{"id":16954,"date":"2017-05-10T13:29:18","date_gmt":"2017-05-10T12:29:18","guid":{"rendered":"http:\/\/www.propertysurveying.co.uk\/newsletter\/?page_id=16954"},"modified":"2020-07-08T15:31:46","modified_gmt":"2020-07-08T14:31:46","slug":"nationwide-takes-ground-rent-scandal","status":"publish","type":"page","link":"https:\/\/www.propertysurveying.co.uk\/newsletter\/?page_id=16954","title":{"rendered":"Nationwide takes on the ground rent scandal"},"content":{"rendered":"<p>The \u00e2\u20ac\u02dcground rent scandal\u00e2\u20ac\u2122 has caused some shocking headlines in recent months:<\/p>\n<ul>\n<li><em>Taylor Wimpey sold our freehold \u00e2\u20ac\u201c it will cost \u00c2\u00a340k to buy it back<\/em><\/li>\n<li><em>Flat owner reports being trapped in property valued at \u00c2\u00a3NIL just six years after being built<\/em><\/li>\n<li><em>\u00c2\u00a31k fees to freeholder for permission to build extension<\/em><\/li>\n<li><em>\u00c2\u00a335k quote to buy freehold on Bovis house built a year ago<\/em><\/li>\n<li><em>Solicitors could face \u00c2\u00a3578m in claims for professional negligence following leasehold ground rent scandal<\/em><\/li>\n<\/ul>\n<p>The Telegraph recently illustrated how a ground rent starting at \u00c2\u00a3250 could escalate to \u00c2\u00a369\u00c2\u00a0trillion towards the end of one property\u00e2\u20ac\u2122s 999 year lease.<\/p>\n<p>An estimated 40 per cent of new homes built by several of the UK\u00e2\u20ac\u2122s big builders are sold on leasehold tenure. The failure of some estate agents and solicitors to bring potentially ruinous ground rents to the attention of purchasers has been widely criticised, but Nationwide Building Society has made a surprise move to protect its members.<\/p>\n<p>As the world\u00e2\u20ac\u2122s largest building society and one of the UK\u00e2\u20ac\u2122s top three mortgage providers, Nationwide has announced that it will not lend on new build properties with escalating ground rents \u00e2\u20ac\u201c a move that has been roundly applauded by property professionals.<\/p>\n<p>Nationwide has reacted to the practice of including leasehold clauses which allow the application of multipliers over short intervals by linking the escalation of ground rent to a verified index, such as the Retail Price Index. The maximum acceptable ground rent will be capped at 0.1 per cent of the property\u00e2\u20ac\u2122s value. It will also impose a minimum lease term for new build transactions of 125 years for flats and 250 years for houses.<\/p>\n<p>Ground rents are not the same as service charges \u00e2\u20ac\u201c they do not offer anything in return &#8211; but they are a valuable commodity to those in the business of purchasing them from the big developers.\u00c2\u00a0 There is no justification for houses being sold as anything other than freehold and there is a legal structure in place that would enable flats to be sold as commonhold, but properties on new build estates are still being sold as leasehold.<\/p>\n<p>Nationwide\u00e2\u20ac\u2122s spokesman said: \u00e2\u20ac\u0153We are doing this to address the practice of using leasehold tenure where this is unnecessary, particularly for new-build houses, and to ensure that onerous leasehold terms, including ground rents, are properly considered and controlled in order to safeguard our mortgage members. Nationwide is taking a proactive, leading position on this issue to address a significant risk facing our members and to challenge what we believe to be poor practice in the new-build market.\u00e2\u20ac\u009d<\/p>\n<p>Taylor Wimpey has announced that it has set aside a \u00c2\u00a3130m compensation fund for those caught in the \u00e2\u20ac\u02dcground rent trap\u00e2\u20ac\u2122, but the cost of making a legal challenge may make it difficult for some leaseholders to obtain a fair ruling. Peter Bottomley MP has criticised one company which backdated the terms of its lease through a deed of variation to 1961 &#8211; when the property was built. The new clause doubled the ground rent at Blythe Court, Coleshill near Birmingham, every ten years. So from an initial \u00c2\u00a3250 in 1961 the ground rent for the \u00c2\u00a385,000 property increased to \u00c2\u00a38,000 by 2011, when it was purchased by a new owner who was not aware of the clause.<\/p>\n<p>For professional advice on property in Birmingham contact <a href=\"http:\/\/www.propertysurveying.co.uk\/WESTMIDLANDS\/birmingham.html\">www.PropertySurveyors.co.uk<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>The \u00e2\u20ac\u02dcground rent scandal\u00e2\u20ac\u2122 has caused some shocking headlines in recent months: Taylor Wimpey sold our freehold \u00e2\u20ac\u201c it will cost \u00c2\u00a340k to buy it back Flat owner reports being trapped in property valued at \u00c2\u00a3NIL just six years after being built \u00c2\u00a31k fees to freeholder for permission to build extension \u00c2\u00a335k quote to buy &hellip; <a href=\"https:\/\/www.propertysurveying.co.uk\/newsletter\/?page_id=16954\" class=\"more-link\">Continue reading<span class=\"screen-reader-text\"> &#8220;Nationwide takes on the ground rent scandal&#8221;<\/span><\/a><\/p>\n","protected":false},"author":2,"featured_media":0,"parent":22327,"menu_order":0,"comment_status":"closed","ping_status":"closed","template":"","meta":{"footnotes":""},"folder":[558],"class_list":["post-16954","page","type-page","status-publish","hentry"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.6 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Nationwide takes on the ground rent scandal - Property Surveying NEWSLETTER<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.propertysurveying.co.uk\/newsletter\/?page_id=16954\" \/>\n<meta property=\"og:locale\" content=\"en_GB\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Nationwide takes on the ground rent scandal - Property Surveying NEWSLETTER\" \/>\n<meta property=\"og:description\" content=\"The \u00e2\u20ac\u02dcground rent scandal\u00e2\u20ac\u2122 has caused some shocking headlines in recent months: Taylor Wimpey sold our freehold \u00e2\u20ac\u201c it will cost \u00c2\u00a340k to buy it back Flat owner reports being trapped in property valued at \u00c2\u00a3NIL just six years after being built \u00c2\u00a31k fees to freeholder for permission to build extension \u00c2\u00a335k quote to buy &hellip; 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