Trapped by doubling ground rent
There have been an increasing number of stories in the press in relation to onerous ground rent clauses for Leasehold homes built in the last ten years. One story in particular has been that of a young couple in Soham who purchased a leasehold coachhouse style property with a ground rent which doubles every ten years until the ground rent reaches £4800 a year. They are now unable to sell their house because prospective purchasers and mortgage lenders are reluctant to accept such onerous clauses.
A normal ground rent clause can increase on a regular basis such as ten years but it will be in line with the Retail Price Index (RPI) rather than doubling up. The Government has been investigating these clauses and is promising to stamp them out, however there is still a problem for people who have already puchased properties with these clauses.
There is some good news. Taylor Wimpey have recognised that this is a concern for homeowners and have voluntarily set up a scheme for anyone who purchased a property with a doubling ground rent clause from them and still owns it. They will enter into negotiations with the freeholders which will enable them to enter into a deed of variation with the homeowner changing the ground rent clause to one that increases in line with the RPI. If you qualify Taylor Wimpey will also contribute towards your legal fees to the sum of £750.
You will need a solicitor to deal with this on your behalf as they will need to check the drafting of the deed of variation for you and Vanessa Newman Property Lawyers are already dealing with a number of matters for clients who have qualified for the scheme.
The bad news is for those who have bought their properties 'second-hand' or from a different developer as they will not qualify for this scheme. Another method that they may consider to deal with this is a direct request with the freeholder for a deed of variation, although the freeholder is not obligated to agree to this. If that fails then the next consideration for a solicitor would whether an enfranchisement claim could be made. Enfranchisement is the right to purchase the freehold or to extend a lease. By purchasing the freehold the ground rent issue drops away and on a lease extension the ground rent is effectively reduced to nil. Unfortunately this will be at an immediate cost to the homeowner.
If you purchased a Taylor Wimpey property from new and are concerned that you may be affected by the doubling ground rent clause then visit their Ground Rent Review Assistance Scheme and fill out the initial enquiry form for free. If you would like any assistance or advice in relation to this then please contact Vanessa Newman on 01480 261100.