Fleecehold

A new law has passed but it doesn’t scrap or cap existing ground rents. BBC article doesn’t do a good job of describing what it does include.

www.bbc.co.uk

Leasehold reforms become law but without ground rent cap

Laws aimed at making life fairer for England and Wales leaseholders are rushed through Parliament.
www.bbc.co.uk www.bbc.co.uk

Edit - apparently makes it cheaper to extend leases to, a now standard, 990 years.

www.gov.uk

Leasehold reforms become law

The Leasehold and Freehold Reform Act has become law today.
www.gov.uk www.gov.uk
 
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Stu999 said:
A new law has passed but it doesn’t scrap or cap existing ground rents. BBC article doesn’t do a good job of describing what it does include.

www.bbc.co.uk

Leasehold reforms become law but without ground rent cap

Laws aimed at making life fairer for England and Wales leaseholders are rushed through Parliament.
www.bbc.co.uk www.bbc.co.uk

Edit - apparently makes it cheaper to extend leases to, a now standard, 990 years.

www.gov.uk

Leasehold reforms become law

The Leasehold and Freehold Reform Act has become law today.
www.gov.uk www.gov.uk
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Was passed very late last night so i wouldn't expect the finer details untill Tuesday.

Either way it was manifesto pledge that failed.and one that leaves a lot of leaseholders as mortgage prisoners or they can only sell to cash buyers. I've fallen fowl of a change of bank lending criteria .
 
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Guess it's a step in the right direction but seems like a massive failure considering the reforms which had been mooted. Just another example of this government completely failing to meet the country's challenges, even on their own terms.
 
mattyfez said:
It's a baby step in the right direction, but as said above, there should be much stricter rules on transparency and fairness for management fees...

I mean in some respects, it's appropriate the management company builds up a 'rainey day' fund for big jobs like roof repairs or whatever in the case of a shared building or block of flats, but there should be annual accounts published stating what has been spent on what, what's left over for emergencies, and also clearly stating what the management companies admin charges are.
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100%. A good start would be listing it on the invoice as that.
 
So... one of the objections about banning ground rent is apparently it's some human rights violation of freeholders. There seems to be that there is an obvious answer to this as depriving them of an asset is supposedly a violation of their human rights: We should tax ground rent payments like cigarettes are taxed, payable by the freeholder.
 
drakioned said:
So... one of the objections about banning ground rent is apparently it's some human rights violation of freeholders. There seems to be that there is an obvious answer to this as depriving them of an asset is supposedly a violation of their human rights: We should tax ground rent payments like cigarettes are taxed, payable by the freeholder.
Click to expand...
So as a leaseholders I can sort of understand the freeholders argument, they invested with the knowledge of a return on ground rents. However , the ground rents that double or go up with RPI are just terrible.

At the very least they should have been capped at a percentage of property value or a ceiling limit. Mines now £267 a year but is review every 10 years and goes up in 2026,. Going by an RPI calculator from 2016 to 2026 that will be north of £400 and becomes totally out of the realms of anyone obtaining a mortgage. You all become a mortgage prisoner in your own house or can only sell cheap to a cash buyer.
 
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drakioned said:
So... one of the objections about banning ground rent is apparently it's some human rights violation of freeholders. There seems to be that there is an obvious answer to this as depriving them of an asset is supposedly a violation of their human rights: We should tax ground rent payments like cigarettes are taxed, payable by the freeholder.
Click to expand...

They could have smacked it down to some insignificant numbers like £1 a month and not violated their "human rights".

I bet there are MPs sitting on the boards of these management companies or major shareholders, so they don't want it to hurt too much.
 
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so on a pack of 20 - the taxes are 16.5% of the retail price plus £6.33.

I'm thinking maybe 10% of the ground rent + £500. We see how many freeholds are left after 6 months.
 
Bald-Eagle22 said:
So as a leaseholders I can sort of understand the freeholders argument, they invested with the knowledge of a return on ground rents. However , the ground rents that double or go up with RPI are just terrible.

At the very least they should have been capped at a percentage of property value or a ceiling limit. Mines now £267 a year but is review every 10 years and goes up in 2026,. Going by an RPI calculator from 2016 to 2026 that will be north of £400 and becomes totally out of the realms of anyone obtaining a mortgage. You all become a mortgage prisoner in your own house or can only sell cheap to a cash buyer.
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If its anything like my last GR increase they'll simply double it. Nice round figure. Because they can.
 
Bald-Eagle22 said:
So as a leaseholders I can sort of understand the freeholders argument, they invested with the knowledge of a return on ground rents.
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But really this isn't their return.

A freeholder sells/grants the leases for a consideration.

This usually happens when the block is created, either new build flats or conversion of a property. The freeholder builds/acquires the freehold property for an amount, them sells/grants lease's, usually doubling their money in the process.

Ground rent is complete ********, service charges I can understand, yes some management companies arrangements are dubious, sometimes absolutely scandalous, but at least there is an objective purpose, but ground rent????

As I posted at the start of this thread there is no such thing in Scotland they seemed to have managed to sort their laws out.
 
Blackjack Davy said:
If its anything like my last GR increase they'll simply double it. Nice round figure. Because they can.
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They can't just "double it", however it's calculated has to be mentioned in your leasehold documents. Granted the calculations aren't always straightforward. Ours is something like the greater number of the current GR or the RPI divided by some value multiplied by the current GR.
 
Ill be leaving f it a few weeks and getting g in touch with the solicitor who advised me about a compulsory lease extension, seems bonkers when my lease is 990 years but if it's the only way to kill the ground rent them it's going to be the way ahead. Was quoted around 12k , if I'm reading it correctly now it should be half if that now .
 
Semple said:
They can't just "double it", however it's calculated has to be mentioned in your leasehold documents. Granted the calculations aren't always straightforward. Ours is something like the greater number of the current GR or the RPI divided by some value multiplied by the current GR.
Click to expand...
However it was calculated it was exactly doubled it went from £50/year to £100.
 
I think people are going to be shocked that its not cheap to run a block of flats, get insurance, repair things, keep communal areas clean and tidy etc even when you take out a leaseholder.
 
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