Pulled out again due to onerous Ground Rent increases

I own an older flat with escalating ground rent.These flats are now almost impossible to sell at market value.The only glimmer of interest was from overseas investors enticed by the low pound but now we will be leaving the EU with all its "uncertainties" that may no longer be a possibility for the future. .Robert Jenrick MP stated on the 19th December, 2019 that "we are moving forward with legislation to set ground rents to zero" but I have heard no more , perhaps because of the raft of other more important legislation he is proposing such as forcing private landlords to become animal shelters and picking up all the other waifs and strays that government and local councils are unable to provide for.For those concerned about these ground rents do please write to your MP.

Reply to the comment left by David at 21/01/2020 - 11:46
Thank you for explaining your predicament to us newbies of this pernicious practice!

We sold a flat with one of these a while back. We priced to attract cash buyers. Banks and Building Societies were refusing to lend.
Hundreds of owners trapped.
Developers sell the leases so effectively sell their properties twice and once some investment company owns your lease you will never be able to afford to buy it.
doubling ground rents became seen as greedy.
This critical part of the documentation not being 'front and centre' was 'stealthily' applied and buyer's legal representatives weren't tuned in. New builds are often sold with the offer of free conveyancing which, in my opinion, is cynically used to spin these onerous terms when a new buyer's budget is tight.
Now doubling rents are frowned upon the industry shifted to linking to some seemingly less 'aggressive' mechanism like RPI.
Now these are getting bad press so developers set up management companies to 'manage the open spaces'. The buyer has even less protection against these; fail to pay then your home is taken away.
And the Local Authority breathe a sigh of relief as they don't have to adopt and maintain these areas thus less pressure on their budgets ... but they still take the homeowner's council tax.
I would rather have 1950's slightly inefficient but genuine freehold, real brick, with a decent sized garden front and back any day against these new builds without a single solar panel at planning stage and their plastic chimneys. At least I will be able to hang shelves.
The system stinks.
H

The GR scam is so rife that I will never buy a flat in anything other than Vic conversions or similar where I have a share of freehold, or no GR and just a split of costs. It just doesn't make good business sense let alone the hassle.

Sure you still fight with other lessees, but you have some say at least.

You will note how few agents place GR & Service charges on the adds for sales. I wonder why?

This scandal is growing and growing. Strangely enough I have seen little mentioned on here about leasehold and fleecehold homes - especially, though not limited to -Shared Ownership and new build estates.
These homes are being monetised by large corporations and investment companies. The number of lenders refusing to lend on these types of properties (some are now looking closely at service charges, not just onerous ground rent terms), is growing. Many people are trapped as they are unable to sell.
Very interestingly, whilst, as we know, there has been a raft of new regulations against the small landlord, the abuses of large corporate developers, managing companies and freeholders has been allowed to escalate.
Any idea why this might be???
Two excellent websites -
National leasehold campaign facebook group - over 16,000 members and growing rapidly, and
Leasehold Knowledge Partnership

Although I was after Articles and then a solicitor for nearly 55 years in the law, I did I think only 2 house purchases and 1 sale, I heard these types of complaints all the time. Seems to me that GRs are an anachronism and ought to be abolished. After all, if you extend the lease under the extension procedure, the GR disappears? Alternatively, buy out the GR for a fixed payment, say 5 X GR at point of contract exchange? If enough purchasers held this gun to the vendors, they would see sense?

I have commented on this before. We bought two new builds off plan in the same development in 2008. The Solicitor appointed by the developer did not bring the ground rent issue to our attention at any time during the conveyance process and the account for his services were not included in the sales price, just ostensibly cheaper the developer advised. They weren't. As we were non UK BTL investors we had no experience of this extraordinary concept, and so we failed to question or recognise a potential future problem. Fast forward to 2018, and after a very nasty experience with a serial rogue tenant, we decided to exit the UK property market after we evicted the tenant. It took 20 months to achieve a successful sale on the empty unit, three abortive offers that cost us unnecessary conveyancing fees, costly management packs and all the attendant fees due on a property including the mortgage. The two issues that drove keen buyers away were the cladding and ground rent. Both have been subject to demagogic government scrutiny but as of yet there has been no definitive nor urgent decision on either to make property sales more inviting. I have been informed that a nil value is now apportioned to my second unit in lieu of the above ie a GBP500 000 flat is now worthless. I will repeat what I have stated before. The UK blathers on about the importance of home ownership but does everything in it's power to make such ownership impossible.
It's a tragedy that is ludicrous.

RPI increases shouldn't be an issue in itself. If it is affordable now then it should be affordable in the future because wages should keep pace with inflation.

Mortgage Lenders don't have a problem with RPI increasing leases.

We bought our house in 1998 and it's worth 3.5 times more than we paid for it. But if you look at the increase in the RPI since then it's less than 3 times higher. So the ground rent is cheaper in real terms than it was originally.

Hope this helps. There's a lot of scaremongering and confusion in regard to onerous ground rent charges. The real issue would be if ground rent increased at a faster rate than house price inflation. There are leases that are referred to as "doublers" which will increase at a greater rate than inflation unless inflation is unusually high and these are the ones with onerous terms.

I totally agree with beefy.
I have a clause in my lease
Revised Rent = £250 * Latest Index Figure/Initial Index Figure
OR
the sum of the yearly rent payable immediately before the relevant review date and £250
whatever is greater
My Ground Rent will increase every 10 years by minimum £250 depending on inflation. Even if it increases say by £350 every 10 years. I hope rents will go up by more than £350 every 10 years. My property cost 100K but get 10K in profit each year so will quickly recover the investment.
Its not ideal and may put off buyers but don't think banks should be necessarily think its high risk and decide not to lend
The problem lies with leases that just double every 10 years without any reference to inflation. The free holders also expect to maintain the value of their investments

We have a similar problem with a block. We have formed a leaseholders action group and have engaged a solicitor. So far the advice we have been given is that you may be able to take action against the solicitor who did the conveyancing if they did not point out this problem with the ground rent. It is not enough to just outline the terms on which the ground rent is payable, but rather that the situation you are now in could occur. Another course of action is to buy the freehold and then extend the leases and somehow when this is done it will reduce the amount of ground rent payable. I am not sure of all the ins and outs as am not legal. If you are struggling with the property I would suggest contacting other owners in the block, pooling resources and obtaining legal advice.