The Government has opened a consultation for leasehold reform with five proposals around ground rents to save homeowners thousands of pounds.
In some cases, leaseholders can be faced with ground rent clauses which lead to spiraling payments with no benefit in turn and can throw up issues when selling.
The proposed measures include 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.
This is included in the Leasehold Reform Bill, which was introduced in the King’s Speech earlier this week.
The public consultation will be open for six weeks and the Government will consider all responses to inform the reforms in Leasehold and Reform Bill.
Secretary of State for Levelling Up, Housing and Communities, Michael 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.”
He added: “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.
“Today, we are taking further steps to right that wrong – consulting you, the public, about how best to change this system so leaseholders are not exploited any longer and can take back control of their own destiny.”