Have you been affected by issues relating to increasing ground rent clauses or other adverse terms in a long term lease?
For a free 15 minute consultation call Co-op Legal Services on 0330 606 9736 or contact us online and we will help you.
The Government announced today that the practice of builders imposing onerous ground rent and consent requirement clauses on the buyers of new homes, by imposing long leases with terms which impose potentially unfair requirements, is to be brought to an end.
The Department for Communities and Local Government is launching a consultation on banning new build houses being sold on a leasehold basis to stop home buyers from being exposed to “long-term financial abuse”.
Home buyers of new build homes will no longer have to pay unfair annual ground rents - this is the charge the leaseholder, as a tenant, pays to the person or company which owns the freehold on a property, as they will own the freehold of their home.
Whilst this is clearly good news, it leaves an estimated 1.2 million people who own properties under such leases in limbo, with increasing annual ground rent liabilities, having to go through an often costly and lengthy process to obtain the freeholder’s permission to make alterations to their property and potentially being unable to sell their home because of the costly terms included in the lease.
Historically, a typical ground rent would increase in line with the Retail Price Index (RPI).
However, many major house builders have (wholly lawfully) applied ground rent clauses in their leases so as to impose increases far ahead of the RPI. Many such leases double the ground rent payable every five or ten years, so that, for example, under a ten yearly doubling ground rent lease, an initial ground rent of £500 a year will increase to £16,000 a year over a period of 50 years. The leases can be up to 999 years long.
The Government cites the following examples of abuse:
- A homeowner being charged £1,500 by the company to make a small alteration to their home
- A family house that is now unsaleable because the ground rent is expected to hit £10,000 a year by 2060
- A homeowner who was told buying the lease would cost £2,000 but the bill came to £40,000
Potential mortgage lenders are reluctant to lend on properties such as this, meaning that properties are difficult to sell and often worth considerably less than what was paid for them.
What Can You Do?
1. Seek a Deed of Variation of Lease from your house builder, or more probably the investment company to which they have sold the freehold interest in your home, removing or reducing the ground rent and consent requirement clauses.
2. Acquire the Freehold interest in the property.
3. Bring a Professional Negligence claim against the Solicitor or Conveyancer which acted for you in purchasing your home.
Solicitors and Conveyancers are under a duty to provide advice to home purchasers about the existence and impact of onerous ground rent clauses, including the impact of such clauses on the value, saleability and cost of renovating the purchased property. If they have failed to provide appropriate advice, they can be required to compensate you in respect of your resultant financial losses.
You will usually have six years from the date of entry into a contract for the supply of conveyancing services within which to start Court proceedings. Although it is sometimes possible to pursue a claim more than six years after this date, it is always safest to start a claim within six years of your original instruction of the Solicitor or Conveyancer concerned. Otherwise, your claim could be out of time, and you will be unable to pursue it further.
It is important that you seek legal advice, particularly if it is more than five years since you purchased your property.
How Co-op Legal Services Can Help You
Our specialist Solicitors can:
- Provide you with free initial legal advice as to your options
- Assess if you have a professional negligence claim to compensate you in respect of your losses; and whether we can act for you on a No Win No Fee basis.
It is part of the Co-op’s ethos and values to provide help and support in enforcing legal rights so as to prevent injustice, and we will always strive in appropriate cases to secure the best possible compensation.
For a free 15 minute consultation call Co-op Legal Services on 0330 606 9736 or contact us online and we will call you.