Ground Rent demand

[Gavia]

shep1001 said:

It was on a private community & I was OK with the charge for grounds maintenance it was the fact the property was lease hold not free hold and the lack of forthcoming detail about the significant charges & mechanism for annual increases that made me run.

The st has hit the fan near us on another development about the leaseholds, the solicitor our neighbour approached refused their business as their new build purchase was a lease hold and they were too busy sorting out the mess on the development next door to them as many of the residents used them as solicitors for their purchases.

Edited by shep1001 on Saturday 18th February 20:11

The lease will define the terms of any ground rent payable. It has to, otherwise it's a waste of paper and nonhouse builder will peobsue a document that's unacceptable to any solicitor or mortgage lender.

The communal grounds aspect of your original purchase is distinct from the lease. The service charges are the variable and potentially unlimited costs. The ground rent will be defined.

[Red Devil]

Gavia said:

I'm not a tenant.

OK, so you're a lessee. So what? In law it's still a type of tenancy because you don't own the land on which the property is built.

Gavia said:

The freeholder is not my landlord.

In which case another party must have a superior lease - http://www.landlordzone.co.uk/forums/showthread.ph...

The main point which you have chosen to bypass, for what purpose remains unclear, is that what is commonplace where you live (houses on 999 year leases) is not necessarily the case elsewhere. It certainly isn't down south where I am. So the answer is, as always, it depends. Futhermore there is a fundamental difference between houses and flats in terms of the length of the lease. Another relevant point is the Commonhold and Leasehold Reform Act 2002 does not apply to leasehold houses (see Section 72 re qualifying properties).

As for new builds, the total is minuscule in terms of the country's housing stock. The annual number has lagged behind demand for decades.

Nothing would ever induce me to buy a new build leasehold house. It would be pointless unless I had no alternative which would be very unlikely.

[Gavia]

The points that I have continued to make over and over again is that leasehold is not automatically bad and the bias against it is often driven by the south. You reiterated that point for me.

The second point is that in many areas it is more likely that you'll find leasehold houses rather than freehold. And again you reiterated that point for me.

[DJFish]

thecremeegg said:

So my SO and I purchased a leasehold flat in 2013 and have since then been paying the service charge that we assumed contained the ground rent as well.

Fast forward to today and we have received a letter from the leaseholder's solicitors stating we owe them £750 in rent plus interest that comes to £1100 or so.

We've never had a demand for ground rent before, if we had we'd have paid it. They also said in the letter that they are following up from a letter send on Jan 20th - never had that either.

Now I'm "happy" to pay the rent, but not the interest as we've never been asked for the rent before, why has it taken nearly 4 years to ask us and then add interest?

Can anyone savvy advise on if we have any grounds to not pay the interest on this?

Thanks

Yes, it's a common thing that a lot of disreputable companies seem to be doing nowadays, they tried it on with us, we told them to jog on, I suggest you do the same.

[Funk]

Another thing to watch for is that the ground rent can increase by 50% every 10 years. Before I bought a fifth of the freehold for my building my ground rent went from £50/yr to £75/yr in the 11th year. Now as a group of freehold owners we've reduced GR to zero for the 5 of us and leases to 999 years. The other 3 properties continue to pay ground rent on the original terms.

I think the issue of 'ground rent' and 'maintenance charges' also get confused. The previous freehold owner (the company which built the block) let us get on with managing the block as we saw fit. A company was formed and we decided how much to put in to the fund to run it. In the end we also appointed a management company of our choice to deal with legislation and compliance etc and they save us more than they cost so it makes sense when the added hassle factor of doing it ourselves is included. The freeholder could have forced us to use them (or one of their companies) but we were fortunate that we were left alone to get on with it.

Now 5 of the 8 flats own the freehold we do have obligations to the building, however these were already being met by the residents' company and takes into account future expenditure as well - we started building a reserve fund from the beginning in case major works are ever needed on top of the regular maintenance.

This means we're in charge of our costs and when we do things, we also can't be forced to use a management company we don't like and hopefully the fact that when I come to sell my flat it will have the remainder of the 999 year lease will mean it's either worth a little more or more appealing to a buyer (and their lender).

