Landlords will be banned from charging ground rent to future leaseholders, under the Leasehold Reform (Ground Rent) Act 2022, which comes into force on the 30th June.
The government is taking action to rid future homeowners of annual costs – known as ground rent. Sometimes worth hundreds of pounds a year, these charges provide no clear service in return and can be set to escalate regularly, with a significant financial burden for leaseholders.
Leases granted after 30th June 2022 that breach these provisions will expose the person granting them to penalties and fines of between £500 and £30,000 will be enforced by a civil penalty regime.
In preparation, many landlords have already reduced ground rent to zero starting a new lease with them. Anyone preparing to sign a new lease on a home in the next two months is urged to speak to their landlord to ensure their ground rent rate reflects the upcoming changes.
Leasehold Minister Lord Stephen Greenhalgh said: “This is an important milestone in our work to fix the leasehold system and to level up home ownership. Abolishing these unreasonable costs will make the dream of home ownership a more affordable reality for the next generation of home buyers.
The ban on landlords charging ground rent on new residential leases, announced today, will also apply to retirement homes. This will come into force no earlier than 1 April 2023 and more details will be confirmed in due course.
