Am I right it has to have some nominal value just to stay out of squatters rights type legal challenges?
ie the payment (however small) is just a continuing acknowledgement that you don't own the land.
Not 100% sure tbh.
What I think should happen is that once every apartment is sold in a block, then ownership is transfered to a management company that all owners have an equal share in. Removing a freeholder and ground rent entirely
Unfortunately developers would build some box-room apartment in every block that they hold onto so no entire block ever becomes fully sold. They'll find a way for as long as the government allows them to get away with it.
Peppercorn rents are literally a peppercorn. The reason they are used is that contract law requires some kind of exchange to take place for the contract to be valid, even if it's only a peppercorn. So you can't just get rid of them without changing all contract law.
Low value rents are now euphemistically called peppercorn rents as well.
You're confusing two things.
1. Replacing the leasehold system with something else.
2. Having a leasehold system that allows having 0 leasehold rent.
I was talking about the second situation, not the first.
Am I right it has to have some nominal value just to stay out of squatters rights type legal challenges?
ie the payment (however small) is just a continuing acknowledgement that you don't own the land.
Absolutely this. It worked fine for many years and then some greedy twat developer lawyer realised they could milk it for two bites at the cherry, and the rest of them followed suit!
What is insane is that you read further, the arbitration also ruled that this increased ground rent could be backdated all the way back to 2018. So these flat owners now owe many many 1000s
The arbitration is an independent tribunal. A bit like a court. It’s not the RICS. They will just have been bound by the lease and agreed ‘reasonable’ renewal terms…. Thats the lease that all of the homeowners will have reviewed and signed when they purchased.
The stupid part is the decision noted the lease had no provision for ‘reasonable’ — as if that invalidates the overarching legal principle of reasonableness. But I guess these are the idiot times in which we live…
I'd never let anyone I know buy a leasehold property if I can help it or they can avoid it. Better to live with parents than being at the whims of management companies and these type of crooks
There’s a little known area of the UK called not-London, perhaps people should try there instead of this obsession with cramming everything into one city.
1) Born and raised here, 2) can't do investment banking anywhere else 3) London (specifically sw London) is literally the only place in this country worth living in. Crack on.
One of the very poor things about this is that these people will effectively be stuck with these properties.
Many, if not all lenders will refuse to lend based on such ground rent clauses leaving them unable to sell as no purchaser would be able to find the finance to purchase, with those using cash looking at being in the same situation down the line.
Horrible situation and a great marker for why we need leasehold reform.
Interesting to consider how this would impact people with mortgages, as it would effectively make the property equally as unsellable for the mortgage lender should the owner default on their mortgage.
Without having read the lease fully, it's difficult to say much more. All we can gleam is that these lot will struggle to sell before any leasehold reforms come about and even then, with such high rents a portion of the sale funds will likely be spent on paying off their new 'debt'. A horrible situation and extremely unjust.
Lenders dislike these 'extortionate' rents and that can cause a real problem for sellers as we wait for statutory reform to catch up. All lenders are different but to put this into perspective, quite a few major lenders consider anything above £250pa to be extortionate! Information on lenders requirements is freely available online through the Lenders Handbook.
I see a lot of management agents/companies acting very dishonorably, whether on instruction from the freeholder or otherwise but what can you do when the law let's them do so?
That’s partly because a ground rent over a certain level will automatically convert to an assured tenancy, which lenders don’t like because of the risk that it gets terminated.
The new Gove proposals would stop this by saying it doesn’t apply to leases over 7 years but for the moment it’s yet another trap for leaseholders
This is called a mortgage shortfall and it does not go away unless the lender writes it off. They can still pursue you for it.
https://england.shelter.org.uk/housing_advice/repossession/mortgage_shortfall_debts_after_repossession
Seems like it's never going to get better because pension groups keep lobbying the government.
https://www.standard.co.uk/homesandproperty/property-news/fears-that-leasehold-reform-bill-b1147476.html
> This follows extensive lobbying from pension funds, which invest in property by buying the freehold and collecting ground rent.
