In our article in February 2022 - The Leasehold Reform (Ground Rent) Act 2022 is finally law but what does it actually mean? - we announced that the Leasehold Reform (Ground Rent) Bill the Bill had received Royal assent on Tuesday 8 February 2022 and was from that date law.

We also highlighted that, despite that Royal Assent, Regulations would still need to be made by the Secretary of State before most of the provisions of the Act came into force. Of those provisions, perhaps the most important for landlords, developers, those managing developments consisting of residential property let on long leases (houses or flats) and, of course, the current and prospective leaseholder of those properties, is when does the “ban on Ground Rent” actually apply.

Well, last week, the (unpaid) Minister of State for Building Safety and Fire, Lord Stephen Greenhalgh, announced that the ban will take effect on 30 June 2022. Leases completed on or after that date may only lawfully entitle the Landlord to demand and collect rent of a peppercorn (a £nil value).

The Act aims to make leasehold ownership more fair and affordable for leaseholders as part of a package of reforms to the residential leasehold sector in England and Wales and will arrive in two parts. The first was the ban on ground rent, as referred to above. The second tranche of new rules will include matters designed to streamline the process, and minimise the cost, of extending a residential lease or buying a freehold. There is however no timetable yet for when that second part of the reforms will appear on the statute books.

To what leases does the ban apply?

The ban only applies to new leases granted on or after 30 June 2022. The ban is not retrospective and so all leases currently in place prior to 30 June 2022 will continue be subject to any rent provisions contained therein and leaseholder of those leases will still need to pay that rent on demand.

See here our article from earlier this year which explains in more detail what properties are and are not caught by the ban on rents.

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