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All-Party Parliamentary Group for Leasehold and Commonhold Reform

OPEN CONSULTATION

Modern leasehold: restricting ground rent for existing leases

Deadline: Wednesday 17th January

This consultation by the Department for Levelling Up, Housing & Communities seeks views on capping the maximum ground rent that residential leaseholders can be required to pay in England and Wales.

The MP co-chairs of the All-Party Parliamentary Group, Sir Peter Bottomley, Justin Madders and Daisy Cooper, support the Leasehold Knowledge Partnership, the National Leasehold Campaign and the Leasehold Advisory Service in their submissions to cap residential ground rents at a PEPPERCORN

You may respond to the consultation by completing an online survey here:

https://consult.levellingup.gov.uk/leasehold-reform/38011950/

Alternatively, an email response to specific consultation questions can be sent to: Consultation@levellingup.gov.uk

Lease extensions and Ground rent

12 This Bill introduces a new right to a lease extension for leaseholders of both houses and flats, for a term of 990 years at a peppercorn ground rent on payment of a premium.

15 The Bill introduces a new right for leaseholders who already have very long leases (with over  150 years remaining) to buy out their ground rent without extending the term of their lease or buying the freehold.

16 The Bill sets the method for calculating the price of a statutory lease extension or freehold  acquisition, known as the valuation process. The Bill removes the requirement for marriage  value to be paid, caps the treatment of ground rents in the valuation calculation at 0.1% of the  freehold value and allows Government to prescribe the rates used to calculate the  enfranchisement premium. Rates will be set by the Secretary of State in secondary
legislation.

My comment  on No. 16  :     Removing the marriage value is correct ,  because the building belongs to the leaseholders.

                                                             But treatment of  ground rent at 0.1% of freehold value is not acceptable ,  because the building belongs to  the leaseholders.

Here is a   weblink   to  explanation notes  on Leasehold and Freehold Reform Bill  which is passing through Parliament :

-  https://publications.parliament.uk/pa/bills/cbill/58-04/0013/en/230013en.pdf

Overview of the Bill

1 The Leasehold and Freehold Reform Bill is the second part of a legislative package to reform  English and Welsh property law. It follows on from the Leasehold Reform (Ground Rent) Act
2022, which put an end to ground rents for new, qualifying long residential leasehold  properties in England and Wales.

2 The Bill will make long-term changes to  homeownership for millions of leaseholders in
England and Wales. The main elements of the Bill are:

3 Empowering leaseholders:
a. Making it cheaper and easier for existing leaseholders in houses and flats to extend  their lease or buy their freehold.

b. Increasing the standard lease extension term from 90 years to 990 years for both  houses and flats, with ground rent reduced to a peppercorn.

c. Removing the requirement for a new leaseholder to have owned their house for two   years before they can extend their lease or buy their freehold and for flats before they can extend their lease.

d. Increasing the 25 per cent ‘non-residential’ limit preventing leaseholders in buildings  with a mixture of homes and other uses such as shops and offices, from buying their  freehold or taking over management of their buildings - to allow leaseholders in  buildings with up to 50 per cent non-residential floorspace to buy their freehold or
take over its management.

4 Improving leaseholder consumer rights:

a. Requiring greater transparency regarding leaseholders' service charges so that all  leaseholders receive minimum key financial and non-financial information on a
regular basis, including introducing a  standardised service charge demand form and  an annual report, so that leaseholders can scrutinise and better challenge costs if they
are considered unreasonable.

b. Replacing buildings insurance commissions for managing agents, landlords and freeholders with transparent administration fees.

c. Scrapping the presumption for leaseholders to pay their landlords’ legal costs when  challenging poor practice.

d. Granting freehold homeowners on private and mixed tenure estates the same rights  of redress as leaseholders – by extending equivalent rights to transparency over their  estate charges and to challenge the charges they pay by taking a case to a Tribunal.

The  "Leasehold and freehold  Reform bill"   is  in House of Commons,   at the Committee Stage  after 1st and 2nd reading.

This  consultation on "capping ground rent "  is a separate  subject  from  Mr Gove  and  it is  open to public response  from   freeholders,  leaseholders, management companies , mortgage lenders , property  letting agents and  conveyancing solicitors  , who report on title to a mortgage lender, and to  members of  forum .

So  if  you are leaseholder,  then  please  respond  to  the consultation  and  inform  Mr Gove  that   buyers   have paid 100%  to developer  for  their flat  which  includes construction  of their  building , and the  leaseholders  should own their  building with  the gardens  .   But currently,   a  ground rent  company  can  pay    2% -3%   to developer  for   "the  freehold title"   for the    ground  rent   income  (  and  gets the building for free.) .  

The Government's mistake is to define "freehold title includes  land  plus the building" and protect the freeholder's interest  by  upholding   unfair laws ,  such as   "forfeiture of lease" for ground rent in arrear and "marriage value"  in statutory lease extension .  It is time for  Mr Gove  to recognise the block of flats  belongs to the flat owners  ,  and   withdraw the  court   rules  on " forfeiture" and "marriage   value etc .

