Ground Rent increase (Huge) - leasehold

[maxorg]

I own a flat with lease - was 99 years in 1985 and I bought it in 2001 - The lease has a term inside that my solicitors never mentioned which means that the ground payable has gone from £70 p.a. per flat to £850 p.a. per flat (10 in block). This is because apparently it is based on the value of the property. The increase was supposed to be by 2 months notice in 2006, but they (SIMARC) only served a notice in 2007 and have never claimed the increase, but are now seeking this plus any arrears.... help?

[Ed999]

You should immediately seek the assistance of a solicitor.

You have, potentially, a huge negligence claim against the solicitors who acted for you when you bought the flat. They are insured against negligence, so you will be claiming, in effect, against their insurers.

You have a complex case on your hands, so don't try any self-help remedies. Go see a solicitor: they usually enjoy taking a case that casts one of their competitors in a bad light!

You have what is known in the business as a "Blue Dolphin" lease: one that has rent increases tied to the RPI or some other Index. It's a known hazard of leasehold cases, and your solicitor should have spotted it and warned you in writing of the dangers.

Do not write back to the landlord. Leave it to your new solicitors to deal with that aspect of the situation.

Warn your fellow leaseholders. Try to form an action group, and a fighting fund; and go to see the same solicitor as a group - or nominate a couple of the leaseholders to liase with the solicitor on behalf of you all, since you are all in the same mess!


Advice & opinions on this forum are offered informally, without any assumption of liability. Use your own judgment. Seek advice of a qualified and insured professional if you have any doubts.

[Conniff]

I thought ground rent was stipulated in the lease - have a read.

Are you sure this isn't inclusive of the service charge as well.

[Aequitas]

So far as I can recall it used to be the case and may still be the case that if a lease provides that the ground rent can at any time exceed two thirds of the rateable value, then

1. It is illegal to charge a premium for the grant of the lease and any premium paid may be recovered

2. It is illegal to charge a premium for the transfer of the lease and any premium paid may be recovered

3. Anyone who draws up such a lease is guilty of an offence

[Ed999]

If maxorg has bought a lease subject to an illegal premium (under the Rent Act 1977) then he has a second negligence claim against the solicitor who acted for him when he bought the flat.

The law regarding illegal premiums was altered in the 1980s. It now depends on the date that the lease was granted. But I cannot recall the relevent date off hand.


Advice & opinions on this forum are offered informally, without any assumption of liability. Use your own judgment. Seek advice of a qualified and insured professional if you have any doubts.

[Aequitas]

I seem to recall that the statutory provision involving at least one amendment to an exisiting act was a bit tricky to follow. When drafting leases with rising ground rents I always inserted a proviso that the rent should never exceed a figure that would make a premium illegal. The OP should check his lease does not contain such a proviso.