The notoriety of ground rent scandal had been going on for several years; however, the scandal was uncovered and exposed at the end of 2016. It has been speculated that national developer Taylor Wimpey dealt in the sale of houses and apartments, which required the homeowners and landlords to pay excessive ground rent at the end of a decade. With the story out in the public, Taylor Wimpey has contributed more than £150 million to compensate with the leaseholders he dealt with.
However, it has enabled every leased homeowner and flats owner to question the integrity of the leasehold system. Apartment flats are often required to be leased for various legitimate reasons; however, a developer cannot demand for leasehold rent from a house owner unless he has contributed to the leasehold interest. The implication of ground rent allows a homeowner to pay excessive charges to the developer for an undefined reason. How to eliminate it?
As mentioned previously, Taylor Wimpey was required to pay £130 million to compensate his clients who purchased properties on the merits of a double ground rent method. On the contrary, if a homeowner bought a freehold associated with their properties—they would not receive any compensation from the developer.
It requires the legitimate leaseholders to take certain initiatives to ensure the elimination of such system. It requires them to implement two types of legislation, which would enable the leaseholders to own their freehold. Or, they could have their lease extended to avoid paying any ground rent to a developer.
The Leasehold Reform Act 1967 encourages the leaseholders to purchase freeholds or have the deadline of their lease extended to avoid paying the exorbitant ground rent scandal. It is recommended to the leaseholders to buy the freehold, as opposed to having the lease extended for particular reasons. However, if a leaseholder is adamant on getting an extension, it requires him to own the property for more than two years. It also requires him to submit the required documents to become eligible for the extension.