The government is considering five different options for ground rent as the reform process for the sector begins.
The government is committed to introducing a Leasehold and Freehold Bill to end the ground rent scandals which have sometimes made it harder for owners to sell or remortgage a property.
The options - contained in a consultation paper from the Department of Levelling Up, Housing and Communities - are:
- Setting ground rents at a peppercorn;
- Putting in place a maximum financial value which ground rents could never exceed;
- Capping ground rents at a percentage of the property value;
- Limiting ground rent in existing leases to the original amount when the lease was granted; and
- Freezing ground rent at current levels.
Housing Secretary Michael 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.”
The public consultation will be open for six weeks and the government says it will carefully consider all responses to inform the final decision, ahead of introducing reforms through the Leasehold and Freehold Bill.