Leasehold Ground Rent Reform Changes

What does the Leasehold Ground Rent reform mean for me?

Following the announcement of the Leasehold Reform (Ground Rent) Act 2022, which came into effect on 30th June 2022, many leaseholders are keen to understand what these changes mean for them. We’ve compiled an overview of the Act, answering your questions on what changes are taking place.

What is Ground Rent?

If you are a leaseholder, you may have to pay ground rent. This is an annual sum you pay to the owner of the land your property is on – typically associated with apartments.  

What is changing?

Under the previous legal framework, Ground Rents could be charged on leasehold properties and could range from £50 to £100 a year – and often higher.

When the Leasehold Reform (Ground Rent) Act 2022 came into force on the 30th of June 2022, the new rules implemented a ban on ground rents for new and qualifying long-term residential leasehold homes.

The wording of the legislation states that the ground rent for new leases will not be allowed to be more than ‘one peppercorn per annum’. Effectively this his terminology means that the ground rent will be nil for new leases which fall under this Act.

How will this help first time buyers?

Seeking to help leaseholders through the new legislation, the Ground Rent Reform will ensure that leaseholders purchasing a property under a new lease granted on or after 30 June 2022 will never need to pay unnecessary ground rent charges.

Leasehold Minister, Lord Stephen Greenhalgh, has called the new law “an important milestone in our work to fix the leasehold system and to level up home ownership”, which has been recognised as a change that will make the dream of climbing the property ladder a more affordable reality for the next generation of home buyers, creating a cheaper and fairer system.

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