Preparing New Leases

 

Ground Rent Abolition

The Leasehold Reform (Ground Rent) Act 2022 came into effect on June 30, 2022. This law primarily aims to prohibit the charging of ground rents on new residential leases. - Under this legislation, ground rents for new leases of residential properties, including flats, are set to zero. This means that any new leases granted after this date cannot include a ground rent charge. 

Scope of the Legislation

The law applies to new leases, including those for flats and houses. - It does not apply to existing leases that were granted before the effective date. Leaseholders of existing properties may still be required to pay ground rent as per the terms of their lease. 

Exemptions

Certain types of leases may be exempt from this legislation, including those related to commercial properties or community-led housing developments. However, most residential leases are covered. 

Enforcement and Penalties

 The legislation includes provisions for enforcement. If a landlord charges ground rent in violation of the law, they may be required to refund any amounts collected and could face penalties. 

Reform Movement:

The legislation is part of a broader movement to reform the leasehold system in England and Wales, aimed at addressing concerns about the fairness and transparency of leasehold arrangements. 

Implications For Prospective Buyers 

Prospective buyers of new leasehold flats should look for assurances that ground rent will not be charged and that the terms of the lease comply with the new law. ### Practical Advice for Leaseholders and Buyers: - Review Lease Terms: Buyers should carefully review the terms of any lease agreement before purchase to ensure compliance with the new legislation. - Seek Legal Advice: It is advisable for leaseholders and potential buyers to seek legal advice if they have questions about their rights or the implications of this legislation. - Stay Informed: Legislation can change, and it is important to stay informed about any further developments in leasehold reform.