The Land Registry are taking  17-22  months to register :

https://www.gov.uk/guidance/hm-land-registry-processing-times

The consultation period has been extended to   close   on 17 Jan 2024.

Your local MP  could   reply to   this  consultation , as  the  Head of  a  Constituency.  

Note  for  responders  :     We strongly encourage responses via the online survey, particularly from organisations with access to online facilities such as local authorities, representative bodies and businesses. Consultations receive a high-level of interest across many sectors. Using the online survey greatly assists our analysis of the responses, enabling more efficient and effective consideration of the issues raised.

The MPs for Sheffield area include :

Gill Furness , MP  for Sheffield Brightside

Paul  Blomfield ,  MP for Sheffield  Central

Olivia Blake , MP for Sheffield Hallam,

Louise  Haigh ,  MP for  Sheffield  Heeley .

Clive  Betts , MP for Sheffield  South East

https://www.gov.uk/guidance/guide-to-the-leasehold-and-freehold-reform-bill

The Bill will strengthen existing, and introduce new, consumer rights for homeowners by: 

• Making it cheaper and easier for people to extend their lease or buy their freehold so leaseholders pay less to have more security in their home.  
• Increasing the standard lease extension term to 990 years for houses and flats (up from 50 years in houses and 90 years in flats), so leaseholders can enjoy secure ownership without the hassle and expense of future lease extensions. 
• Giving leaseholders greater transparency over their service charges by making freeholders or managing agents issue bills in a standardised format that can be more easily scrutinised and challenged. 
• Making it easier and cheaper for leaseholders to take over management of their building, allowing them to appoint the managing agent of their choice. 
• Making it cheaper for leaseholders to exercise their enfranchisement rights as they will no longer have to pay their freeholder’s costs when making a claim. 
• Extending access to redress schemes for leaseholders to challenge poor practice. The Government will require freeholders, who manage their building directly, to belong to a redress scheme so leaseholders can challenge them if needed – managing agents are already required to belong to a scheme. 
• Making buying or selling a leasehold property quicker and easier by setting a maximum time and fee that for home buying and selling information.
• Granting homeowners on private and mixed tenure estates comprehensive rights of redress, so they receive more information about what charges they pay, and the ability to challenge how reasonable they are.  

Copied from  https://www.gov.uk/government /consultations/modern-leasehold-restricting -ground-rent-for- leases

This consultation seeks views on limiting the level of ground rent that leasesholders can be required to pay in England and Wales. It asks for views on the the following:

• the full range of problems that existing ground rents can cause for leaseholders, and the scale of these problems
• which option to cap ground rents respondents believe is the right one to deliver our aim of giving leaseholders a fairer deal
• whether there should be a period of delay before implementing any cap, and
• the types of leases which need to be exempted from any cap to ground rents

How to respond:

You may respond by completing an online survey at Citizen Space.

Alternatively you can email your response to the questions in this consultation to Groundrents.Consultation@levellingup.gov.uk

If you are responding in writing, please make it clear which questions you are responding to.

Written responses should be sent to:

I   found this  report  about capping  the ground rent  on the LKP  website  :

https://www.leaseholdknowledge.com/leasehold-reforms-respond-to-government-consultation-over-ground-rents-before-21-december-because-those-legging-you-over-will-certainly-be-doing-so/

Send your choice for option 1  to Mr Gove   and send  before  4 Dec   or   those-legging-you-over-will-certainly-be-doing-so/

To beat the postmans strike  starting 14 Dec,  its better to post your  selection   for option 1  about  10 days earlier by second class  stamp  costing 75 p  to Mr Gove   at Ministry of Levelling Up , Housing and Communities.   SW1P 4DF . 

Mr Michael Gove ,  Housing Secretary  is  holding a consultation on capping ground rent  for existing leaseholders ( published on 9 Nov 2023  and closing on 23 Dec 2023 ).

Ground rent reforms to save thousands for leaseholders - GOV.UK (www.gov.uk)

The options are :

1.  setting ground rent  at a peppercorn

2.  putting in  place a max value .

3.  capping ground rent at a percentage of property value.

4.  limiting ground rent to original value  when lease was granted .

5.  freezing ground rents at current  levels.

Leaseholders should  post  their  selection   (  for  option 1  )  to Mr Gove    before  15  Dec 2023 .

Other  options   means   paying   ground rent etc   .

Almost  20% of housing stock  in E & W  is sold under leasehold title .    The properties  are  sold under 99 year  or 125 year leases , which can be  sold / transferred   to the next buyers  etc ,  until the lease term  falls  to   expiry, when the premium  falls to zero.

When  property  under freehold title  is purchased , the buyer becomes the legal owner of the property.       When property under leasehold title is purchased , the buyer becomes the long term rental tenant   who pays  annual  ground rent and service charge for 99 or 125 years.     The leaseholder pays for everything  under the leasehold property system   but  gets  no interest in  the freehold title.  We can estimate that 5Mil leasehold  units  (  at  £250,000 each  ) = £1.25 Trillion  will be  lost  over 125 years .

