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Ground Rent Reform – How it Impacts You

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In 2023 the UK Government announced their intentions for a Ground Rent Reform. This is part of a larger campaign to change the UK leasehold system. It is supposed to significantly reduce ground rents, potentially saving homeowners thousands.

Housing Secretary Michael Gove’s latest survey suggests solutions such as nominal ground rents for current leaseholders and freezing rents at current levels. A long-awaited reform that could spell good news for countless homeowners. We outline the reform, and what it could mean for you. Let’s take a closer look.

What is ground rent?

If you’re the owner of a leasehold property or looking at buying one, then it’s good to know what ground rent is. Ground rent is not the same as rent, it is an annual fee that you pay to the landlord or freeholder. In essence, it is a form of rent for the land on which your home is built.

Your solicitor will review your lease agreement as part of the conveyancing process when you buy a leasehold property. This outlines the terms and conditions of your leasehold and will include details about the ground rent, such as the amount to be paid, the payment frequency, and how it can be increased over time.

Ground Rent Reform

Over the years paying ground rent has become a significant issue for many, this is because it’s led to skyrocketing charges and often exploitative terms. As a result of these unpredictable costs, it’s not surprising that many people have been hesitant when buying leasehold properties. This level of uncertainty is not good for anyone looking to buy or sell a leasehold home.

Propertymark has long lobbied the UK Government on behalf of property owners’ interests to push for change.

As more people shared their stories about unfair charges, the public, newspapers, and politicians took notice. There was a big push to change things. Seeing how big of an issue this was, the UK government decided it was time for a change. They introduced the Leasehold Reform (Ground Rent) Act to help make things fairer for homeowners.

This is just the start. It’s part of a bigger effort to fix problems in the housing market, making sure buying and selling a home is as fair and straightforward as possible.

In short, the Leasehold Reform (Ground Rent) Act 2022 is about stopping those big, unexpected ground rent charges for people who own leasehold properties. It’s meant to make owning a home more affordable and take away the worry about sudden increases in costs.

Frequently asked questions

It’s understandable that when The Ground Rent Reform takes shape, you may have some questions.

We have therefore provided answers to some commonly asked questions on ground rent:

Q: Can my landlord increase my ground rent?

A: Landlords can only increase ground rent if the increase terms are set out in the lease agreement. However, under the proposed reforms, increases could be a thing of the past for existing leaseholders, while new leaseholders might only see nominal fees.

Q: Is there a cap on ground rent charges?

A: The government’s initiative aims to introduce caps, significantly reducing the financial burden on homeowners.

Q: Is ground rent going to be abolished?

A: While not entirely abolished, the move towards nominal ground rents represents a significant step in minimising its impact.

The future of ground rent in England and Wales

The future of ground rent looks more promising, with reforms on the horizon that aim to resolve longstanding issues within our UK leasehold system.

The Leasehold and Freehold Reform Bill was introduced to the House of Commons on 27 November 2023.

The Bill’s second reading took place on 11 December 2023.  It was considered by a Public Bill Committee between 16 January and 1 February 2024.

The Bill’s report stage and third reading took place on 27 February 2024. The Bill has now moved to the House of Lords.

As the proposal moves through Parliament, additional ground rent restrictions are being considered, indicating a continued intention to change the leasehold system completely.

If you’re thinking about or in the middle of buying a leasehold property or selling one, then instruct a Propertymark estate agent who can guide you through the whole process.

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Last Updated: March 19th, 2024