‘Labour peer left us trapped and unable to sell our homes'
Homeowners in a London residential block have been left 'trapped' in unsellable flats because of 'punitive' ground rent clauses imposed by their freeholder, a Labour peer.
Leaseholders in the 122-flat development in Illford, east London, are subject to ground rent charges that increase every five years by the retail price index (RPI). The charge, which is in breach of most banks' lending terms, means the homeowners can no longer sell or remortgage.
The freeholder, Lord Carter of Coles, was the only Labour peer to vote against new legislation to reduce existing long lease ground rents to peppercorn in 2021. The Freehold Corporation, of which Lord Carter is a director, collects the payment through its operating company Emerald Ground Rent.
One resident said the landlord's decision to oppose reform was 'morally corrupt'. Lord Carter declined to comment.
Ground rent is an annual fee paid by leaseholders to the freeholder for the right to occupy the land their property is built on. Last year, Labour vowed to ban the practice under leasehold reforms, but stopped short of banning it on existing properties.
For residents of the East London Development, there is little sign of change in the near future. The charges, which have risen from £400 in 2018 to £519.64 from 2023 mean just three banks are now willing to lend against the flats. Others will take the risk, but only with a 20pc deposit.
Most lenders' terms state that in order to qualify for a mortgage, the maximum ground rent must be no more than the greater of £500 or 0.1pc of the property value, and that the ground rent review period cannot be less than 10 years.
In some cases, the East London properties have been valued at 'zero' while others have had to sell to cash buyers at a £125,000 loss.
'Conveyancers valued our property at zero'
Gary Dalton, 48, rents out his property in the building, but had hoped to sell it and put the money towards a larger property for him and family who are currently renting.
'When we came back from being overseas, our plan was to sell it and buy something bigger. I have a wife and two young kids, but we haven't been able to,' Mr Dalton said.
Mr Dalton said some property owners in the building have had their properties valued at zero.
'Some others have managed to sell to cash buyers or with specialist mortgage lenders but at a 30pc loss,' he said.
Mr Dalton and his family are currently living in rented accommodation, as they cannot afford to buy without releasing the equity from the flat.
An estate agent who has sold properties in the building, but declined to be named, said one flat was bought for £425,000, but as a result of ground rent had sold for around £300,000.
Chris Sykes, of brokerage Private Finance said: 'There are lenders that will touch them [properties with higher ground rent], but not every lender will and it will put off buyers.
'It is definitely a complexity the buyer needs to take into account when they are trying to sell, and when they bought the property it probably wasn't considered.
'I have seen this situation where mortgage lenders' opinions have changed and the lease clause is the same as before, but they aren't happy with it now.'
Lord Carter was in 2021 the only Labour peer to vote against an amendment to the Leasehold Reform (Ground Rent) Act 2022 that would have reduced all existing long lease ground rents to zero.
'I am sure he is within his rights, but it feels morally corrupt for him to be voting against legislation that will help literally millions of leaseholders,' said Mr Dalton.
Harry Scoffin, the founder of the campaign group Free Leaseholders, said: 'Enslaving people to ground rent is not consistent with human values, let alone Labour Party ones. How does Lord Carter sleep at night?
'Ahead of the election, Labour said the Conservative government 'must act to protect leaseholders from ground rent exploitation'. Now they're in power, Labour is refusing to publish the results of the ground rent reform consultation which closed over a year ago. Why?'
The Leasehold and Freehold Reform Act 2024, passed under the previous government, but not yet fully in force, is expected to be expanded to include ground rent reform although there is no guarantee of full abolition.
In the meantime, flat owners are considering paying thousands of pounds to extend their leases, a move that, under the Leasehold Reform (Ground Rent) Act 2022, will reset their ground rent to 'a peppercorn' effectively zero.
One resident in the building, who spoke to The Telegraph on the condition of anonymity, is considering this step. She and her husband want to sell their flat they bought in 2018 in order to buy a house and start a family. They are now worried they won't be able to remortgage with a high street lender.
'I am from a really working-class background and grew up in a family on benefits. Most people work towards homeownership as a dream, but now so many people are completely stuck for no good reason except for that British homeowners are turned into financial assets,' she said.
'Some lenders are okay with the five -year review period but it dramatically reduces the number of lenders who are willing to lend.'
In recent years, the Competition and Markets Authority (CMA) has taken action against freeholders imposing 'unfair' ground rent terms, leading to over 21,000 households being freed from issues such as doubling grounds rents.
The watchdog's 2024 report added that while it did not take action against ground rent clauses that increase by RPI, it still has 'concerns about them'.
Paula Higgins, chief executive of the Homeowners Alliance campaign group, said: ' The CMA rightly stamped out doubling ground rents, but now some lenders are refusing mortgages on properties with RPI-linked increases or rent reviews every 10 years or less.
'What once seemed reasonable has become toxic under high inflation, trapping hard-working homeowners in unsellable properties.
