Author Topic: Ground Rent review clause  (Read 3212 times)

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Offline marksowji

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Ground Rent review clause
« on: March 20, 2018, 02:57:10 PM »
Has anyone had a chance to check their lease agreement regarding the Ground Rent review clause? Apparently the ground rent can be increased every 21 years and I presume it will be revised sometime in 2019 for the first time.
 
The ground rent calculation is based on a formula that depends on the market value of the property, would there be a substantial increase in ground rent based on this formula? Has anyone made enquiries regarding this to understand what could be the maximum increase in ground rent? I am presuming the lease terms w.r.t to ground rent is same for all leasehold properties in VQ.

Given how the service charges are increasing every year, can the ground rent also have a substantial increase?

Offline 586

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Re: Ground Rent review clause
« Reply #1 on: March 21, 2018, 11:03:37 PM »
I've attached the extract.

Looks like they need to give 12 months notice of the proposed increase prior to the 21st Anniversary of the commencement of the leases (1st April 1998 for most blocks) which means its due by 1st April?

As you say its linked to the relative market value increase of the property

Offline first-settlers

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Re: Ground Rent review clause
« Reply #2 on: March 23, 2018, 10:13:16 AM »
I briefly looked into the section 127 and Schedule 18 II of Rent Act 77, as well as compared some values.
In my assessment the grounds rents are going to increase anywhere between 1.70 to 2 times the existing ground rates.

Offline marksowji

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Re: Ground Rent review clause
« Reply #3 on: March 23, 2018, 11:44:36 AM »
The clause says anytime within 12 months prior to the 21st anniversary. I doubt they will notify us anytime soon.

Anything < 2 times , which is less than £300 is not bad I would think.

I think we will also have to pay surveying costs as well when they reevaluate the market value.

Offline kewpie

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Re: Ground Rent review clause
« Reply #4 on: April 15, 2018, 10:31:43 AM »
A bit annoying reading this, as this issue has been tacked for new builds. From the Guardian;
Many ground rent practices have been condemned by communities secretary Sajid Javid.
Javid added that he would force developers to cut ground rents to zero on all future apartments and houses Ė but for those who bought before the ban, the agony continues.

Offline 586

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Re: Ground Rent review clause *READ*
« Reply #5 on: May 14, 2018, 06:42:52 PM »
They've finally done it....

letter came in today...Ground Rent will increase to £513 per annum starting 1st April 2019

If you have received the letter, check your lease as you will likely have 3 months from date of letter to dispute per the language within the picture in my earlier post.

Per my calculations based on sold flat prices I see an approximate range in % property value increase between 290% and 310%, valuing a revised GR (over 21 years) between £410 to £510. (i.e equates to a Ground Rent increase between 5-6% per annum, whereas a fair value would have been at 2-3% per annum inline with inflation)


« Last Edit: May 14, 2018, 07:09:35 PM by 586 »

Offline 586

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Re: Ground Rent review clause
« Reply #6 on: May 14, 2018, 07:07:16 PM »
Alternatively a Section 42 notice for a Lease Extension under "Leasehold Reform, Housing and Urban Development Act 1993" would offer 90 additional years (irrelevant for 999 year lease) but also peppercorn ground rent (i.e. eliminating this problem entirely)

A rough estimate for the total costs (Premium + Legal Fees) for this could be anywhere between £6k to £12k.

Doing this as a block would probably help reduce costs.

Offline green

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Re: Ground Rent review clause
« Reply #7 on: May 15, 2018, 08:41:16 AM »
we received this letter as well yesterday.
What can we do. can we propose a meeting with all owners and take this further asap. Unless we know how many people are keen to take this further there is no point voicing our concerns on a forum.
I don't mind forming a group if everybody is ok. Please let me know and I shall create group.

Online Michelle Singh

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Re: Ground Rent review clause
« Reply #8 on: May 15, 2018, 03:45:48 PM »
Hi, also received a letter yesterday, interested in challenging this increased price

Offline vesky90

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Re: Ground Rent review clause
« Reply #9 on: May 15, 2018, 04:22:51 PM »
Hi, also received a letter yesterday, interested in challenging this increased price.

