Yesterday (9th November) the Government released its consultation on Ground Rents. This is a new proposal not suggested previously and the Government want to consult on this before putting it in the proposed Bill.
They are seeking people’s views from the industry and leaseholders on how the current rent in flats should be capped or extinguished. Their aim is make living in a leasehold property easier, cheaper and fair.
They are asking for people’s opinions on five different possible solutions.
- Reduce all current ground rents to a peppercorn – £0
- Cap all current ground rents to a maximum figure – a maximum ground rent of £250pa is suggested.
- Cap ground rents to a percentage of the value of the property – a figure of 0.01% of the total value has been suggested.
- Fix all ground rents to their original amount – the ground rent that was payable at the beginning of the lease – regardless of the ground rent now payable.
- Fix all ground rents at the amount currently paid. So that there will be no more increases ground rent.
The consultation closes on 21st December 2023.
This proposal is controversial. It is rare for a Government to become involved in altering existing contracts. A lease is a contract between a leaseholder and a freeholder. Some people have suggested that this proposal would be ‘confiscation’ by the Government. As such I believe that this controversial proposal will be challenged and it is possible it may not find its way into the proposed legislation. However the government does appear to be determined to get all their proposals through the legislative process before the end of 2024.