Bishop & Sewell

The Leasehold Reform (Ground Rent) Act 2022

So, we were all wondering when the 2022 Act banning ground rent for new leases would come into force and now we have the answer.

The Leasehold Reform (Ground Rent) Act 2022 will come into force on 30th June 2022.

The 2022 Act prevents any new lease granted after 30th June 2022 containing a ground rent. The only acceptable rent after this date will be a peppercorn – I.e. zero, nothing, nil.

The only exception to this will be that if a lease is renewed on a voluntary (agreed) basis that the existing ground rent may continue during what would have been the term of the old lease. In the ‘new’ or extended part of the lease term the ground rent must be zero.

Leases granted after 30th June 2022 that breach these provisions will expose the person granting them to penalties and fines of between £500 and £30,000 will be enforced by a civil penalty regime.

Any rent paid in error after commencement must be returned with interest and there are anti-avoidance provisions in the Act preventing freeholders form charging an administration fee to collect a ‘peppercorn’ ground rent.

There are some very limited exceptions which relate to community housing, business leases, certain types of financial products and shared ownership. In addition, commencement is delayed until a date which will not be before 1st April 2023 for the retirement sector.

The writing is therefore very much on the wall for ground rent.

For further information, click here. You can find our updated note on the Act here.

To get in contact with Mark Chick or a member of the Leasehold team at Bishop & Sewell to discuss any related issues, then please email or call 0207 631 4141 and ask to speak to a member of the Landlord and Tenant team.

The above is accurate as at 01 April 2022. The information above may be subject to change during these ever-changing times.

The content of this note should not be considered legal advice and each matter should be considered on a case by case basis.

Mark Chick Senior Partner   +44 (0)20 7079 2415

Category: News | Date: 1st Apr 2022

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