The BBC website today features a first-time buyer of a leasehold house in Liverpool who pays £800 a year in ground rent and service charges.
The BBC website reports the case of Ashleigh Wilson, 27, who bought her £200,000 home in Knowsley four years ago but now cannot sell it because of the lease terms.
The BBC reports:
“I came to view the show home with my mum and I just fell in love with it.”
Four years on, she’s in a home no-one will buy because of the strict rules on her lease – which charge her fees and stop her changing her floor tiles.
A leasehold is when you own the right to live in a building but don’t own the bricks or the ground it sits on.
It is not clear whether £800 a year is ground rent – specified in the lease – or ‘fleecehold’ service charges, which are unspecified and can be as much as the management company thinks it can get away with.
There are certainly leasehold house owners in the North West on ten-year doubling ground rents that have already doubled: with Taylor Wimpey properties this would typically be from £295 to £590 a year.
Ground rents are for no service whatsoever, and bear no relationship to the value of the property: they are simply an income stream sold off to someone else by the developer.
So a flat in Mayfair worth several million pounds sometimes has a ground rent far less than a starter home worth a fraction of that sum.
The article also references Harry Scoffin, 24, who works with LKP, saying that he thinks first-time buyers are being conned.
“Developers say ‘flats to buy’, but actually you cannot buy it, you are only buying a lease.”
He wants people to push for the Scottish system of commonhold, saying it gives people more power over fees.
“Stay renting and push for commonhold, we cannot have leasehold anymore.”
Related posts:
The Sun says … ‘thousands trapped in leasehold homes due to spiralling ground rent costs’
Brokenshire demanding action for 100,000 trapped in toxic leasehold homes five months ago
First-time buyers facing £8,000 ground rents stuffed by plc housebuilders
Bovis Homes leaseholder in Bristol cannot sell as ground rents reviewed every five years
Ground rent speculator in leasehold homes laments losses in FT
FirstPort named twice in Commons today
Apologies for being slightly off topic.
On the News today, Tory Party receives funding from offshore companies.
Is this why we see little progress from them on reforming leasehold.
The £800 pa ground rents publicised in this article may form part of their funding.
Michael, was posted previously, stating the Conservative Party were provided with Funding circa £600,000.00 in the past by the Tchenguiz Brothers and their Sister, check it out in Archive on Better Retirement Housing.
Has it also recently been stated in the House of Commons the opening up of Off Shore Companies this year has been moved back to 2020, by the Conservative Company, even though a date had been confirmed?
I do believe Firstport made a small donation towards the expenses for the Welwyn & Hatfield constituency office.This was at a time when I believe Grant Shapps was the Housing Minister.
I found this tonight by Shabbir Lakha – Housing Counterfire.
Vincent Tchenguiz, owns up to 300,000 freeholds in the UK, being embroiled in multi-billion pound lawsuits over the failed Kaupthing Bank and kicking pensioners and families out of their homes in Huddersfield, is a Conservative Party donor along with his brother, sister and former brother-in-law. Together, they donated almost £500,000 to the Tories between 2004 and 2010 – that we know of.
Shabbir Lakha also wrote, Pre`cede and added too by chas:
Proxima G R Properties ltd, Freeholder (part of the Tchenguiz Family Trust) of Citiscape has been forcing residents to pay £2 million pounds for their own safety is putting lives at risk by not removing Grenfell-style cladding from the Citiscape Croydon Complex.
Residents of Citiscape was found to have similar cladding to that of Grenfell Tower. Proxima G R Properties ltd told the Residents they will have to pay to change the cladding.
FirstPort Retirement or FirstPort Property Services Ltd or FirstPort Retirement Ltd or any of the companies but as the Managing Agent, was informed 5 months ago by the Government the cladding should have been removed.
Proxima GR Properties Ltd the Freeholder, refuses to accept liability and maintains that it will not begin works until it has received the £2m + bill from the leaseholders (up to £31,000 per leaseholder).
FirstPort have employed Fire Wardens to patrol the building at a cost of £4,000 per week, (£208,000 per year) which I determine should be paid by the Owners (Freeholder/Landlord) as the Cladding was not contracted by the Residents but by the Owners. The Landlord & Tenant Act 85 puts the responsibility of necessary building works on the Freeholder but to be paid for by the Leaseholders.
