Can the freeholder charge ground rent under new regulations?

Can the freeholder charge ground rent under new regulations?

0:02 AM, 7th July 2023, About 8 months ago 5

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Hello, I exchanged on a new build flat before June 2022 when the new regulations on Ground Rent came into force. The property is due to be completed this month and the freeholder wants to charge £350 pa Ground Rent with five yearly reviews.

Can the freeholder do this under the new regulations?

Any advice would be appreciated,

Nilesh

Editors Note: The Leasehold Reform Ground Rent Act 2022 can be found here

From 30 June 2022, landlords of regulated leases must not require a leaseholder to make a payment of prohibited rent.

The peppercorn limit generally only applies to new residential leases that were granted after commencement of the Act, that is leases granted on or after 30 June 2022, or 1 April 2023 for leases of retirement homes (the ‘relevant commencement date’). If you bought a new (regulated) lease after this date you will not be faced with financial demands for ground rent. 

Check whether your lease is covered by this Act. The Act’s peppercorn limit only applies to leases granted on or after the relevant commencement date. This reform does not apply to existing leaseholders. They will continue to face ground rent charges while they own their property on a leasehold basis. 


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Comments

moneymanager

10:13 AM, 7th July 2023, About 8 months ago

I wouldn't touch a property with a GR that high and with vague five yearly increases, ourone beds are £150 with TWENTY year doubling which equals 3%p.a. that's reasonable

Amethyst

10:24 AM, 7th July 2023, About 8 months ago

The answer to the original poster's question is in the Editor's answer. Was the lease written before the Act came into force, if so the demand for GR is not prohibited as I understand it. From what I have also read, since your GR would then be well in excess of the £250 threshold, that would turn it into an Assured Tenancy, improving the Landlord's legal remedies against you in case of any default. No doubt Ian Narbeth on this site will be able to comment on that.

Judith Wordsworth

17:00 PM, 7th July 2023, About 8 months ago

The peppercorn limit generally only applies to new residential leases that were granted after commencement of the Act, that is leases granted on or after 30 June 2022.

You completed before 30 June 2022 so yes you have to pay the annual Ground Rent

Julesgflawyer

8:31 AM, 8th July 2023, About 8 months ago

Reply to the comment left by Judith Wordsworth at 07/07/2023 - 17:00
OP says they "exchanged" on the lease in time, not that the lease was granted (ie completed) before the cutoff date.

Amethyst

10:42 AM, 8th July 2023, About 8 months ago

The issue seems to be about when the lease was written- often when the land was purchased for development or when planning permission given. As it is backdated before the Act, companies are justifying it as a legal charge. See leasehold knowledge.com and search ' find everything ' and under April 2023 documents you will see the article about Sir Peter Bottomley raising this matter with Churchill Homes. It is a very useful site about all leasehold matters.

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