The government has launched plans to slash ground rents on existing leaseholds as part of a consultation into widescale reform.
It sets out options that include capping ground rents at a peppercorn rate for existing leaseholders, freezing ground rents at current levels and capping the ground rents at a percentage of the property value.
Confirmed as part of the Leasehold and Freehold Bill in this week’s Kings Speech it also proposes to put in place a maximum financial value which ground rents could never exceed and to limit ground rent in existing leases to the original amount when the lease was granted.
The Leasehold Reform (Ground Rent) Act 2022 already means that if any ground rent is demanded as part of a new residential long lease, it cannot be charged at more than the cost of one peppercorn per year – effectively setting the rate to zero.
Housing Secretary Michael Gove says ground rent can feel like an annual reminder that you do not own the land your home stands on, that your lease on it is finite, and that there is a payment for the privilege of staying there.
He adds: “Today we are taking further steps to right that wrong…so leaseholders are not exploited any longer and can take back control of their own destiny.”
The Conveyancing Association has urged the government to also look at the introduction of commonhold and the Regulation of Property Agents (ROPA).
Beth Rudolf (pictured), director of delivery, says: “Commonhold, we are told, has not been included because it is deemed too complicated to fit into this legislation, while the Regulation of Property Agents [legislation] or ROPA is not included and we are led to believe this is because there is not enough time to achieve this in this Parliamentary term and yet without ROPA there will be nothing to stop property managers and lease administrators putting their profits over the welfare of homeowners.”