Ground rents are not the sexiest of things to write about, but if have a leasehold property in your portfolio, you need to be aware of the changes that will be taking affect later this month.
Why the change in ground rents?
As part of the ‘levelling up’ drive, it was found that the major homebuilders were doubling ground rent charges every year. Which, particularly in the main cities, was putting additional costs to homeowners, some of whom reported that they were unaware of the situation.
Therefore, the Government has announced that there will now be a ban on charging ground rent on new leases in England and Wales which will come into with effect from the end of this month. This means that if you are buying a property from the end of June 2022 you will now be freed from these annual costs. However, as this is a recent change to the law you need to make sure that your lease reflects these changes. If you already have a property, then you now have the right to extend your lease to 990 years at zero ground rent.
For those of you who own properties with Aviva, Persimmon, Countryside Properties, Taylor Wimpey you will see your ground rent returned to the rate it was when you first bought the property.
Head landlords will also be banned from charging ground rent to future leaseholders but, to be honest, we have seen many head landlords reducing ground rents to zero.
Have any questions? Just get in touch with us.