Changes to leasehold agreements have officially been enacted, yet one pledged amendment remains unfulfilled
Ground Rent Cap Remains Part of Leasehold Reform Legislation, Despite Delays
The ground rent cap, initially introduced in the Leasehold and Freehold Reform legislation, remains a key part of the reform framework, despite recent delays in its detailed implementation. The cap, capped at 0.1% of a property's value, was intended to protect leaseholders from exorbitant ground rent charges [2].
However, the enforcement details, including the Discount Rate used to calculate lease extensions and buyouts affected by the cap, are still under government consideration and delay [4]. This delay is primarily due to legal challenges from freeholders contesting the reforms, ongoing negotiations in Parliament, and the government's intention to refine the economic impact for both leaseholders and freeholders [2][4].
The broader reform package includes banning new leasehold flats and moving towards commonhold, which will gradually replace leasehold ownership and affect ground rent regulations [5]. The Leasehold and Freehold Reform Act, which has been officially passed into law, aims to increase leaseholders' rights, provide them with more control over their properties, and make lease extensions more affordable [2].
Robert Poole, director of Glide, part of the Leaders Romans Group, has expressed support for the Act. He believes that it represents a significant shift in the leasehold system, leading to a future where homeowners have greater autonomy over their homes with reduced costs and red tape [6].
The Act also introduces major changes to the residential leasehold sector, making it cheaper and easier for people to buy their freehold. However, critics argue that the legislation is a 'piecemeal' piece of legislation that makes radical changes to the valuation regime, to the detriment of freeholders and the advantage of leaseholders [7].
Despite these debates, the Leasehold and Freehold Reform Act has not been mentioned to have any specific negative impacts on freeholders as of yet. The Act, which was passed into legislation just before Parliament was shut down ahead of the next General Election on 4 July 2024, is expected to bring about significant changes in the residential leasehold sector [8].
In summary, while the details of the ground rent cap's implementation are being reconsidered and delayed, the cap itself remains a part of the Leasehold and Freehold Reform framework. The delay and adjustments stem mainly from legal challenges and the government’s intention to refine the economic impact for both leaseholders and freeholders [2][4].
The ground rent cap, a integral part of the Leasehold and Freehold Reform Act, continues to be a contentious issue in the realm of business and politics, as well as general news, given its potential impact on both leaseholders and freeholders. The cap's enforcement details, including the Discount Rate, are under review, causing delays in its implementation.
