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I have just come across a scandal (my words) that, if true, is going to cause a lot of problems, if you are a lease holder and the lease has a clause in the contract that means it can go up you will not be able to sell your property, due to the fact that no lender will give a new buyer a mortgage.
I am interested to know if others have come across this situation yet?
google Leasehold knowledge website
Thanks I will have a look
I recently sold a flat where the ground rent doubles every 20 years and the buyer obtained a mortgage
I have another flat in the same block under offer and and the buyer has her mortgage offer at 75%LTV.Ground rent currently £300 pa and this will be £4800pa in 100 years time but I think inflation will erode the increase somewhat
I am guessing you are referring to >>>> this. There have been a number of consultations going on, and the Government is definitely looking at this area of law with the intent of reforming it.
Vanessa Warwick Landlord and Co-Founder of PropertyTribes.com **If you have got value from Property Tribes, find out how you can support it in remaining a free to use community resource**
Yes. I remember getting excited about a 3 bed in prime Kensington for a few hundred thousand. Wasn't a short lease. Very long lease but ground rent doubled every 20 years started at £20 but that was a few hundred years ago. The ground rent was over £20k. I walked away thinking who in their right mind would buy it. And there you have it - someone whose mind is not right!
regulation will come in to stop people forfeiting. But that's a hell of an investment punt.
Chartered Accountant, Tax Advisor and Mortgage broker
(and BTL portfolio owner)
My £300 pa Ground rent increasing to £4800pa at 100 years would actually need be £19770 to match inflation if history repeats the last 100 years
My god that’s madness, who will buy it? Who will give a mortgage ?
National Leasehold Campaign, facebook
If you are a leaseholder you have to join so so knowledgeable, they have truly opened up a can of worms.
Thanks James, I have looked at these but I think (could be wrong) that they are on a soap box and just want to shout and not do.
There is no reason whatsoever why houses should be sold as leasehold, they should have been sold as freehold properties. Worse still is the fact that they have been sold with high ground rents that double every 10 years, 25 years or are linked to RPI (the retail Price Index)
The majority of leases pertaining to leasehold houses have onerous fees that must be paid to the freeholder for licences and permissions included in the clauses of the lease.
Many of the tens of thousands of people who have bought leasehold houses from developers also feel that they were not correctly advised at the point of sale. Purchasers who tell the same story that at point of sale the salespeople working for the developers told purchasers that they would be able to buy their freeholds for a few thousand pounds once they had owned the property for the required two years. The vast majority however have found that their freeholds have been sold to large institutional ground rent investors without ever being consulted and these investors are now asking for £40,000 to sell them the freehold of their homes.
There is also huge anger from the purchasers that the solicitors they paid to advise them on the purchase of their houses did not advise them correctly about the implications of the ground rents and terms of the lease. Many contracts I have seen from the developers have directions that the solicitors the purchasers must use for the conveyancing should be “Nom Sol Only” i.e the solicitors named by the developers.
It really doesn’t smell right does it?