From Thursday 30th June 2022, the Leasehold Reform (Ground Rent) Act 2022 comes into force. This essentially means that any new lease granted on or after 30 June 2022 (except for a few exceptions) will no longer be permitted to have a ground rent.
What is Ground Rent?
Ground rent is normally a pre-determined amount a leaseholder has to pay to his/her landlord under a lease for the duration of that lease. In many cases, annual ground rent payments have been small, but in recent years these rents have started to creep up in certain properties such as new builds to as high as several hundreds of pounds a year. It is due to this that the government has stepped in with the Leasehold Reform Act 2022 to prevent this inflation of ground rent.
What will change on 30th June 2022?
From Thursday 30th June, the ground rent in most new residential leases granted on or after that date cannot legally be anything more than ‘one peppercorn per year’. ‘Peppercorn rent’ is a commonly used term in leases to essentially assign zero value to ground rent. There are a few exceptions to the Act such as retirement properties (this will come into force from 1 April 2023), community-led housing, and business leases of commercial premises which include a dwelling.
What does this mean for my lease?
- If you are currently extending your lease and the terms of the new lease include a ground rent, the lease will need to complete before 30 June 2022 or you will need to agree revised terms that include a peppercorn or nil ground rent.
- If you have a lease that needs extending your new lease will not be permitted to have a ground rent if the lease completes on or after 30 June 2022.
- If you have a long lease with a ground rent attached to it then the new Act will not impact upon your lease as it will only apply to leases granted on or after 30 June 2022 (unless there is an agreement for that lease that was entered into prior to 30 June 2022).
About our Lease Extension Team
Based in our Crystal Palace office, our Leasehold specialist solicitors are all very experienced in this complex area of Property law, and have a fantastic local knowledge of South London. Amphlett Lissimore are also members of the Association of Leasehold Enfranchisement Practioners (ALEP), so you can be sure to receive a high level of service, integrity and professionalism from us.
If you would like to discuss extending your lease, please call our leasehold specialists on 020 8771 5254 or complete the enquiry form below, for a free initial assessment of your legal matter over the phone.