Ground Rent abolished??

Rabs

Recently found out about this..

Apparently land owners (the free holders) are no longer allowed to charge ground rent..  However from what I read it only applies to new contract/lease. obviously for existing leases you still have to pay  BUT..  If you get a lease extension you wont have to pay it any more.

About time if you ask me. Its such a rip off in the first place.

https://www.gov.uk/government/publications/the-leasehold-reform-ground-rent-act-user-guidance/leasehold-reform-ground-rent-act-2022-guidance-for-leaseholders-landlords-and-managing-agents

marxski

I rented a couple of places where every year I used to get a ground rent bill of a few pounds. It was really old fashioned invoices. I just ignored them.

Stevepage

Back when I owned a flat (moved out and into a house in 2019) we were paying £100 ground rent per year. However, a friend of ours was paying over £100 a month. Money for litterally nothing.

Service charges need a look at next. If you live in a flat with loads of other flats next to you, I get being charged to look after the grounds/building, but service charges shouldn't even come into it when it comes to new build houses. The local councils should adopt the land as soon as building has finished, especially as they charge council tax the second you move in. 

Rabs

Dont..  I hate those bastards..

My family are actually trying to sell a flat which is how I found out about this..  It turns out that there is a clause in the lease that says the ground rent doubles every 20 years..  Which sorta sounds reasonable until you actually work it out.

So its currently £250 a year which is normal. But theres almost 120 years left on the lease.. Which means by the end of the lease the ground rent will be £16000 a year.  Which is bonkers right. So the buyers solicitor has said that she shouldnt sign it. And our own solicitor said she would have advised the same thing..  We have asked the freeholder if they will remove it, they wont...  So our only way out is if we extend the lease. Which the freehold management company said they refused.

Such a pain. And its all from a lease that dates back to something like 1964....

Let alone the service charges which are about £1200 a year for a company who seem to do nothing.. We recently needed some work doing to a property and it turns out that the freehold managers have now given the work out to a third party company to manage who want 10% of the cost of the project on top of what we will already have to pay just for sending a few emails out and making a couple of calls..  Its all such a rip off and I am totally sick of these fucks...

Kittyfrisk

https://en.wikipedia.org/wiki/Tyneside_flat
Under a Tyneside flat scheme, each flat tenant even if holding the freehold of their own flat, is made the landlord (and thus reciprocally the tenant) of the other. This allows the responsibilities to be enforced legally, without requiring the existence of an external landlord or management committee over the whole building. A peppercorn was the arranged lease arrangement between properties.
Essentially, a reciprocal mutual consideration situation.

Edit: Bugger, this was clipped when I posted.
I was simply suggesting that there are & have been many good means of avoiding leasehold exploitation.

rogd

Mrs Rog and I live in a group of 'retirement' properties in a small village in North Cumbria. It consists of 20 properties, 6 flats and 14 cottages. We all own our own properties which are on 999 year leases.
It was developed about 35 years ago and is a very pleasant place to live. One minute walk to the pub!!
The freehold is owned by one of the largest housing associations in the UK and we pay a monthly service charge to them. The only thing we are responsible for is the internal maintenance of our own properties. The service charge covers the lot, insurance, grounds, plumbing, wiring etc.
A month ago the association told us they wanted to sell the freehold and offered it to us for a nominal £1-00!!
As a group of residents we have decided, after taking legal advice, to cough up the required quid and go ahead with the purchase.
We will have to form a company in which each property has a twentieth share in the freehold or common hold and also appoint a managing agent as we are all in our seventies and more and we came here get away from responsibilities.
The alternative is for the housing association to sell on the open market and we could end up with a shower such as Rabs describes.
I think the bottom line is that we were costing them too much to run.
We have along way to go but at least we'll be our own masters.
Roger.

JerkMoans

Wanna see a real leasehold horror story?

https://www.bbc.co.uk/news/uk-wales-south-west-wales-33071504

BillDL

I believe you should all move up here to Scotland where we do not have Freehold vs Leasehold complications.  There are some areas where there was a modest feudal charge but most owners paid that off in a lump sum decades ago, so in the vast majority of instances you actually own the house and the land it is built on.  Of course there are instances of people in flats or an "estate" where there are charges for maintenence of communal areas by a factor, but that's an expected overhead.

drofluf

JerkMoans said:

Wanna see a real leasehold horror story?

https://www.bbc.co.uk/news/uk-wales-south-west-wales-33071504

My take on that is that the court’s view was tenants signed a contract without understanding it or had been poorly advised. (TLDR service charge increases 10% per annum to allow for inflation. Inflation was 16% when it was written). Either that or they were poorly advised. Happily the landlady has agreed to reduce it to CPI. 

But in a shared ownership arrangement some form of service charge to cover common areas is necessary problem is too many landlords and managing agents rip the tenants off.

TheBigDipper

rogd said:

Mrs Rog and I live in a group of 'retirement' properties in a small village in North Cumbria. It consists of 20 properties, 6 flats and 14 cottages. We all own our own properties which are on 999 year leases.
It was developed about 35 years ago and is a very pleasant place to live. One minute walk to the pub!!
The freehold is owned by one of the largest housing associations in the UK and we pay a monthly service charge to them. The only thing we are responsible for is the internal maintenance of our own properties. The service charge covers the lot, insurance, grounds, plumbing, wiring etc.
A month ago the association told us they wanted to sell the freehold and offered it to us for a nominal £1-00!!
As a group of residents we have decided, after taking legal advice, to cough up the required quid and go ahead with the purchase.
We will have to form a company in which each property has a twentieth share in the freehold or common hold and also appoint a managing agent as we are all in our seventies and more and we came here get away from responsibilities.
The alternative is for the housing association to sell on the open market and we could end up with a shower such as Rabs describes.
I think the bottom line is that we were costing them too much to run.
We have along way to go but at least we'll be our own masters.
Roger.