The  lease  is  recognised  by  successive  Housing Ministers   as  " a   contract  on   unfair terms for leaseholders"  ,   but  these  leases   are  protected by the Government  , by foolish decision  and £1.25 Trillion will be lost   .

The proof of payment is shown on your bank statement .

What is the current value of house, off  Chippinghouse Road now ?  Must be over £150K ?

Was any compensation paid based on ground rent or house value , on the house lost to slum clearance ?

When you own a house under  freehold title, you are the legal owner of the property. There is no risk of forfeiture for a   freehold house.

When you own a house under leasehold title, you are the long term  rent tenant  of house owned by the freeholder.

Your question about "putting buyers off", should be  answered by   local  estate agents  operating  around your  district.  

Many house buyers will refuse to view leasehold houses,  so you may not attract  offers from  buyers  looking at   freehold  houses.

As I have pointed out, the £6.50  ground rent is not economic  to collect.

Have you checked the freeholder at Land registry Records ?    Was the ground rent previously  paid to  a person or company ?  

I suggest  you make an  informal  offer ( and  marked  "subject to contract" )  to buy the freehold title of your house  at  30 x GR  =  £195  + £250 contribution to landlord's legal costs .

1.     If the ground rent is no longer collected by landlord's solicitor , it is indicating  the annual ground  rent must be small ( below £25 p.a  ). 

2.    Before you write to make an  informal offer to buy the freehold title for your  house , investigate the size of the freehold title . ( just one house or entire street of houses ? ) 

Visit Land Registry Online website and buy a copy of the (1) freehold title and (2)  site plan for your leasehold house . The cost is  £3 each by credit card and you can download the  info.

Check with the  houses , next door ,  to  ascertain if  they have same freeholder .

3.   Details of free guide  to  compulsory purchase  of freehold title  of  a leasehold house (  enfranchisement under 1967  Act ) , may be obtained from  LEASE (  www. lease-advice.org ) . 

4.  Consider making an informal offer to buy the freehold title  of  your house at 25 x annual ground rent  +  £250  contribution to landlord's  legal cost .

On 01/11/2022 at 21:29, Twitcher said:

I need to inform the Land Registry of a change of address, to do this I need to get an ID1 form authorised by them, I have contacted a solicitor who wanted to do all the 'work' (it's a simple form) and charge me the staggering sum of £750.

Last time I was charged about £30 but these guys have since moved.

Anyone any recent recommendations please?

I think £750 charge by solicitor  must include some conveyancing work.   

For countersigning ID1 form only , the countersigning party must see identify  you in person,  say  with passport , driving licence with photo , proof of residence for last 5 years ( council tax and utility bills )  

You can find the name &  address of freeholder of your  leasehold house from Land Registry  Online and pay £3 for copy of freehold title.

The annual ground rent  in  your 700+ years  lease  may be very low and not   economical to demand  payment  .

If you make  direct  approach   for  price of  the  freehold title,  the freeholder may ask you  to pay a few  thousand pounds.  

However where the price of freehold title for a leasehold house  cannot  be agreed between leaseholder and freeholder  , you  can  apply to :

the Residential Property Tribunal Services ( Northern Region ) . 1st Fl, Picaddily Exchange , Manchester M1 4AH     for determination of price to pay.

On 09/10/2022 at 13:22, tomo2001 said:

61 years left. Ground rent started at £50 but rising to £200. Paid £145 this year included the ludicrous £45 'insurance check'

1,  There is  a free guide to buying the freehold title  (  for   leasehold house )  which can be downloaded from www.lease-advice.org  . 

2.   Also  for evaluation of  cost, see   section 6   for a house with 60 years remaining on the lease    (  https://www.lease-advice.org/advice-guide/leasehold-houses-valuation/  ) .

The valuation sample  ( section 6)  includes "marriage value"  which the  previous  Housing Minister  has announced   it intends to withdraw  in the future.

3.  You should pay  Jeffrey Shaw  for half hour consultation . He is the expert  on leasehold matters and dealing with the freeholder.

The Chancellor  has announced in recent  mini-budget that energy prices from 1st Oct will be capped .

Electricity  should  cost around   34p per unit and Gas cost around 10.3 p  per unit.

Are you a leasehold house ?  if so,  how many years left on your lease and what ground rent do you pay ?

The priority for  charging council tax    seems to be  (1st ) the resident  (2nd ) the property owner , if property  is vacant 

22 hours ago, HeHasRisen said:

Yes, but this forum has deemed Argos changing a word on its website as being more worrying.

This thread  is about  "energy price cap". 

Please start a new thread for your complaint against Argos.

Ofgen has raised  the price cap on energy prices :

Electricity  from  1st Oct- 31st Dec 2022  will  increase   from 28p /KWh   to 52p /KWh.

Gas  from 1st Oct 2022-31st Dec 2022  will increase   from 7p /KWh  to 15p /KWh.

These huge rises will  push  many families into bankruptcy.