

Clause 9 states on each Review Date the Rent shall be adjusted by multiplying it by the RP Index last published immediately before each Review Date diving the result by the Base Index and then rounding the figure up to the nearest five pounds PROVIDED ALWAYS that the adjusted Rent shall not be less than the Rent initially defined or any increased amount following a rent review BUT so that such reviewed rent shall never equal or exceed such a sum as would in appropriate circumstances create an inhibition on the premium capable of being charged on an assignment of the Demised Premises in the same manner as set out in Section 27 and Schedule 18 Part II of the Rent Act 1977 as amended by Section 78 of the Housing Act 1980 or any amending or similar legislation in which case the Rent shall be £1.00 less than the sum which would otherwise be charged.

So the Base Index would be December 2005 which was 194.1 and for the first rent review in January 2011 the calculations were £200 x December 2010 RP Index 228.4 / December 2005 RP Index 194.1 = £235.34 rounded to nearest £5 is £240. This is the figure the ground rent increased to and as far as I can see is correct.

For the second review in January 2016 the calculations should have been £200 x December 2015 RP Index 260.6 / December 2005 RP Index 194.1 = £268.53 rounded to nearest £5 is £270. However, the rent was actually increased to £325. Having worked out how they got to this figure it became apparent that they had used the £240 figure thus carrying out a rent review for the first 5 years once again.

I did query this but was told the rent changes to the new figure each review and that if I didn’t pay it immediately I would incur a penalty of £120 on top.

I am concerned that if this carries on at the next review in January next year the first five years will have been reviewed three times, the second five years twice and so on.

I would appreciate if someone could confirm that my assumptions and calculations are correct and that “the Rent” should also stay at £200 for the calculations?

Many thanks
Simon

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Comments

Ian Narbeth

17:24 PM, 29th March 2022, About 3 years ago

Reply to the comment left by Steve Knell at 29/03/2022 - 13:06
Hi Steve
Please contact me offline and I should be able to help. I will need to see full copies of documents.

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Paul Brignall

14:18 PM, 1st September 2022, About 2 years ago

Reply to the comment left by Ian Narbeth at 12/08/2020 - 14:33
Could you clarify your comment:-The "Rent" is NOT fixed at £200 but is the increasing figure. At each review the Rent (as previously reviewed) is multiplied by the RP Index last published immediately before the Review Date and dividing the result by 194.1. This leads to the ratcheted rent.
The lease does not define the Rent (as previously reviewed) but only the Rent is £200 so surely the £200 is always used for successive reviews. I have exactly the same situation so wanted to understand the above. Thanks in advance. Paul

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