The Government has outlined five proposals to reduce ground rents for existing leaseholders as its latest attempt to reform the sector beings.
It comes after the King’s Speech promised a Leasehold and Freehold Bill to help homeowners struggling with high charges that often make it harder to sell or remortgage a property.
While ground rents have been set at a ‘peppercorn rate’ for all new leases, housing Secretary Michael Gove launched a six-week consultation yesterday that set out five options for tackling ground rents for current leaseholders.
• Setting ground rents at a peppercorn;
• Putting in place a maximum financial value which ground rents could never exceed;
• Capping ground rents at a percentage of the property value;
• Limiting ground rent in existing leases to the original amount when the lease was granted; and
• Freezing ground rent at current levels.
The consultation document mentions Propertymark research on the impact of ground rents on the property market and seeks responses from agents, property professionals and the wider public.
Gove said: “People work hard to achieve the dream of homeownership. They plan, toil, sacrifice, save and should rightly be proud to get on the housing ladder.
“However, far too many are burdened with onerous ground rents – these punitive charges can leave some paying thousands of pounds a year for nothing in return.
“Ground rent can feel like an annual reminder that you do not own the land your home stands on, that your lease on it is finite, and that there is a payment for the privilege of staying there.”