Agents told to be ‘ready to understand the implications’ of ground rent changes


Estate agents are being urged to familiarise themselves with the the government’s ban on charging ground rent on new leases in England and Wales. Which comes into force in just over two months.

The government is taking action to rid future homeowners of annual ground rent costs.

From 30 June 2022, anyone buying a home on a new long lease will now be freed from these annual costs.

Landlords will be banned from charging ground rent to future leaseholders, under a new law that the government says will lead to fairer, more transparent homeownership for thousands of homebuyers, helping to level up opportunities for more people.

In preparation, many landlords have already reduced ground rent to zero for homebuyers starting a new lease with them. Anyone preparing to sign a new lease on a home in the next two months should speak to their landlord to ensure their ground rent rate reflects the upcoming changes.

Leasehold Minister, Lord Stephen Greenhalgh said: “This is an important milestone in our work to fix the leasehold system and to level up home ownership.

“Abolishing these unreasonable costs will make the dream of home ownership a more affordable reality for the next generation of home buyers.

“I welcome the move from many landlords who have already set ground rent on their new leases to zero and I urge others to follow suit ahead of this becoming law.”

The move forms the first part of the government’s reform package that will make homeownership cheaper, fairer and more secure.

Future measures, announced last year, include a new right for leaseholders to extend their leases to 990 years at zero ground rent and an online calculator to help leaseholders find out how much it would cost to buy their freehold or extend their lease.

In addition, thousands of existing leaseholders have also already seen a reduction in their inflated ground rent costs. In a government crackdown, the Competition Market Authority (CMA) secured commitments with major homebuilders to stop doubling ground charges every year for leaseholders.

Those who own properties with Aviva, Persimmon, Countryside Properties, Taylor Wimpey and others will see their ground rent returned to the rate it was when they first bought their home. The CMA’s investigation is continuing into Barratt Developments, Brigante Properties and the investment group Abacus Land and Adriatic Land.

The ban on landlords charging ground rent on new residential leases, announced by the government, will also apply to retirement homes.

This will come into force no earlier than 1 April 2023 and more details will be confirmed in due course.

Propertymark has welcomed the government’s confirmation that a ban on ground rent on new leasehold properties in England and Wales will come into force on 30 June 2022.

Timothy Douglas, policy and campaigns manager for Propertymark, said: “These unfair and restrictive charges levied on leasehold homeowners have in some cases been allowed to become a cash-cow and abolishing them has been a long time coming.

“Propertymark has been a strong campaigner on this issue and it was our investigation in 2018 that helped bring the scale of it to light for the first time, revealing the impact it was having on the housing market as leasehold homeowners struggled to improve or sell their properties as a result.

“These changes only legally restrict ground rents on new leases, so we hope they are a catalyst for further reform by the housebuilding sector itself and the UK Government that will release the estimated over one million existing homeowners who remain locked into these agreements.

“Agents should be ready to understand the implications and the material information they need to provide to consumers when these properties come on the market from 30 June onwards.”


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