An announcement to cap ground rents at £250 a year has been welcomed by leaseholders locally who have been hit by rising costs and unfair charges.
The announcement, made by the Prime Minister on Tuesday, will cap ground rents at £250 per year before reducing them to a peppercorn after 40 years, as part of a wide-ranging overhaul of England and Wales’s leasehold system. More than five million leaseholders are expected to benefit.
The reforms also include banning the sale of new leasehold flats, strengthening protections for existing leaseholders, abolishing forfeiture rules that allow people to lose their homes over small debts, and making it easier for residents to convert their buildings to commonhold ownership.
James Naish MP arranged for Rushcliffe councillors and residents to share some of their concerns directly with MPs in Parliament. He said the changes would make a real difference in Rushcliffe, where many residents have contacted him about escalating ground rents and poor value for money.
Speaking from Westminster on Tuesday, he said: “Too many people across Rushcliffe feel trapped by an outdated leasehold system that can leave them paying hundreds of pounds a year for no meaningful service. Capping ground rents at £250 will put money straight back into the pockets of local families and pensioners at a time when every pound counts.”
“I would, of course, like to see the Government go further on a whole range of issues, but we’re unravelling an archaic system which will take time. The good news is that every few months, we see progress being made.”
The announcement has been given a qualified welcome by residents in Rushcliffe, including at Edwalton Hall in Edwalton, where leaseholders Louise Scull and Sarah Colvin, supported by James Naish, successfully worked with fellow residents to remove FirstPort as their managing agent. Last October, they gave evidence to a parliamentary inquiry into the firm.
Louise said: “Capping ground rent at £250 per annum is good news for leaseholders. Now the Government needs to take swift action to deal with unaccountable and unscrupulous management companies for escalating service charges, which in many cases are five or even ten times the annual ground rent for individual properties.”
Sarah added: “Banning leasehold on all new flats is excellent news, but we need to see the detail of what protections there will be for existing leaseholders and how the abuse of management fees and service charges will be ended. Management companies need to be properly regulated, with consequences greater than suspension from the Property Institute for those that do not comply.”
Alongside the ground rent cap, the Government has published the draft Commonhold and Leasehold Reform Bill, which will now enter pre-legislative scrutiny. The ground rent cap is expected to come into force in the coming years, subject to parliamentary approval.
