I read the 18 September Gazette article by Russell Hewitson entitled ‘Don’t write off leasehold just yet’.
The problem does not so much concern leasehold property per se. One of the main issues is some developers of leasehold houses and flats trying to maximise the value of their reversion portfolio, whether or not for the purposes of a future sale. Provision for stepped increases in ground rents will certainly enhance the valuation of a portfolio of reversionary interests.
Developers will have received capital receipts on the sale of each unit and they are having a second bite of the cherry on the sale of a portfolio of reversions with stepped ground rent increases.
It is naive to think that some developers will not have set up a game plan in advance to sell on the reversions in due course.
Leasehold houses are not new and have been in existence with nominal rents in certain areas of the country for years. One way to resolve the problem of existing leasehold houses might be to give
the householder a right to buy at a nominal or on a reduced price formula based on the initial ground rent passing, say, within the first 10 or 20 years.
Andrew Cross, Hatchers Solicitors, Shrewsbury