The UK government is seeking public input on proposals to reduce ground rents, potentially saving homeowners in England and Wales significant amounts over the duration of their lease.

Housing Secretary Michael Gove initiated the consultation, offering options such as capping ground rents at a nominal "peppercorn" rate for existing leaseholders, maintaining current ground rent levels, and limiting ground rents as a percentage of property value.

The consultation highlights the historical context of ground rents being of low or nominal value, emphasizing that they have evolved into a means for freeholders to charge rent throughout the lease term. The document notes that 86% of owner-occupier leaseholders in England reported paying an average ground rent of £298, while research in Wales found median average rents of £150 for flats and £200 for houses.

Concerns include potential increases in ground rent causing financial strain, affecting the affordability assessment for mortgages, and complicating property transactions. The consultation explores five intervention options, including setting ground rents at a peppercorn, imposing a maximum financial value, capping ground rents as a percentage of property value, limiting ground rent in existing leases, and freezing ground rent at current levels.

Part of the Leasehold & Freehold Bill, the consultation will be open for six weeks, aiming to gather public opinions to inform the final decision. The proposed reforms seek to make lease extension and freehold purchase more affordable, increase lease extension terms, enhance transparency over service charges, and simplify building management. The government plans to introduce the reforms through the Leasehold & Freehold Bill. Photo by UK Government, Wikimedia commons.