Some leaseholders have found themselves in situations where they face excessive amounts of ground rent due to onerous clauses in their leases, with many finding difficulty re-selling or mortgaging their properties. Many are now opting to bring a claim for professional negligence against the solicitor that acted on their purchase for failing to advise them of the problems with the ground rents.
If you are a leaseholder and you think you may have an escalating ground rent clause in your lease, you may be able to bring a claim. There are a number of things you will need to consider:
Considerations when making a ground rent claim
What were you told when you purchased the property?
You need to consider what advice (if any) your solicitor gave you about ground rent at the time of your purchase.
Did they inform you of the starting price of the ground rent? Did they tell you that it was going to increase? Did they tell you how the future ground rent would be calculated?
If they failed to give you clear advice about the existence or effect of an onerous ground rent clause you may have a claim.
What kind of ground rent clause do you have?
There are different types of escalating ground rent clauses within leases that are causing problems for leaseholders. Your lease may have one of the following:
- Doubling clauses – for example, a clause that allows the ground rent to double every 10, 15 or 20 years.
- Retail Price Index (RPI) clauses – with RPI clauses, the ground rent could be set to increase with the RPI every 10, 15 or 20 years.
Have you tried to sell the property?
These onerous ground rent clauses have resulted in some leaseholders finding it difficult to sell their properties. Many buyers are now aware of the problem and will not buy properties with onerous ground rent clauses.
If you have tried to sell your property and been unsuccessful, it may be important to consider the effect of your ground rent clause on this.
Can you purchase the freehold or amend the ground rent clause?
Bringing a ground rent claim will not directly resolve the issue of the onerous ground rent clause. However, it may help with providing the funds to rectify the situation.
The issue could be resolved by:
- Purchasing the freehold of your property – as you are not currently the freehold owner you have to pay a ground rent to the freehold owner. If you were to purchase the freehold you would no longer have to pay any ground rent.
- Amending the terms of the lease – you could try to renegotiate the lease to remove or amend the ground rent clause or you could seek to extend your leasehold interest which would offer the possibility of reducing the ground rent – there is likely to be a fee in order to do this
Some freeholders have recently been offering these solutions to leaseholders. If you have received a similar offer from your freeholder you may wish to consider making a claim against your solicitors which could help you to fund one of the options mentioned above.
Some other things to consider
You may want to consider talking to other neighbours in the area to see if they are in a similar situation to you or to see if they were given the option to purchase their freeholds.
How Can Nelsons Help?
Charlotte Dowdy is a Paralegal in our Professional Negligence team.
Our expert team are experienced in all types of professional negligence claims, including ground rent claims and claims against solicitors. If you feel that you may have a claim for professional negligence then we can evaluate your case and assess your chances of success and the timescales and costs involved.
For more information, please contact Charlotte or another member of the team in Derby, Leicester or Nottingham on 0800 024 1976 or via our online form.