On 30th June 2022, a new law (the Leasehold Reform (Ground Rent) Act 2022) that bans landlords from charging ground rent on most new residential leases comes into force. This law has been identified by the government as the first step in creating a fairer housing system.
HOW DOES THIS AFFECT FUTURE HOMEBUYERS?
Future buyers of long leasehold properties will be freed of the annual ‘ground rent’ charge which will drastically reduce their property bills – a very exciting prospect in a time where the costs of living is rising exponentially.
WHICH LEASES DOES THE REFORM INCLUDE?
The law only applies to leases taken out on, or after 30th June 2022
Leases that are extended through the statutory route, where a minimum of 90 years is added to the lease term; however, if a landlord voluntarily decides to extend the lease, then they will not be able to increase the ground rent for the original lease term
Retirement properties will be included but will not come into force before 1 April 2023.
WHAT DO LANDLORDS NEED TO KNOW?
Landlords need to familiarise themselves with the provisions of the lease to avoid occurring any liability due to non-compliance.
The Act is not retrospective- this means landlords with existing leaseholders who entered into the lease before the above date can still charge and collect ground rent.
The government are still looking at this sector as a whole, and there may be changes in the future that affect existing leases, so landlords need to make sure they keep themselves informed.
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