Overview

The Leasehold Reform (Ground Rent) Bill aims to abolish costly ground rents for most new long leases on houses and flats in England and Wales. It makes ground rents essentially zero for new leases, except for specific circumstances, and provides mechanisms for enforcement and redress.

Description

This bill significantly alters the rules surrounding ground rent payable under long leases (leases exceeding 21 years) for dwellings. It largely eliminates ground rents, making them a nominal "peppercorn rent" (one peppercorn annually) for most new leases.

Types of Leases Affected:

The bill defines "regulated leases" – new leases granted after the commencement date, for a premium, of a single dwelling, and not fitting the exceptions detailed below. Exceptions include business leases where dwelling use significantly contributes to the business; leases granted through statutory lease extensions; community housing leases; and home finance plan leases. Specific criteria define these exceptions.

Ground Rent Rules:

For regulated leases, the permitted rent is typically a peppercorn rent. Exceptions exist for shared ownership leases (peppercorn rent on the tenant's share, but any rent on the landlord's share) and leases replacing pre-commencement leases (rent limited to the pre-existing amount for the initial period of the pre-existing lease, then a peppercorn rent thereafter).

Enforcement:

Local authorities (enforcement authorities) are responsible for enforcing the rules. They can impose financial penalties (between £500 and £30,000) on landlords for requiring prohibited rents. Tenants can also apply to a tribunal to recover prohibited rents and interest.

Government Spending

The bill doesn't directly increase or decrease government spending. However, enforcement costs may arise for local authorities, and there's potential for increased administrative burdens in processing applications. The actual financial impact is not specified in the bill text.

Groups Affected

• Leaseholders: Most new leaseholders will benefit from significantly reduced or eliminated ground rent payments. Existing leaseholders are unaffected.
• Landlords: Landlords will see a significant reduction in income from ground rents on new leases, except where exemptions apply. They may face financial penalties for non-compliance.
• Local Authorities: Local authorities will have new responsibilities for enforcing the regulations, potentially incurring administrative and enforcement costs.
• Tribunals: Tribunals will handle tenant applications for recovering prohibited rents and landlord applications for clarification on lease terms.

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