Q: I heard in the news the government is going to cap Ground Rents. I bought a house on a new development six years ago and pay an annual “maintenance” fee to a management company. I’ve never really understood why I pay this, as my house is freehold. The developer said the fee would be minimal, which it was at first, but it has since increased several times. Will the new Ground Rent cap mean my charges are reduced?
A: What you are paying is not Ground Rent. Ground Rent applies to leasehold properties where the homeowner does not own the land their property is built on.
Leaseholders often pay both ground rent and service charges, particularly in flats where the cost of maintaining communal areas is shared. As a freehold homeowner, your charges fall into a different category.
Your confusion is common. In recent years, local authorities have increasingly refused to “adopt” roads, footpaths, green spaces and playgrounds on new developments. This means they are not responsible for maintaining them, and the cost is instead passed to homeowners.
Typically, the developer retains ownership of the communal land and transfers responsibility for it to a property management company. That company arranges maintenance and recovers the costs from homeowners. Sometimes the management company is jointly owned by residents; in other cases, it is owned by a third party.
There is currently no statutory cap on these charges. Where residents own the management company, they generally have greater control over costs. Where they do not, options to challenge increases are limited.
In summary, the proposed cap on ground rents will not affect maintenance or service charges payable by freehold homeowners.
This question has been answered by Michael Ogden, a Senior Solicitor with GHP Legal. If you would like to speak to someone about this or any other legal matter, please visit our website www.ghplegal.com and use the contact us form, or call us on: Wrexham 01978 291456, Llangollen 01978 860313, Oswestry 01691 659194
