The Guardian newspaper has today reported the Blythe Court ground rent scandal that has left leaseholders with bills of up to £8,000 a year.
In 95 years the ground rents can reach £8 million a year for a one-bedroom flat bought for £58,000, says the article, written by Guardian staff reporter Rupert Jones.
It quotes leaseholder Kadian Kennelly describing the practice as “simply scandalous”, acknowledges the role of the Leasehold Knowledge Partnership in highlighting the issue and quotes MP Sir Peter Bottomley.
The article can be read here: https://www.theguardian.com/money/2016/oct/22/small-print-ground-rent-property-millions-leasehold-flat#comment-85948167
It reports Sir Peter’s Early Day Motion calling on auctioneers Allsops to remove 1, Blythe Court from sale in January this year. It had similar ground rent terms to Miss Kennelly’s flat.
In a separate comment article entitled “Property is theft? Well, leasehold certainly is”, Guardian Money editor Patrick Collinson addressed the general issues of leasehold.
He referenced housebuilders building leasehold houses, now thought to be around 6,000 a year according to the DCLG.
The article can be read here: https://www.theguardian.com/money/blog/2016/oct/22/leasehold-property-ground-rent-no-ethical-basis#comment-85953791
Collinson writes:
“No wonder financiers love this stuff. Bundle up loads of ground rents, create a fund effectively paying 7% and you can sell it for twice the price you paid, because even a 3.5% yield is attractive these days. And all for doing absolutely nothing. Ground rent is almost the definition of a socially useless activity.”
The Leasehold Knowledge Partnership is quoted: “Freeholds represent 5% or less of the capital value of a block of flats yet have a preponderance of the power. That does not make sense, even capitalistically … a tough monetising property spiv should get a 20% annual return on a freehold.”
And LKP’s solution is also referenced:
“New leases should be indefinite; ground rent should be abolished; all flats should be built with residents’ management companies, so the residents take control once a majority of the flats are sold.”
Related posts:
Hogan Lovells property solicitors report Blythe Court scandal on website
Guardian reports the Taylor Wimpey £130m offer to settle ground rent scandal
‘New-build ground rent scandal could spark legal battles,’ says Guardian
Guardian’s Patrick Collinson welcomes Nationwide exploding the ground rent scandal
Guardian sticks with new-build ground rent scandal, while LKP advises Persimmon home buyers to walk away
Do you REALLY know what your managing agent is charging you?
Hello All,
I was in a similar situation with a property I bought in 2007. At purchase I was told the service charges were 444 pounds annually. I bought the property in October 2007 and the charge was pro-rated till December 2007 which I paid at exchange of contracts. Just before Christmas 2007, I received a 6 month bill for over 700 pounds meaning service charges was actually 1400 pounds a year. I wrote to the management company inquiring why and hence started the battle. Fast forward 9 years and the management company was eventually dissolved and taken over by homeowners of which 3 chose to become directors of the supposed new management company. I had paid service charges for over 3 years before a mutual agreement was made by homeowners to stop making payments until the issues with the management company was resolved. Last year in 2016, authority of the bank account was handed to the supposed new directors and an agreement was reached to refund payments to all home owners. To my surprise these directors told me I was due nothing and distributed the funds amongst themselves. I was in absolute shock and really pissed. I contacted Leasehold Advisory Service but really got no help. Now these same directors want to start a new service charge scheme which frankly I am not interested in. Also they want me to make contributions to the repairs for the property while they claim that I am solely responsible for other rainwater external areas around my property. What can I do about this legally? would really appreciate some advice. Thank you.