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/ 19 Oct 2021

The Leasehold Reform (Ground Rent) Bill: What you need to know

What is the Leasehold Reform (Ground Rent) Bill?

In January of this year, whilst many were continuing to isolate and the only news seemed to be about Covid, the government announced its intention to reform leasehold property. Ground rent issues have come to the public’s attention over recent years with lenders becoming wary about increasing ground rents. Associate Solicitor Steven Bannell provides a summary of the much-anticipated announcement as well as key areas of the Leasehold Reform (Ground Rent) Bill below.

Steven Bannell



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What changes is the Bill set to make?

  • Limit all future ground rents to a peppercorn
  • Provide the right for all leaseholders to extend leases to 990 years with zero ground rent
  • Provide the right for leaseholders to “buy out” their current ground rent without having to extend their lease
  • Reform the valuation process for enfranchisement
  • The creation of a Commonhold Council

Currently, the Leasehold Reform (Ground Rent) Bill is undergoing its first reading in Parliament, having already passed through the Lords. This bill, if passed, will restrict all future ground rents of regulated leases to zero and thus achieve the first of the government’s above objectives. Whilst some exceptions will apply (business leases for example), most new, long, residential leases granted after the enactment of the Act (but no earlier than 1 April 2023 for retirement properties) must not contain a ground rent higher than a peppercorn (meaning zero).

Before entering any informal or formal renegotiation of a lease, the Landlord will be required to notify the tenant of the Act and can be fined up to £30,00.00 (but not less than £500.00) for a breach of the Act.

In recent months we have also heard that developers such as Barratts, Bellway, Countryside and Taylor Wimpey will not collect ground rent from their new residential leases, even if the leases are granted prior to the Act coming into force.

What happens next?

The tide is clearly turning with regards ground rents and the Leasehold Reform (Ground Rent) Bill is a step in the right direction, however many current leaseholders will rue the fact it will not be retrospective, and the government currently remains quiet regarding excessive service charges that are being levied by landlord’s following the Grenfell disaster.

How can we help?

Our market leading team of property lawyers are happy to discuss any ground rent or leasehold property related queries, please call 020 7228 0017.

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