Pensioner, 90, hit with £17,000 ground rent bill – as next government faces call to abolish ‘medieval leasehold system’
A 90-year-old pensioner who has paid off his mortgage is having “sleepless nights” after being hit with a “feudal” £17,000 bill for ground rent.
Derek Taylor is one of five leaseholders at Elgin House, North Herts, whose annual ground rent has risen from £25 to £2,350 – an increase of 9,000%.
The rise has been backdated to 2018, meaning he now owes £17,169 in one lump sum and is facing legal action if he does not pay.
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The case has renewed calls for the next government to abolish England’s centuries-old leasehold system, which campaigners say is “feudal” and “exploitative”.
A ground rent is a charge leaseholders have to pay so they can have a home on land they do not own and does not require a service in return.
Derek Taylor owns his home but under the leasehold system, is required to pay rent to the owner of the land it is built on
The Tories promised to effectively abolish these charges in their 2019 manifesto, but the long-awaited legislation aimed at doing this now hangs in the balance following Rishi Sunak’s decision to hold a snap general election.
Read More: ‘Buying a flat ruined my life’: Leaseholders plead for tougher legislation
Derek, who has lived in the property for 50 years and paid off his mortgage, told Sky News: “We were asked to send £17,000 plus pounds and about a fortnight later we got a letter saying this amount is outstanding and if it’s not paid in five days, we have no course but to take you to court.
“That caused a lot of upset because who can simply pay that amount of money?
“The letter upset me because it was very threatening. You wake up in the night and can’t get to sleep again because it’s on your mind.”
The letter was sent to Derek by solicitors Salter Rex on behalf of the freeholder Quadron. They did not respond to a request for comment.
‘Let down by government’
The ground rent for these properties is now over £2,000 a year
It said £17,169 is outstanding on his account and if he does not pay “we will have no alternative but to commence legal proceedings”. It added that a £120 administration fee will be charged on top of that if no money is paid within five days.
The ground rent increase is allowed under the terms of Derek’s lease, drawn up in the 1960s, which said the fee could be reviewed in March 2018 and every 50 years after in line with the annual value of the land.
Derek and his neighbours, who were not aware of the clause, took the case to arbitration but it was ruled that the rise was allowed and the lease agreement “includes no requirement for the level of rent to be “reasonable”.
Derek, a former print worker, said: “It’s simply because they can. Legally that may be so but whatever way you look at it we can’t see that this is fair.
“We feel let down (by the government). This has been going on so long, it should have been sorted out a long time ago and when this bill does eventually get passed we don’t know if it will apply to our situation at all.”
Derek is due to meet his local MP Bim Afolami, who is also the economic minister, next week to discuss the issue.
In a newsletter to constituents seen by Sky News, Mr Afolami said he was aware of the situation and the government is “committed to removing these terrible practices”.
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Labour’s Barry Gardiner says leaseholders face ‘exorbitant’ ground rents for ‘no service’
‘Leaseholders in limbo’
At the last election in 2019, the Tories promised to reduce ground rent to a zero “peppercorn” rate.
But the Leasehold and Freehold Reform Bill, which was meant to be the mechanism for doing this, was only introduced to the House of Commons in November last year and is yet to be given Royal Assent.
The policy will be considered in the House of Lords later as part of the “wash-up” period, when the final bills that will become law are rushed through parliament before it is dissolved for an election.
The National Leasehold Campaign (NLC) has welcomed this news, amid fears the bill would be killed, but said the “devil is in the detail” as it is not clear if a cap on ground rents will be included in the final draft of the legislation.
This was due to be added to the bill as an amendment, but there have been reports for months that the Treasury wants to block the policy because it is worried about spooking insurers and pension funds that have amassed vast freehold portfolios.
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Katie Kendrick, co-founder of the NLC told Sky News: “Leaseholders remain in a state of ‘Leasehold Limbo’ wondering if they will be helped by this bill.