@rogd  - Definitely take it on yourselves. I live on a small development with 6 freehold detached houses. We don't have a managing agent and run it ourselves (well, two of us do as directors of the company). Two filings per year to the government (very simple accounts that we prepare) and a statement about the directors. One AGM to approve the service charge for the year and one round of invoices to collect the money. Our biggest expense is public liability insurance for the public areas (a roadway and pavement). Our only responsibility is the maintenance of those common areas (nothing - unless a repair is needed). We paid £105 each for this years service charge and we set a limit of £6,000 in a sink fund for unexpected repairs that was reached a couple years ago and hasn't been touched since 2019.

Before that I used to live on a big development with 330 properties - 30 houses and 300 flats in several blocks. Every property paid the service charge for the common areas and each block of flats had an individual service charge on top just for their block. The freeholder (all of us - the management company) was the landlord for the leasehold flats and had a managing agent doing the day-to-day work. It was expensive and they rarely made decisions without involving the unpaid directors anyway. 

Assuming the 6 flats are in one block, I'd suggest one of the directors was a leaseholder who looked after the interest of the block and could liaise with their fellow block residents to establish their own priorities (and therefore how much they would need to collect and spend on looking after their own block). 

Good luck! :-) 

rogd

Many thanks for the reply Dipper.
Its invaluable for us to compare our situation with people such as you.
At the moment we have accepted the offer but are not an 'official' body yet. We have appointed a 6 person steering committee and are interviewing potential managing agents and getting insurance quotes.
The next step is to put the legal representation in place and proceed with the sale.
We will have a large sinking fund coming to us, in excess of £100,000, so that will need to be invested carefully.
The flats are one block of 4 and one block of 2 and our solicitor recommends that because we are relatively small we treat them as commonhold with each flat having one twentieth of the freehold.
Obviously we have a long way to go and a myriad of things to consider, but once we have taken the first steps it will all fall into place.
Thanks for your good wishes.
Roger.

randella

marxski said:

I rented a couple of places where every year I used to get a ground rent bill of a few pounds. It was really old fashioned invoices. I just ignored them.

These things can be a minefield for flats and shared tenancies - even with a privately owned house it was a pain in the arse. Our leasehold was run by a management company and if you wanted to ask them something there was a charge of £50 per question, I kid you not.

The £4.50 ground rent was payable in 6-month instalments, I used to send 'em a cheque in the post for £2.25 twice a year just to be awkward.

I think Michael Gove was heading up the inquiry into getting this lot sorted out but he's been stymied for whatever reason.

TheBigDipper

rogd said:

Many thanks for the reply Dipper.
Its invaluable for us to compare our situation with people such as you.
At the moment we have accepted the offer but are not an 'official' body yet. We have appointed a 6 person steering committee and are interviewing potential managing agents and getting insurance quotes.
The next step is to put the legal representation in place and proceed with the sale.
We will have a large sinking fund coming to us, in excess of £100,000, so that will need to be invested carefully.
The flats are one block of 4 and one block of 2 and our solicitor recommends that because we are relatively small we treat them as commonhold with each flat having one twentieth of the freehold.
Obviously we have a long way to go and a myriad of things to consider, but once we have taken the first steps it will all fall into place.
Thanks for your good wishes.
Roger.

You should obviously follow the advice you're paying for. All I'd say about the blocks, is that my experience (the previous address, not where I live now) was that one or two of the six blocks were far more expensive to maintain than the other four. For example, one block would have the common parts (staircases, entrance hall) redecorated and within a week someone would damage it carrying their bicycle upstairs. Next thing, the buy-to-let landlords owning some of those flats would complain they couldn't rent their properties because of the damage and it needed redoing! Understandably, people in other blocks didn't want to pay for something they didn't benefit from.

I presume you could still set an extra service charge on a per block basis to reflect their differing running costs if you wanted to. 

vasselmeyer

My ground rent is £1.50 per yer and I have 866 years left on the lease. They've offered to let us buy the lease out for £650. It was an easy decision to decide whether we should take them up on the offer.

rogd

TheBigDipper said:

.

You should obviously follow the advice you're paying for. All I'd say about the blocks, is that my experience (the previous address, not where I live now) was that one or two of the six blocks were far more expensive to maintain than the other four. For example, one block would have the common parts (staircases, entrance hall) redecorated and within a week someone would damage it carrying their bicycle upstairs. Next thing, the buy-to-let landlords owning some of those flats would complain they couldn't rent their properties because of the damage and it needed redoing! Understandably, people in other blocks didn't want to pay for something they didn't benefit from.

I presume you could still set an extra service charge on a per block basis to reflect their differing running costs if you wanted to. 

I take your point about differing maintenance costs.
We are all owner occupiers and I am sure we wouldn't look favourably on buy-to let or sub-letting.
We still have to look at the level of service charge but no doubt we'll take that into consideration.
Roger.