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30 June 2022: The introduction of peppercorn ground rent

In February we saw the first step in the leasehold reform package with The Leasehold Reform (Ground Rent) Act 2022 ('LRGRA') receiving Royal Assent. The Act comes into force later this week (30 June 2022) and puts an end to homeowner costs, known as ground rents for new, qualifying long residential leasehold properties in England and Wales. From Thursday 30 June, any ground rent demanded as part of a new residential long lease, cannot be for more than a peppercorn per year. Historically, a ‘peppercorn’ was defined as nominal or low value, however, the Act has defined the annual rent as 'one peppercorn’ and restricts ground rents on new leases (unless an excepted or non-regulated lease). The LRGRA applies to future leaseholders only and no retrospective applications apply. There is also a transition period that applies to regulated leases of retirement homes, which means the Act will not come into force for these leases until 2023.

The LRGRA is the first of a two-part seminal legislation to reform the law surrounding leasehold property in England and Wales, with the second bill expected to cover a more significant range of issues that will be seeking to streamline the way in which the cost of extending a lease or buying a freehold is valued. Leasehold minster, Lord Stephen Greenhalgh highlighted how the 'important milestone' aims to 'fix the leasehold system and to level up homeownership'. However, it is yet to be determined when the second stage of the leasehold reform legislation will enter into the statute books.

Guidance for leaseholders, landlords and managing agents has been published here which covers more on the LRGRA. Our specialist enfranchisement team offers pragmatic, clear advice in this complex area of law and if you have any questions regarding the impending changes please complete our contact form here.

This guidance has been prepared for leaseholders, freeholders and managing agents in England to help them understand the Leasehold Reform (Ground Rent) Act 2022 (‘the Act’).


real estate, leasehold reform, property