I think there's going to be a bit of a ststorm over the way leaseholds appear to be being abused recently: https://www.theguardian.com/money/2016/nov/05/grou...

[SystemParanoia]

I'll stick with my original thoughts of

Leasehold = Avoid like the plague!

[Gavia]

Funk said:

Another thing to watch for is that the ground rent can increase by 50% every 10 years. Before I bought a fifth of the freehold for my building my ground rent went from £50/yr to £75/yr in the 11th year. Now as a group of freehold owners we've reduced GR to zero for the 5 of us and leases to 999 years. The other 3 properties continue to pay ground rent on the original terms.

I think the issue of 'ground rent' and 'maintenance charges' also get confused. The previous freehold owner (the company which built the block) let us get on with managing the block as we saw fit. A company was formed and we decided how much to put in to the fund to run it. In the end we also appointed a management company of our choice to deal with legislation and compliance etc and they save us more than they cost so it makes sense when the added hassle factor of doing it ourselves is included. The freeholder could have forced us to use them (or one of their companies) but we were fortunate that we were left alone to get on with it.

Now 5 of the 8 flats own the freehold we do have obligations to the building, however these were already being met by the residents' company and takes into account future expenditure as well - we started building a reserve fund from the beginning in case major works are ever needed on top of the regular maintenance.

This means we're in charge of our costs and when we do things, we also can't be forced to use a management company we don't like and hopefully the fact that when I come to sell my flat it will have the remainder of the 999 year lease will mean it's either worth a little more or more appealing to a buyer (and their lender).

I think there's going to be a bit of a ststorm over the way leaseholds appear to be being abused recently: https://www.theguardian.com/money/2016/nov/05/grou...

I agree with everything, apart from the first paragraph. All ground rent terms are set out in the lease and can't be altered by either side without consent of the other, so ground rent can't simply increase whenever the freeholder feels like it.

The article you've quoted has already been quoted on here and discussed. If you sign up blindly to the terms in those leases, then you've got a valid case against your solicitor. If you sign up regardless, then you've made a big mistake, but anyone with half a brain should be able to avoid those circumstances. There is a similar Taylor Wimpey new build near me where the same has happened, but the ground rent will be c£18m at the end of it. Those terms will be overturned fairly soon, but I'm amazed at the people who've signed up to them.

[Funk]

Gavia said:

Funk said:

Another thing to watch for is that the ground rent can increase by 50% every 10 years. Before I bought a fifth of the freehold for my building my ground rent went from £50/yr to £75/yr in the 11th year. Now as a group of freehold owners we've reduced GR to zero for the 5 of us and leases to 999 years. The other 3 properties continue to pay ground rent on the original terms.

I think the issue of 'ground rent' and 'maintenance charges' also get confused. The previous freehold owner (the company which built the block) let us get on with managing the block as we saw fit. A company was formed and we decided how much to put in to the fund to run it. In the end we also appointed a management company of our choice to deal with legislation and compliance etc and they save us more than they cost so it makes sense when the added hassle factor of doing it ourselves is included. The freeholder could have forced us to use them (or one of their companies) but we were fortunate that we were left alone to get on with it.

Now 5 of the 8 flats own the freehold we do have obligations to the building, however these were already being met by the residents' company and takes into account future expenditure as well - we started building a reserve fund from the beginning in case major works are ever needed on top of the regular maintenance.

This means we're in charge of our costs and when we do things, we also can't be forced to use a management company we don't like and hopefully the fact that when I come to sell my flat it will have the remainder of the 999 year lease will mean it's either worth a little more or more appealing to a buyer (and their lender).

I think there's going to be a bit of a ststorm over the way leaseholds appear to be being abused recently: https://www.theguardian.com/money/2016/nov/05/grou...

I agree with everything, apart from the first paragraph. All ground rent terms are set out in the lease and can't be altered by either side without consent of the other, so ground rent can't simply increase whenever the freeholder feels like it.

You'll note that I said 'can increase' - I probably could've phrased it better. Obviously every lease is different, the original lease for the properties in my building allowed for a 50% uplift every 10 years. I wasn't saying that it would be the same for all lessees everywhere.

