Ground Rents Reforms

31 March 2021
Uncategorised,

By Stuart Hill, Director and Solicitor, Residential Conveyancing

Ground Rent is payable by the owner of a leasehold property to the freeholder.

Historically this has applied to apartments and flats, however in recent years, many new build houses have been sold on a leasehold basis.

If you are the owner of a leasehold property, you may be faced with the issue of a “Doubling Ground Rent Clause”.

What is a doubling ground rent clause and what problems do they cause? 
A doubling ground rent clause means that the ground rent payable by the leaseholder of a property will double on fixed dates during the term of the lease, this means that ground rents can rise to incredibly high levels. As well as increasing the cost of ownership for the leaseholder a doubling ground rent will also make the property less attractive to potential buyers and may limit the number of mortgage providers willing to lend on the property. 

Public Pledge for leaseholders 
The housing sector has recognised that this practice is an issue and is taking steps to eradicate the problem. A Government-backed pledge committing to free existing leaseholders trapped in leases with frequently doubling ground rent has been agreed and signed by many of the industry’s leading players.

In addition, the Housing Secretary Robert Jenrick has announced that Millions of leaseholders will be given the right to extend their lease by a maximum term of 990 years at zero ground rent as discussed in our recent article A better deal for leaseholders by Paralegal Kara Nicholls.

What should you do if a property you are interested in contains a doubling ground rent clause? 
Firstly, you should seek advice from your conveyancing solicitor to confirm the details of any lease before you commit to any purchase. Potentially you could ask the seller to seek agreement from the landlord to remove or amend the doubling ground rent clause before completion. There may be costs involved with this however, you could request that the seller covers these.

If you are considering buying or selling a leasehold property, or if you are considering a lease extension on your property and would like a free initial consultation with one of our specialist Conveyancing team, contact us on 01244 356 789 or email info@cullimoredutton.co.uk.

Please note: This is not legal advice; it is intended to provide information of general interest about current legal issues.

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