The government says a shake-up of the leasehold system will see ground rents capped at £250 a year, changing to a peppercorn cap after 40 years.
New leasehold flats will also be banned – a consultation on that proposal has been launched this morning.
The government claims over five million leaseholders and future homeowners will benefit from stronger control, powers and protections, through the draft Commonhold and Leasehold Reform Bill published today.
It will cap ground rent at £250 a year before ultimately reducing it to a peppercorn after 40 years – marking the end of residential leaseholders paying over the top bills for no clear service in return.
The government says this move will ensure some leaseholders save some £4,000 over the course of their lease.
This will also unlock house sales for leaseholders whose lives have been put on hold because of ground rent terms that make their homes hard to sell.
Forfeiture, whereby leaseholders can lose their home and the equity they built up by defaulting on a debt as low as £350, will also be abolished and a new enforcement regime introduced.
The new process to make it easier for existing leaseholders to convert to commonhold will also be introduced under a revamped commonhold model.
The government says: “The reinvigorated commonhold system will ensure it works for all types of developments, as well as mortgage lenders, with strong management rules in place around repairs and leadership, and greater rights for homeowners.
“Those living in the building will have a say in the annual budget and how the building is run, and new protections when things go wrong.
“Current leaseholders will also be given the opportunity to switch to commonhold, where the majority of residents agree to it.”
Last week, former Labour minister Justin Madders told the BBC that the prime minister could face a “mass rebellion” if the government abandoned its pledge on a ground rent cap.
He said setting the limit at a peppercorn rate would be his preferred choice but that he could accept a £250 cap due to the “risk of elongated legal challenge”.
This article is taken from Landlord Today