90-year-old pensioner receives £17,000 ground rent bill as next government faces call to abolish ‘medieval tenancy system’ | Politics News

90-year-old pensioner receives £17,000 ground rent bill as next government faces call to abolish ‘medieval tenancy system’ |  Politics News

Derek Taylor has paid off the mortgage on the house he has owned for 50 years. But as he does not own the land he stands on, he now faces a £17,000 bill for renting the land, a charge the government had promised to abolish in its 2019 manifesto.

By Faye Brown, political reporter @fayebrownSky


Friday 24 May 2024 06:55, United Kingdom

A 90-year-old pensioner who has paid off his mortgage is spending “sleepless nights” after receiving a “feudal” £17,000 bill for ground rent.

Derek Taylor is one of five tenants of Elgin House, North Herts, whose annual ground rent has risen from £25 to £2,350, an increase of 9,000%.

The increase dates back to 2018, meaning he now owes £17,169 in a single sum and faces legal action if he does not pay.

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The case has renewed calls for the next government to abolish England’s centuries-old tenancy system, which campaigners say is “feudal” and “exploitative”.

Land rent is a fee that tenants must pay in order to have a house on land that does not belong to them and that does not require a service in return.



Image:
Derek Taylor owns his house, but under the lease system, he must pay rent to the owner of the land on which it is built.

The Conservatives promised to effectively abolish these charges in their 2019 manifesto, but long-awaited legislation aimed at achieving this is now up for grabs following Rishi Sunak’s decision. decision to hold early general elections.

Read more: ‘Buying an apartment ruined my life’: Tenants ask for stricter legislation

Derek, who has lived in the property for 50 years and has paid off his mortgage, told Sky News: “We were asked to send £17,000 plus pounds and about a fortnight later we received a letter saying that this amount is outstanding and if it is not pay In five days we have no choice but to take him to court.

“That caused a lot of discomfort because who can pay that amount of money?

“The letter bothered me because it was very threatening. You wake up at night and can’t go back to sleep because it’s on your mind.”

The letter was sent to Derek by attorney Salter Rex on behalf of owner Quadron. They did not respond to a request for comment.

“Defrauded by the government”



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Ground rent for these properties is now over £2,000 a year.

He said £17,169 is outstanding on his account and if he does not pay “we will have no alternative but to commence legal proceedings”. He added that an administration fee of £120 will also be charged if money is not paid within five days.

The increase in the ground rent is permitted under the terms of Derek’s lease, drawn up in the 1960s, which said the rate could be reviewed in March 2018 and every 50 years thereafter, according to the annual value of the land .

Derek and his neighbors, who were unaware of the clause, took the case to arbitration but it was ruled that the increase was permissible and the lease “does not include any requirement that the rent level be ‘reasonable.'”

Derek, a former print worker, said: “It’s simply because they can. Legally it may be that way, but whichever way you look at it, we can’t see that this is fair.”

“We feel let down (by the government). This has been going on for so long that it should have been fixed a long time ago and when this bill is finally passed we don’t know if it will apply to our situation at all.”

Derek is due to meet his local MP Bim Afolami, who is also Minister of Economy, next week to discuss the issue.

In a bulletin to voters seen by Sky News, Afolami said he was aware of the situation and that the government is “committed to eliminating these terrible practices.”

Labour’s Barry Gardiner says tenants face ‘exorbitant’ ground rents due to ‘lack of service’

‘Tenants in limbo’

In the last election in 2019, the Conservatives promised to reduce ground rent to zero.

But the Tenancy and Freehold Reform Bill, which was meant to be the mechanism to achieve this, was not introduced to the Commons until November last year and has yet to receive royal assent.

The policy will be considered later in the House of Lords. as part of the “washout” period, when the final bills to become law rush through parliament before it dissolves for elections.

The National Leases Campaign (NLC) welcomed this news, amid fears the bill would fail, but said the “devil is in the details” as it is unclear whether a cap on rents will be included. land rentals in the final draft of the project. legislation.

This was due to be added to the bill as an amendment, but there have been reports for months that the Treasury wants to block the policy because it is worried about scaring insurers and pension funds who have amassed vast wholly owned portfolios.

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Katie Kendrick, co-founder of NLC, told Sky News: “Tenants are still in a state of ‘tenancy limbo’ wondering if this bill will help them.

“It remains to be seen how far this bill will go, but rest assured there will still be some way to go to achieve our goal of abolishing tenancy and moving to Commonhold.

“The abolition of the medieval tenancy system must be in every manifesto and any incoming government must prioritize this.”

What is the position of the parties regarding the lease reform?

The issue could be a dividing line in the general election campaign, amid a broader housing crisis which at its core is a problem of insufficient supply and spiraling affordability.

Labor has said it will abolish leasing, but recently pushed back the schedule to do soblaming conservatives for watering down their own proposals.

Housing Secretary Michael Gove initially said he wanted to abolish the system, calling it “feudal”, but his bill only went so far as to ban leasing in the sale of new homes.

Gove, who will speak in 2023, says he wants to abolish ‘unfair’ tenancy system

Houses make up a small portion of around five million rental properties across England, the majority of which are flats.

Other provisions of the legislation include making it cheaper and easier for people to extend their leases, buy the freehold and gain the right to manage their buildings.

But whatever measures are ultimately adopted, for some tenants it will be too late.

Owners ‘looting’

Derek’s neighbor David Pickett ended up borrowing £54,000 from family members to change the terms of his lease so that in future the ground rent would be £0.

Increasing ground rent risked leaving him trapped as it significantly devalued the property he invested his savings in, putting him at risk of negative equity and reducing his chances of selling it.



Image:
David Pickett had to pay £54,000 to renegotiate his lease and remove the ground rent clause.

The payment included £15,000 in backdated ground rent and a £34,000 bonus, a fee David says is around seven times that of three other neighbors in identical properties who renegotiated their lease terms in 2016. They have a rent fixed land fee of £100 a year. and paid a bonus of between £4,000 and £5,000.

However, for David, the communications worker, that was not an option.

“Everything is done with mathematical formulas that are difficult to understand, the language they use is very cold,” he said.

The 31-year-old said delays to tenancy reforms have allowed landlords to “cash in” on people like him and Derek.

“Part of the reason we delayed the arbitration and tried to delay it as much as possible is because we thought these reforms were coming soon and when we got legal advice they were talking about this bill, so we always had this hope.

“Now I feel like the flame has gone out.

“There seems to be no one to turn to for help and anyone who can help wants £200 an hour.”