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February 24, 2021 No Comments

Major Proposed Changes to Ground Rent Legislation


Posted by Mario Theodorou in Blog

The Government has just announced that it wants to make some widespread and far-reaching changes to the rental property market, which have been described as the biggest shake-up in the sector for more than 40 years.

Maunder Taylor, who offer property lease negotiations advice for landlords and tenants in Barnet and across North London explain what the changes could mean for both landlords and tenants, and how we will be able to help all our clients, whether they are leaseholders or freeholders.

The Current Situation

At the moment, tenants who are leaseholders (rather than freeholders) have to apply to their landlord for a lease extension. This can involve many fees, including ground rent, which means that the leaseholder has to pay an additional fee to the freeholder, particularly if they wish to make alterations or improvements to the property.

The amount of ground rent you pay can be fixed or on a sliding scale, although anyone who has successfully applied for a lease extension under the Leasehold Reform Housing and Urban Development Act of 1993 will only be paying a nominal or peppercorn figure.

The Proposed Changes

The Law Commission has made a series of recommendations to the Government which have been accepted in principle regarding the private rented market, although the precise form of any new laws will take is not yet clear. Neither is how the rights of the freeholders will be protected. It is also not clear when any of this will come into law.

However, it is widely believed that the any new legislation will favour leaseholders rather than landlords.

The Commission’s recommendations include giving leaseholders of residential properties the right to extend their leases by 990 years at zero ground rent. This includes protecting elderly residents by reducing ground rents to zero for all new leasehold retirement properties.

In addition, it was also recommended that the so-called ‘marriage value’, which forms part of the calculation for the sum of money payable for any agreed lease extension, should be abolished. The marriage value represents the increase in value of the property once the lease extension has been agreed.

Other Legal Developments

The pandemic has delayed other potential changes to the law. This includes the Renters’ Reform Bill which was set to abolish ‘no fault evictions’ and also gives landlords more rights to gain access to their property, which has been delayed for an ‘indefinite period’ due to the impact of coronavirus, despite having the backing of all the political parties.

The ‘eviction ban’ period has also been extended from the beginning of January for six weeks. For this reason, landlords are not allowed to evict someone for non-payment of rent if they have lost their job due to coronavirus. It also means bailiffs are not allowed to serve notices. This extension applies in England, Scotland and Wales (although for slightly differing time periods).

Property Lease Negotiations Advice from Maunder Taylor

Maunder Taylor follows new legal developments actively and with interest as we represent both landlords and tenants. We appreciate how important it is that both parties are fully aware of any changes to legislation which may affect them.

We can help leaseholders who join forces to buy the freehold of their flats. This means that the leaseholders own their properties outright with a share of the freehold so they don’t have to worry about the lengths of their leases or about paying any ground rent.

We also are happy to act as managing agents, looking after all of the communal areas, managing the day-to-day running of the block and administering service charge income and expenditure.

Maunder Taylor offer property lease negotiations advice for landlords in Barnet, Potters Bar, Totteridge, Whetstone, and across North London too. Whoever we represent, we always look to resolve disputes professionally and amicably, reducing the likelihood of any lengthy, and potentially very expensive, court cases.

If you would like to know more about our services, you can call our Whetstone office on 020 8446 0011. Alternatively, you can call our Potters Bar office for any residential service charge management enquiries on 01707 665 666 or click on this link and fill in our online contact form.