Leaseholders in Gallions Reach, east London, are seeing their ground rents more than double owing to 20-year revisions as stated in the lease.
This is, of course, excellent news for the punters in the Long Harbour fund, who own the Abacus Land 4 freeholds anonymously and offshore, and who appear to be some of the richest people on the planet.
(Long Harbour claims its investors are mainly blameless pension funds, but there is absolutely no need for complex anonymity for that, still less offshore smoke and mirrors.)
It is markedly less good news for the leaseholders at Latitude Court, which was built in 2007, with the leases commencing in 2003: another example of tiresome gaming by developers, which stuffs their paying customers and makes the freehold asset, with its 20-year ground rent revisions, more attractive to investors.
So they have just seen ground rents increase from £350 to £711, or an increase of more than double (103%).
It was a point routinely made by LKP trustee Joanne Darbyshire, who is a co-founder of the National Leasehold Campaign, at the outset of the 10-year doubling ground scandal that RPI indexed ground rents could be far more onerous if inflation took off, as it has done.
The Competition and Markets Authority deemed 10-year doubling ground rents were unfair:
But it made no mis-selling ruling to close down the aggressive RPI clauses in leases, which – as in this case – are worse.
A leaseholder Rowena Evans said:
“Abacus Land 4 Limited provide absolutely no service to the leaseholders. For example, during the ongoing fire safety crisis, us leaseholders are paying for huge increases in service charge due to the costs of waking watch and insurance.
“Abacus Land remained silent and did not financially contribute. When we were facing large bills for cladding remediation – fortunately now covered under the Building Safety Fund – Abacus Land did not offer a single word of support or a penny of finance.”
Unfortunately, property values have not increased with inflation but stagnated as a result of the Grenfell disaster and its impact on saleability in the wider leasehold market.
Ms Evans says a one-bedroom flat at Latitude, originally sold for £250,000 in 2007, is listed for sale at £260,000, but she believes will sell for less.
Two sales on the Land Registry that took place after the Grenfell fire in June 2017 are shown registering losses on the orginal purchase price of £94,000 and £25,000.
Ms Evans says: “The ground rent is the same regardless of size of flat. Therefore, two-bedroom flats have a ground rent of £711 but this is a much lower percentage of the value of their property. Assuming a sale price of £260,000, my ground rent is 0.27% of property value: so along with a depreciating asset and the lease term decreasing, we will not be able to sell to anyone who needs a mortgage.
“Buying this flat was the worst decision of my life and a constant source of stress. I would love to sell the flat and walk away from it.”