Following the announcement in the Queen’s Speech, the government has introduced the Leasehold Reform (Ground Rent) Bill.

The Ground Rent Bill restricts ground rents on newly established long residential leaseholds to one peppercorn per year, thus effectively restricting ground rents to a zero financial value.

The Ground Rent Bill also prohibits the charging of administration charges in relation to those peppercorn rents.

What dwellings does the Bill apply to?

Subject to certain exceptions (including business leases, statutory lease extensions of houses and flats, community led housing and home finance plan leases), the Ground Rent Bill applies to leases of dwellings granted on or after commencement of the relevant provision of the Ground Rent Bill.

This includes leases created by a variation of a lease after commencement that was also deemed surrender and regrant.

Breach of the restrictions

A breach of the ground rent restrictions will be a civil offence, and carry a financial penalty of between £500 and £5,000.

In addition to the Ground Rent Bill placing a duty on trading standards authorities to enforce the Bill, it also makes provision for leaseholders to recover unlawfully charged ground rents through the First Tier Tribunal.