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The Masked Tulip

Sorry, But Your House Is Now Worth £0

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'Sorry, but your house is now worth £0' - what resident of Elba estate in Gowerton was told by mortgage lender following ground rent rise

This is a interesting story which I posted about on here a couple of months back.

Basically Swansea Council is the lease-holder and basically ramped up the ground-rent of the houses on an estate enormously.

They haven't done it eslewhere in Swansea even though the Council owns leases all over the city. Some say that the Council has it in for this particular estate.

Others say that the Council has spent a few million on a sports centre nearby and wants the land cheap.

Others say that the Council is merely uping the ground rent as and when the leases come up for renewal. They haven't done this elsewhere though.

Anyhow, apparently the banks are now saying that these houses are worth sweet FA.

Read more at http://www.southwales-eveningpost.co.uk/Sorry-house-worth-pound-0-resident-Elba-estate/story-22961279-detail/story.html#tIzeR6Sto5LTP4SQ.99

Edited by The Masked Tulip

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Its a bit steep to say the least but I cannot see the houses being worth nothing. I reckon the £0 figure in that article was how much the lender was prepared to lend to that particular person. Probably mew`d up the hilt already.

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Its a bit steep to say the least but I cannot see the houses being worth nothing. I reckon the £0 figure in that article was how much the lender was prepared to lend to that particular person. Probably mew`d up the hilt already.

Depends on how the valuation is done. On a cashflow basis, If the ground rent is more than the rent you would receive then the present value of the cashflows would be negative, thus the valuation is indeed (or should be) negative......

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Depends on how the valuation is done. On a cashflow basis, If the ground rent is more than the rent you would receive then the present value of the cashflows would be negative, thus the valuation is indeed (or should be) negative......

Ok that`s me being naive again. I just thought of people buying a house to live in.

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Ok that`s me being naive again. I just thought of people buying a house to live in.

It comes to the same thing. No one would buy a house and accept liability for a ground rent when they could rent an equivalent house for less.

However, the story makes no sense. It would have to be a very bizarre lease which gave the freeholder carte blanche to raise the ground rent at will. And even if such a lease existed it would be valueless to start with - why would you buy an asset which carried an open-ended liability?

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It comes to the same thing. No one would buy a house and accept liability for a ground rent when they could rent an equivalent house for less.

However, the story makes no sense. It would have to be a very bizarre lease which gave the freeholder carte blanche to raise the ground rent at will. And even if such a lease existed it would be valueless to start with - why would you buy an asset which carried an open-ended liability?

According to an item on 'You and Yours' a copy of one of the actual leases in question was checked by an expert on leasehold. He said the schedule and details of how increases would be calculated are written in the lease. It appears that the council is acting legally. (I don't doubt it got a lawyer to look at the leases before the decision was made.)

An action group has been formed and they're trying to stump up the cash to engage specialist lawyers.

I suspect a lot of people's conveyancing solicitors cast only a cursory glance over the leases, if that.

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According to an item on 'You and Yours' a copy of one of the actual leases in question was checked by an expert on leasehold. He said the schedule and details of how increases would be calculated are written in the lease. It appears that the council is acting legally. (I don't doubt it got a lawyer to look at the leases before the decision was made.)

An action group has been formed and they're trying to stump up the cash to engage specialist lawyers.

I suspect a lot of people's conveyancing solicitors cast only a cursory glance over the leases, if that.

Would the conveyancing solicitors not be liable in some way?

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There must be people on that estate just coming up to a stress free retirement after 40 years hard work and suddenly need to find another 100K to give them 3K per year, hoping they don't get another uplift in 25 years time..if they live that long. Nightmare scenario.

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Would the conveyancing solicitors not be liable in some way?

You'd have thought so, unless they could prove they had warned the buyers in writing about the terms of the leases.

But then, perhaps they did, and the buyers didn't bother reading the warnings.

As well as financial education, I really think Citizenship/PSE should include some basics about laws and contracts that are likely to affect ordinary people's lives - employment contracts and laws/regulations/contracts when renting/buying property being top.

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Councillor Rob Stewart said: "I have been personally uncomfortable with the amounts being asked. I accept Swansea Council acted appropriately and the officers followed correct procedures, but is it morally right to charge people that amount?

Well at least "correct" procedures were followed!!!! That's all that matters no matter how crazy the decision all we need to do is ensure procedures are followed?

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