The Leasehold Reform (Ground Rent) Act 2022 was passed on 8 February 2022 – see our insight for full details of the new law. The Act introduced a ban on ground rents for almost all new residential leases, which come into force on 30 June 2022 (the key exception being retirement housing leases, which will only be affected after 1 April 2023).
Ahead of this date, here are the key points to remember:
- The payment of ground rents will be restricted to a peppercorn in most future residential leases with a term longer than 21 years.
- Freeholders will be banned from charging administration fees for collecting rent.
- There are a few exceptions – business leases, statutory lease extensions of both houses and flats, community housing leases and home finance plan leases will not be affected by the Act.
- The Act will not have retrospective effect – if an agreement for lease has been entered into before the Act was passed, the new lease will be unaffected and a ground rent may be demanded.
- Leases granted pursuant to options or rights of first refusal which pre-date the Act will not be exempt and landlords will not be able to lawfully reserve a ground rent of more than a peppercorn.
- Landlords who demand a ground rent in contravention of the Act face hefty fines and enforcement action can be taken against past and current landlords, as well as people acting on their behalf.
The ban on ground rents is just the first in what is expected to be a raft of reforms to home ownership and the rental market as part of the levelling up agenda. The government has committed to making “home ownership fairer and more secure” and this has wide cross party support – see our recent insight for full details on the Government’s Fairer Private Rented Sector White Paper.
If you have any queries on this or any leasehold related issue, contact Rob Bridgman or Ashley Mitchell.
About the author(s)
Rob Bridgman is a Gowling WLG partner who helps clients to protect or assert their real estate rights, whether that be in the context of getting a deal done or resolving a dispute.
Ashley Mitchell leads our Housing Development and Regeneration team. He acts for many of the largest national house builders, dealing with the full range of transactions from serviced sites and mixed use schemes to large scale strategic options and collaboration arrangements.
Katy is a Birmingham-based Solicitor Apprentice within the Social Housing team. Katy started the Level 7 Solicitor Apprenticeship in September 2017 after successfully completing the Level 3 Advanced Apprenticeship in Legal Services (Paralegal Apprenticeship). Katy will graduate in 2022 with qualification by the SQE exams later that same year.