By inserting Unfair Contract Terms in Leases,( now being taken to task). The terms mentioned in leases are purposely vague so that Freeholders are released from any payment for Maintenance and or Updating, nothing about Unsuitable Cladding or any item Not Fit For Purpose is in a Lease paid for by any Residents?
Proxima G R Properties Ltd should have began the works changing the unsafe cladding immediately, as Proxima are able to claim insurance or make a claim against the developers, Barratts who built Citiscape, but who are Barrett’s are they the same as the director that used to fly to sites in a Helicopter and show the Oak Tree in their Advertising?
From Companies House, Barrett’s was and may still be involved with Directors of Peverel Group way back in 1997, can anyone confirm?
MH, you are probably more right than wrong.
Nice to see the BBC highlighting one of our countries serious problems for a change.
For the last 12 months I interpret BBC as meaning the Brussels Broadcasting Company
The heading of this article by the LKP is poorly drafted. The reader believes from the heading that this young girl is stuck in her property because the ground rent is £800 a year. When reading the BBC article, which LKP is reporting on, it transpires that it is the total for ground rent and service charge. The BBC fail to give any breakdown as to what the costs are supposed to cover.
LKP automatically by default suggests that the costs may be “fleecehold charges”. There is no evidence in the article to support such an assertion.
Then the usual chestnut about ground rent being for no service. The ground rent is indeed for no service and the reading of the lease will confirm that the freeholder has no commitments to meet out of it. Therefore, it is a financial burden on the property that needs to be considered and valued when making an offer for a leasehold property. This is why I constantly argue that the NPV of the ground rent should be shown in the prescribed clauses of the lease using a prescribed discount rate set by the Government
This is a particularly poor article from the BBC made worse by the poor reporting of it by LKP
Stephen. It can not be said enough that ground rent is indeed for no service and a rip off from the days of feudalism. The BBC is doing an excellent job highlighting what is nothing more than legal robbery and all you can do is regurgitate the same nonsense about NPV.
How can you and this government possibly support a Help to Buy scheme where ground rents double every 10 and 15 years and homeowners can’t sell on their homes. Shameful greed.
You make a wild inaccurate statement to try and punch home your case.
Where in my various postings have I supported 10 year doubling rents ?
I am not supporting penurious rents but I see no issue with a rent that keeps in line with inflation or average earnings over the term of the lease
The term of the ground rent are set out in the lease and the higher the rent the less a purchaser will pay for the property. . The purchaser has a couple of months to consider the purchase. So if they have signed the lease they have either
1) Accepted those terms based on their professional ad visors reports
2) Done neither and acted carelessly
In all both cases it is not robbery. Those selling have put forward a proposal which includes the reservation of a rent and the purchaser has to take a view on it
Stephen, Stephen:
You post
The term of the ground rent are set out in the lease and the higher the rent the less a purchaser will pay for the property. I assume you are always present at the Sale of a Property?
You assume the higher the GR the less a purchaser will pay. are you also part of the pricing of properties, with all the Home Builders?
You also post, those selling have put forward a proposal which includes the reservation of a rent and the purchaser take a view on it, what happens if they are not given the full information, as has been stated?
Stephen. I note you don’t say that you disagree with 10 year or 15 year doubling ground rents on Help to buy. How about joining the campaign for justice and abolition of leasehold. You’ll feel better for it knowing you are helping homeowners enjoy their homes without harassment from feudal practices.
I don’t agree with rents that double every 10 or 15 years
If my proposal that the NPV of the rent is shown next to the premium with stamp duty payable on it these terms would never have been accepted . The NPV would make the prospective purchaser challenge those rent terms
The elderly have a need to downsize often for health reasons, and the Government encourage them to do it to release larger properties for families.
By doing this they are penalised by the likes of Churchill and M&S charging them around £600pa ground rent for the privilege and for no service. According to Stephen it is take it or leave it, and leaving it could cost them solicitors fees and a deposit already paid.
Maybe it is legal robbery but how can it be fair.
The marketing of the flat should state next to the premium the NPV of the rent OR the sum sort for the lease needs to be the premium the developer wants plus the NPV of the rent – this would address the concern land you raise
There is a similarity between the imposition of a ground rent and loan interest – what I am proposing is that like with loans certain key facts are clearly shown before a prospective purchaser gets under way with the legal process of buying the flat
The BBC (not LKP generated) headline is misleading
.A bit like offshore freeholding companies claiming to be “Custodians” of properties!