Back in February this year we talked about the Leasehold Reform (Ground Rent) Bill 2022 which received Royal Assent on the 8th February.
The department for Levelling up, Housing and Communities announced on the 22nd of April 2022 that the section of the act in relation to ground rent will come into force on the 30th of June 2022, just over two months’ time. If you are in the process of buying a flat under a new lease, you should consider delaying completion until after the 30th June if the seller will not agree to not charge any rent in the lease.
The effect of this is that from the 30th of June Freeholder’s will no longer be able to charge a ground rent in new leases. Unfortunately, the provisions of the act are not retrospective and therefore existing leases will still be subject to the payment of the ground rent reserved under them, however leaseholders under these existing leases do have the right to extend their lease under the Section 42 process which reduces the ground rent to a peppercorn and adds an additional 90 years to determine the lease. (There can be a substantial premium to pay to do this however). The government do have further plans to introduce other measures to enable these holders to extend their leases to 999 years after zero ground rent.
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