The UK Government has introduced major reforms to the leasehold system aimed at making home ownership fairer, simpler and more transparent. These changes affect both new and existing leasehold properties and have important implications for property values, sales and mortgageability.
1. Ground Rents on New Leases Since 30 June 2022, most new long residential leases in England and Wales must have a ground rent set at a ‘peppercorn’ (effectively £0). Developers and freeholders can no longer charge ongoing monetary ground rent on newly created leases.
2. Existing Leasehold Properties Proposed legislation will cap ground rents on most existing residential leases at £250 per year. After 40 years, the ground rent is expected to reduce to a peppercorn. These changes are intended to improve saleability and reduce long-term ownership costs.
3. Move Towards Commonhold The Government has signalled its intention to phase out leasehold ownership for new flats and replace it with commonhold, giving owners greater control over their buildings and removing the landlord–tenant structure.
4. What This Means for Property Owners
• Improved property values and marketability where ground rents were previously high or escalating
• Reduced risk of mortgage refusal linked to onerous lease terms
• Greater long-term certainty over ownership costs
• Simpler and fairer leasehold arrangements going forward Surveyors and valuers will increasingly reflect these reforms in valuation advice, leasehold risk assessments and market commentary.
Professional advice should always be sought where lease terms are complex or where reform changes may materially affect value.
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