The Leasehold Reform (Ground Rent) Act 2022 received Royal Assent on 8 February 2022 and is expected take effect within the next 6 months.
The purpose of this new law to make leasehold ownership “fairer and more affordable”. Contravening the Act will result in fines of £500 to £30,000.
People purchasing new long leases of houses and flats (unless exempt) after the Act passes law, will pay zero ground rent thus potentially saving hundreds of pounds a year. The Act does not apply to existing leases so current leaseholders will still need to pay ground rent if their lease provides for it.
It is important to provide information of these pending changes to developer and buyer clients, as buyers may want to delay purchases until the law passes, and developers may wish to consider getting rid of ground rents altogether to avoid a situation where some lessees pay ground rent and some do not.
Eddie Hughes, Minister for Housing and Rough Sleeping, said: “I am delighted that we have put an end to ground rent charges for future homebuyers, as our ambitious reforms become law.
“This truly monumental change will set ground rents to zero on new leases from this summer – providing real life benefits to future leaseholders.
“This is the first step in a whole raft of government reforms to protect leaseholders and end unfair practices in the market.
“We continue to work towards making it easier, quicker and cheaper for leaseholders to buy their freehold or extend their lease.”
Further details, news and publications relating to the Act can be found here.