There’s been broad praise for the government announcement on ground rents for England and Wales.
Ground rents will be capped at £250 a year, changing to a peppercorn cap after 40 years.
New leasehold flats will also be banned by the Commonhold and Leasehold Reform Bill published this week.
Liam Spender, the lawyer behind the Leaseholder Action group, says: “Some will no doubt be disappointed that ground rents are not being eliminated immediately and are instead being phased out over 40 years.
“However, crucially the cap will make it cheaper for people to buy the freehold and to extend their leases, both of which are priced by reference to ground rent values.
“Ending ever-increasing ground rents should also make flats easier to sell and mortgage because there is often a need to vary ground rent terms simply to get transactions over the line.
“Also welcome is the government’s promise to abolish forfeiture, which is the right of a freeholder to take back a flat with no compensation if as little as £350 goes unpaid.”
And ALEP (the Association of Leasehold Enfranchisement Practitioners) has welcomed the publication Bill, describing it as an important step in the government’s long stated aim to modernise tenure structures in England and Wales.
Mark Chick, ALEP director, says: “Reforming tenure structures may not attract the same attention as meeting housebuilding targets, but it remains a cornerstone of housing delivery.
“The structure of ownership underpins how communities are managed, maintained and held to account and reform was long-overdue.”
Timothy Douglas, head of policy and campaigns at Propertymark, is also pleased, saying: “Addressing ground rents for existing leaseholders is a key step towards a fairer leasehold system.
“It brings existing leaseholders on par with new leaseholders, and it tackles one of the largest barriers to selling leasehold properties.
“We also welcome steps to make it easier and cheaper to buy leasehold property and the ambition to transition towards commonhold.
“But agents and consumers will need clear guidance, education, and practical support to understand and navigate this change.”
Meanwhile Becky Fatemi of Sotheby’s International Realty UK also welcomes the move, describing it as “genuinely sensible.”
She says: “A clear cap brings transparency and consistency, which are critical in a market where confidence has been fragile.
“It also helps correct the imbalance between newer homes with no ground rent and older flats that have unfairly carried the burden.
“For buyers, it removes a lingering question mark over future costs. For sellers, it makes homes cleaner, clearer and more competitive.”
But not everyone is happy.
A spokesperson for the Residential Freehold Association (RFA), says: “The inclusion of a ground rent cap in the draft Leasehold and Commonhold Reform Bill represents a wholly unjustified interference with existing property rights.
“If enacted, [this] would seriously damage investor confidence in the UK housing market and send a dangerous and unprecedented signal to the wider institutional investment sector.
“Property rights and contract law are fundamental drivers of domestic and global investor confidence in the UK.
“Instead of focusing on those reforms which address the issues that leaseholders care most about, the Government’s draft Bill will tear up long-established contracts and property rights, which are pillars of the UK’s investment reputation.”
This article is taken from Landlord Today