Leasehold reform has been progressing for a couple of years now. At the end of June 2022, ground rents on new leases and extensions to existing leases were restricted to a ‘peppercorn’ rent, effectively zero, under the Leasehold Reform (Ground Rent) Act.
However, this did nothing to address the issue of freeholders hiking the ground rent for existing leasehold property owners.
For some homeowners, spiralling ground rent and maintenance/service charges has been making their homes virtually unsellable, while many landlords similarly affected have seen their rental profits dramatically reduced.
Feedback from the consultation on ways in which the government could intervene to cap existing ground rents 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.
Other problems with leasehold include the often-excessive cost of lease extensions and restrictive clauses and covenants.
In an effort to tackle these, the Leasehold and Freehold Reform Bill (for England and Wales) was introduced to Parliament on 27th November last year, although the proposed changes are, once again, focused on future leaseholders, rather than helping current owners.
For further 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 the Bill has progressed, we expect it to be given Royal Assent in the coming weeks and become law either this Autumn or next Spring.
If you have a leasehold property and would like to discuss your options, contact your local Reeds Rains branch today.
The Reeds Rains Content Marketing Team
