With effect from 30 June 2022 the Leasehold Reform (Ground Rent) Act 2022 (“the Act”) will come into force restricting payment of ground rents in most residential long leases of a dwelling to a peppercorn. An administration charge in connection with a peppercorn rent can’t be made either.
Are all leases affected?
The Act will apply to long leases (more than 21 years) of a dwelling granted for a premium after 30 June 2022 (a “regulated lease”). Varied leases which have been effectively surrendered and re-granted will also be caught.
Business leases, leases granted under the Leasehold Reform Act 1967 and the Leasehold Reform, Housing and Urban Development Act 1993 will be exempt. As will community housing leases, rent to buy arrangements and home finance plan leases. Retirement leases will be exempt until at least 1 April 2023.
What is a dwelling?
A dwelling is a building or part of a building occupied or intend to be occupied as a separate dwelling. So a single house or bungalow or a flat.
When does the Act come into force, and is it retrospective?
The Act only applies to leases granted from 30 June 2022. If contracts have been exchanged before that date but the grant of the new lease takes place afterwards then the lease will not be caught and rent above a peppercorn can be charged. If both happen after 30 June 2022 only a peppercorn rent is chargeable.
Are holiday leases exempt?
There is no exemption in respect of a long lease of a dwelling for holiday use only.
There are serious sanctions for non-compliance so landlords need to be aware of the Act and how it could affect their business.
Find out more
For further help or support, please contact our specialist Parks team who will be happy to provide bespoke advice and guidance.