Freeholders should be halted from collecting ground rent and service charges

2 June 2020 | General

The government should suspend freeholders’ rights to collect ground rents and service charges according to The Leasehold Solutions Group, which works with leaseholders on tasks like managing lease extension.

Around half of leaseholders are struggling to pay their current service charge bills and ground rent, according to ‘anecdotal evidence’ from group.

Louie Burns (pictured), managing director of The Leasehold Group of Companies, said: “The last few months have caused unprecedented disruption to societies and economies across the world and many tens of thousands of people have tragically lost their lives to the Covid-19 virus.

“The ongoing lockdown has caused significant financial problems for millions of people, causing the UK government and financial institutions to offer comprehensive aid to support affected businesses, individuals and families.

“The government’s Coronavirus Job Retention Scheme has covered 80% of the salaries of furloughed workers and the self-employed, while mortgage lenders and credit card providers have moved swiftly to offer payment holidays to their clients.

“However, one notable group that has failed to offer any support whatsoever are freeholders, who continue to exploit the leasehold system to extort profits from struggling leaseholders.”

Leaseholders have a legal responsibility to pay their leasehold dues to their freeholder, including ground rent, service charge and major work bills.

Burns added: “It comes as no surprise that leaseholders are struggling to meet the terms of their lease, given the current financial climate and the fact that many people are furloughed through no fault on their part. What is shocking though, is the absence of offers of help from fat cat freeholders.

“In fact, we have seen compelling evidence that the opposite is true. Indeed, many freeholders appear to be exploiting the COVID-19 crisis to extort even greater profits from hard-hit leaseholders.

“We have received numerous complaints from leaseholders that their freeholders have used the government scheme to furlough staff, with the effect that no routine maintenance work has been carried out on some leasehold buildings for months, while freeholders refuse to reduce the service charge bill, even by a penny.”

In the last few years there have been stories of onerously high ground rents.

Burns said: “Many leaseholders are currently facing profound financial hardship and expecting them to be in a position to continue to pay onerous ground rent is simply unacceptable, given what is happening to the UK economy.”

This post has originally been featured in Property Wire.