The Leasehold Reform (Ground Rent) Act 2022, what does this mean for future buyers?
Are you preparing to buy a new leasehold property? The government have now introduced a ban on charging ground rent on new leases which begins on or after 1st July 2022.
Buying a property is not only a lengthy process but also expensive. Not only do you need to consider the mortgage, but all the fees that are incurred along the way too. From 1st July 2022, ground rent charges on most new residential leases will now be banned.
So what does this mean for new buyers?
As you are aware, the cost of living has rapidly increased over the past few months. The government is aiming to reduce property bills to rid homeowners of annual costs – also known as ground rent. By doing so, this will help homeowners manage their bills as the cost of living is on a rapid increase.
The new Act will make owning a leasehold residential property fairer, as well as more affordable, providing better opportunities for future homeowners. Before today, the ground rent fees have caused problems for those purchasing leasehold properties due to the potential increase in price year after year.
Of course, there are a few exceptions to the Act which include business leases. This relates to any lease that allows.
- Premises to be used for business purposes,
- The use of dwelling contributes to the business purpose.
- Before the time the lease is granted the landlord and leaseholder exchange written notices confirming the use of the premises
It is important to be aware that this new legislation will include retirement properties but this will not be enforced until 1st April 2023. The ground rent restriction will only apply from, the expiry date of the original lease term. Although The Leasehold Reform Act applies to ownership leases, the landlord can still charge rent on their share.