Property News

Under the terms of most leases the leaseholder is obliged to pay an annual ground rent to the landlord which increases at several points over the term of the lease. While the rent payable under many modern leases increases in line with inflation, we have identified a number of leases under our management where the rent may increase at a much higher rate than current inflation rates. There is some evidence that the level of future ground rent may hinder these leaseholders’ ability to sell or re-mortgage their property.

While there is no legislation in place requiring landlords to amend these lease terms, the government are encouraging landlords and housebuilders to voluntarily change leases where the ground rent doubles more frequently than every 20 years (“onerous ground rents”).

Amendment of leases other than Countryside or Taylor Wimpey Leases

In 2019 we started a voluntary program of contacting leaseholders whose leases contain onerous ground rents with an offer to replace these with RPI linked ground rents. If your lease contains an onerous ground rent, we will contact you with an offer to have your lease amended.

Countryside and Taylor Wimpey Leases

Countryside Properties Plc and Taylor Wimpey Plc have recently undertaken to vary any leases which contain onerous ground rents. In light of this, we will now be varying all leases which were originally issued by Countryside Properties Plc, Taylor Wimpey Plc or a subsidiary of those companies and which contain onerous ground rents (a “Countryside Lease” or a “Taylor Wimpey Lease”) so that the ground rent is fixed at the initial sum and will not increase.

If you hold such a lease and have already completed a deed of variation with us (to convert your onerous ground rent to one linked to RPI) you will be eligible for a further deed of variation to convert this RPI linked ground rent to a fixed ground rent.

The variation will see your ground rent revert to the initial sum stated within the lease (unwinding and refunding any reviews that have already taken place) and will ensure the rent stays the same for the entire lease length. Whether you choose to vary your lease or not, we will not implement any ground rent uplifts and will instead continue to charge the initial ground rent sum only.

If you are a former leaseholder of a Countryside Lease or a Taylor Wimpey Lease who paid an onerous ground rent to your landlord that had increased beyond the initial sum, you are entitled to a refund of any excess sums paid. Please contact us on the details below to instigate this claim.

Process

Regardless of which scheme your lease falls into, the landlord will not charge a premium for the amendment of your lease or require you to pay any of their costs for the time and work incurred in respect of the amendment of your lease. The Landlord will also make a contribution towards your legal fees*.

Given the administrative burden of this process, we will be writing to leaseholders over a period of time to make these offers. There is nothing that you need to do at this stage to request the variation of your lease. If your lease meets the criteria set out above, the amendment will be offered to you in due course.

If you are concerned about your lease and we have not yet contacted you, please email us at: TYD@piermanagement.com

*Up to a maximum of £750 (incl VAT) per leaseholder