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Acquiring freehold - Ground Rent 'multiplier'?

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  • 10-07-2006 9:37pm
    #1
    spockety
    Moderators, Education Moderators Posts: 5,468 Mod ✭✭✭✭


    Hoping someone can answer this question for me.
    On a leasehold property, if you want to acquire the freehold and buy out the ground rent, the law states (from landregistry.ie)

    "The Purchase Price can't exceed an amount which, if invested in the most recent long-term Government Stock matching the criterion specified in the subsection, "would produce annually in gross interest an amount equal to the amount of the rent" under the lease or tenancy. This amount is calculated by dividing the price of the Government stock, as quoted on the stock-exchange at closing on the previous evening, by the interest rate on the stock and multiplying the rent by the resulting figure, colloquially referred to as the 'multiplier'."

    Can anyone shed any light on where you can find out the price of such Government stock today, and the interest rate on that stock?

    Cheers.


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    #2
    Victor
    Registered Users Posts: 78,420 ✭✭✭✭Victor


    I'm sure it can be worked out, but phone the Land Registry and ask them nicely if they have the current multiple. Your solicitor may also have it.

    Goverment debt is issued by the www.ntma.ie (check there for the %)

    Essentially if the most recent government debt is at 2%, you pay 50 times the annual ground rent. At 2.5% you pay 40 times. At 3% you pay 33.3 times and so on.

    Is it worth waiting for the expected rate rise?


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    #3
    lomb
    Registered Users Posts: 6,031 ✭✭✭lomb


    do the state not allow a value for the reversionary interest of the land?


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    #4
    Diaspora
    Closed Accounts Posts: 213 ✭✭Diaspora


    Only where the unexpired term is less than 15 years


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    #5
    oosterbeek
    Registered Users Posts: 4 ✭oosterbeek


    I'm about to inherit a property left to me by a relative who died a few months ago. I haven't taken possession as probate has not been issued yet.

    The executors were informed by their solicitor that the 148 year leasehold on the house is due to expire next February.

    I have done some research on how to purchase the Freehold and have realised that it is important that this be done before February otherwise the cost could be significantly more.

    Can someone help me calculate the cost of purchase based on the forumla on the PRAI website? It's all double Dutch to me.

    "Where less than 15 years remain on the lease, the purchase price is fixed in accordance with section 7(8) of the 1984 Act. The formula specified in the section is as follows:
    [15 N][ V - MR] + MR
    [ 15][8]
    where P = Purchase-price, r = rent, v = market-value, n = unexpired-term-of-lease, m = multiplier."


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