The Government has recently announced that it is planning to make the leasehold system fairer for leaseholders through a brand-new Reform Act. It’s important that all relevant parties understand the Act and the implications that it might have on them.
Perdip Kaur Bhachu, Senior Associate Solicitor in the Residential Property team at Blacks Solicitors, discusses the Leasehold Reform (Ground Rent) Act 2022, what it means for Conveyancers, Landlords and Leaseholders and where it applies.
There are a number of key terms that all relevant parties should be aware of and understand:
- In terms of ground rent, there is currently no legal definition but this is the rent that Landlords charge Tenants, usually on an annual basis for long leases;
- A regulated lease is a lease granted on or after 30th June 2022, for a term which exceeds 21 years and for a premium;
- Peppercorn rent, or peppercorn ground rent, is a rent of a nominal value, hence in practice no actual rent is paid. However, S4 (3) of the Act now defines the peppercorn ground rent as “an annual rent of one peppercorn.”
What is the Leasehold Reform (Ground Rent) Act 2022?
In a nutshell, the Act, which came into force on 30 June 2022, abolishes ground rent for qualifying residential long leases, with the exception of retirement properties, for which it will not come into force before 1 April 2023.