Homeowners living on a development in east Londen say they are being forced to pay an “unjust and unfair” charge that provides them with no benefits and is likely to make their properties “unsellable and unmortgageable”.
Residents of Chobham Manor pay a “fixed estate charge” for the upkeep of Queen Elizabeth Olympic Park in Stratford, the site of the 2012 Olympic Games and Paralympic Games and now a public open space.
It is collected by the London Legacy Development Corporation (LLDC), a mayoral department that was given the power to impose the charge by Boris Johnson in April 2016, shortly before the end of his second term as London mayor.
The payment, which for leaseholders is in addition to service charges, is based on the size of their homes, and increases annually. For a three-bedroom property it is now £1,357 a year, almost £200 more than the starting rate of £1,159.
In die verlede, London’s mayor, Sadiq Khan, has criticised the “unfair extra costs” that many leaseholders face across the city, and in his manifes vir die 6 May election he pledges to work to ensure the capital leads the way in ending this “scandal”.
While the LLDC defended it as “fair and reasonable”, a spokesperson for Khan told the Guardian that he “understands the concerns raised”, and “these will be looked into”.
Chobham Manor is a 659-home development next to Queen Elizabeth Olympic Park. Every household and business on the park “estate” has to pay the charge, which increases annually in line with the RPI measure of inflation.
They say they receive no benefits in return, such as exclusive park access or discounts on event tickets, and claim they are, in effect, contributing twice because they also have to pay council tax.
Marco Boscolo, who bought his three-bed maisonette on the estate in September 2019, said the charge “is a leasehold scandal and an unfair extra cost.”
Hy het bygevoeg: “The mayor of London has the power to remove this fixed estate charge. He has come out many times in favour of leasehold reform.”
Die Chobham Manor Residents Association is calling for the charge to be abolished.
In a letter seen by the Guardian, it claims the charge is an “unfair contract term” that could have “extremely damaging” consequences for residents.
One reason why the fixed estate charge is controversial is because it increases in line with the retail prices index (RPI), watter has been widely discredited as a measure of price rises as it frequently overstates them.
In its letter, the association claims the charge is “effectively a ground rent obligation”. In Februarie 2020 the Competition and Markets Authority said it had “significant reservations” about RPI-linked increases to ground rent.
The residents’ association claims it is “extremely likely that properties in Chobham Manor may be deemed unsellable and unmortgageable” as a result of the charge.
The LLDC describes itself as a “mayoral development corporation, and therefore directly accountable to Londoners through the mayor of London”. The mayor appoints members to the its board and allocates its budget.
An LLDC budget document seen by the Guardian says the charge “is a significant future revenue stream”.
It adds that the LLDC is expecting to receive £4.3m of income from “park operations and venues (excluding trading)” in 2021-22, rising to £6.2m the following year and £7.2m in 2023-24. It says this is “largely income from the fixed estate charge”.
An LLDC spokesperson said: “We believe the fixed estate charge is fair and reasonable… These type of charges have existed for many years and have been increasingly used on large regeneration projects like ours.”
The LLDC said the charge was not a ground rent or a service charge, “and is not affected by the recent reforms.”
It said the requirement to pay the charge “is made very clear to prospective residents and businesses from the outset”, en bygevoeg: “The fixed estate charge is currently increased by RPI and not by LLDC’s actual costs, which are greater, to provide more certainty for residents”
The spokesperson for Khan said: “The development at the Olympic Park is driving regeneration, growth and investment in east London and will deliver 33,000 much-needed new homes by 2036. The fixed estate charge … goes towards the upkeep and security of the park, but the mayor understands the concerns raised by residents, particularly about the RPI increases in the charge, and these will be looked into.”