The National Leasehold Campaign and the leasehold knowledge partnership have succeeded in getting a great deal of press coverage . However, the stream of negative press coverage they have been able to generate has unfortunately meant that many lessees are in a worse position than they were when the campaign got under way.
For example in their recent post a lessee with a ground rent of £250 per annum rising every 5 years in line with the RPI has now found that lenders will not lend with such a review and therefore unless he sells to a cash buyer will not be able to move on. This change in view on the lenders' behalf is a reaction to the press coverage over 10 years doublers and had landed many lessees with a problem which they didnt have until the campaign got under way
10 year doublers are indeed a problem and the CMA are of course dealing quite firmly on this matter however the campaigning has implied that ground rents linked to the RPI are somewhat onerous. This is rather bizarre . It is a perfectly reasonable expectation of a landlord/investor to want to preserve the purchasing power of their investment, or for employees to expect the employer to increase pay rates in times of inflation . We also expect the state pension to rise each year by the RPI - if it didn't there would be riots on the street
Making everything a problem to bash the freehold owning community with will not deliver what is really needed. What is needed is a focused campaign concentrated on trying to get professional regulation over managing agents, clarity in lease terms as to what the ground rent is and its review pattern and finally understanding what the costs will be for a lease extension either now or at certain points in time . All of this to be made clear PRIOR to entering into the lease
There is nothing wrong with a ground rent. It is a financial burden on a property and needs to be valued PRIOR to taking on the lease. A ground rent of £500 doubling every 10 years for the next 6 anniversaries is indeed sobering BUT if the price of the flat was reduced by some £60,000 as a consequence then it can be viewed in a differing light and may appeal to certain types of buyer. In the commercial world ground rents are seen as a form of funding and provided the terms are understood and valued appropriately they have their place
A favourite line trotted out by the campaigners is that ground rent is for no service. That is quite correct and it is a pure profit stream to the freeholder and must therefore be valued and reflected in the price paid. But because buyers and their advisors did not consider it properly they want the rent capped at £250 even though the initial rent shown clearly in the lease was perhaps say £350. It is a highly confrontational stance and what they fail to appreciate is that to get their way it would require contracts to effectively be torn up , the government to face a significant challenge on human rights and for the world to wonder what other contracts will now be torn up by the UK government to appease people who claim it's all unfair as it was written in "legal speak"
Tenants taking on an AST almost never represented legally . They sign contracts written in "legal speak" where they may pay 50% of their income each month - they may feel justified if ground rents get capped to advance an argument for the capping of rents notwithstanding they signed a tenancy at a higher rent
Then we move on to cladding have a look at this table produced at a recent conference - so aside from the dreadful Grenfell and another similar incident in China in 2011 we are faced with 2 deaths in 10 years.