Leasehold Reform (Ground Rent) Act 2022

The Leasehold Reform (ground rent) Act 2022 came into force on 30th June 2022 and impacts ground rent charges for new long residential leasehold properties, effectively preventing them from being charged by freeholders of leasehold properties.

The new Act refers to regulated leases, which are residential leases for a house or flat granted after 30th June 2022, for more than 21 years and thus covered by the Act. There will be no requirement to pay ground rent or administrative lease related costs in relation to these regulated leases. There are a number of exceptions under the Act;

• Statutory lease extensions
• Existing leases
• Leases granted pursuant to contracts exchanged before 30 June 2022
• Certain financial products such as home finance leases
• Community housing leases
• Business leases defined by the Act as leases of commercial premises

In the case of informal (non-statutory) lease extensions for existing leaseholders the ground rent is restricted to zero. In the case of statutory lease extensions, the landlord is forced to reduce ground rent to a peppercorn for the lease term. Existing leaseholders not extended their leases could consider enquiring about a deed of variation regarding ground rent. Local authorities can impose fines up to £30,000 per lease, ground rent is required and payment not returned. As of April 2023 ground rent ban also applies to retirement homes.

Future measures may include the right for leaseholders to extend leases to 990 years at zero ground rent along with online tools to assist leaseholders in buying freehold rights or extended leases.

For further information visit Leasehold Reform (Ground Rent) Act 2022: Guidance for leaseholders, landlords and managing agents.

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