“It remains to be seen how far this bill will go but rest assured that there will still be some way to go to achieve our goal of abolishing Leasehold and a move to Commonhold.
“Abolishing the medieval leasehold system must be in all manifestos and any incoming government must prioritise this.”
Where do the parties stand on leasehold reform?
The issue could be a dividing line in the general election campaign, amid a wider housing crisis which at its heart is a problem of insufficient supply and spiralling affordability.
Labour has said they will abolish leasehold, but recently pushed back the timeline for doing so, blaming the Tories for watering down their own proposals.
Housing Secretary Michael Gove initially said he wanted to abolish the system, calling it “feudal”, but his bill only went as far as to ban leasehold on the sale of new houses.
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Gove speaking in 2023 says he wants to abolish ‘unfair’ leasehold system
Houses make up a small portion of around five million leasehold properties across England, most of which are flats.
Other provisions of the legislation include making it cheaper and easier for people to extend their leases, buy the freehold and gain the right to manage their buildings.
But whatever measures are ultimately enacted, for some leaseholders it will be too little too late.
Freeholders ‘cashing in’
Derek’s neighbour David Pickett ended up borrowing £54,000 from family members to change the terms of his lease so that moving forward, his ground rent will be £0.
The rise in ground rent risked leaving him trapped as it significantly devalued the property he poured his savings into, putting him at risk of negative equity and reducing his chances of selling it.
David Pickett had to pay £54,000 to renegotiate his lease and remove the ground rent clause
The payment included £15,000 in backdated ground rent and a £34,000 premium – a fee David says is around seven times higher than three other neighbours in identical properties who renegotiated their lease terms in 2016. They have a fixed ground rent of £100 a year and paid a premium of between £4,000 to £5,000.
However, for communications worker David that was not an option.
“Everything is done in mathematical formulas that are hard to understand, the language they use is so cold,” he said.
The 31-year-old said delays to leasehold reforms have allowed freeholders to “cash in” on people like him and Derek.
“Part of the reason we delayed to arbitration and tried to push this as far back as possible is because we thought these reforms were coming soon and when we were getting legal advice they were talking about this bill so we always had this hope.
“Now it just feels like that flame has been extinguished.
“It feels like there is nowhere to turn for help and anyone that can help wants £200 an hour.”
UK
More prisoners are being transferred to less secure jails to tackle overcrowding crisis, Sky News understands
The prison service is starting to recategorise the security risk of offenders to ease capacity pressures, Sky News understands.
It involves lowering or reconsidering the threshold of certain offenders to move them from the closed prison estate (category A to C) to the open estate (category D) because there are more free cell spaces there.
Examples of this could include discounting adjudications – formal hearings when a prisoner is accused of breaking the rules – for certain offenders, so they don’t act as official reasons not to transport them to a lower-security jail.
Prisoners are also categorised according to an Incentives and Earned Privileges (IEP) status. There are different levels – basic, standard and enhanced – based on how they keep to the rules or display a commitment to rehabilitation.
Usually ‘enhanced’ prisoners take part in meaningful activity – employment and training – making them eligible among other factors, to be transferred to the open estate.
Insiders suggest this system in England and Wales is being rejigged so that greater numbers of ‘standard’ prisoners can transfer, whereas before it would more typically be those with ‘enhanced’ status.
Open prisons have minimal security and allow eligible prisoners to spend time on day release away from the prison on license conditions to carry out work or education.
The aim is to help reintegrate them back into society once they leave. As offenders near the end of their sentence, they are housed in open prisons.
Many of those released as part of the early release scheme in October after serving 40% of their sentence were freed from open prisons.
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Overcrowding in UK prisons
They were the second tranche of offenders freed as part of this scheme, and had been sentenced to five years or more.
Despite early release measures, prisons are still battling a chronic overcrowding crisis. The male estate is almost full, operating at around 97% capacity.
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Campaigners demand IPP sentences are scrapped
Sky News understands there continue to be particular pinch points across the country.
