What is your pension up to right now?
The prevailing wisdom in the UK at least is to try to buy a property and pay off your mortgage before you start drawing down your pension.
But for people buying leasehold homes, this can prove impossible if ground rent doubles every 10 years.
Not only can it drain funds, it makes the property much harder to sell as mortgage providers won’t lend on it, tanking its value.
An attempt to secure your future instead leads to negative equity.
The Competition and Markets Authority (CMA) is working hard to free thousands of people from onerous ground rent contracts.
In a 2019/20 investigation, the CMA found ground rent was “neither legally nor commercially necessary” and found “no persuasive evidence that consumers receive anything in return”.
And yet, the Prime Minister and the Chancellor have reportedly stepped in to prevent the Secretary of State for Housing, Michael Gove, from including a proposal to reduce ground rent to zero in the upcoming Leasehold Reform Bill.
Pension funds have been lobbying the Government hard over the issue.
Many of these funds have invested in the ground rent market and have warned that a policy to cap it would lead to shortfalls for retirees.
It comes as no surprise after the relentless defanging of the Renters Reform Bill in favour of landlords, many of whom view their buy-to-let properties as retirement income, over tenants.
Property as pension plan has become a zero-sum game, where the futures being saved for some are stolen from others.
