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Ground rent scandal - PETITION

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24

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  • ASGM
    ASGM Posts: 4 Newbie
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    Freeholders have been enjoying this ground rent regime for too long, I think if anybody has to ‘pay’ it should be them

    Laws change constantly, the change this petition proposes is about fairness and justice and moving on from a feudal, rotten system

    And you haven’t answered my point: is it fair for old leaseholders to be at great disadvantage if ground rent is abolished only for some as the government plans?
  • eddddy
    eddddy Posts: 16,441 Forumite
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    edited 19 March 2018 at 5:29AM
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    ASGM wrote: »
    And you haven!!!8217;t answered my point: is it fair for old leaseholders to be at great disadvantage if ground rent is abolished only for some as the government plans?

    I think a lot of people would argue it's fair because of free market economics.

    As an example,

    A developer might currently sell new propeties for for £150k because the leaseholders have to pay £500 per year ground rent.

    After the new legislation, the developer might sell new properties of the same type for £160k because the ground rent is zero.


    (Using this example, if the government abolished ground rent on existing leaseholds, there would be a whole different set of fairness issues - they would be forcing freeholders to give 'old' leaseholders a free gift of £10k, but 'new' leaseholders would get nothing.)
  • davidmcn
    davidmcn Posts: 23,596 Forumite
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    ASGM wrote: »
    Freeholders have been enjoying this ground rent regime for too long, I think if anybody has to ‘pay’ it should be them
    I'll say it again - it is not possible for Parliament to abolish anybody's property rights without them being compensated. If your petition is to ask Parliament to do something which is impossible for them to do then it seems a waste of everybody's time.
    And you haven’t answered my point: is it fair for old leaseholders to be at great disadvantage if ground rent is abolished only for some as the government plans?
    Yes, because the value of the leaseholder's interest takes into account the rent. If it's an onerous rental clause then that will discount the price. If buyers aren't getting adequate advice about that, then they already have remedies available against their professional advisers.
  • Richard_Webster
    Richard_Webster Posts: 7,646 Forumite
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    Yes, because the value of the leaseholder's interest takes into account the rent. If it's an onerous rental clause then that will discount the price. If buyers aren't getting adequate advice about that, then they already have remedies available against their professional advisers.

    The valuation should take the rent into account but the problem is that builders get away with these awful clauses because people are so in love with the new build in question that they are not prepared to walk away because the house/flat that is being sold is too expensive. Someone else comes along and buys it using some supposedly cheap "online" conveyancer who doesn't really give proper advice about the issue.

    Sadly, while people are prepared to accept these clause builders get away with them.
    RICHARD WEBSTER

    As a retired conveyancing solicitor I believe the information given in the post to be useful assuming any properties concerned are in England/Wales but I accept no liability for it.
  • kinger101
    kinger101 Posts: 6,282 Forumite
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    Richard_Webster wrote: »
    Sadly, while people are prepared to accept these clause builders get away with them.

    These types of leasehold agreements have now been banned for houses. The government did respond pretty quickly to be fair.
    "Real knowledge is to know the extent of one's ignorance" - Confucius
  • Norman_Castle
    Norman_Castle Posts: 11,871 Forumite
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    When new, leasehold properties would have been cheaper because someone else would have paid for the freehold. Is it fair to remove the annual ground rent cost of older properties at no cost to the leaseholders? One option could be forcing freeholders to sell the freehold to leaseholders at the market rate.
  • ASGM
    ASGM Posts: 4 Newbie
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    I don’t think builders will be able to increase the prices of new flats to compensate for the loss of ground rent

    In fact after the announcement on new leases builders’ share prices have dropped significantly

    The only obvious and unfair consequence of this will be a negative effect on existing leases with ground rent

    Re the fact that existing freeholders’ income is basically untouchable and new regulations can only adjust something wrong for future contracts, there are plenty of cases to prove this theory wrong

    I will use just one example: slavery. When this has been abolished, I don’t think the new law said sorry this is going to be applicable only for new borns, while existing slaves will remain slaves cause you know we can’t touch the acquired rights of their owners
  • davidmcn
    davidmcn Posts: 23,596 Forumite
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    ASGM wrote: »
    Re the fact that existing freeholders’ income is basically untouchable and new regulations can only adjust something wrong for future contracts, there are plenty of cases to prove this theory wrong

    I will use just one example: slavery. When this has been abolished, I don’t think the new law said sorry this is going to be applicable only for new borns, while existing slaves will remain slaves cause you know we can’t touch the acquired rights of their owners

    Not sure slavery is a great example, considering that slave-owners were given compensation when it was abolished in the UK!

    As I pointed out above, it wouldn't be compliant with the ECHR for Parliament to remove property rights without compensation.

    More realistically you could provide for existing rents to be phased out gradually, by e.g. requiring them to be redeemed at the time of the next purchase (i.e. at a point when the leaseholder has some liquid assets floating about).
  • economic
    economic Posts: 3,002 Forumite
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    davidmcn wrote: »
    Not sure slavery is a great example, considering that slave-owners were given compensation when it was abolished in the UK!

    As I pointed out above, it wouldn't be compliant with the ECHR for Parliament to remove property rights without compensation.

    More realistically you could provide for existing rents to be phased out gradually, by e.g. requiring them to be redeemed at the time of the next purchase (i.e. at a point when the leaseholder has some liquid assets floating about).

    That’s actually a very good idea. It’s the leaseholders mistake for buying the property in the first place. There’s nothing wrong with ground rents. In fact it can be thought of as a form of financing. It appears the leaseholders who complain are a bit too dim to realise it’s sometimes an expensive form of financing plus they may have paid a price comparable to an equivalent freehold property.

    Leaseholders need to accept they made a mistake. They should have got a surveyor who should have explained if they were over paying or underpaying which is a function of the ground rent terms. The only recourse leaseholders have is possibly the surveyor.

    A solicitor would most likely have done their job. Their job is to state what the terms are and what leaseholder will have to pay in ground rent. Not explain how it’s such a bad deal as that’s where the price comes in and so that’s where the surveyor comes in.
  • economic
    economic Posts: 3,002 Forumite
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    Of course why bother with a surveyor when you are buying a new build? That!!!8217;s what a buyer would typically think and that!!!8217;s their own mistake. Always get a proper survey done and crucially to find out whether you are overpaying or not!!!
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