Superior landlords – the Thieves of Variation?

Superior landlords – the Thieves of Variation?

0:01 AM, 24th May 2023, About A year ago 6

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Hello, As a reasonably large portfolio landlord, we had been caught out by the ‘Doubling Ground Rent’ clause in numerous leases for a multitude of apartments. These clauses make the property un-mortgageable in many cases, and the Competitions and Markets Authority (CMA) recognises these clauses as punitive and unfair.

Many superior landlords undertook a pledge to vary many of the doubling ground rent clauses in these leases to RPI linked increases (much more palatable for lenders) in response to pressure from the CMA.

We initially received plenty of offers from superior landlords offering to enter into a Deed of Variation linked to RPI. They offered to forego their costs, and to pay up to £750 towards our solicitor’s fees. These ‘deals’ were often only for owner occupiers, however.

The ‘offers’ or ‘deals’ we are being presented with now are for NO contribution to our solicitor’s fees and up to £7,000 per apartment for the landlord’s ‘costs’ PLUS disbursements.

When we have asked for a bulk discount, we have been offered a buy 5, get 1 free scenario. £35,000!

When investigating these landlords, a little further, we have often seen that ‘Penult 101’ or ‘Adriatic Land 2’ (for example) have undertaken to vary all leases containing doubling ground rent clauses at no cost to owners. This seems to be the case when these Landlords have purchased the ground rent from the likes of ‘Taylor Wimpey’ or ‘Countryside’ but are unwilling to do the same across the board, only when either the CMA or the seller (Taylor Wimpey for example) have pressurised or compensated them for agreeing to the Ground Rent purchased from them.

Also, we often find that our landlords are Penult 102, Penult 103, Adriatic Land 3 or Adriatic Land 8 etc (as opposed to Penult 101 and Adriatic Land 2). who have given NO such undertaking. The full list can be found here https://www.gov.uk/cma-cases/leasehold#undertakings-accepted-from-15-more-freeholders.

Has anyone else experienced this?

And, more importantly, have they had any success negotiating with their landlord on reasonable terms?

We can only go via their agents (Homeground is the most common) and find them immovable.

Thank you,

Benjamin


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Comments

Judith Wordsworth

10:32 AM, 24th May 2023, About A year ago

I don't understand the "caught out" bit.
whether a BTL landlord or an "ordinary" buyer the properties Lease clearly states the Ground Rent clauses.
If you don't like them why buy?
And what is a pledge? A verbal or written agreement that is not a Deed or part of the Contract so possibly unenforceable ?

JB

11:17 AM, 24th May 2023, About A year ago

I would be looking at purchasing the freehold

Ben

13:08 PM, 24th May 2023, About A year ago

Reply to the comment left by Judith Wordsworth at 24/05/2023 - 10:32
at the time of purchase, we could lend on these. No attention was drawn to these clauses by solicitors or any property professionals, these clauses were a new phenomena. It was only subsequently that lenders changed their criteria.

I have no idea what constitutes a pledge - a public promise?

Ben

13:08 PM, 24th May 2023, About A year ago

Reply to the comment left by JB at 24/05/2023 - 11:17
Would be ruinous on all apartments

SCP

16:34 PM, 24th May 2023, About A year ago

Reply to the comment left by Judith Wordsworth at 24/05/2023 - 10:32
Fair point.
Often, we were lured by the developer offering to pay our legal costs. We were then directed to a "tame" firm, whose report on the terms of the Lease glossed over the fact that the GR clause was onerous, and worded in legal gobbledygook.
I know for a fact that at least one such tame firm of solicitors has folded.
The developer was not some fly-by- night operator, but well-known name.

peter robertson

14:34 PM, 25th May 2023, About A year ago

This is what happened to me when i historically purchased a number of flats many years ago. The solicitors failed to mention the future implications of the doubling GR clause and now I am faced with either allowing the GR to double, more than 10yrs after purchase or pay a substantial fee for a DOV to change to RPI. I have challanged some solicitors who have paid compensation for their failings but I am still faced with a enormous financial problem which if I don`t resolve I cannot sell now or in the future!
The main culprit is Adriatic 3 who are represnted by Homeground. The actual owners of Adriatic are First Harbour who`s CEO is David Cameron`s brother in law!

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