Leasehold reform has been under the spotlight for a couple of years now, and there have been two significant pieces of legislation:
- At the end of June 2022, under the Leasehold Reform (Ground Rent) Act, ground rents on new leases and extensions to existing leases were restricted to a ‘peppercorn’ rent (zero).
- On 27th November last year, In an effort to tackle a number of other issues, including the excessive cost of lease extensions and restrictive clauses and covenants, the Leasehold and Freehold Reform Bill (for England and Wales) was introduced to Parliament.
For information on the key changes and amendments in the Bill, see our article from March this year.
The Bill is currently at the Committee report stage in the House of Lords, after which it will have its 3rd reading and any final amendments will be considered. Given how quickly it has progressed, it could be given Royal Assent in the coming weeks and become law either this Autumn or next Spring.
While they’re good news for future leaseholders, the problem with both of these reforms is that the changes do little to help current owners of leasehold properties.
For some homeowners, spiralling ground rent and maintenance/service charges has been making their homes virtually unsellable. Meanwhile many landlords have seen their rental profits dramatically reduced as a result of freeholders hiking costs.
A consultation on ways in which the government could intervene to cap ground rents for existing leases ended in January and feedback is still being analysed. But it is possible that an amendment could be made to the Leasehold Reform (Ground Rent) Act, possibly later this year, which could help current leaseholders.
If your rental property is leasehold and you have any questions, contact your local branch experts today.
The Your Move Content Marketing Team
