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If you own a leasehold property or have done so in the past, it is likely you will be aware of the term ‘ground rent’. Ground rent is a charge from the freeholder and paid by the leaseholder for the duration of the lease.

Ground rent terms can be escalating or fixed and therefore it is important to make sure you are familiar with the terms of your ground rent before you exchange contracts of sale. As well as potentially costing you a lot of money some ground rent clauses can be onerous which may cause problems in the future when attempting to sell your property.

The solicitor or conveyancer advising you should warn both, you as the buyer and also any lender who is providing a mortgage secured on the property, of any terms in the lease that are unusual, or may adversely affect the value of the leasehold property. It is the responsibility of your solicitor or conveyancer to consider whether the ground rent terms of your lease are onerous and whether they should warn you about the terms of the clause.

Whether a ground rent term is onerous or not will depend on the individual terms of the clause. The things that your solicitor or conveyancer should consider include the amount of ground rent that is charged when you take ownership of the lease, whether this is fixed or escalating, the regularity of payments and how often and on what basis the ground rent term is reviewed.

A potentially onerous ground rent clause is when the clause contains a ‘doubling’ review provision which is a ground rent increase. Terms such as these may be onerous if they are reviewed on a regular basis, such as every 5 to 10 years. Although the charge may sound minimal when you first take ownership of the lease, a doubling clause may result in a considerable amount later down the line causing a serious concern for potential lenders and prospective buyers. This could make it very difficult or even impossible to sell your property in the future, which is why terms such as these are generally viewed as onerous and should be identified and advised upon by your solicitor or conveyancer.

Your solicitor or conveyancer should advise you of any potentially onerous ground rent review clauses in a “Report on Title” or a “Report on Contract”. This should be sent to you before you commit to the purchase on exchange of contract. This will allow you to take any consequences of the ground rent into consideration when deciding to continue with the purchase of the property and give you the opportunity to negotiate a variation of the lease with the freeholder if required.

Failure of your solicitor or conveyancer to provide you with a clear explanation of the key terms in the lease could amount to breach of duty which may cause you a financial loss. In such instances you may be entitled to make a claim for professional negligence against your solicitor or conveyancer.

Potential claims for loss in this respect could be in the form of cost of variation of the lease with your freeholder, or loss in value of your property. You may be able to claim both the cost of deed of variation and loss in value of your property if your freeholder permits you to vary the lease to a degree that is not as advantageous as a lower or nominal amount, such as ‘peppercorn rent’.

If you have become aware of a potentially onerous ground rent review clause in your lease that your solicitor or conveyancer failed to provide you advice upon, contact Specters Solicitors today so that we can discuss your prospects of making a claim against your former solicitor or conveyancer for professional negligence.

There are time limits for bringing professional negligence claims and therefore it is vital that legal advice is sought as soon as a problem with a lease is identified.

To obtain a quote or if you would like to discuss your ground rent with our experienced disputes team, please call 01925 428360 or start an enquiry here.