'A two-tiered housing market is already operating, with ground rents banned on new flats since 2022 while existing leaseholders are stuck, unable to sell or remortgage without a lease extension to get rid of the ground rent provisions entirely. The Government must act now before even more leaseholders are locked into financial limbo.'
Lord Carter of Coles and the Labour party declined to comment.
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The Guardian
3 hours ago
- The Guardian
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The Guardian
6 hours ago
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The Guardian's analysis shows Reform's target seats would have an average ranking on the English index of multiple deprivation of 92, out of 543 places in total, with 1 being the most deprived. The index brings together a wide range of data sources to build a picture of deprivation, including income, work, education, health and crime rates. Sign up to Business Today Get set for the working day – we'll point you to all the business news and analysis you need every morning after newsletter promotion Average wages are £65 a week lower than the UK average. Unemployment, economic inactivity and the rate of jobless benefit claims are higher. To track the rise of Reform, Labour researchers have been using data from parliamentary petitions as a straw poll to see if the party is growing in their local area. Analysts are poring over data from the 'Call a General Election' online poll, launched within months of the last one, and signed by 3 million people. 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Reindustrialisation runs like a seam of coal through the rhetoric of rightwing populists worldwide – seen most prominently in Trump's Make America Great Again campaign to 'bring back' factory jobs to rust belt states. Much of the intellectual driving force behind reviving industry emanates from the US. The economist Oren Cass and his American Compass conservative thinktank, with close ties to JD Vance in particular, has promoted a 'new right' strategy prioritising a pro-worker, pro-trade union, pro-industry agenda that is scathing of corporate America. Cass was among speakers – including Farage and Kemi Badenoch – at a London conference held by the Alliance for Responsible Citizenship (Arc) this year, sharing a stage with Michael Gove, the Spectator editor and former Tory cabinet minister. 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'We wouldn't talk to those fuckers. Load of posh boys hanging tough for the working class? They can go fuck themselves,' said one union boss. Paul Nowak, the general secretary of the TUC, said: 'The hypocrisy is stunning. This is a guy [Farage] who was hanging on the coat-tails of Donald Trump. He turns up at Scunthorpe saying he wants to save British Steel at the same time as his mate in the White House is slapping tariffs on steel and could cost jobs across Britain's manufacturing base. 'In industrial communities there is a lot of cynicism about politics and whether it can make a difference. But it can make a tangible difference to peoples lives who is in Downing Street.' For Labour, the challenge from Farage showed the importance of an 'ambitious' industrial strategy, he said. It could be central to its hopes of winning a second term.
Powys County Times
11 hours ago
- Powys County Times
Creative industries to get £380m boost ahead of industrial strategy launch
Britain's film, music and video game industries are set to receive millions of pounds of investment as the Government seeks to ensure the UK's place as a creative superpower. The investment, announced by Culture Secretary Lisa Nandy, will see £380 million spent on a range of projects intended to double private investment in the creative industries. Ms Nandy said the investment would 'boost regional growth, stimulate private investment, and create thousands more high-quality jobs'. The figure includes £25 million for research into cutting-edge technologies such as the virtual avatars used in Abba Voyage, and £75 million to support the film industry. It will also see £30 million put towards backing start-up video games companies – an industry worth billions of pounds to the UK – and another £30 million for the music industry, including an increase in funding for grassroots venues. Another £150 million will be split between the mayors of Manchester, Liverpool, the West Midlands, West Yorkshire, the North East and the West of England to support creative businesses in their regions. The announcement comes as the Government prepares to publish its industrial strategy next week, billed as a 10-year, multibillion-pound plan to back certain sectors and secure growth for the UK economy. The creative industries are set to be one of the winners, with a plan for the sector expected to be published alongside the wider industrial strategy. Business Secretary Jonathan Reynolds said: 'The UK's creative industries are world-leading and have a huge cultural impact globally, which is why we're championing them at home and abroad as a key growth sector in our modern industrial strategy.' But earlier this month, the Government also rejected a planning application for a major new film studio near Holyport, in Berkshire, over its impact on the green belt. The £380 million has been welcomed by the industry, with the Broadcasting, Entertainment, Communications and Theatre Union (Bectu) saying it was a 'show of commitment to the sector'. But Bectu chief Philippa Childs said creative workers would also be looking for 'sustained support' from the Government as the sector 'recovers from a series of external shocks'. Recent years have seen the sector rocked by Covid, the cost-of-living crisis and concerns about the impact of AI and Donald Trump's threat to impose tariffs on films made outside the US. Conservative shadow culture secretary Stuart Andrew accused Labour of threatening the 'very survival' of the creative industries. He said: 'From their national insurance jobs tax to their business rates hike, Labour are pushing creative businesses to the brink, and we now know that Rachel Reeves has a secret plan to raise taxes – meaning things will only get worse. 'Labour must recognise that their economic mismanagement is dealing a devasting blow to the sector.'
