- Posted by Jon Nuttall
- On September 17, 2021
- 0 Comments
Ground Rent is the regular payments made by an owner of a leasehold property to the freeholder or a superior leaseholder, as required under a lease. Ground Rent can be either fixed or escalating. If the payments are fixed, this means that it will remain unchanged throughout the term of the lease. Escalating Ground Rents will increase during the course of the lease. The cost increases can leave some homeowners struggling to sell or mortgage their homes, while their rights to their property can also be at risk if they fall behind on ground rent payments.
In 2019, the CMA (Competition and Markets Authority) launched investigations into leaseholds, because of worries that leaseholders were facing huge and unexpected increases in the cost of buying a freehold or massive increases in Ground Rents, according to the BBC. This week, there has been a monumental change and a glimmer of hope for leaseholders. Countryside Properties, a major house builder, confirmed that leaseholders who have bought homes from them and those who will purchase in the future, will no longer be subjected to Ground Rents that double ever 10 or 15 years. This means a total of three firms have now agreed to change their policies since the start of the investigations, with another two being investigated further.
Andre Coscelli, Chief Executive of the CMA has celebrated the change, stating “No one should feel like a prisoner in their home, trapped by terms that mean they can struggle to sell or mortgage their property,”. He continues, “We will continue to robustly tackle developers and investors – as we have done over the past two years – to make sure that people aren’t taken advantage of.”
With an estimated 4.6 million leasehold dwellings in England between 2019 and 2020, these changes and progression made by the three firms will be a massive financial relief for leaseholders and a step in the right direction for all major house builders to comply moving forward.
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