Good story – in the very bad sense – in the Daily Mail of a woman who bought a flat in South London where the ground rent rises to £1 million a year in 50 years time – after doubling every five years.
God knows how Carole Patterson,44, an HR administrator and mother of two, managed to buy this property in East Dulwich, or a solicitor sign it off or a mortgage lender issue a loan on something so utterly toxic.
Apparently, the freeholder MEA Real Estate Limited is prepared to waive the ground rent for a one-off payment of £100,000, which is described as “a quarter of the value of the property”. We assume this means: what Ms Patterson paid for the flat, because as things stand it most certainly is not the value of the property, which is closer to zero. In today’s climate – that is, after Taylor Wimpey, Redrow and Countryside Properties plc began selling leases with 10-year doubling ground rents – is almost certainly unmortgageable.
Carole Patterson’s one-bed South London flat has become her worst nightmare She faces an annual ground rent bill that will eventually cost her £1m every year Mother-of-two’s contract means annual ground rent will double every five years So in 50 years’ time she would have to pay £1,075,200 a year to keep the home After years of hard work and saving, Carole Patterson was overjoyed to finally get on the property ladder a decade ago.
The Daily Mail omits to mention that the sole director of MEA Real Estate Limited is Mark Edward Adams, although it appears from Ms Patterson’s quote that he acquired the freehold with this pre-existing ground rent term.
A ground rent that doubles every five years is even more odious than those dreamed up by Martin Paine, described as a “crook” in the House of Commons by Sir Peter Bottomley, who added that he was “turning the sleaze in leases into an art form”.
The get-out is the same as that suggested by Mr Paine to his victims: that they sue their conveyancing solicitors for professional negligence for failing to spot the aggressive escalation of the ground rent (that in Mr Paine’s case he himself inserted into the leases).
The firm of solicitors who messed up are given as Shropshire-based FBC Manby Bowdler (“you can rest assured you’re working with property experts who work tirelessly on your behalf, simplify the legal jargon and keep you updated every step of the way”).
Osbornes Law is now in pursuit, presumably on some kind of conditional fee arrangement.
“I first got the letter finding out about the clause when the freehold was sold on. I had no idea about it before. I was pregnant at the time and it was such a horrible position to be in,” Carole told the Daily Mail.
“I just feel so frustrated that something I worked so hard for and saved for has no value at all now. I bought this flat as an investment for my pension.
“The ground rent on Buckingham Palace wouldn’t be as much as what I would be paying at the end of my lease.”
The article references the Competition and Markets Authority finding of mis-selling by plc housebuilders who landed buyers with unsellable properties owing to highly aggressive ground rents.
FBC Manby Bowlder said: “The issues which arise in this case are much broader than relating to a particular firm of solicitors and are being addressed by Parliament.”
Er … well, only up to a point. The debased value of conveyancing in our over-heated property market, along with factory conveyancing practices, also play a part.