Following the bill’s report stage in the House of Commons on 14 January 2025, the Second Reading took place in the House of Lords on 4 February 2025. This session provided the members with an opportunity to debate the main principles and...
There has been much negative publicity focused on ground rent clauses for leasehold properties. Ground rent is payable by some homeowners of leasehold properties to the landlord (or their appointed managing agent), for the land their house is built on. For some years, homeowners have been exposed to their ground rent doubling, or cumulatively increasing year on year. Alternatively, the ground rent may be increased by way of a calculation that is linked to the retail prices index (RPI). In the case of RPI linked ground rent this can be vulnerable to inflation rate increases. Under most leases, the leaseholder is obliged to pay an annual ground rent to the landlord or their managing agent which can increase at several points over the duration of the lease term, making costs unmanageable and affecting the owner’s ability to sell the property. Many mortgage lenders are refusing to lend to purchasers seeking to buy a property which has an increasing ground rent clause within the lease.
This has resulted in the Leasehold Reform (Ground Rent) Bill , for all new build properties. The new law stops ground rents for new properties and ensures it is charged as a nominal fee of ‘a peppercorn’. However, if you are an existing property owner with a leasehold property which has unreasonable increasing ground rent clauses then you should seek to remove this by way of a deed of variation.