I merely wanted to highlight that often people aren't aware (or don't read) the terms of their lease which allows for future increases for example.

[Gavia]

Funk said:

You'll note that I said 'can increase' - I probably could've phrased it better. Obviously every lease is different, the original lease for the properties in my building allowed for a 50% uplift every 10 years. I wasn't saying that it would be the same for all lessees everywhere.

I merely wanted to highlight that often people aren't aware (or don't read) the terms of their lease which allows for future increases for example.

Fair enough. The ground rent can increase by any amount, as long as it's stated in the lease at outset, but most don't increase, or any increase is so small that it gets eaten up via inflation anyway. There are the odd anomalies, as per the ones we've pointed out, but despite the scaremongering they are the rarity.

[Gavia]

SystemParanoia said:

I'll stick with my original thoughts of

Leasehold = Avoid like the plague!

Given your posts on other threads highlighting your tendency to live up to your username, I wonder how you get out of bed every morning.

Do some research, understand the bigger picture. It's amazing what education can do for you.

[SystemParanoia]

Gavia said:

SystemParanoia said:

I'll stick with my original thoughts of

Leasehold = Avoid like the plague!

Given your posts on other threads highlighting your tendency to live up to your username, I wonder how you get out of bed every morning.

Do some research, understand the bigger picture. It's amazing what education can do for you.

I do it very carefully!! ... if at all

I understand that with flats you really don't have a choice about the leasehold thing, its a take it or leave it kind of deal.

[thecremeegg]

SystemParanoia said:

I'll stick with my original thoughts of

Leasehold = Avoid like the plague!

I wish I could afford a house but a flat is my limit!

[Fastpedeller]

thecremeegg said:

SystemParanoia said:

I'll stick with my original thoughts of

Leasehold = Avoid like the plague!

I wish I could afford a house but a flat is my limit!

I sympathise as I was in the same situation in 1989. Bought a flat and it was my worst regret. Gave keys to Mortgage co in the end - a long story, but I was fortunate to find the one person in the country who was prepared to do the legals (and it was possible with the contracts at the time) - best £500 I ever spent! My advice (from experience) is Leasehold = Avoid like the plague also.

[matjk]

I don't think there are any plus sides to a lease hold at all, not one ! Plenty of potential downsides that are well published. But I can't think of one possible upside. Bottom line someone else owns the land your building is on (and sometimes the building its self)
For me it's a great big 'NO THANKS' Others my disagree but that's their bag

[Gavia]

matjk said:

I don't think there are any plus sides to a lease hold at all, not one ! Plenty of potential downsides that are well published. But I can't think of one possible upside. Bottom line someone else owns the land your building is on (and sometimes the building its self)
For me it's a great big 'NO THANKS' Others my disagree but that's their bag

Nobody is saying it's better. What I've said is that it's not as bad as the picture you and others are painting. I was simply trying to educate that many areas of the UK are predominantly leasehold properties and it makes no difference to those owners.

If you don't want leasehold, then that's your choice. I just hope you never move to an area where leasehold is the norm, as you've massively reduced your housing options for no real reason. Ditto on flats, a freehold flat is unmortgageable. Those flat owners who've bought their freeholds still have to grant leases to themselves and the other owners and have potentially created a pain for themselves in having to arrange a management company to then manage the properties.

[S11Steve]

Planning permission has been granted for the garage and driveway, and we are having a bathroom refit and some windows replaced at the same time. Doing the right thing and informing the freeholder has resulted in this.

And this fee is for each item of work, not for all the work on one application.



It's going to be more cost effective to go to tribunal to buy the freehold than to pay for the individual consents.

[SystemParanoia]

S11Steve said:

Planning permission has been granted for the garage and driveway, and we are having a bathroom refit and some windows replaced at the same time. Doing the right thing and informing the freeholder has resulted in this.

And this fee is for each item of work, not for all the work on one application.



It's going to be more cost effective to go to tribunal to buy the freehold than to pay for the individual consents.

Bunch of thieves.