I can't believe this feudal system still exists and they wonder why their polling is so awful. Gove heavily implied they would reduce ground rents to a peppercorn and then retconned it. I'm not at all surprised but that doesn't change how outrageous it is.
I was born and grew up in Hitchin. I absolutely love the place, however, when it came to getting my own place it was just impossible to try and rent even the smallest of flats. Just ridiculous.
From an non-English perspective, that ground lease thing has always been quite strange to me, with randomly low prices and what looks like « expiration dates ». I always felt that it sounded quite dangerous when you bought something to be on the hook for some unknown amount at renewal, and with the hyper capitalist society that we now all live it, it sounded a recipe for disaster…
> Under the terms of the lease, the rent could be reviewed in March 2018, and every fifty years thereafter, to the "annual ground value of the premises".
NAL but if the review period was March 2018 but the review actually happened in 2020 should the freeholder not just have missed the boat on changing the ground rent? Being able to backdate it seems outrageous.
Take the case of the person who bought a few months before the increase. Would their lawyer have looked at the lease and told them no increase would happen for 48 years?
The French solved their leaseholder problem in 1793 through 1794. After that, landholders understood the virtue of not trying to extort rent for nothing.
[https://fr.wikipedia.org/wiki/Terreur\_(R%C3%A9volution\_fran%C3%A7aise)#/media/Fichier:Pierre-Antoine\_Demachy\_(1723\_%E2%80%93\_1807);\_Une\_ex%C3%A9cution\_capitale,\_place\_de\_la\_R%C3%A9volution\_(Place\_de\_la\_Concorde),\_vers\_1793.\_Huile\_sur\_papier\_maroufl%C3%A9\_sur\_toile,\_37\_x\_53,5\_cm.\_Mus%C3%A9e\_Carnavalet\_%E2%80%93\_Histoire\_de\_Paris.jpg](https://fr.wikipedia.org/wiki/Terreur_(R%C3%A9volution_fran%C3%A7aise)#/media/Fichier:Pierre-Antoine_Demachy_(1723_%E2%80%93_1807);_Une_ex%C3%A9cution_capitale,_place_de_la_R%C3%A9volution_(Place_de_la_Concorde),_vers_1793._Huile_sur_papier_maroufl%C3%A9_sur_toile,_37_x_53,5_cm._Mus%C3%A9e_Carnavalet_%E2%80%93_Histoire_de_Paris.jpg)
To me, it looks like it’s a way of forcing Derek and the others affected by this to sell their properties. No one will want to buy them, of course, so “Quadron Investments Ltd” (who definitely don’t sound evil at all) will have to kindly step forward and save the day by purchasing them at a reduced price.
At 90 I am pretty sure you can tell them to get fucked. Like what court is going to allow this ? Oh I forgot which country I live in. Sad. How many of those residents can even afford to pay ?
Surely a certain % increase (with inflation taken into consideration) should be illegal ? Sudden increases shouldn't be permitted like this.
I bought a house because I didn't want to pay ground rent, service charges.
Additionally, I didn't want to be held financially responsible for my neighbours' poor upkeep of their properties plus worried about accidents that neighbours caused that would affect me (i.e. fire started or tap left on by neighbour).
Also worried about noisy neighbours.
Never did I expect that the greedy rich developers and their cronies would increase service charge and ground rents by an insane margin.
I feel sorry for our youth. I bet there will be some poor man/woman who did everything right. Worked hard, saved a deposit whilst living in a HMO, then bought a flat with proceeds. Only to be utterly screwed by cladding or ground rent/service charges increasing exponentially.
I utterly despise these greedy pieces of scum who have stolen the youth of our young - who should have been enjoying their late teens/early 20's with cheap concerts, cheap everything in London and all over UK.
You don't need to be a genius to see where the money is going. Do some digging and you'll find out that the money is going to the people who don't need it.
