Leasehold and Ground Rent Rules 

A leasehold means that, while you own the property, the land the property is built on is owned by a freeholder. Therefore, you are able to occupy your property for as long as the lease is valid.

Free 30 days listings on:

  • ✓ Rightmove
  • ✓ Zoopla
  • ✓ Mashroom
Start listing
First time Buyer mortgage

However, an update to the rules means that certain aspects have changed. Keep reading to learn more!

What was the issue with ground rents? 

Previously, ground rents have been very high on leasehold properties. Freeholders were also able to increase the ground rent charges with little warning. Ground rent is the payment a leaseholder makes to the freeholder of the property. 

Unfortunately, these fees can make a leaseholder feel like they are paying excessive amounts on a property. Certain leases can also be pretty strict – pets can be banned, and poor building management is not uncommon.

What’s changed? 

In short, buyers of new flats will now be given the right to extend their lease by 990 years, with zero ground rent. This modification could save people up to tens of thousands of pounds! 

This means that, in the long run, those who wish to own their home fully will be well within their means to do so. The Government has also implemented a cap on ground rent that is payable when a leaseholder decides to extend their lease or those who choose to become a freeholder. 

It has also been decided that costs such as ‘marriage value’ have been abolished. This will make sure that any payments made are fairer, cheaper and in general, more understandable. 

If you are a leaseholder, you will be able to stop future development on your property if you so desire and avoid paying the ‘development value’. 

The new rules also protect the elderly. The ground rent charges have also been lowered to zero on new retirement properties.

So, it’s good news if you live in a leasehold property or think of purchasing one. You will now have much more protection under these new rules and will not have to worry about paying out unnecessarily to the freeholder. If you want to purchase your property eventually fully, these changes will mean that you can certainly start thinking about it!

Tenancy deposit
Money shield
Local heroes
Approved code
Property ombudsman
Open banking
Mashroom is an appointed representative of Adelphi Insurance Brokers Ltd. Adelphi Insurance Brokers Ltd is authorised and regulated by the Financial Conduct Authority (FCA). Their Financial Services Register number is 594620, with permitted business activities being introducing, advising, arranging, dealing as agent, assisting in the administration and performance of general insurance contracts and credit broking in relation to insurance instalment facilities. You may check this on the Financial Services Register by visiting the FCA’s website, or by contacting the FCA on 0800 111 6768