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Ground rent review clause

Ground rent review clause

Postby mrtn » Sat Feb 03, 2018 11:11 am

Hi

I am reviewing a ground rent review clause in my lease and looking to get your opinion on the actual way of calculating it. The clause says:

The Ground Rent hereby reserved shall on each of the Review Dates be adjusted either upwards or downwards (but subject to the Ground Rent never falling below the actual amount of the yearly rent specified in the definition of Ground Rent in the particulars hereof) by reference to any percentage change in the Index between:

1. (in relation to the first of the Review Dates) the figure published immediately prior to the term commencement date and the figure published immediately prior to the first Review Date and

2. (in relation to each of the subsequent Review Dates) by reference to any percentage change in the index between the figure published immediately prior to the previous Review Date and the figure published immediately prior to the Review Date in question


The initial ground rent value mentioned in particulars is £120 and the index is RPI.

Therefore, I would be grateful if someone could confirm if my understanding of the calculation is correct.

Hypothetical RPI values:

A. 2010 = 100

B. 2020 = 130 (up 30%)

C. 2030 = 175.5 (up 35%)

D. 2040 = 245.7 (up 40%)

The first review is straightforward:

£120 x 1.3 = £156

Am I right in thinking that the next reviews is calculated as follows? This is the part that is very unclear to me, as I can't see anywhere any reference to the current/most recent ground rent value being 'the base' for the calculation.

C. 2030 - £156 x 1.35 = £210.6

D. 2040 - £210.6 x 1.4 = £294.84
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Re: Ground rent review clause

Postby atticus » Sat Feb 03, 2018 3:25 pm

That looks right. The formula for second and subsequent reviews is to be found in that para 2 which resets the base point to the date of the last review.
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Re: Ground rent review clause

Postby dls » Mon Feb 05, 2018 10:18 am

It looks like one of thoe monumentally complicated and obfuscated definitions so beloved of lawyers, but which when examined, (and explained by Atti) turns into a piece of swiss watch logic - precise and effective.
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Re: Ground rent review clause

Postby theycantdothat » Mon Feb 05, 2018 4:54 pm

dls wrote:It looks like one of thoe monumentally complicated and obfuscated definitions so beloved of lawyers, but which when examined, (and explained by Atti) turns into a piece of swiss watch logic - precise and effective.


It shows the distinction I like to make between "plain English" and "clear English". To someone not familiar with legal language the meaning may not be immediately apparent, but there is only one possible meaning. Assuming the intention was that every ten years the rent should rise or fall in accordance with inflation as recorded in the RPI that is precisely what the clause achieves. The words may not be plain, but the meaning is clear on a careful reading. The introductory words could perhaps be a bit shorter, but the unnecessary words do not confuse things.
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