Queens Speech unveils Leasehold Reform

During the Queen's Speech the UK government once again confirmed its commitment to bringing reform to Leasehold ownership of long-term residential property.

Ground rent is an annual payment made by the Leaseholder to the Freeholder for occupying the land upon which their property is built during the term of their lease. Leasehold ownership has been around for hundreds of years and in relatively recent years ground rents have gradually increased from pounds, shillings and pence, to several hundreds of pounds per annum. Furthermore, leases often contain mechanisms to periodically increase the ground rent due which may affect a property’s future marketability.

The Leasehold Reform (Ground Rent) Bill ('the Bill'), will aim to end monetary payments for ground rent in all "new" residential leases. The Government's background briefing notes confirm that for applicable leases ground rent will now be limited to a ‘peppercorn rent’ which means that literally a peppercorn could be demanded. The introduction of the Bill will eliminate leaseholder concerns surrounding ground rents in new leases.

From the wording of the Bill and the briefing notes, it is clear the reforms will not extend to service charge payments as these are made for a ‘tangible service’ (estate or building maintenance costs). It is also worth noting that both the Queen’s Speech and the briefing notes omit to discuss what impact, if any, the Bill will have on existing leases.

With the Bill yet to be laid before Parliament, and no specific time-frame being provided as yet, it will be interesting to see what final form it will take and whether any substantial amendments will be made before passing into law. As with any proposed new law, at this stage, there is no guarantee that the current or any future Government will see this through, although we would welcome leasehold reform to make the rules surrounding property ownership clearer for all.

As ever, if you require any assistance when buying or selling properties or you do have any queries, please do not hesitate to reach out to our dedicated Conveyancing team on 0808 1685643 or via info@ramsdens.co.uk.