The block of 12 flats in Coleshill, Birmingham contains what critics describe as the most egregious leasehold contracts in the UK.
Some of the apartments in Blythe Court contain leases where the ground rents are fixed at £12 a year for the life of the lease. But others double every 10 years, with one already at £3,200 and the worst at £8,000.
The soaring ground rents have left buyers of the flats – who originally paid between £50,000 and £100,000 for their homes – with properties that are now completely unsaleable.
The total ground rent roll on the building is £17,000 a year, so the new owner of the freehold will have effectively guaranteed themselves an income of 9.5% a year on their money, the Guardian reported.
“Mr Paine perhaps saw the writing on the wall. Having created appalling ground rents at the Blythe Court site they have now dumped their ownership through an auction,” said campaigner Martin Boyd of the Leasehold Knowledge Partnership.
The government intends to stop all ground rents higher than a peppercorn on all new homes.