On 30th June 2022, the Government is scrapping the ground rent payable on residential leases in England and Wales. This is part of the new Leasehold Reform (Ground Rent) Act 2022.
What is the aim of the new Leasehold Reform Act?
By introducing the Leasehold Reform Act, the government’s aim is to tackle the doubling ground rent crisis. Previously, such bodies as the Competition and Markets Authority (CMA) had stepped in to free leaseholders trapped in contractual onerous ground rent. However, many leaseholders argued more needed to be done, especially for long leases tenants.
As a result, the Government has introduced the Leasehold Reform Act which will affect residential lease, which has been granted a term of at least 21 years for an additional annual cost. Regulated Leases, as they are known in the legal sector. Although this is limited to England and Wales.
What does the new Leasehold Reform Act mean for leaseholders?
For leaseholders, the new act will be welcomed news. On or after 30th June 2022, freeholders will only be able to charge what is known as a ‘peppercorn rent’ per year. This means a very low or token amount, typically zero pence.
However, ground rent will still be chargeable under existing leases. In addition, the government is delaying extending the new act to include the retirement sector until at least April 2023.
What are the penalties for breaching the act?
Any breaches of the new Leasehold Reform Act could occur a penalty and a fine of between £500 and £30,000. Additionally, any rent paid in error will have to be paid back to the leaseholder with interest.
Therefore it is extremely important you understand your rights and legal obligations. Attwells Solicitors, are a niche property law firm, as a result, we are perfectly suited to support you with your freehold and leasehold needs.
If you require any support please give Will Oakes a call on 01206 239764.