Q&A Is it le­gal to charge ground rent for a new-build house?

The Wharf - - Property - DAWN SAN­DOVAL Dawn San­doval of Dawn San­doval Res­i­den­tial

QI re­cently re­served a new house from a de­vel­oper and it should com­plete in the spring. I par­tic­u­larly de­cided on a house as I am cur­rently in a lease­hold flat and the ser­vice charge and ground rent are ex­tor­tion­ate. How­ever, I have just heard the house is sub­ject to ground rent charges. I am shocked to hear this and had no idea that a reg­u­lar new-build house could be sub­ject to such charges, is this le­gal?

AFor as long as I can re­mem­ber new houses have al­ways been freehold. True, there are a few that are maybe lo­cated within gated de­vel­op­ments with lux­ury ser­vices such as a 24-hour concierge and leisure fa­cil­i­ties that are nat­u­rally sub­ject to these charges. But reg­u­lar houses are not.

The Gov­ern­ment how­ever flagged a new trend of ground rent charg­ing that seems to be fairly preva­lent amongst new-build houses.

It re­cently an­nounced that the ma­jor­ity of new-build houses would be sold as free­holds in a move to tackle un­fair prac­tice in the lease­hold sec­tor and bring­ing an end to un­jus­ti­fied selling of prop­er­ties in this way. Min­is­ters have promised to con­sult on a pro­posal that ground rents on new leases should be capped at £10. Un­fair ground rents can turn a home­owner’s dream into a night­mare by hit­ting them with an un­ex­pected charge.

Pur­chas­ing a home like this can also make it po­ten­tially dif­fi­cult to sell the prop­erty in the fu­ture, given most buy­ers would also not want to be stuck with such charges.

Con­sid­er­ing some lease­hold­ers are now pay­ing up to £700 per an­num in ground rent this move is se­ri­ously needed.

Hope­fully, given you are not com­plet­ing on the prop­erty un­til the spring, by that time these new gov­ern­ment rules should be in place and pro­tect you from be­ing sub­ject to such charges.

The Gov­ern­ment is tak­ing this se­ri­ously and it looks like any hefty ground rent charges for houses will be short lived with a to­ken £10 ground rent be­ing in­tro­duced for new leases.

So even if you do find you are left with no choice but to pay them ini­tially in all like­li­hood, this sit­u­a­tion will change when the new leg­is­la­tion comes in and you’ll only be get­ting a bill for a rea­son­able amount.

That should also al­lay any fu­ture buy­ers’ con­cerns about the prop­erty when you come to sell.

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