Ground into dust by law on leases

OVER the years I have heard countless horror stories about exorbitant ground rents from residential leaseholders – particularly flat owners.

Freeholders keep ramping it up, making it difficult or impossible to sell or remortgage.

Some leaseholders simply did not appreciate the long term cost of ground rent in the first place.

And some landlords take advantage of the lack of protection for the leaseholder.

Gayle, from North London, contacted me in despair, saying: “I desperately need to sell this flat but the landlord keeps on increasing the ground rent every year and it is putting off buyers.

“Jumping out of the window feels like the only way out of this place.”

Finally this issue is being addressed by a new law designed to make things fairer, more transparent and affordable.

The Government has also set out commitments to set future ground rents to zero.

However, the changes in the Leasehold Reform (Ground Rent) Act will not help people like Gayle so more needs to be done.

If you currently own a leasehold property, or are thinking of buying one, here’s what you need to know:

HOW DOES THE NEW LAW HELP?

It guarantees that if you buy a leasehold property that is covered by the Act, you will never have to pay any ground rent.

WILL THIS APPLY TO MY PROPERTY?

The Act will apply only to long leaseholds, defined as those with a term of more than 21 years, and it is not retrospective, meaning it will apply only to leases entered into after June this year.

WHAT ABOUT EXISTING LEASES?

Whilst the Act does not apply to existing leases, if there is a surrender and re-grant of a lease, either extending the term of the lease, or adding additional property to the demise as defined in the lease, you will then enjoy the protection of the Act.

RETIREMENT HOMES

The ban on landlords charging ground rent on new residential leases will also apply to retirement homes but this will not come until April 2023.

WHAT NEXT?

We cannot leave people like Gayle out in the cold. The Competition and Markets Authority has already determined that landlords have been acting unfairly when it comes to ground rent, so why not pass a law banning ground rents across the board?