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Publish date

26 July 2021

What does the Leasehold Reform Bill mean for you?

The Leasehold Reform (Ground Rent) Bill was introduced to Parliament on 12 May 2021, with the intention of reforming the current legislation to make it easier and less costly for residential leaseholders to extend the term of their lease and/or to acquire the freehold.

The Bill makes provision for leaseholders to recover unlawfully charged ground rent plus interest through the First Tier Tribunal. Further, the Bill places a duty on trading standards authorities in England and Wales to take enforcement action where a prohibited rent has been charged.  Where a breach occurs, the enforcement authority has power to impose a financial penalty subject to a minimum of £500 and a maximum of £5,000.

In recent years many leases have included higher annual ground rents as well as provision for the rent to be reviewed at regular intervals. The leaseholder, having already paid a premium for the lease, is then faced with an escalating annual ground rent which can often make it difficult to mortgage the property or sell it going forward.
The purpose of the Bill is to make leasehold ownership fairer and more affordable for leaseholders by restricting the annual ground rent payable to a peppercorn or nil.

On 24th January 2022 the bill passed its third reading in the House of Commons and has now become law.

What does the new Leasehold Reform (Ground Rent) Bill mean?

The new law means that, going forward, new homes that are sold as leasehold will only be able to charge a nominal fee. However, while the new law will stop ground rents on new leaseholds, it does not extend to existing property owners. However, the government has made it clear that the abolition of future ground rents is a starting point. Future legislation may address existing leases where leaseholders find themselves trapped by rapidly escalating ground rents.

Landlords who demand a ground rent in contravention of the Act face fines and leaseholders will be able to apply to the First-Tier Property Chamber for a declaration that a prohibited ground rent is replaced with a peppercorn rent.

We await the second part which aims to make the statutory process for enfranchisement and lease extension easier and more affordable.


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