Does any one know if the leasehold can be bought out?, If so what is the process?

Offline Fizz

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Re: Ground Rent review clause
« Reply #10 on: May 15, 2018, 10:00:22 PM »
Count me in for any kind of challenge

Offline Sunshine

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Re: Ground Rent review clause
« Reply #11 on: May 17, 2018, 01:40:08 PM »
I was shocked at its more than double the current ground rent.  I would like to be included on how we can challenge this

Offline green

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Re: Ground Rent review clause
« Reply #12 on: May 17, 2018, 03:39:33 PM »
please count us in for challenge for this.

Offline Fizz

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Re: Ground Rent review clause
« Reply #13 on: May 18, 2018, 07:52:02 PM »
My ground rent is going up to £324 which sounds more reasonable (Wotton Court)

Offline mrangry

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Re: Ground Rent review clause
« Reply #14 on: May 19, 2018, 07:20:28 PM »
Got the letter the other day, I live in a 2 bed flat in Susan Constant and I'm well displeased cos my ground rent was £75 and is going up to £512.46. I must say I haven't really even given it a great deal of thought up til now. Is it a standard cost of living in an apartment as it seems that the entire block is occupying ground so therefore the freeholder should pay rent, I suppose this maybe divided into smaller leaseholder chunks (don't know)

Offline Fizz

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Re: Ground Rent review clause
« Reply #15 on: May 19, 2018, 11:53:37 PM »
Presumbly it's £75 per half year so £150 p.a.?

Offline mrangry

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Re: Ground Rent review clause
« Reply #16 on: May 20, 2018, 06:56:27 PM »
Good point Fizz, thanks for that

Offline 586

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Re: Ground Rent review clause
« Reply #17 on: June 11, 2018, 07:08:56 PM »
I don't see any point disputing the valuation. We should dispute the clause itself. Other freeholders (i.e. Taylor Wimpey) have come under intense public and government scrutiny due to these onerous and non-transparent clauses.

My spouse recently had success in getting their freeholder to amend their doubling ground rent clause to one linked to RPI as It's better than what we have at the moment. I believe we should push for the same.

For reference please see example ground rent clauses below:

ē   Taylor Wimpey, imposed a GR clause which doubles the ground rent for their leased flats every 10 years which equates to a 7% increase per annum

ē   Aviva Ground Rent Investors Ltd, imposed a GR clause which doubles the ground rent for their leased flats every 15 years which equates to a 5% increase per annum

The proposed increase for my GR equates to a 6% increase YoY from 1999 to 2019.

The Retail Prices Index (All Items) increased from 1999 to 2018 at approx 2.5% YoY.

Both of the above example freeholders have now offered their lessees a Deed of Variation to amend their existing GR clauses and link them to inflation. They also cover the lessees legal fees.

Does anyone else have any thoughts on pursuing this route?


Offline Sunshine

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Re: Ground Rent review clause
« Reply #18 on: June 11, 2018, 08:29:51 PM »
That's a good idea as can we do the same and link to inflation as that's lower compared to the suggested rise in the letters?

Offline 586

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Re: Ground Rent review clause
« Reply #19 on: June 11, 2018, 09:26:07 PM »
It would definitely be lower than the suggested rise for Susan Constant Court (you should check the annual increase per your own GR in your building, the Year on Year increase should be similar). More importantly an inflation linked clause is a lot more transparent then their current methodology and represents a fairer interest for both freeholder and leaseholder.

I have until 9th August to dispute the valuation they have used under the existing methodology.

However I think a parallel and coordinated response requesting a Deed of Variation to amend the clause entirely, from as many residents in VQ, to both the freeholder and our local MP (jim.fitzpatrick.mp@parliament.uk) would be a better solution.

I have drafted a template letter that I think we should send. I'm happy to circulate by e-mail and hear other peoples thoughts. Message me if interested.




Offline steved

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Re: Ground Rent review clause
« Reply #20 on: June 12, 2018, 11:22:09 AM »
I challenged this rise from £150PA to £308.19PA recently in an email to E&M.
Their response on the 4th June reconfirmed their belief in the lease clause and should stand.
They went on to say that 'I have 3 months from date of their notice to serve a counter notice together with a counter offer. If no agreement is reached' (which I would fully expect to happen), 'the matter can be referred to an independent expert.... Chartered Surveyor.... with costs up to £3500, shared equally between landlord and leaseholder.'

