Queens Speech - Ground rent reform
The UK Government announced their plans for the next parliamentary session in the Queen’s speech yesterday, which includes several significant proposals to change planning rules, introduce a new Building Safety Regulator, reform ground rents and explore the next steps for Renters Reform.
Ground rent charges are to be banned on new-builds in a bid to protect millions of leaseholders from eye-watering increases every single year.
Currently, millions of householders in England own their homes on a leasehold basis and pay an annual ground rent to the freeholder of the property.
Typically, this ground rent is set at a low “peppercorn” rate, however some developments of leasehold homes - namely new-builds - contain clauses in their leases which allow rents to rise at regular intervals by huge amounts. Furthermore, freeholders can increase ground rents whilst failing to offer any benefit to leaseholders.
These loopholes mean millions of people are being forced to pay extortionate ground rents and costs for extending their lease, sometimes leaving them unable to sell their homes. However the new law will ban ground rent from rising above the peppercorn amount.
This news is obviously very welcome and a step in the right direction, however, there is pressure from the property industry on the UK Government to extend this to those who already own a leasehold property, as well as all retirement properties, to create a level playing field.
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