The greed of housebuilders has created a housing crisis as homeowners with onerous properties now cannot sell.
LKP has been deluged with home buyers saying that their mortgages have been refused at the last moment.
One caller was buying a flat in Windsor where the ground rent rose by £150pa every 30 years, but the mortgage was refused.
This is hardly an onerous ground rent.
The Council of Mortgage Lenders sent the following statement to LKP on April 20:
“The CML lenders handbook, which contains standard instructions from lenders to conveyancers, has a section on ground rents (s5.14.9); this sets some parameters for conveyancers to consider, in advising lenders.
“However, it does not go so far as far as defining lender policies on what constitutes acceptable ground rent terms. That is up to individual lenders; we are aware that some lenders are reviewing their policies to reflect concern about onerous ground rent clauses.
“As it is a regulatory requirement for lenders to take account of all known future changes to a borrower’s income and expenditure that could affect the affordability of their mortgage, ground rent may become a relevant factor in lenders’ assessments.
“Known future ground rent increases need to be taken into account by lenders in their affordability assessments.
“A lender’s risk might also be increased if ground rent values are disputed in the future and the borrower does not pay while in dispute, such as in such situations the least could potentially be forfeited and the lender’s security put at risk.
“Clearly, it is therefore helpful to both the owners of leasehold properties and mortgage lenders if ground rent increases are set at levels that will not materially change mortgage affordability in the future, or impact on the value of the property, and therefore create potential distortions in the availability of mortgage finance on affected properties.”
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Help offered to leasehold house owners facing onerous ground rents
My Freehold was sold on, and I became involved in a service charge dispute with the new Freeholder, who refused to discuss the matter with me. I advised my mortgage provider in writing of the situation, and confirmed that I had paid my Ground Rent, and received their written confirmation they would not pay the Freeholder. The Ground Rent is the main consideration for the mortgage provider, not the other service charges, so ALWAYS pay this amount, and dispute later!.
When the Freeholder realised I had a case for not paying, they wrote to my mortgage provider claiming I had not paid my Ground Rent and other service charges. Despite my mortgage provider having my information on record, they simply paid the Freeholder (£750) and then wrote to me saying they had added the sum to my mortgage.
I complained, and threatened to go to the Ombudsman. After some months, numerous calls and letters, they had to admit they had made a mistake, and removed the sum from my mortgage account. I do not know if they were successful in recovering the amount fraudulently claimed by the Freeholder.
Lou- You should definitely report this to the Ombudsman. It costs you nothing. No lender should deduct monies from your account without your permission. and they should pay you compensation.
Its time the Council of Mortgage Lenders started demanding the end of ground rent payment system and the system of starting lease forfeiture for as little as £350 . .
If the there is no mortgage loan offered for new build property sold under lease with ground rent , then the leasehold system will soon collapse.,
Is your new freeholder using a company like E & M to collect ground rent ?