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03 Feb
Ban On Ground Rent: What You Need To Know
30 May
Mortgage News
Last month, the Government announced an upcoming ban on ground rent, which will come into force on 30th June 2022. The new ban (under the Leasehold Reform Act 2022) will stop landlords from being able to charge ground rent to their leaseholders. Now considered an unreasonable cost, this rent will be abolished in England and Wales to provide transparent and affordable housing ownership to homebuyers.
Are you looking to sign a new lease within the next two months and need advice on whether your current charges are reasonable? Get in touch with our Mortgage Advisors in Northamptonshire today for more information.
Ground Rent Ban: What Do I Need To Know?
Ground rent is the term for the regular payments made from a leaseholder to their landlords, or ‘freeholder’. It is usually made in respect of charges for the land their home has been built on. With the upcoming legislation changes, our Mortgage Experts have put together a guide on the new Act:
- If You’re A Leaseholder
- If You’re A Landlord
If You’re A Leaseholder
As a Leaseholder, you’ll benefit from no longer having to pay ground rent after 29th June 2022 on new leases. However, it is estimated that over one million existing leaseholders will remain stuck in these agreements until the Government brings in further reform to cover current leases.
It is hoped that the introduction of the Leasehold Reform (Ground Rent) Act 2022 will act as a catalyst for change in this area, however, you may still be expected to pay on ongoing leases.
If You’re A Landlord
Many Landlords have already set their ground rent rates to zero. As a Landlord, after the Act comes into play at the end of June, you will not be able to charge or receive any money legally as ‘ground rent’ on new, qualifying leaseholds. Failure to comply with the legislation by charging ground rent (on new leases) may result in you facing a fine of up to £30,000.
There are, however, some exceptions to the rule, which include business leaseholds where the “leases of commercial premises include a dwelling, use of which substantially contributes to the business purposes”.
Source: Leasehold Rent Act, Gov.UK
Speak To One Of Our Mortgage Experts Today!
We know it’s not easy to keep up with changing legislation, but we’re here to help ensure you’re being treated lawfully and fairly. If you’re currently seeking mortgage advice to extend an existing lease or need advice on what can be charged to your leaseholders, get in touch with CG The Mortgage Experts today.
