Spiralling ground rents ‘engulfing’ flat owners, investigation claims
Spiralling ground rents could “engulf” flat owners and might lead to their homes being “virtually worthless”, an investigation has claimed.
The study by The Guardian reported that they were inundated with apartment owners who are struggling to sell their homes because banks are refusing mortgages due to clauses in leaseholds for fixed ground rent reviews every 10 years.
It claimed that traditional 999-year leases were increasingly unlikely to attract “peppercorn” ground rents, and reported the case of a flat in Solihull where ground rent had spiralled to £8,000 a year.
One reader told the investigation that he was left unable to sell his apartment because future ground rent increases meant buyers were being refused mortgages.
They told the newspaper: “We found out that the ground rent review clause in our lease is preventing lenders approving a mortgage. We are now trapped with an apartment we cannot sell.”
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