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Doubling Ground Rent

If you purchase a new build house or flat you may find that you are now faced with doubling ground rents. This is because you entered into a lease when you purchased your property and a clause in the lease has allowed for the ground rent to be doubled.

This can be a real problem for you not only because your ground rent will double but it can create an issue when you want to sell your property. In fact, this clause should have been flagged by your conveyancer or solicitor when you bought the property.

You are right to be concerned about doubling ground rents but there is action you can take.

What is Ground Rent?

Ground rent is payable when you buy a leasehold flat or house with a clause in the lease. You can read about the difference in our article, Leasehold and Freehold Property Explained. Traditionally, people who live in apartments or flats usually pay ground rent. But it’s become common for new build houses to be sold on a leasehold rather than freehold.

Historically the ground rent collected by a landlord was only a nominal amount and in reality a large amount of leaseholders probably aren’t aware that such a clause exists because payment of the ground rent isn’t pursued.   

More recently there has been a trend of landlords abusing ground rent by including a doubling ground rent clause as a way of demanding higher sums of money over the period of the lease.  These cases are generally seen in new residential developments and some of the country’s major house builders such as Taylor Wimpey have been known to include these clauses in the leases they offer.

If a doubling ground rent clause exists in your lease, the ground rent you pay each year will begin as a relatively small amount, but this amount will double at intervals of 10 or 20 years over the course of your lease. This can result in an annual bill of more than £10,000 within just 40 years and may result in mortgage lenders refusing to lend on properties where this type of ground rent clause exists.

There are obvious financial incentives for a landlord by including these clauses in new leases.  Not only do they provide an ever increasing income from leaseholders during the course of the lease but these clauses and the income they provide also make the freehold title more valuable when and if the landlord chooses to sell.  As a result landlords can be very reluctant to agree to remove a doubling ground rent clause unless the leaseholder agrees to pay a substantial premium.

Why Didn’t I Know About Doubling Ground Rent?

Your conveyancer or solicitor should have highlighted this issue with you when you were in the process of buying the property. If they didn’t they were negligent and you can make a professional negligence claim against them.

Every law firm must have Professional Indemnity Insurance in place in order to continue to practice. This insurance is for a minimum of £2 million to cover claims when solicitors make mistakes and means your claim will be covered by this insurance.

It’s vital to speak to a professional negligence solicitor as soon as possible as there are time limits for making a claim. They also have the expertise to make sure you get the best result possible for your claim.

What Will I Get For Making a Claim?

The rules on compensation here in England and Wales are to put you back in the position you were in before you had the issue.  If your claim succeeds, your compensation will be decided using the difference between the amount you paid for your property and its true value (with the existence of the clause) and the amount demanded by the landlord to remove the doubling ground rent clause from the lease.

This is likely to be a significant amount of money so make sure you contact a professional negligence solicitor who has experience in doubling ground rent claims.

Contact Us Today

Call us to discuss your circumstances so we can help you understand your options. We’re happy to have a free initial discussion with you so you can be clear about your position.

If you need help with a doubling ground rent clause, call our experienced team now. We’ve successfully brought claims on behalf of other people in the same situation.

Call on 0117 926 4121 or make a Free Online Enquiry.