Have you bought a leasehold property, which is subject to increases in Ground Rent that were not explained to you at the time you acquired the property? If so you may have grounds for claiming compensation.
What is Ground Rent? It is generally an annual payment made by a leaseholder to a freeholder (who has outright ownership of the property) under the terms of a long-term lease, which is meant to reflect the value of occupying the land.
In what circumstances can Ground Rent payments arise? It is not uncommon, for the sale of new build properties to be on a leasehold basis, with the house builder retaining ownership of the freehold, and the lease containing Ground Rent obligations. The house builder may subsequently sell the freehold title to third parties, such as investment companies.
Flats are also commonly sold on a leasehold basis, with the lease containing Ground Rent Obligations.
What problems could there be with payment of Ground Rent? There are various potential problems including:
If the Ground Rent is greater than £250 then this might prevent the right to acquire the freehold or extend the lease, which could significantly affect the property’s value.
If the lease includes a provision which allows the freeholder to periodically review the Ground Rent and increase it at each review, then this could be a problem, if the provision allows Ground Rents to double or increase significantly, and the implications of the review were not explained to you at the time you purchased the property.
What can you do? You may have a claim against the solicitors or licensed conveyancer that you instructed to advise on the purchase of the property. If they did not provide clear advice about the existence and implications of an onerous Ground Rent clause, then you may have a claim for negligence or breach of contract against your adviser.
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