March 24, 2017

Why are retirement ground rents so high?

Please follow and like us:

… because it is what retirement housebuilders can get away with, along with 125 year leases, high estate agency fees, try-on documentation fees on sale, exit fees, transfer fees, sublet fees, contingency fund fees … AND plummeting capital values

Thank you Sebastian, We are stuck with it.

I have a nephew living in Buckinghamshire who has the lease of 2 flats which he sub-lets.

The ground rent on one is £40 per annum the other is £180. per annum, and here we are stuck in Dorset, six miles from the direct line to London which is a two hour journey from Gillingham Dorset and we are paying £440 per ann per flat – there being 44 flats in this block.

Can you blame me for feeling I’m stuck in a viper’s nest. One can never feel free to take one’s eye off the ball?

I am 78 and thought that I had done with all that “watching the wheeling and dealing”.

And still it goes on.

Within the last 18 months the manageress here applied to work 4 days a week (she is 68).

At the meeting, I mentioned that she had been working 5 day per week since my arrival in 2008 – so why were we paying a 5 day a week salary for all the preceding years. (No answer came forth).

She then said that she would leave if not given a 4 day a week contract and that her days away from the premises would be Friday, Sat and Sun. ie 3 days away from here.

Since October 2015 she has been taking a days Annual leave every week for a period of 14 weeks. She then mentioned to me that she would be leaving at the end of March and would be putting in her notice in January 2016.

On the 6th January I wrote to the Chief Executive and asked that the days of attendance be reduce to 3 days per week MON-WED-FRI 8.30 to 4.30 (1 hr for lunch) mentioning the 14 week period of a 3 day attendance. I and another resident wrote on behalf of residents and circulated out letter to all the flats after posting off the letter. Some of the Residents objected to being included and wrote to the CEO to that effect.

The following morning the Manageress decided NOT TO LEAVE. However I wrote on my own behalf to the CEO and said that this changed nothing and could the proposal be considered. I received a somewhat highhanded/condescending/patronising letter both from the Area Manager and the Regional Manager to say that it was not going to happen unless the Manageress requested it, and only then after an official ballot with a 66% majority. (there was however no official ballot for the existing reduction in hours). I again have written to the CEO enclosing copies of their letter saying that it was implied that the Management were the people who should instigate such a proposal.

I said that as LEASEHOLDERS we pay her salary and in fact all salaries. I also asked who would be balloted – 20 flats were sublet by leaseholders not resident, 6 leaseholders were permanently in rest homes and 1 had recently died and the remaining 17 leaseholders were residents.

I await an answer to this question- I don’t quite know what to expect, but I do not look forward to it. At 78 years of age I really don’t want to be bothered with this haggling, and I would rather be anywhere else on earth than here. But that’s life in a place like this.

Thanks for your support Sebastian, and for listening to my moans.

Goodnight now … [name withheld]

 

Comments

  1. The property developers can sell a new property under freehold or leasehold title depending on what brings the highest profit.

    A sale of property under freehold title ( e.g house ) will be a sale to buyer of legal ownership of property.

    A sale of property under leasehold title will be a sale of a “lease= long term rental agreement” for a premium equivalent to sale of new freehold property plus extra profit from later sale of the freehold title for entire block .

    The real cost to the buyer of a leasehold title property is (1) premium paid upfront (2) stream of annual service charges and rising ground rent income for 99 years or 125 years ( 3) return of property to freeholder at end of term worth about 100 x the first premium ( my educated guess ).

    All developers try to get the highest price for sale of freehold of the block by pitching the annual ground rent as high as possible knowing the buyer and conveyancing solicitor don’t understand the economics of the lease situation.

    One leading name in residential development is Wimpey Taylor which issues leases with ground rent doubling up every 10 years . You can find this information by google search.

    So avoid Taylor Wimpey.