Nationwide’s £54m ground rent portfolio

Nationwide Building Society has a portfolio of ground rents worth more than £54m – despite it publicly attacking builders who sell freeholds, it has been claimed. 

 

There has been a groundswell of opinion against developers over the past couple of years for selling freeholds to investors. The issue has been discussed in Parliament over the past six months and following media reports earlier this year, the building society attacked investors for charging exorbitant ground rents. However, its own staff-pension fund invests in leases itself and has a portfolio of ground rents worth £54m, the Daily Mail has reported. 

 

Nationwide became the first major lender to refuse to offer mortgages on properties with 'onerous' leasehold terms. It has imposed strict caps on the amount developers can charge, and will stipulate a minimum lease term of 125 years for flats and 250 years for houses. 

 

Nationwide said that none of the property investments made in its pension fund was the type of punitive deals it is clamping down on.

 

Chief product officer Chris Rhodes said he hoped its decision would shame others into doing the same.  

 

He said: “We don't believe customers truly understood what they were buying. Builders were taking large amounts of value that was hidden from the customers when they were buying.  “We would hope that the rest of the industry follows us, because it's in the interests of the home buyers.”