There has recently been a flurry of press over ground rent clauses. 

Here is a quick recap. 

You buy a long leasehold and buried in the lease out of view is an innocuous clause which says you owe ground rent of £250 per annum. No big deal you think. However, it goes on to say it doubles every five years. 

That is a big deal. With compounding that measly £250 becomes £32,000 per year in year 40. 

The point is you do not need to wait that long. Just knowing that this is where the ground rent is heading is enough to blight the property.

And this is exactly what has happened in certain developments in Liverpool. 

So what is in it for developers? Well of course they get to sell on these revenue streams for a hefty mark up to finance houses. 

But in my view this is very short term thinking indeed, especially in the world of social media. 

Take Taylor Wimpey. They told the client of this article that she could buy her freehold for £5,000 which would put an end to her ground rent payments. However, Wimpey subsequently sold the freehold to a freehold company called Adriatic who are now demanding £44k for the freehold. 

What a mess! 

Thousands of homeowners have now formed a group on Facebook called National Leasehold Campaign and are circling the UK's biggest housebuilders.

I think commercial sense will prevail. These days no housebuilder can afford the reputational damage from a poorly managed flatted scheme. This is why they will have a continuing interest in the management of the scheme to ensure there are no future issues which could affect their sales pipeline on future schemes. 

In exactly the same way how exactly is this "rent charge" issue going to pan out for housebuilders do you think?

I won't go on about the legal issues here, but just think of the terrible PR, blighted housing developments etc.