In the past, ground rent in long leasehold properties were fixed at a moderately low price of £1 to £50 annually. Since the price was relatively small, freeholders may decide not to collect at the end of the year. In recent times (about a decade ago), new ground rent clauses began to emerge. Some in long leasehold agreements for newly built residential properties. Sometimes, they were between £250 to £500 annually. And it is likely to double every 5 to 10 years.
This led to a robust conversations among stakeholders (tenants, freeholders, developers, the Government, Mortgage firms, Insurance companies) on what was best for everyone. Soon, as the exchange grew into summits and formal conferences, the matter was tagged ground rent scandal. It was hoped that affected homeowners will be given a break. Lately, some well known solicitors or legal advisers have come out to give solution tips on how to handle ground rent issues.
Below are four available options:
1. House/estate developer’s compensation: A substantial amount of money have been set aside by certain developers or freeholders as compensation for homeowners whose ground rent doubles every 5 to 10 years. The ones who need much succor during the ground rent scandal are catered for. Though these estate businesses did not accept or admit to any misdeeds; in a way, the gesture has helped to lessen the financial obligations of most leaseholders. Other real estate developers are yet to follow suit. It is hoped more developers will join in.
2. Amendment of existing ground rent clauses: Certain clause like: A homeowner, not being able to make changes, alteration or improvement, to avoid being penalized is currently being amended to allow leaseholders make changes.
3. A homeowner can sue their solicitors or legal advisers for damages: In cases where a homeowner’s solicitor fails to give concrete advice on the ground rent clause, the homeowner has the option to take legal action against his counsel, and sue for damages.
With these highlights, there is light at the end of the tunnel for homeowners.