When the lease is first granted the rent is generally calculated at 3% of the equity owned/retained by the landlord. For instance if the property is worth £100,000 and the share owned by the leaseholder is 50% the rent will be 3% of the remaining share held by the landlord being 3% of £50,000 which equals £1,500 per year or £125 per month. The lease will also provide that the rent will increase every year typically by a specified percentage above the upward movement of the Retail Price Index (RPI).
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