Geographies Affected by Ground Rent

As happens, whenever an issue goes public, many are written about. Oftentimes, this can cause information overload and sometimes misinformation. There are ways to assess information before we use them as basis for judgment.

The leasehold scandal has been on the headlines in the recent years. There are many elements to the issue that are more focused on rather than the bigger picture. This article will attempt to clarify and offer a more objective approach to broaching the subject.

The Blame

Most of the fingers point to the owners in the leasehold agreement to be the sole party to blame.

Myth: The owners have complete autonomy in assigning fees on annual basis out of caprice. Ground rent rates can be increased without due consultation.

Fact: All terms and fees of the agreement should have been negotiated on and agreed upon before being minted on paper. While ground rent rates are computed from land value, this cannot just be assigned without proper negotiation in the contract.

The Solution

With the proposed solutions to the predicament of leaseholders, the focus is on how the extra fees can be limited or allow the buying out of the lease and revert to freeholder.

Myth: It is not possible to convert a lease into freeholder status. Leasehold agreements can no longer be renegotiated in terms of ground rents.

Fact: This is an ongoing process, especially with how the laws can work for both parties. In terms of buying out the lease, it is not impossible but it can be costly.

The Effect

When the leasehold scandal surfaced, everybody just oversimplified that it was due to the greedy imposition of fees.

Myth: The only problem is that owners became so greedy that they have been increasing rates to profit more.

Fact: There is also a factor of the lack of laws that work both ways to protect buyers, lessees, and owners.

There are a lot more to consider and negotiate before a solution that fits everybody can be reached. All in all, proper information should be everybody’s responsibility.