New Law to Restrict Ground Rent on New Homes to ‘One Peppercorn’

In our blog of the 2 June 2021, we reported that the government had promised reforms of the law in relation to new leasehold properties but that no timetable had been announced. This new legislation is now making progress through Parliament.

The latest bill proposes that ground rents on new leasehold properties can only be ‘one peppercorn’. This is the term used historically to describe non-existent or minuscule payments. There has been pressure to change the law due to new leases charging exorbitant and escalating rents. These ground rents have made some properties difficult to sell and difficult to mortgage.

The current system has been described as “a nightmare for some” by the Housing Minister Eddie Hughes. He added that “no meaningful service is provided in return” for the ground rent payments and that was why the government was introducing new legislation to remove the financial demand for ground rent in new residential leases.

The new legislation, called the Leasehold Reform Bill, has already been passed by the House of Lords and it passed its first reading in the House of Commons unopposed on the 29th November. The bill will now undergo further scrutiny by MPS before it can become law.

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