I'm very happy to support a group action against this but legally I am unsure how to proceed.
If anyone is prepared to lead this I will gladly support in any way I can.

Thanks.

Offline 586

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Re: Ground Rent review clause
« Reply #21 on: June 12, 2018, 08:55:13 PM »
I also received a similar response as well,

"Your lease outlines that you have three months from the date of our notice to serve a counter notice together with a counter offer for our client to consider."

They expect the figure to be challenged, and it should be as they've calculated the block values from a simple desktop valuation (e.g. Zoopla)


Offline Sunshine

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Re: Ground Rent review clause
« Reply #22 on: June 13, 2018, 09:30:57 PM »
Do you think Consort or Ashley our development manager can help to get a letter to all owners asking if they want to support a challenge on the costs?

Offline 586

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Re: Ground Rent review clause
« Reply #23 on: June 13, 2018, 10:22:19 PM »
First Port are managing agents for Proxima GR so it's unlikely they will help, no harm in asking though.

I've attached a template letter to send to the freeholder. Please edit as you see fit, and send to the address provided.

Fyi the calculation of annual rate of GR increase = [(NEW GR)/(OLD GR)^(1/21)] - 1

Also please raise your concerns to our local MP (jim.fitzpatrick.mp@parliament.uk)

It's a long uphill battle, the more people who raise this issue the better our chances are to enact any change.

Offline SJ

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Re: Ground Rent review clause
« Reply #24 on: July 06, 2018, 02:36:18 PM »
Thanks 586 for the template.
I agree we should try and amend the clause in the lease going forward and takes everyone 10 mins to send the letter to First Port and local PM !! 10 mins well spent.

however to see immediate results for the current proposed rent increase, we have 3 months from the notice letter to challenge the increase. Once we submit our challenge, first port would appoint a surveyor to review the valuation and the cost is split 50/50 between the leaseholder and freeholder.  If we therefore challenged this as a group action, the costs for us, the leaseholders would be very little on a per leaseholder basis , and definitely think its worth doing.  I believe we would have to do this by Block as that is how the ground rent is calculated ie each block has a different % increase.   

i would want to challenge the valuation for both Bartholomew and Studley court - any others for those two blocks?  I am happy to lead this for these two blocks.   If interested to join you can email me on groundrente14@gmail.com and let me know whether its for bartholomew or Studley

Thanks !

Offline 586

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Re: Ground Rent review clause
« Reply #25 on: July 06, 2018, 10:41:26 PM »
I'm happy to challenge the valuation, but the potential reduction is around £50-£75 at most in annual GR. My deadline to serve counter notice is 14th Aug.

I chased for an acknowledgement of the letter I sent to E&M who act on behalf of the freeholder, and received the below response:

The initial reply was:
"When you acquired the property from the previous owner, it was the duty of the solicitors acting for you to clearly explain the lease terms and the implications of purchasing a leasehold property.  If you do not feel that your solicitors clearly explained the lease terms to you, you may wish to seek independent legal advice to clarify this issue and to determine whether you have any recourse available as a result of any failure by your solicitors to properly advise you.  Therefore we are afraid at this time, our client is not able to vary the terms of your lease."

Within 2 minutes of sending the above response they sent a follow up:
"Kindly note that this email was sent to you in error and our clients are considering your request for a deed of variation for the subject property.
Please accept my sincere apologies for any inconvenience caused."


The freeholder has no choice but to carefully consider the request for a deed of variation, as the short term reputational damage is significant (search for 'James Tuttiett' as an example last year). Longer term they may end up having to offer variations anyway due to government legislation change on ground rents.

As an initial step i strongly recommend pushing them to change the lease clause to an RPI index linked increase subject to a cap at 0.1% of the property value.

I'm also aiming to dispute the valuation as well, and am happy to help, anyone else in Susan Constant Court that is interested  please reach out.

