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Keeping It Real Estate News and Trends in UK Real Estate, Disputes and Planning Law
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Government proposes to abolish residential ground rents

Following a number of recent reports of scandals involving leasehold properties, the Rt Hon Sajid Javid MP, Secretary of State for Communities and Local Government, yesterday issued a consultation paper entitled “Tackling unfair practices in the leasehold market” with the aim of addressing particular issues.  You can read the full paper here.

We highlighted some of these issues back in February 2016, when we described the doubling ground rent issue at a flat in Solihull (see our blog post “Beware the hidden costs of ground rents“) and in May we blogged about Nationwide’s announcement that it would no longer provide mortgages on leasehold properties with similar doubling ground rents (see our blog post here).

The consultation paper confirms the government is minded to limit ground rents in new leases to a peppercorn (i.e. nothing), subject to certain exceptions.  However, they are seeking views on whether that is appropriate, or whether a more “reasonable” ground rent regime could be introduced.  This question covers the initial ground rent payable, but also the basis for any increases during the term of the lease.  For example, they refer to Nationwide’s suggestion that ground rent increases could be linked to RPI increases.

The paper also covers a number of other leasehold issues, and in particular seeks views on whether the government should limit the sale of new leasehold houses (as opposed to flats).  We’ll be covering some of these issues shortly, so watch this blog!

The consultation period runs for 8 weeks from 25 July.  The proposals are potentially very radical, so if you have views – whether you are a landlord, leaseholder or developer – follow this link and share your views with the Rt Hon Sajid Javid MP.