Up to 150 flat owners “trapped” by potential ground rent rises which left them unable to sell their homes have now been offered “a fairer deal”.
It recently came to light that there is a clause in the lease for flat owners in Six Hills House, Stevenage, which says ground rent will double every 15 years.
While the ground rent is currently £300 a year, mortgage companies are declining to lend money to prospective purchasers as the lease contains potentially onerous ground rent terms for the future.
Many of the people who own flats in the 2016 development are public sector workers who used the Government’s Help to Buy scheme to get on the property ladder.
One said: “I have recently put my flat up for sale and, whilst I found a buyer within a week, no banks would lend on the mortgage and so the estate agents have advised I cancel all other viewings and limit to cash buyers only.”
Another flat owner, Sahar Nejabati, said: “I have found myself unable to sell my flat, in a situation that seems hopeless.
“For many of us, this has been our first property and has now left us trapped in a home which is unsellable.”
Last week, Stevenage MP Stephen McPartland raised the issue with the Parlimentary Under-Secretary of State for Housing, Communities and Local Government Heather Wheeler.
He said: “The situation is preventing homeowners from remortgaging or selling their properties. My constituents feel frustrated and trapped. Most of the tenants felt they would be leaving before the ground rent began to double.”
Mrs Wheeler said a working group has been set up to look at existing service charges on a wider scale, as well as consider if fees and charges that go beyond service charges should be capped or banned. A report is due in July.
She said: “We must see an end to leaseholders being charged excessive and unfair fees.
“The Government will introduce measures to deliver reform. Nothing, including legislation, is off the table.”
On Tuesday, housing association Metropolitan Thames Valley, which owns most of the shared ownership at Six Hills House, told Mr McPartland it had jointly agreed with freeholder Adriatic Land 5 that any future increases to the ground rent – which will be limited to every 15 years - will be made in line with the Retail Price Index.
A spokesman for HomeGround, managing agent for the freeholders, said: “Following negotiations between HomeGround and Metropolitan, we are pleased to confirm that an agreement has been reached to convert the leases, removing the doubling ground rent clauses in the leases at Six Hills House and replacing them with a review that is linked to inflation (RPI), acceptable to lenders and conveyancers.
“As agents for the current freeholder, we have been able to negotiate a positive settlement for the benefit of the residents, who are Metropolitan’s leaseholders. As part of the agreement, we have secured agreement from Metropolitan that no costs or liabilities will be passed on to the residents.”
A spokesman from Metropolitan Thames Valley added: “The agreement means that ground rent payable by the residents will no longer double every 15 years. Instead any change will be determined by a Retail Price Index review every 15 years. We believe that this will meet mortgage lenders’ changed criteria on ground rents.
“We have written to Six Hills House residents to confirm this good news. We are entirely sympathetic to those who have been wanting to sell or remortgage their homes; and we have been doing all we can to support them as we work with the freeholder to resolve their situation.”
Mr McPartland said: “It is a fantastic step towards a fairer deal for leaseholders.”
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