Council ground rent 650% increase - can they do this?

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    Council ground rent 650% increase - can they do this?

    I am the Chairman of a community amateur sports club (CASC). 21 years ago our club leased a plot of land from the local council, upon which we built a garage to house our club equipment.

    The rent charged was £100 per annum.

    It would appear to us that the 21 year lease was put in place so that the council could claim rights to the garage once the tenancy agreement expired - although we were not involved in securing the original lease and the members that were responsible are no longer with or in contact with the club.

    For the past two years we have been trying to get our council to start the process of putting in place a new lease agreement as ours expires this month. Finally in November they proposed a rent of £750 per annum and costs of £1500 to put in place a new agreement.

    We have challenged the increase and the costs. The council has responded that they are not prepared to move on the rent but that they would review the costs and also see if we are eligible for any grants. We have not responded to this offer yet as we are still reeling from the 650% increase and the £1500 charge proposal. These will have a serious negative impact on our finances that would result in us being forced to increase membership costs by at least 15%.

    We have looked online for ground rents in the area and they are all (albeit for residential properties) £100-£200 per annum. We cannot see where the £750 rent comes from.

    The garage is situated on land that is at risk of flooding, in a council owned car park that has no charge to park, so prior to us leasing the land from them they had no income from the plot (the size of a double garage).

    We have no experience dealing with this kind of transaction and so are operating fairly blind here.

    Our questions are as follows:

    1 - are there questions we should be asking the council regarding how they have come up with the valuation and if so what are these
    2 - are they permitted to just increase rents by 650% with no notice or time for the tenant to adjust
    3 - are costs not the responsibility of the respective parties (ie we bear our costs and they bear theirs) from my searches online it would appear that the 1958 Cost of Lease act applies
    4 - are there options or a body for us to appeal to

    Many thanks for any advice

    #2
    £750 pa for a garage does not sound bad to me. We pay that here in Reading for a single one to put a car in. Where are you in the country?

    Comment


      #3
      As I read this, they are not increasing the rent, on an existing lease, but negotiating a completely new lease.

      It appears that there is no premium for this new lease (other than the council's immediate costs), so you can expect to pay rents that are comparable with those for short term rentals A quick google suggests that a simple parking space can run to about £1,200 a year in some parts of the country. The Gumtree price for just a garage, near me, runs to £1,800 a year.

      Councils are suffering from reduced central government funding (from which most of their money comes) and restrictions on council tax, so they are going to charge market rates.

      Comment


        #4
        Originally posted by JK0 View Post
        £750 pa for a garage does not sound bad to me. We pay that here in Reading for a single one to put a car in. Where are you in the country?
        South Coast

        Understood - the frustration is that the club paid for and built the garage. We could knock it down, return the land to it's original state (a dumping ground) and walk away but that would be cutting off our noses to spite our face. There are many within the club that feel the council should be paying for the building that we built but legally I think it's theirs because of the expiring lease.

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          #5
          Oh, well the way to think of it is the cost of building the garage, plus 21 years ground rent divided by the 21 years. I bet the increase is not so bad if you look at it like that?

          Comment


            #6
            Originally posted by leaseholder64 View Post
            As I read this, they are not increasing the rent, on an existing lease, but negotiating a completely new lease.

            It appears that there is no premium for this new lease (other than the council's immediate costs), so you can expect to pay rents that are comparable with those for short term rentals A quick google suggests that a simple parking space can run to about £1,200 a year in some parts of the country. The Gumtree price for just a garage, near me, runs to £1,800 a year.

            Councils are suffering from reduced central government funding (from which most of their money comes) and restrictions on council tax, so they are going to charge market rates.
            Cheers - I understand that.

            Checking other areas it appears Mid Devon ground rents for 100-200m2 is £250 per annum with costs and admin at a much more reasonable rate (move the decimal point to the left).

            I get that government funding has been cut but this council already has the highest Band D council tax in the country and has made a habit out of gouging every last penny out of it's "victims". I suspect we are in the like it or lump it category here but just trying to see if there are any loopholes or positions that we can take to try and get the costs down as much as possible. A 15% increase in membership fees would result in some members having to leave the club which would put a further strain on finances.
            Attached Files
            Last edited by ChairmanCASC; 03-01-2018, 09:42 AM. Reason: Clarification on Mid Devon (we are not in Devon...but close enough)

            Comment


              #7
              The normal position with leases is that improvements you make become the landlord's immediately.

              Comment


                #8
                Originally posted by leaseholder64 View Post
                The normal position with leases is that improvements you make become the landlord's immediately.
                That's my understanding too

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