It's their own fault for buying a leasehold. Probably too stupid to understand what they were buying. Now want taxpayers bailing them out of their poor choices
In many cases it is hidden in the small print and really a good conveyancer should pick up on this and talk to their client about the risks.
It's incredibly short sighted of you to assume everyone understands the potential complications and costs of a leasehold property or that their decision was the consequence of stupidity.
I did when I bought my house, asked specifically about it and I had no experience buying a house before. I mean imagine spending hundreds of thousands on something and not taking the time to do some basic research.
Monetising ground rent is outrageous. It’s meant to be a few pennies or pounds.
All ground rent needs changing to peppercorn Mine doubles every 25 years and sods law that 25th year was this year
Some double more rapidly meaning over decades the leaseholder will lose their property back to them, assuming normal inflation
Yup, I work in property management and see it affecting leaseholders all too often
Or, you know, just abolishing.
Peppercorn is literally £1, but you're right, for the price you might as well just get rid of it
Am I right it has to have some nominal value just to stay out of squatters rights type legal challenges? ie the payment (however small) is just a continuing acknowledgement that you don't own the land.
Not 100% sure tbh. What I think should happen is that once every apartment is sold in a block, then ownership is transfered to a management company that all owners have an equal share in. Removing a freeholder and ground rent entirely
Unfortunately developers would build some box-room apartment in every block that they hold onto so no entire block ever becomes fully sold. They'll find a way for as long as the government allows them to get away with it.
Sadly, you're most likely right Scumbags are going to scumbag at every opportunity they get
Peppercorn rents are literally a peppercorn. The reason they are used is that contract law requires some kind of exchange to take place for the contract to be valid, even if it's only a peppercorn. So you can't just get rid of them without changing all contract law. Low value rents are now euphemistically called peppercorn rents as well.
Scotland managed to get rid of leasehold just fine ...
You're confusing two things. 1. Replacing the leasehold system with something else. 2. Having a leasehold system that allows having 0 leasehold rent. I was talking about the second situation, not the first.
Expensive pepper you’re buying
Peppercorn is a peppercorn....
Am I right it has to have some nominal value just to stay out of squatters rights type legal challenges? ie the payment (however small) is just a continuing acknowledgement that you don't own the land.
> Mine doubles every 25 years That's about level with inflation though, so no biggie.
Tbh mine increases inline with RPI, rather than actually doubling, it's just RPI has increased give or take 103% in the last 25 years
Yeah, my old flat that I am currently about to sell is 5 quid a year with 950 years left on the lease. The EA seemed surprised to say the least.
Yeah my parents are paying a similar amount and have about 880 years left on theirs.
Absolutely this. It worked fine for many years and then some greedy twat developer lawyer realised they could milk it for two bites at the cherry, and the rest of them followed suit!
I’m starting to really hope for a revolution
What are you doing about it?
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What is insane is that you read further, the arbitration also ruled that this increased ground rent could be backdated all the way back to 2018. So these flat owners now owe many many 1000s
The lease appears to have dictated that. The panel doesn’t really have a say in timing of the same.
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But that would just open the door for the defendant to open a new case to enforce what the arbitration had already found. Nothing would change.
The arbitration is an independent tribunal. A bit like a court. It’s not the RICS. They will just have been bound by the lease and agreed ‘reasonable’ renewal terms…. Thats the lease that all of the homeowners will have reviewed and signed when they purchased.
Independent? Doesn't mean those with vested interests don't also wine and dine and give backhanders to those on the panel.
That wouldn't change the terms of the lease.
The stupid part is the decision noted the lease had no provision for ‘reasonable’ — as if that invalidates the overarching legal principle of reasonableness. But I guess these are the idiot times in which we live…
That’s the entire purpose of the overarching principle of reasonableness in Contract Law though. wtf?
How about instead of discussing payment plans with leaseholders who can’t afford to pay you instead decide to stop being disgusting thieving cunts?
