Five major developers abolish ground rents on new flats

SandyN21

Not sure if this has been posted

https://www.independent.co.uk/news/business/leasehold-ground-rents-abolished-taylor-wimpey-barratt-b1768551.html

tacpot12

No, I'd not seen this. This could be very good news for the future owners of flats, but I do wonder if the lack of ground rents will cause problems for freeholders in the future. Ground rents were never an issue when they were set at £10 per annum and could never increase. It was only when developers started to see ground rents as money making opportunity that problems arose. 

Now we just need similar reforms in the leasehold charges for house and rent charges space, and for the unfair practises to be outlawed so that no developer can try to rip their customers off. 

anselld

I guess it is good news but not sure it fixes the whole problem.  Ground rents were at least fixed by the lease and not subject to possible exploitation by the freeholder.  They were known at the point of purchase if anyone cared to read the lease.  It is the other fees and charges of a variable nature where freeholders were able to exploit and this hasn't changed.

annetheman

This is good news but I wonder how difficult it will be for current owners to negotiate themselves out of leases that double GR, currently they can only get out of them with the "goodwill" of the freeholder/developer. 

Also, Barratt announced they were setting lease terms at 999 years for all new leases. I expect the others will follow suit.


The major benefit of this is that without GR exploitation, and arguably even RPI-level increase every year is exploitation IMO, the cost of marriage value/lease extensions will be lower, since there is nothing to be "lost" by the freeholder in increasing lease terms and thus nothing to compensate them for.

This could be the end of leasehold being of any financial benefit to freeholders; as an industry rep said, if they aren't able to "sweat the asset", there is no use in keeping them [freeholds]. So naturally, commonhold adoption may increase as a result in blocks...


Well overdue and in my opinion not at all unrelated to the current CMA investigation, in which all big 5 are facing HUGE compensation payouts for their exploitation of leaseholds.

princeofpounds

Agree - this is a decent move, but ground rents were never the biggest problem apart from a) the escalation issue and b) the recent 'discovery' of the AST trap.

What the headline doesn't make clear is that there appears to be some proposed change to management arrangements that will be set up too, but the devil is in the detail on that one... not that meaningful unless the change is systematic.

Personally I have a lot of sympathy with the notion that the solicitors are more at fault than the building companies are, for not explaining properly to clients what they were actually buying with these arrangements. And I think the competition investigation is somewhat misconceived as 'mis-selling' is a concept that should imply some kind of duty of care to the customer that existing legislation specifically exempted housing transactions from precisely because the buyer is supposed to have expert legal advice. That's not to say there wasn't plenty of lying going on, but that's a different thing.

Anyway, the whole mess needs to get improved one way or another. Only about 20 years too late - well done civil service and government, responsive as ever...