2 January 2020
ESCALATING GROUND RENTS
If you own a leasehold residential property, it is often the case that you will need to pay an annual rent to the freeholder or landlord of the property. This is known as ground rent and it is payable in addition to the purchase price of the property. The lease will normally state the amount of the ground rent payable and when it must be paid. It can be paid either yearly, half-yearly or even quarterly depending on what it says in the lease.
Traditionally, ground rents were just a peppercorn or a nominal amount. Over the last decade or so, grounds rents have risen significantly. In addition, it is now common for leases to provide for periodic increases of the ground rent.
The government has voiced its concerns over this trend in ground rents. In 2016 Taylor Wimpey were heavily criticised for selling houses and flats with grounds rents that doubled every 10 years.
Furthermore, it is now the case that mortgage companies will not lend on properties where the ground rent does not stay at a reasonable rate throughout the entire term of the lease. For example, Nationwide will not lend on a property where the ground rent exceeds 0.1% of the value of the property. The Council of Mortgage Lender’s Handbook states that although there is no objection to leases which provide for a periodic increase in ground rent, the increase must be “fixed or readily ascertainable and…REASONABLE”. If there is an increase in the ground rent which “may materially affect the value of the property”, this must be reported to both the lender and to the buyer/s.
Unmanageably high ground rents can result in the owners of leasehold properties defaulting on payments. This can lead to the instigation of possession proceedings by the freeholder/landlord and possibly even result in forfeiture. In addition, high ground rent rates can diminish the value of the leasehold property. They can also negatively impact on the lender’s security.
The Leasehold Property Enquiry Forms, LPE1 and LPE2 introduced in 2013 and revised in 2015, give an indication of the ground rent applicable to the leasehold property however additional enquiries should also be raised about the ground rent provisions in the lease especially in relation to the rate of any periodic increases of the same. A higher degree of vigilance is certainly required in this area.
9 July 2019
THE IMPORTANCE OF MAKING A WILL AND USING A PROFESSIONAL WILL WRITER
The importance of making a will cannot be overstressed. A will makes it much easier for your friends/family to sort everything out when you die and they can do so in the comfort of knowing that they are carrying out your wishes. Without a will the process can take much longer and can cause additional stress at a time which is already very difficult. If you do not make a will, the statutory Intestacy Rules will apply which could mean that your intended beneficiaries may not inherit in practice. A will can help reduce the amount of Inheritance Tax that might otherwise be payable and making a will is especially important if you own property, have a family (particularly with young children) or dependants.
Furthermore, it is important to use a professional will writer. There was a sharp increase in the number of inheritance disputes heard in the High Court from 2018 to 2019. The reason for this, in most cases, was due to the use of DIY will packs (found online and at post offices/newsagents etc.). Probate is a highly complex area of law and DIY will packs are often not equipped to deal with the nuances of this area, nor the specific and bespoke instructions that people want with their wills.
A will must be clear and unambiguous and you should be certain that you have made the necessary provisions for your loved ones. Therefore, it is crucial that you consult a professional when making your will. Someone who can guide you through the process and you can be sure that your will is in safe hands.
If you would like to make a will, please contact Sinclairs Solicitors on 020 8202 8222 or info@sinclairssolicitors.co.uk for further information. We would be delighted to assist you.