THE ISSUE OF RISING GROUND RENTS FOR LEASEHOLDERS: IMPORTANT INFORMATION FOR THOSE WHO OWN A NEW BUILD UNDER A LEASE
Following the publication of our recent article ‘COLLECTIVE ENFRANCHISEMENT FOR LEASEHOLD PROPERTY’ (which looked at the cost to leaseholders of buying the freehold title of their house), there has been a further development with regards to leasehold ownership at a time when issues such as the availability and affordability of housing are becoming more important given the results of Brexit and the General Election.
The latest turn of events comes as house building giant Taylor Wimpey has confirmed it will set aside £130 million in order to compensate those customers who have purchased new-build leasehold property only to be caught out by increasing ground rent provisions contained in their lease, in what is being referred to as a “national scandal”. For further information on the news story please see here.
To explain this in more detail, ground rents are a type of extra fee payable by leaseholders to the freehold owner at regular intervals throughout the duration of the lease. Specifically in relation to those leaseholds purchased from Taylor Wimpey, some of the leases provided for ground rents to increase at an alarming rate, in some cases they were doubling after 10 years. Obviously this leaves those who own leasehold property with substantial extra costs and complications because houses with high ground rent can be less desirable and harder to sell. It is acknowledged that other house builders have also left leaseholders in the same position although at this stage it is unclear whether any more builders will also offer compensation like Taylor Wimpey.
This is yet another example of the issues to be considered when dealing with leasehold property. Bury & Walkers reminds all leasehold buyers of the importance of obtaining appropriate legal advice prior to purchase and also at any point when you are considering your options in relation to leasehold property. Similarly, if you are confused about any aspect of your lease then please contact Bury & Walkers by telephone on 0113 244 4227 or email at firstname.lastname@example.org for further information on the services available or to discuss your particular circumstances in more detail.