fbpx

What You Should Know About The Ground Rent Scandal

FREE cash offer within minutes
What You Should Know About The Ground Rent Scandal
  • Free cash offer within minutes. Receive funds within 7 days.

Ground Rent Problems

An unsettling trend has begun in the UK housing market. A number of new-builds have entered the marketplace with 999 year leases. Although this initially sounds like good news, it’s been described as a front for the deeply unfair ground rent scandal. Distracted by this long lease, and promises that it’s ‘essentially the same as freeholding’, first-time buyers have become trapped with freeholds too expensive to buy themselves, and too high to be attractive to any potential buyers.

Developers such as Persimmon, Taylor Wimpey and Bellway have been found selling houses as leasehold that would traditionally have been freehold. These sales include clauses that allow the ground rent to rise significantly in later years, in fact, on average they double every 10 years. The property owners could then be forced to live there forever, unable to sell and facing spiralling ground rent charges. A 28 year old first-time buyer at the end of their loan term on a 30-year mortgage will have to pay nearly £2,500 a year in ground rent. This is obviously a huge amount of money, and an unreasonable one to still be paying after 30 years of ownership and mortgage repayments.

Much of the uproar around this issue is the stark, and incredibly sharp, ground rent price hike. Prices used to be as little as £5/year, a ‘peppercorn’ rate, so low that at times they were not even collected. Now, Taylor Wimpey and the likes are charging rates starting at £295. This is a huge increase even if you ignore the freehold trap set further down the line. To make matters worse, Taylor Wimpey then sold on the freeholdings to a third party and so do not claim responsibility. At the point of purchase, buyers were told the lease would cost about £4,000, plus legal costs, which would be available for purchase after 2 years occupation. Yet the fine print detailed something quite different, a clause that meant freehold costs could rise from £3,000 – £4,000 to £40,000.

The process wasn’t made clear to those buying the property, although controls on having pets on the property were well established. This omission of detail has been highly criticised by many, including the hundreds of people who are now in possession of properties being deemed of ‘zero value’. The extent of this is seen with some banks and building societies denying mortgages to prospective buyers as the original leasehold agreement could require owners to pay ground rent to the freeholder that will spiral out of control.

Not only does this situation make it nearly impossible to sell, move or even outright own the property, it also puts significant restraints on any developments to the property. Leaseholders need permission for any major works, and these come in at around £2,500 for an extension. It is clear that this nasty trend is one that will affect livelihoods nationwide, and often those who are least expecting and vulnerable, those in a rush to get on the property ladder. Government reactions have condemned the actions by developers such as Taylor Wimpey, and have promises to stamp out the abuses in this ground rent scandal.

Whether you are you looking to sell your house now or in the future, you could consider a cash house buyer. We Buy Any Home is here to provide with with a quick cash offer for your property that can see you sell within as little as 7 days.

Free cash offer within minutes, any condition, any location.

Posts Related To Sell House Fast

View all articles
What to Do if There Are Problems with Your House Survey
Are Estate Agent Valuations Free?
Dealing with a Break in your Property Chain
How Long Does It Take to Move House After Offer Accepted?
What Is The Average Cost to Sell A House In The UK? (2024 UPDATE)
Why You Should Sell Your Home Now – Before the January Rush
What Documents Do I Need to Sell My House?
Can You Sell a Derelict Property?
Should You Rent in Retirement?

Get a free cash offer today
Enter your details below

"*" indicates required fields

Hidden
Hidden
Hidden
This field is for validation purposes and should be left unchanged.
crossmenu