Offline marksowji

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Re: Ground Rent review clause
« Reply #26 on: July 12, 2018, 12:37:38 PM »
If you don't challenge this clause now and also force them to move to RPI as 586 has stated above then you are going to be in a very very BIG problem when you want to sell your apartment as most mortgage lenders will not lend due to onerous ground rent clause where in the ground rent has increased more than double and is unreasonable. I speak here from personal experience.

Offline 586

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Re: Ground Rent review clause
« Reply #27 on: July 15, 2018, 11:53:40 PM »
Received a formal response attached.

The offer doesn't apply any reasonable cap on the ground rent increase (i.e. it will continue to increase ad infinitum), and it still applies the existing property price linked increase for 1st April 2019 following which an RPI linked increase applies, which negates the point of the amendment to begin with.

Overall not a good offer from the freeholder.


Offline Fizz

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Re: Ground Rent review clause
« Reply #28 on: July 16, 2018, 09:45:41 PM »
As a minimum I would have thought you can push back on the use of RPI.  It is generally accepted to be a flawed measure of inflation and has been withdrawn as a national statistic.  CPI has averaged less than 2% p.a. over the review period.

Offline sm

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Re: Ground Rent review clause
« Reply #29 on: July 18, 2018, 06:21:02 PM »





https://www.leaseholdknowledge.com/mps-turn-out-in-force-to-welcome-leaseholder-demonstrators-at-westminster

An Option maybe?

"a Bill in the autumn to make enfranchisement and lease extension a simple multiple of 10 times annual ground rent."

Please note the above. Particularly if you are thinking of involving lawyers. The landlord will employer the best ( and will likely seek to get this re-imbursed.

Therefore the maximum anyone would want to settle these hassles & demands   for i suggest is is 10 * GR, arguably it should be less.


ANOTHER OPTION?

This has been snipped from a poster 586.

"""Alternatively a Section 42 notice for a "Lease Extension under "Leasehold Reform, Housing and Urban Development Act 1993" would offer 90 additional years (irrelevant for 999 year lease) but also peppercorn ground rent (i.e. eliminating this problem entirely)

A rough estimate for the total costs (Premium + Legal Fees) for this could be anywhere between £6k to £12k.

Doing this as a block would probably help reduce costs.
Posted by: 586
ę on: May 14, 2018, 06:42:52 PM Ľ""""


Option 4

If enough support some compulsory procedure purchase of the freehold

http://www.leaseholdadvicecentre.co.uk/Collective%20Enfranchisement.htm


I would support any options to constrain these escalating costs from our Landlord/Managing Agent. It was previously attempted but we failed to gain enough support from leaseholders as some are absentee perhaps they may want join this time. We got significant support enough to try again. 








Offline sm

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Re: Ground Rent review clause
« Reply #30 on: July 18, 2018, 06:43:21 PM »
Other interesting articles.

https://www.leaseholdknowledge.com/housebuilders-ground-rent-scandal-compo-schemes-must-go-further-and-faster-says-housing-minister

We would urge ALL leaseholders caught up in the doubling ground rent scandal to contact Clive Betts MP and the MP members to the Communities Select Committer to haul in the house builder CEOs and freehold speculators for the full Philip Green treatment.
officeofclivebettsmp@parliament.uk


https://www.leaseholdknowledge.com/john-lewis-partnership-pensions-trust-tells-leaseholder-will-disinvest-doubling-ground-rents.
Note the

Offline Sunshine

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Re: Ground Rent review clause
« Reply #31 on: July 26, 2018, 01:23:06 PM »
Thanks 586 for the letter template. 

Someone mentioned you can email a letter of complaint as well.  Can someone post the email address to EM?

Thanks

Offline Sunshine

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Re: Ground Rent review clause
« Reply #32 on: July 26, 2018, 01:31:38 PM »
Are we forming a group to contest the costs collectively?  I would really like to see if we can do something about the spiralling charges.

