Five options on leasehold reform have been set out by the government, following the unveiling of its Leasehold and Freehold Reform Bill in the King’s Speech.
The six-week consultation “sets out a series of options for how the government could intervene to cap the ground rent leaseholders have to pay,” says the Department for Levelling Up, Housing and Communities.
The options the paper outlines include:
- Capping ground rents at a peppercorn
- Setting maximum financial value for ground rent
- Capping ground rents at a percentage of the property value,
- Limiting ground rent to the original value when the lease was agreed
- Freezing ground rent at current levels
The department says the Bill builds on its Ground Rent Act 2022, “which limits ground rent on new leases to one peppercorn per year – effectively setting the rate to zero”.
But it adds that the proposed Bill “will go further” and aims “to make the leasehold system more transparent, protecting the millions of people who own a leasehold property”.
The department, led by housing secretary Michael Gove, says that following the consultation, its “Leasehold and Freehold Reform Bill will be introduced to Parliament soon”.
The Conveyancing Association director of delivery Beth Rudolf welcomed proposed Bill, but adds that key measures need more work.
Rudolf says: “In some key areas – such as commonhold and the regulation of property agents – it’s clear there is however more work to be done.
“Commonhold, we are told, has not been included because it is deemed too complicated to fit into this legislation, while the regulation of property agents is not included and we are led to believe this is because there is not enough time to achieve this in this Parliamentary term and yet without the regulation of property agents there will be nothing to stop property managers and lease administrators putting their profits over the welfare of home owners.
“They are still therefore policies and measures worth pursuing and we would like to see more developments included to make commonhold more attractive to developers, and also be made available to those wishing to convert from managed freeholds and estate rent charges, which are the current ‘go to’ replacements for leasehold houses since the announcement they would be banned in 2019.”
The department’s consultation period ends on 21 December.