Southwest England struggled over the weekend with three space-related ‘lockouts’ – which means prisoners are held in police suites or transferred to other jails because there is no space.
One inmate is believed to have been transported from Exeter to Cardiff.
A Ministry of Justice spokesperson said: “The new government inherited a prison system on the point of collapse. We took the necessary action to stop our prisons from overflowing and to protect the public.
“This is not a new scheme. Only less-serious offenders who meet a strict criteria are eligible, and the Prison Service can exclude anyone who can’t be managed safely in a category D prison.”
UK
Prisoner driven to psychosis after stealing mobile phone unable to undergo health test ‘due to lack of staff’
A prisoner who has served 12 years in jail for stealing a mobile phone was unable to attend a psychiatric assessment because of a lack of staff, his family claims.
According to psychiatrists, Thomas White has developed psychosis as a direct result of being handed a controversial indefinite jail term called imprisonment for public protection (IPP), which was abolished in 2012.
His sister has been campaigning for over a year to have him transferred to a hospital, which would require him to receive sign-off from two separate psychiatrists.
Ms White said her brother, who experiences religious hallucinations, was placed in segregation and needed three prison staff to release him from his cell – but they were not available due to staff shortages.
Thomas White pictured with his sister Clara White and their mother Margaret at Manchester prison
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Sky News understands that Lord Blunkett, the former Labour home secretary who introduced the IPP sentence but now campaigns for reform, has asked prisons minister Lord Timpson to investigate.
What are IPP sentences?
Thomas White, now aged 40, was one of more than 8,000 offenders who were given an IPP sentence – a type of open-ended prison sentence the courts could impose from 2005 until they were scrapped.
The sentence – which has been described as a form of “psychological torture” by human rights experts – was intended for serious violent and sexual offenders who posed a significant risk of serious harm to the public but whose crimes did not warrant a life term.
Although the government’s stated aim was public protection, concerns quickly grew that IPP sentences were being applied too broadly and catching more minor offenders, partly due to the fact that previous convictions were taken into account when determining whether someone posed a “significant risk”.
Thomas was sentenced to two years for stealing the mobile phone in a non-violent exchange back in 2012 – but because he had 16 previous convictions for theft and robberies, he was given an IPP sentence and has served 12 years.
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What is an IPP sentence?
The coalition government scrapped the sentence in 2012, but the change was not applied retrospectively, meaning 2,852 prisoners remain behind bars – including 1,227 who have never been released.
The new government is under increasing pressure to act on the IPP crisis given they were introduced by Lord Blunkett – who has since said he feels “deep regret” about the way the sentence was used.
‘My brother is being seriously failed’
In an email to Lord Blunkett, seen by Sky News, Ms White said: “My brother had a psychiatric appointment on the 1 November to see if he could be admitted to an outside hospital as he has to have two signatures to be transferred to an outside hospital.
“The system is nothing but criminal – people like my brother are being seriously failed.
“We waited a long time to have Thomas assessed again by the psychiatrist. We more than likely won’t get the assessment again.”
Read more:
11 years for stealing a mobile phone: Inside the lives of IPP prisoners
The £1bn cost of keeping people in prison on indeterminate IPP sentences
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Inside the lives of IPP prisoners
James Frith, the Labour MP for Bury North, said: “Thomas’ case highlights why these sentences were abolished over a decade ago.
“Thomas’s indefinite imprisonment has had a hugely detrimental impact on his mental and physical wellbeing. Thomas should be a patient, not a prisoner.
“We know the prison system is underfunded and overcapacity, but this is no excuse for failing Thomas. I have been working with Clara, Thomas’ sister, and I have written to the Lord Chancellor to raise Thomas’s case and the wider issues of IPPs.
“Thomas has been denied appropriate assessment and care for too long, we will not give up this fight for what is right.”
The Ministry of Justice does not comment on individual medical cases.
It is understood Lord Timpson will respond to Lord Blunkett in due course.
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