Offline Settlers Court RTM

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Re: Ground Rent review clause
« Reply #33 on: July 26, 2018, 06:55:28 PM »
I received a notice from Estates & Management of increase of the ground rent for my two-bedroom flat in Settlers Court from £150 to £311.  This increase is higher than the increase in the value of the flat which I am sure is closer to only about 60%.  Also, the value of properties in Canary Wharf area have fallen approx. 20% in the last 18 months and continue to fall.  Iím therefore planning to issue a counter-notice proposing an increase of only 60% as this fairly reflects the current value of the flats.
 
Based on past experience with the landlord, I fear it will not agree to my proposal and will insist on its own unilaterally imposed increase.  They donít appear to be concerned with negative press surrounding ground rent reviews.  As is often the case, real impact can only be achieved if tenants on the estate act together.  I am already planning to canvas tenants in my block (Settlers Court).  If one or two individuals from the other blocks is prepared to collect signatures, I will happily provide you with a blank counter-notice I plan to use.  The blank counter-notice would need to be modified to reflect the terms of the leases in those blocks.  I would therefore need the following information for each block:
 
1.   The current ground rent for each flat layout/per building (i.e. 1bed, 2bed, 3bed etc)
2.   A sample copy of a lease
3.   Initial purchase price per flat layout/per building (this should be in original lease)
4.   Current market value per flat layout/per building thatís currently on the market or recently sold (eg from rightmove or similar website).

If you would like to discuss this, please get in touch.
 
David
07960150100
dataylor@gnil.net

Offline 586

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Re: Ground Rent review clause
« Reply #34 on: August 01, 2018, 10:18:08 PM »
If you are in Susan Constant Court, please check your mailboxes regarding a notice for a collective challenge.

If someone is willing to take lead and collect signatures in the other blocks, then David Taylor (posted above) has kindly provided templates to use.


Offline December

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Re: Ground Rent review clause
« Reply #35 on: August 03, 2018, 12:11:44 AM »
586 thank you for sharing the draft letter and the response that you received.  May I please ask you what you've decided to do? Have you agreed to the deed of variation and the proposed costs? Have you gone back to challenge why the RPI measure (no matter how flawed) has not been applied to this review?  Has there been any progress in taking group action? 

Any experience you can share would be greatly appreciated. 

I've only just picked up this issue and only have until 9 August to take action.

Thanks!

Offline 586

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Re: Ground Rent review clause
« Reply #36 on: August 04, 2018, 02:18:41 PM »
In terms of changing the ground rent, the landlord made 2 offers:

1. Accept the ground rent increase for April 2019, after which following reviews are then determined by RPI change for the review period (21yrs)

2. Accept a reduced Ground rent (from £512 to £425) but with a reduced term review of 10 years and no further increase after the 6th review.

Both were subject to paying approx a £900 fee towards landlord legal and admin costs (in addition to your own solicitor costs).

Separately, In SCC we are currently trying to pursue a collective challenge under the existing terms of our lease which dictate that the ground rent increases in line with the property value increase for the block. The valuation used by the landlord for this has been grossly overestimated, and as an initial step this is what we are challenging.

The collective challenge would have to be done per block as this is how the increase is valued.

Offline Mrkb

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Re: Ground Rent review clause
« Reply #37 on: August 04, 2018, 04:59:36 PM »
My wife and I live in adventurers court and would potentially be up for getting together with other residents to challenge the increase. The main problem for us, however, is that despite having completed our purchase in June, we have still not been formally put as the new owners by e&m so they haven't sent our welcome pack and therefore we don't yet know how much they're going to want to increase it by.

Offline Settlers Court RTM

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Re: Ground Rent review clause
« Reply #38 on: August 08, 2018, 07:38:00 PM »
Hi, Iím submitting a counter offer on behalf of two Adventures court leaseholdes tomorrow. Iím happy to send you a copy of the counter notice and include you if youíre interested.
Regards,
David
07960150100
Flat 63 Settlers Court

Offline Mrkb

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Re: Ground Rent review clause
« Reply #39 on: August 08, 2018, 10:29:21 PM »
That would be great David,  let us know how it goes. Not sure if we want to be included in any formal correspondence at this stage as we still haven't received the notification of how much more our ground rent will be. We're in number 50.

