The Ministry for Housing Communities and Local Government (MHCLG) has released documents related to the Leasehold Reform (Ground Rent) Bill, which had its Second Reading in the House of Lords a week ago. The documents set out the government’s approach to restricting ground rents in future/new residential long leases … including a proposed £5,000 fine for charging ground rent.

This is the first of two-part legislation to reform the leasehold system in England. The Bill, which has broad cross-party support, focuses specifically on ground rent clauses within future/new residential long leases. Further and more extensive leasehold reform is to follow later in this Parliament.

The Leasehold Reform (Ground Rent) Bill, when enacted, will mean that if any ground rent is demanded as part of a new residential long lease, it cannot be for more than one peppercorn per year (effectively zero) meaning that future leaseholders will not be faced with financial demands for ground rent.

The Bill also proposes banning freeholders from charging administration fees for collecting a peppercorn rent. MHCLG are also proposing to enforce the charging of prohibited ground rent by way of a civil penalty process, including freeholders being hit with a £5,000 fine for charging ground rent in contravention of the Bill.