The Act will apply to new residential long leases which are granted after the commencement date of the Act (which is expected to be within six months of Royal Assent) – it does not cover ground rents on existing leasehold properties. A long lease is a lease for a term of more than 21 years.
There will be some exceptions under the Act which include community housing leases and certain business leases which are excluded and not subject to the ground rent cap. Special rules will also apply for shared ownership leases, retirement properties and voluntary leasehold extensions. In relation to shared ownership leases, where a tenant has yet to purchase 100% of the property, the landlord will be able to demand ground rent on their share of the property but only a peppercorn rent can be demanded on the tenant’s share of the property.
The Act will come into force no earlier than 1st April 2023 for retirement properties.
Fines ranging from £500 to £30,000 can be imposed on landlords who demand ground rent in contravention of the Act and do not return payment within 28 days.
If you have any questions in relation to ground rent or a leasehold property, please call our team on 01926 491181.