Propertymark wants Housing Secretary Michael Gove to continue with ground rent reforms for leaseholders following the launch of a consultation into this issue.
The trade body has been campaigning for five years on the issue, most recently with the report Leasehold 2023: Has Anything Changed? showing agents experiencing difficulties with many facets of leasehold law.
Gove’s options in the consultation include capping ground rents at a so called “peppercorn” rate for current leaseholders, pausing ground rents at current levels, and capping the ground rents at a percentage of the property value.
Many leaseholders can be penalised by ground rent clauses in their leases which result in spiralling payments with no benefit in return, and can trigger issues for those who want to sell their properties.
The Department for Levelling Up, Housing, and Communities will consult on five proposals to determine the best way forward to benefit leaseholders. These are:
- Determining ground rents at a peppercorn;
- Confirming a maximum financial value which ground rents could never exceed;
- Capping ground rents at a percentage of the property value;
- Restricting ground rent in existing leases to the original amount when the lease was granted; and
- Pausing ground rent at current levels.
Gove says: “People work hard to achieve the dream of homeownership. They plan, toil, sacrifice, save and should rightly be proud to get on the housing ladder.
“However, far too many are burdened with onerous ground rents – these punitive charges can leave some paying thousands of pounds a year for nothing in return.
“Ground rent can feel like an annual reminder that you do not own the land your home stands on, that your lease on it is finite, and that there is a payment for the privilege of staying there.
“Today we are taking further steps to right that wrong – consulting you, the public, about how best to change this system so leaseholders are not exploited any longer and can take back control of their own destiny.”
The Leasehold and Freehold Bill – which will be introduced to Parliament shortly - will make it more affordable for people to extend their lease or buy their freehold; and to increase lease extension terms to provide people more security and peace of mind; will provide greater transparency over service charges and insurance commissions; and make it simpler for people to manage their building themselves.
Timothy Douglas, Head of Policy and Campaigns at Propertymark, says: “It is positive to see the UK Government getting on with the job of reforming the leasehold system and this consultation is the next step in this process.
“Propertymark has long argued that policymakers need to do more to create a level playing field with those who already own a leasehold property, so we look forward to working with our members and responding to this consultation to ensure that the Leasehold and Freehold Bill doesn’t leave any leaseholder behind."
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More or less the same article appeared yesterday - although it quoted even more of Gove's tedious BS - and, although nobody seemed to notice, here's the lengthy, and naturally slightly sarcastic, post I made in response....
So large numbers of "...hard working people plan, toil, sacrifice, save ....to get on the housing ladder" only to discover to thier horror that unexpectedly, behind their backs, an evil landlord or freeholder (as all of us are) has somehow exploited an obscure loophole that nobody knew existed to trap them by slapping "thousands of pounds a year for nothing" in ground rent charges on thier property (that were never there before and they couldn't have known about, or been advised by their solicitor about when buying)... thus destroying their "dreams of property ownership" forwver and wreaking their lives....
...and only The Tories - coached apparently by Propertymark looking for cheap publicity - can now save them from their plight.. yeah, right...
Yet more typically irrelevant, intentionally emotve "people" not factual or business focused, ignorant, "sound-byte" waffle from this ill-informed man intent on meddling with yet another thing he has no actual clue or care about.... and no doubt in the process doing yet more damage to something that wasn't neccessarily as "broken" and didn't need as much incompetant wrong-headed "fixing" as he pretended....
I'm not sure it will be easy for them to reset or cancel existing ground rents though.... too many pension funds etc. with huge investments in ground rents (and with priced-in expectations for extentions for older ones), and incomes from them...
So the government is offering us just six weeks to make comments they will dutifully count but of course completly ignore, on their utterly simplistic, naive and potentially damaging proposals aimed to please socialists who don't understand any of it but instinctively always feel cheated and angry about things....
Jolly good.... keep 'em coming.... there's still plenty more damage to be done while frantically virtue-signaling to people who'll probably never vote for you anyhow!
Many Leaseholders extended their Leases so that they had a marketable property and paid a large premium. The Freeholder at the same time increased the ground rent to in excess of £250.00 p.a . Many Mortgage lenders will NOT accept this position and lend money to any future buyers because it enables a Freeholder to reposes the property WITHOUT putting the mortgage lender on notice if the ground rent is not paid. Many Freeholders are now demanding the sum of £5,000.00 to enter into a Deed of Variation just to amend the Lease so that if the ground rent was not paid they would notify the mortgage lender. This surely is a Rip off and one of the many matters that needs to be addressed.
A lease that provides that a Notice of Assignment fee of the fixed sum of £36.00 has to be paid by a new owner but the Freeholder demands a further sum of £84.00 to receipt the notice that was sent to them and return it. That surely is yet another rip off . When challenged that it is an Implied term that the fixed sum includes them purely signing one copy and returning it they waive that additional fee as an act of generosity, but how many times have they got away with this.
John Pettman
@JP, we happen to be freeholders - though only on a small scale with a couple of small blocks in addition to our other rental properties (mainly residential but also several small commercial units).
As it happens I really do have quite a bit of in-depth knowledge of things like landlord tenant law, enfranchisemnt etc.
What you suggest about freeholders being able to reposess a "qualifying long lease" of a residential property ("dwellinghouse") simply for a nominal ground rent arrears is totally incorrect.... once the required threshold has been passed (which £250 and a single year is nowhere near) it would be a huge uphill struggle probably taking at least 2 years or more in court - these days more like 3 or more - and costing the landlord probably many thousands of pounds in costs that for technical reasons will mostly almost certainly not be recoverable from the initially defaulting tenant irrrespectie cof the outcome.... and during this incredibly slow, complex process with all sorts of notices and counter notices being served, and long delays in between, there would be so many opportunities for the tenant to simply apply for relief to pay the relatively trial sum in question (or for the tenant's lender on behalf of the tenant to pay, and then just add it & their costs to the mortage balance as is their contractural right) and thus end the whole thing, it would be a complete waste of time.....
Virtually no judge in any court in the land would be comfortable forfeiting a residential long-eared simply for ground rent arrears... its more orvless inconceivable and every chance would be given to the tenant - year after year if necessary- to remedy the technical and easily at any timecremedied breach.... relief could even be obtained (including but not only on appeal) to get the lease back for quite a while after the incredibly unlikely event of it being forfeit.
There are special situations where for much larger arrears a freeholder *might* go after a defaulting lessee for ground rent arrears... we actually did that many years ago when buying a block where no ground rent had been collected for several years.... we had to pay the seller the arrears then serve notices to collect it back from the tenants/lessee..
but appart from the theoretical three of forefieture for non-payment in reality both payment/collection was a certainty and actual forfeiture completely out of the question.
Hi
You are ignoring the point. Ground rent in excess of £250.00 is NOT acceptable to some mortgage lenders. FACT . Read the Mortgage Lenders handbook Some large Freeholders are charging £5,000.00to agree to notify the Freeholder if there are arrears FACT
John Pettman LL.B (Hons) Former A.I R.P.M and Licensed Conveyancer
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