Help for homeowners affected by the ground rent scandal

News Article

In past editions of our newsletter, you may recall we highlighted the growing issue of the ground rent scandal which has affected a number of property owners.

To bring you up to speed with what has been happening in recent months, here Andrew Skinner, a Partner with Palmers who specialises in legal matters relating to property disputes, provides an overview, along with the latest guidance for anyone affected by ground rent issues:

The ‘great ground rent rip off’ – what’s been happening?

If your property is leasehold rather than freehold, then although you may own the property itself, you do not own the land on which it is built. This means that you have to pay rent to the owner of the land.

In the past the majority of leaseholds have not caused a particular problem, with many classified as ‘peppercorn rents’ attracting a fee of just a few pounds each year.

However, in recent years, a growing scandal has emerged, particularly involving new-build properties, where in some circumstances the terms of the lease meant that ground rents increased disproportionately or home owners were unable to make improvements to their property without being penalised.

In such cases, ground rents have been spiralling out of control, or clauses in the lease have left home owners unable to make improvements to their property without being penalised.

Recent cases have included:

  • A homeowner being charged £1,500 by a leaseholder, to allow them to make a small alteration to their home
  • A family house that is now unsaleable because the ground rent is expected to hit £10,000 a year by 2060
  • A homeowner who was told buying the lease would cost £2,000 but the final bill came to £40,000

Now the Government is cracking down on unfair leasehold practices. It plans to ban the future sale of houses as leasehold, and is proposing that ground rents will be cut to zero.

What help is available?

Taylor Wimpey – just one of a number of housing developers at the centre of the scandal – has not admitted liability for any wrongdoing but has voluntarily set aside £130million to help homeowners who have been locked in to ‘doubling ground rent’ leaseholds.

Other house builders have yet to follow suit but we can advise you on your legal options if you are worried about ground rent charges or other issues relating to your leasehold agreement.

Act now to tackle unfair ground rents

Many homeowners who wish to move are currently in limbo    put your property up for sale as it can take several months to complete the legal process of changing the terms of the leasehold agreement.

If your case is against Taylor Wimpey, it is even more important to act quickly as the developer has voluntarily set aside a fixed amount to compensate buyers – so take action before the funds run out!

For help and advice on all aspects of leasehold contract disputes including unfair ground rents, please contact us.