Leasehold Reform Ground Rent Act 2022

The Leasehold Reform Ground Rent Act 2022 received Royal Assent on 8 February 2022. It is due to come into force by August 2022.

This Act seeks to restrict ground rents on new long leases of houses and flats. This is part of the government’s aim to make leasehold ownership fairer and more affordable to leaseholders.

The Act applies by restricting ground rents on newly created residential leases to one peppercorn per year, i.e. zero pounds for residential leases with a term longer than 21 years. It also bans landlords (freeholder’s) from charging administration fees for collecting a peppercorn rent.

There are exceptions, these include business leases, statutory lease extensions of both houses and flats and community housing leases. These will not be affected by the changes.

The Act will not be retrospective which means that the changes will apply to new leases only and not leases entered into prior to the date of the Act being passed.

The Act gives enforcement authorities power to impose fines (ranging from £500 to £30,000) on landlords who demand ground rent in contravention of the Act.

For more information and advice on how this may affect you, please contact our Commercial Property team on 01904 624903 who will be happy to help.