Is £250 ground rent increase an issue?

Reply to the comment left by Mr Blueberry at 29/11/2023 - 17:59
Unless exisiting ground rents are capped at a peppercorn or a very low number, we are still left with the situation where the system is completely broken for the sale/purchase of flats, where the ground rents and the lease terms under which they are managed, are the primary reason why they are unmortgageable. Ground rents have been a zero risk and highly lucrative investment for many years, for no service or value provided by the freeholder. That must now stop. England & Wales cannot remain as the only countries to still operate such an archaic and unfair system of tenure.

Reply to the comment left by Contango at 29/11/2023 - 18:26
Leasehold is in no way way even-handed. It is an appalling, archaic, unfair system, which is operated by freeholders at the expense of leaseholders. These are people's homes, and should no longer be treated as cash cows for no service or value delivered to them.

Reply to the comment left by NewYorkie at 29/11/2023 - 23:18
There are plenty of good freeholders that people never seem to write about. Unfortunately proper management costs money whether the freeholder undertakes it or the leaseholders. Repairs are terribly expensive and its not necessarily the case that the freeholders are lining their pockets with operation of service charges

I changed my doubling ground rent several years ago and negotiated a 30% increase every 10 years which works out at 2.8% compound each year. I reckoned 2.8% each year had a very good chance of being cheaper than linked to RPI inflation and it looks like I might have made the right decision. So instead of being £250,£500,£1000,£2000,£4000, £8000 my ground rent now goes £250,£325,£423,£549,£714,£928.
I am currently paying £325 and goes up to £423 in 2027. I thought from a resale point of view buyers would like to know the exact figure for the next increase.

The freeholder cannot alter the provisions for Ground Rent set out in the lease.

Reply to the comment left by Kizzie at 30/11/2023 - 08:39
True, but in the case of ground rents the government can do away with all existing ground rents by act of parliament if they believe they serve no useful purpose.

Reply to the comment left by Mr Blueberry at 30/11/2023 - 09:41
But they do serve purpose of land ownership under law of property act 1925. The Crown owns most land and the Royals own the rest as the Duchies established by William in 1066. We haven’t had a civil war since Cromwell and he didn’t manage to sweep away traditional land ownership as they did in Europe in French Revolution and WW2.

Reply to the comment left by Contango at 29/11/2023 - 18:26Under the Building Safety Act 2022 a leaseholder who owns more than two properties (any properties anywhere not just in the affected development) now holds a “non qualifying lease” which means all rectification costs (renewing cladding and extra fire protection measures) have to be paid for by the leaseholder. The developer, Government and local authority get off scot free. Essentially if you’re a landlord it’s tough you’ve got to pay for the modifying works yourself (even though you’ve been sold defective goods) whereas non landlords get all the work done with no cost to themselves.
If the Government can come out with something so egregious as this then I can’t see why they can’t remove ground rents completely. Yes freeholders will be hugely affected but so are landlords with cladding issues.
I can’t see a Tory government going this far though, they’ll want to protect their big business mates. Labour might do it though.

Reply to the comment left by Dylan Morris at 30/11/2023 - 11:25
I dont think there is any comparison. Remediation and repairs are under the lease the leaseholders liability, albeit that leaseholders may well have actions against their surveyors and indeed there may be a possible class action against sloppy building control.
Ground rent is contractual. It was a part off the deal by which the property was sold; it has nothing whatsoever to do with the provision of a service, the service has been provided when the last lease was signed. I dont object to capping ground rents where stupidly greedy housebuilders reserved rents that double more frequently than twenty yearly (which is equivalent to 2.83 compound annual growth rate, and less than the rate of inflation. If existing ground rents were all reduced to a peppercorn I would say that there is a certainty that there would be legal challenges, All of this is preventable by Government introducing a scheme whereby those who want out of their ground rent buy out of it relatively cheaply and under a standard template deed such that costs are neglifible and the deed can be readily registered against the titles, and speedily.

Reply to the comment left by Contango at 29/11/2023 - 23:21
I'm sure you are right, but there is overwhelming evidence that the vast majority of leaseholders are exploited by freeholders and their appointed [often 'associated'] managing agents. They do sweat their assets through the service charge, and even if a leaseholder challenges and wins at the FTT [at great cost and against a well-funded legal team], they face the challenge of ensuring the managing agent actually respects the ruling. Countless examples of managing agents literally stealing service charge monies, especially when leaseholders achieve RTM.