Ground rents for leaseholders to be capped to £250 per annum
Ground rents in England and Wales will be capped to £250 per year in England and Wales, the government has announced. “I’ve spoken to so many people who say this will make a difference to them worth hundreds of pounds,” Prime Minster Sir Keir Starmer said when making the announcement.
The changes to ground rents will be published in the draft Leasehold and Commonhold Reform Bill.
Ground rents are an annual fee for leaseholders that they are required to pay to their freeholder. They were abolished for new residential leasehold properties in England and Wales back in 2022 but continued for any existing leasehold homes. During its 2024 election manifesto, Labour said it would “tackle unregulated and unaffordable ground rent charges.”
Leases often have a clause that ground rents double or increase by RPI inflation at fixed intervals. This can make selling or getting a mortgage for a property challenging. Labour said that it will be reduced further after 40 years.
New leasehold flats will be banned. Forfeiture, which sees leaseholders losing their homes along with the equity built up if they default on a debt as low as £350, are set to be abolished. The new bill will also make it easier to convert an existing leasehold into a commonhold, meaning that occupants jointly own the ground a flat is built on, along with the building, without an expiring lease.
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