© 2025 News On The Block. All rights reserved.
News on the Block is a trading name of Premier Property Media Ltd.
© 2025 News On The Block. All rights reserved.
News on the Block is a trading name of Premier Property Media Ltd.
A storm has broken out over a clause in the ground rent of a modest Midlands flat which could see it rise from its present level of £8,000 – more than 10 per cent of its guide price – to a staggering £8 million by 2120, thanks to a gearing mechanism that doubles the rent every 10 years.
Barnard Marcus has withdrawn a flat from auction amid claims the property’s ground rent could spiral to £8 million by 2120.
The case was raised in the House of Commons by MP Sir Peter Bottomley, who claimed the sellers were apparently “withholding essential information of penal ground rent provision that make the premises worthless”.
The flat in Blythe Court, Solihull, had a ground rent of £250 backdated to 1961 and geared to double every 10 years. The rent currently stands at £8,000 a year – more than 10 per cent of the property guide price, while in 2021 it will increase to £16,000 and in 2031 it will reach £32,000.
“The case is a vivid reminder of how compound interest can turn very small sums into very large ones,” said David Horan of leading real estate lawyers Hogan Lovells in a blog on the company’s website.
“If tenants and leaseholders are offered fixed rent increases, they should tread carefully and make sure they understand what they are signing up to.”
Martin Paine, director of Blythe Court’s freeholder, Circle Residential Management Ltd, said in a statement: “While the terms of the lease at Blythe Court are not uncommon and were advised by our legal team at the time, we understand the need for a more ethical approach to charges, in line with our company philosophy.
“Although we have tried to give direction to owners in the past, we will now start a more formal dialogue with the affected leaseholders.”