Changes to Ground Rent

The government confirms that from the 30th June they will be banning expensive ground rents on any new purchases on a long lease basis and will no longer apply when purchasing a home.

From the 30th June, the government is removing expensive ground rents on leasehold properties for new buyers in England and Wales.  This does not tackle existing rents already in place for current leasehold properties.  However, there is hope that the government will resolve this issue in the future.

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.”

Previously, leasehold properties usually applied to flats but there has been a growing trend in recent years for developers to sell houses on a leasehold basis.  This resulted in the average person paying £319 on the rent annually, with a third of homeowners reporting that they would no longer be able to afford to live in their property if it increased further.

The new rules only apply to new homes in England and Wales, and existing homeowners who are renewing their lease from the 30th June. If you are due to complete a purchase on a new lease or you are extending the lease on your home in the next month, you should ensure the ground rent charging reflects the changes.

The government have made the reforms to allow homeownership to be cheaper and more reasonable to homeowners. 

The contents of this article do not constitute legal advice and are provided for general information purposes only.