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."