Further to our previous article on the Leasehold Reform (Ground Rent) Act 2022 (“the Act”), we advised that the Act was not yet in full effect. The Government has now advised that ground rent charges will be banned on most residential leases from 30 June 2022.
From 30 June 2022 anyone buying a new home on a new long lease will no longer have to pay ground rent. The aim being to help “homeowners manage their bills as they face cost of living increases”. If you are a leaseholder or a freeholder, or you act for leaseholders or freeholders, you might want to consider whether any proposed new leases should remove any provision for ground rent if there is any doubt that they may not be signed in the next two months. Also, for the sake of good estate management, whether you should take steps to avoid some leaseholders paying ground rent, and others who do not.
The Act, together with other changes proposed last year, are intended to make leasehold ownership more affordable. The changes last year relate to the Government’s announcement that leaseholders will begiven the right to extend their lease by a maximum of 990 years at zero ground rent. The Government is also proposing to abolish marriage values (the increase in the value of the property following the completion of the lease extension, reflecting the additional market value of the longer lease) from the calculation of premiums and to set calculation rates. There is no update on when these changes are proposed to take effect at the time of writing.
If you have any queries related to this, or other long leasehold issues, please get in touch with Joe Brightman or Molly Frankham.