Offline green

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Re: Ground Rent review clause
« Reply #40 on: August 09, 2018, 08:55:46 AM »
Hi, Iím submitting a counter offer on behalf of two Adventures court leaseholdes tomorrow. Iím happy to send you a copy of the counter notice and include you if youíre interested.
Regards,
David
07960150100
Flat 63 Settlers Court

************************

have you had anything for studley court?

Offline Sunshine

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Re: Ground Rent review clause
« Reply #41 on: August 09, 2018, 09:29:09 AM »
I received a letter back and they said that the valuation of the block is now nearly 3 times from the original build date.  I think we all do have a strong case as the value of the flat isn't 3 times so their desktop calculations are not accurate.

The more letters that residents send the stronger the case is for them to reassess the ground rent increase.

Offline Settlers Court RTM

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Re: Ground Rent review clause
« Reply #42 on: August 10, 2018, 03:45:04 PM »
I have submitted counter notices for Settlers Court (23 authorities), Sail Court (2 authorities), Adventures Court (3 authorities) & Bartholomew Court (1 authority).

If anyone has already challenged their ground rent and wants to join forces I'm happy to provide assistance.

I'm also interested to here from any leaseholders interested in collective enfranchisement. I've lined up Savills to value Settlers Court and negotiate against the freeholder. They might be prepared to offer a discount if other blocks are interested.

Regards,
David Taylor
Flat 63 Settlers Court
07960150100


Offline Sunshine

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Re: Ground Rent review clause
« Reply #43 on: September 11, 2018, 09:42:58 PM »
Has anyone been able to counter offer a reasonable revised estimate that EM agree to?

Offline Sunshine

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Re: Ground Rent review clause
« Reply #44 on: November 08, 2018, 04:08:47 PM »
Hi
Does anyone know for Studley Court how much the rise of Ground Rent is planning to be as I've lost my letter. I pay £100 today and wondered what the proposed figure is.  I called them today and they said they couldn't see any figures because i put in a challenge.

Cheers

Offline gperowne

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Re: Ground Rent review clause
« Reply #45 on: February 28, 2019, 04:33:15 AM »
Has there been any remotely successful outcome regarding any of this? I own a flat in Atlantic Court and am overseas. I am on paperless billing. They neglected to email me anything about the increase and today I recieved the half year demand for £233.54 (£467.08 for full year) instead of the normal £75.

Offline geoffv

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Re: Ground Rent review clause
« Reply #46 on: March 01, 2019, 06:36:28 PM »
Me too although I'm in the UK.

The problem I see that E&M have access to expensive lawyers/surveyors/etc and the cost of this would fall on us.

I have a problem with what they do for their money as it appears they don't control building works except to say what you can do.

I will never buy a flat again where E&M or First Port are involved.

Geoff

Offline JN

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Re: Ground Rent review clause
« Reply #47 on: March 10, 2019, 03:29:35 PM »
HI,
I have received a letter from E&M for payment of £311 for annual rental . I was away during the time when we received the letter for increase in charges.

is there a way in which we can challenge them now? Its an increase of more than 100%

Need suggestions

Cheers
Dave

Offline SJ

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Re: Ground Rent review clause
« Reply #48 on: May 08, 2019, 06:51:47 PM »
Hi
Would someone from Susan Constant and Adventurers Court be able to let me know how much EM originally proposed your ground rent increase to be eg for £150 ground rent (£75 every 6 months), what did they propose to increase to before any negotiations?  Or for a ground rent of £100, what their proposed increase was?

Also for these blocks, have you been successful in negotiating any lower ground rents since their original demand a year ago?

Trying to assess a reasonable ground rent for Bartholomew Court
Thanks !

Offline SJ

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Re: Ground Rent review clause
« Reply #49 on: May 09, 2019, 01:54:39 PM »
if anyone from any of the VQ blocks are willing to confirm if they agreed any lower ground rents from what was originally proposed would be much appreciated. Still negotiating with EM on this !

Looking for the equivalent of a 2 bedroom 2 bathroom flat and the block you are from - the original rent (presumably £150?) and the new agreed rent versus what they originally proposed last March 2018 when they first served their notice.     We also have the local MP involved on this challenging EM on the disparity of rents across the different blocks

Many thanks