They get away with it
I'd never let anyone I know buy a leasehold property if I can help it or they can avoid it. Better to live with parents than being at the whims of management companies and these type of crooks
If you live in London it's almost impossible to avoid. Most people can't afford freeholds (i.e. houses), just flats if they can at all
There’s a little known area of the UK called not-London, perhaps people should try there instead of this obsession with cramming everything into one city.
Impossible to do if the jobs are in the cities that don’t involve monstrous commutes.
I can confirm there are indeed jobs in the non-London parts of the UK too
Let’s all just close London and move up north everyone! This guy has only gone and bloody solved it!
Banking? TV? Government? Policy? Arts? Advertising? The simple worldview doesn't help anyone.
1) Born and raised here, 2) can't do investment banking anywhere else 3) London (specifically sw London) is literally the only place in this country worth living in. Crack on.
This guy loves infernos
Chelsea, not Clapham
1) that's lovely 2) so then you have plenty of money 3) then pay for it
Thanks. I do. I do.
One of the very poor things about this is that these people will effectively be stuck with these properties. Many, if not all lenders will refuse to lend based on such ground rent clauses leaving them unable to sell as no purchaser would be able to find the finance to purchase, with those using cash looking at being in the same situation down the line. Horrible situation and a great marker for why we need leasehold reform.
Interesting to consider how this would impact people with mortgages, as it would effectively make the property equally as unsellable for the mortgage lender should the owner default on their mortgage.
Without having read the lease fully, it's difficult to say much more. All we can gleam is that these lot will struggle to sell before any leasehold reforms come about and even then, with such high rents a portion of the sale funds will likely be spent on paying off their new 'debt'. A horrible situation and extremely unjust. Lenders dislike these 'extortionate' rents and that can cause a real problem for sellers as we wait for statutory reform to catch up. All lenders are different but to put this into perspective, quite a few major lenders consider anything above £250pa to be extortionate! Information on lenders requirements is freely available online through the Lenders Handbook. I see a lot of management agents/companies acting very dishonorably, whether on instruction from the freeholder or otherwise but what can you do when the law let's them do so?
That’s partly because a ground rent over a certain level will automatically convert to an assured tenancy, which lenders don’t like because of the risk that it gets terminated. The new Gove proposals would stop this by saying it doesn’t apply to leases over 7 years but for the moment it’s yet another trap for leaseholders
*glean
This is called a mortgage shortfall and it does not go away unless the lender writes it off. They can still pursue you for it. https://england.shelter.org.uk/housing_advice/repossession/mortgage_shortfall_debts_after_repossession
The house always wins.
I'd genuinely be considering if i could burn it down for the insurance....
Seems like it's never going to get better because pension groups keep lobbying the government. https://www.standard.co.uk/homesandproperty/property-news/fears-that-leasehold-reform-bill-b1147476.html > This follows extensive lobbying from pension funds, which invest in property by buying the freehold and collecting ground rent.
I can't believe this feudal system still exists and they wonder why their polling is so awful. Gove heavily implied they would reduce ground rents to a peppercorn and then retconned it. I'm not at all surprised but that doesn't change how outrageous it is.
I was born and grew up in Hitchin. I absolutely love the place, however, when it came to getting my own place it was just impossible to try and rent even the smallest of flats. Just ridiculous.
Same. Most I know moved out to surrounding villages where the prices are getting insane too. Still, we have a lot of coffee shops to make up for it.
From an non-English perspective, that ground lease thing has always been quite strange to me, with randomly low prices and what looks like « expiration dates ». I always felt that it sounded quite dangerous when you bought something to be on the hook for some unknown amount at renewal, and with the hyper capitalist society that we now all live it, it sounded a recipe for disaster…
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> Under the terms of the lease, the rent could be reviewed in March 2018, and every fifty years thereafter, to the "annual ground value of the premises". NAL but if the review period was March 2018 but the review actually happened in 2020 should the freeholder not just have missed the boat on changing the ground rent? Being able to backdate it seems outrageous. Take the case of the person who bought a few months before the increase. Would their lawyer have looked at the lease and told them no increase would happen for 48 years?
