The UK government is making welcome changes to home ownership for leaseholders. The new plans restrict ground rate charges from exceeding £250.
Prime Minister Sir Keir Starmer said the move would save many leaseholders “hundreds of pounds”. Labour’s election manifesto promised to address an outdated leasehold system.
Ground rents were stopped for most new residential leasehold properties in England and Wales in 2022 but remained in place for existing leasehold homes.
What's the issue with ground rents?
Frequently ground rent charges increase over set time periods, leaving leaseholders unable to sell their property because mortgage companies will not lend on a property with an increasing ground rent clause in its lease. The new bill will protect leaseholders from unreasonable and unjustifiable increases.
The bill is now due to make its way through parliament with an aim for the cap to come into force in late 2028.
Issues on the horizon
It is expected that the new bill will be challenged by freeholders. The Residential Freehold Association, which represents professional freeholders, warned that the new cap would only negatively impact the UK’s appeal to investors.
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For more information on the new ground rent changes, read this article from the BBC.