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.
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.
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.
The Bill is the first part of two part legislation to reform the leasehold system. We await the second part which aims to make the statutory process for enfranchisement and lease extension easier and more affordable.
If you have any questions about how the Bill may impact you. Please get in touch with our team of expert lawyers firstname.lastname@example.org.
This article first appeared in The Wealden Times