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Future home buyers will see their prospective property bills reduce in just over two months, when the government’s ban on charging ground rent on new leases in England and Wales comes into force.
The government is taking action to rid future home owners of annual costs – known as ground rent. Sometimes worth hundreds of pounds a year, these charges provide no clear service in return and can be set to escalate regularly, with a significant financial burden for leaseholders.
From 30 June 2022, anyone buying a home on a new long lease will now be freed from these annual costs, helping home owners manage their bills as they face cost-of-living increases.
Landlords will be banned from charging ground rent to future leaseholders, under a new law that will lead to fairer, more transparent home ownership for thousands of home buyers, helping level up opportunities for more people.
In preparation, many landlords have already reduced ground rent to zero for home buyers starting a new lease with them. Anyone preparing to sign a new lease on a home in the next two months should speak to their landlord to ensure their ground rent rate reflects the upcoming changes.
The move forms the first part of the government’s reform package that will make home ownership cheaper, fairer and more secure.
Future measures, announced last year, include a new right for leaseholders to extend their leases to 990 years at zero ground rent and an online calculator to help leaseholders find out how much it would cost to buy their freehold or extend their lease.
In addition, thousands of existing leaseholders have also already seen a reduction in their inflated ground rent costs. In a government crackdown, the Competition Market Authority (CMA) secured commitments with major home builders to stop doubling ground charges every year for leaseholders.
The ban on landlords charging ground rent on new residential leases will also apply to retirement homes. This will come into force no earlier than 1 April 2023 and more details will be confirmed in due course.