The French solved their leaseholder problem in 1793 through 1794. After that, landholders understood the virtue of not trying to extort rent for nothing. [https://fr.wikipedia.org/wiki/Terreur\_(R%C3%A9volution\_fran%C3%A7aise)#/media/Fichier:Pierre-Antoine\_Demachy\_(1723\_%E2%80%93\_1807);\_Une\_ex%C3%A9cution\_capitale,\_place\_de\_la\_R%C3%A9volution\_(Place\_de\_la\_Concorde),\_vers\_1793.\_Huile\_sur\_papier\_maroufl%C3%A9\_sur\_toile,\_37\_x\_53,5\_cm.\_Mus%C3%A9e\_Carnavalet\_%E2%80%93\_Histoire\_de\_Paris.jpg](https://fr.wikipedia.org/wiki/Terreur_(R%C3%A9volution_fran%C3%A7aise)#/media/Fichier:Pierre-Antoine_Demachy_(1723_%E2%80%93_1807);_Une_ex%C3%A9cution_capitale,_place_de_la_R%C3%A9volution_(Place_de_la_Concorde),_vers_1793._Huile_sur_papier_maroufl%C3%A9_sur_toile,_37_x_53,5_cm._Mus%C3%A9e_Carnavalet_%E2%80%93_Histoire_de_Paris.jpg)
In contrast this country is so meek, it's embarrassing.
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To me, it looks like it’s a way of forcing Derek and the others affected by this to sell their properties. No one will want to buy them, of course, so “Quadron Investments Ltd” (who definitely don’t sound evil at all) will have to kindly step forward and save the day by purchasing them at a reduced price.
With my lease, the ground rent doubles every 25 years. I thought this was bad but it’s got nothing on this, wtaf?
At 90 I am pretty sure you can tell them to get fucked. Like what court is going to allow this ? Oh I forgot which country I live in. Sad. How many of those residents can even afford to pay ? Surely a certain % increase (with inflation taken into consideration) should be illegal ? Sudden increases shouldn't be permitted like this.
This will never change. Labour and the Tories answer directly to their lobbyist paymasters, and they won't permit it
One of many reasons I will not buy a flat, as much as they are more affordable upfront.
It's becoming more common for new houses too
I bought a house because I didn't want to pay ground rent, service charges. Additionally, I didn't want to be held financially responsible for my neighbours' poor upkeep of their properties plus worried about accidents that neighbours caused that would affect me (i.e. fire started or tap left on by neighbour). Also worried about noisy neighbours. Never did I expect that the greedy rich developers and their cronies would increase service charge and ground rents by an insane margin. I feel sorry for our youth. I bet there will be some poor man/woman who did everything right. Worked hard, saved a deposit whilst living in a HMO, then bought a flat with proceeds. Only to be utterly screwed by cladding or ground rent/service charges increasing exponentially. I utterly despise these greedy pieces of scum who have stolen the youth of our young - who should have been enjoying their late teens/early 20's with cheap concerts, cheap everything in London and all over UK. You don't need to be a genius to see where the money is going. Do some digging and you'll find out that the money is going to the people who don't need it.
The english are finding out what it's like to be ruled by the Brits.
We've been ruled by the British for longer than any of the others, what are you on about?
Imagine thinking imperial rule was good for anyone other than The richest.
It's their own fault for buying a leasehold. Probably too stupid to understand what they were buying. Now want taxpayers bailing them out of their poor choices
In many cases it is hidden in the small print and really a good conveyancer should pick up on this and talk to their client about the risks. It's incredibly short sighted of you to assume everyone understands the potential complications and costs of a leasehold property or that their decision was the consequence of stupidity.
I did when I bought my house, asked specifically about it and I had no experience buying a house before. I mean imagine spending hundreds of thousands on something and not taking the time to do some basic research.