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By Tina Buck
Chartered Legal Executive & Associate

In recent months the term “Leasehold” has had a bad press. Leasehold means the right to exclusive use and possession of Land for a defined term of years, so often you will see a Lease for 99 years, 125 years or 999 years. A Lease is used almost always for a Flat.

So why the bad press? One major reason is the Annual Rent that a Landlord seeks to charge under a Lease. The Landlord does not have to do anything to receive the Annual Rent unlike for example Service Charge. There has been a trend in recent decades for Landlords to see Rent as a “cash cow”. The danger for Leaseholders is that where an Annual Rent is over £1,000.00 if the Property is in Greater London or £250 elsewhere and is demanded but not paid this can then result in the Landlord being entitled to apply to a County Court for a Mandatory Possession Order under Ground 8 of the Housing Act 1988. Parliament never intended this as the provision was meant to cover short term tenancies. Mortgage Lenders do not like lending where Landlord’s possess such draconian powers where in monetary terms the rent is so small.

A Lease which has a rent over the above limit or is set to double every 10 years, is a Lease to avoid without modifications such as

  • Capping the rent at £250.00
  • The Lease stating the Landlord will not exercise the Ground 8 Proceedings at all
  • The Lease states that the Landlord will not start any proceedings without first giving reasonable notice to a mortgage lender

Without modification one is left with having to pay a landlord in many cases ‘five figures’ to extend the term of the Lease at a peppercorn rent. It otherwise remains for Parliament to legislate.