Leasehold Reform (Ground Rent) Act 2022: Update

From the 30 June 2022, The Leasehold Reform (Ground Rent) Act 2022 will reform the leasehold system making all ground rents peppercorn for new, qualifying long residential leasehold properties in England and Wales.

Ground rent is a charge stated in the lease that a leaseholder pays to their freeholder, usually payable in full annually, in advance and with onerous increases, can present a significant financial burden for leaseholders and even if deemed too high, can make a property un-mortgageable

This Act is designed to help future leaseholders making leasehold ownership fairer and more transparent, effectively stopping annual ground rent costs, charges that provide no clear service and can be set to escalate at regular intervals

This is part of the most significant changes to property law in a generation with the legislation coming in 2 parts. This initial part focuses on ground rent clauses within future long residential leases, and further leasehold reform is to follow later in this Parliament

In anticipation of this legislation, many developers and freeholders have already reduced the ground rent provision to zero for buyers of a brand new lease

We suggest anyone looking to purchase a new leasehold property in the near future to ensure their ground rent rate set by the freeholder reflects the upcoming changes

Once it commences, this Act means that if any ground rent is demanded as part of a new residential long lease, it cannot be for more than one peppercorn per year meaning that future leaseholders will not be faced with financial demands for ground rent

The Act also bans freeholders or their agents from charging an administration fee for the collection of a peppercorn ground rent

In addition, the Leasehold Reform (Ground Rent) Act will also restrict ground rent to zero on retirement properties with these changes coming into force no sooner than 1 April 2023

The government have of a civil penalty regime, including fines of up to £30,000 for freeholders that charge ground rent in contravention of the Act

If you’d like to know more about how we can help you effectively manage your properties, don’t hesitate to reach out to our team


Related Articles


Redefining Leasehold Living

Speak to an expert at Horizon

Click here to contact one of our friendly team who will be happy to help