There are many people that have unknowingly bought new build properties that have doubling ground rent terms and they’re beginning to find that their houses are far less valuable than they thought, or even unsaleable altogether.
This is because people do not want to take on such an expensive ground rent and also because mortgage companies are refusing to lend money to those looking to buy these properties.
These doubling ground rents can become extremely expensive over the duration of the lease.
It is estimated that there are approximately 4 million leasehold properties in England. Most leasehold properties are flats, however in recent years developers have been selling an increasing number of leasehold houses too.
As a leaseholder you do not technically own the property, you are effectively renting it for a long time (often 99 or even 999 years). As a leaseholder you will have to pay ground rent to the landlord every year.
The amount of ground rent can vary widely. Historically it was just a nominal fee of around £10 per year however in recent years this has been exploited by developers who now charge an average of £370 per year.
It is common for the ground rent to increase in line with inflation and this is a fair term, as you are effectively always paying about the same amount, relative to living costs. There were however some unscrupulous developers that sold leasehold properties with ground rent provisions that would double every 20, 15,10 or even 5 years.
These doubling ground rents can become extremely expensive over the duration of the lease.
- Take for example a home with a 99 year lease and ground rent of £370 which doubles every 5 years. At first it appears manageable, however by the time the typical mortgage ends after 25 years it would have reached a staggering £11,840 per year!
How do I know if I have doubling ground rent?
You need to read the lease that was agreed and given to you when you purchased your home. It will state how much ground rent is, when it should be paid and how much it increases by.
If your lease says that the ground rent doubles then you may be stuck and unable to sell your home. You should contact a solicitor to see what legal action can be taken to remedy the problem.
How much could my doubling ground rent increase to?
What can leaseholders do about doubling ground rent?
If you bought your home directly from Taylor Wimpey then you should contact them directly, as they have set aside money to help people change their leases to one that is fairer.
If you bought the home from somebody else and have doubling ground rent then you may find it far more difficult to resolve the issue and you should contact a solicitor to seek advice.
What legal action can be taken?
There are a number of options, including seeking a ‘deed of variation’ from the landlord, whereby they will agree to change the terms of the lease lease and reduce the ground rent to a reasonable amount.
Alternately, you may need to bring a claim against your conveyancing solicitor, who should have warned you about the ground rent issues when you initially purchased the property.