Ground down by rent rise
RESIDENTS in a central city apartment complex are struggling to make ends meet after being hit with a massive ground rent hike.
Beaumont Partners, which leases the land to apartment owners at Beaumont Quarter, increased the rent by 400 percent this year.
For resident and business owner Juliet Pratt that means paying more than $20,000 a year instead of about $4000.
Ms Pratt says she was dumbfounded by the increase.
When she bought the property, she asked her lawyer about the ground rent and was told it would increase in 2008, but she did not expect it to go up so much.
“I thought at the time I could cope with a 200 percent increase. No way did I think it would go up to 400 percent.”
Running her business from home means she can claim business expenses, making her situation slightly different to others in the complex.
Ms Pratt says a meeting was called in December to inform residents of the increase, which came into effect on April 1.
“We’ve had urgent meetings since March.”
The residents have also formed a steering committee in the hope of finding a solution.
She says there is a lot of emotion and grief among owners attending the meetings.
“Many had no inkling what was happening when they bought the properties. People need to ask more questions when they buy properties.”
Ms Pratt moved her insurance business to Beaumont Quarter from Three Lamps in October 2006 and moved into the townhouse in March this year.
She says since the increase, owners trying to sell their properties have found it hard.
She had planned to stay at the complex for six months and sell if she was not happy.“
That’s not even in the equation now because no one will buy here.”
In an effort to cut costs she no longer employs an assistant and will be working as many hours as possible.
Beaumont Partners bought the land last year and director Mark Francis says the increase is based on two recent land valuations.
“The land value hasn’t been reviewed in seven years. Prices have moved considerably.”
He says the lease specifies ground rent is 7 percent of the land value.
The Quarter’s 2.2 hectares were valued at $64 million by two valuers in March, making the total rent $4.435m a year.
Mr Francis says the residents were offered a staggered rent increase across three years.
“They told us they weren’t interested and wanted to go to arbitration and that’s where it’s heading. All we’re doing is what the lease says to do.
“We’re doing a lot more than is required of us. So far they are two months overdue. We’re being flexible and doing everything we can to make it work for them,” he says.
A Building and Housing Department spokesman says the matter is a contractual agreement between the two parties.
“The only legislation pertaining to the matter that the department is responsible for is the Residential Tenancies Act, which doesn’t govern commercial residencies.”
Complex problem: Juilet Pratt says apartment owners at Beaumont Quarter are struggling to get by thanks to a 400 percent increase in ground rent.