Ground Rent Scandal

Ground rent is an annual payment made by the Leaseholder to the Freeholder. In the past these were low and at peppercorn rate. However it was highlighted by guardian Money last week that, "developers have begun selling houses as leasehold that would traditionally have been freehold, with clauses that allow the ground rent to rise dramatically in later years". It was claimed that one of the major new build developers Taylor Wimpy had incorporated a clause in their leases which provided that the ground rent would be doubled . For instance if a Lease was purchased for  a term of 125 years a clause has been inserted in the Lease which provides that the ground rent would double after a certain amount of years have elapsed.    It has been argued by many that the introduction of the doubling ground rent clauses into Leasehold contracts has caused the values of the property to depreciate and more importantly it has made the properties unsellable as mortgage lenders will not lend on these basis.    A meeting was held which more than 70 stakeholders, MPs and peers attended to discuss the issues arising in respect of the Ground rent scandal. Taylor Wimpy has not attended this meeting but responded by saying that they are carrying out  reviews into their ground rent terms which is due to be concluded in the New year.    Taylor Wimpy has denied that the properties are unsellable but ceased using this practice.     In a statement to the APPG chairmen MPs Sir Peter Bottomley and Jim Fitzpatrick , the company stated that there is no evidence to suggest that the ground rent clauses has directly hindered the saleability and mortgageability although the lender will always take in to consideration Lease payments in the affordability criteria.    Please refer to the following websites for more information:  
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