Uncertainty surrounds a government pledge to slash ground rents for leaseholders as members of the House of Lords prepare to raise their concerns about the Leasehold and Freehold Reform Bill.

The Department for Levelling Up, Housing and Communities recently consulted on capping ground rents at a so-called ‘peppercorn’ rate for existing leaseholders. However, it was reported over the weekend that the proposal is being resisted by both the Treasury and Downing Street.

A spokesperson for the Department for Levelling Up, Housing and Communities, told the Gazette that the government is committed to strengthening protection for leaseholders and bringing forward reforms through the bill.

The spokesperson said: ‘It is not fair that many leaseholders face unregulated ground rents for no guaranteed service in return – that is why we consulted on a range of options to cap ground rents for existing leases. We are pleased to note that the Competition and Markets Authority recently found that ground rents are “neither legally nor commercially necessary”.

‘The government is currently considering the responses to the consultation and will set out its policy in due course.’

Whatever option the government chooses would most likely be added to the Leasehold and Freehold Bill, which has its second reading in the Lords on Wednesday. Members will 'draw attention to specific areas of concern where they think changes are needed', parliament's website states.

The Leasehold Reform (Ground Rent) Act 2022 sets ground rent for new leasehold properties at ‘one peppercorn’ per year.

 

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