The Government has announced that the abolition of ground rents in residential leases will come into force on June 30, 2022.
The move is one of the main provisions of the Leasehold Reform (Ground Rent) Act 2022 (LRGRA 2022) which applies to all new residential long leases being granted and voluntary lease extensions where the existing lease is surrendered and regranted.
The LRGRA 2022 effectively abolishes ground rents under new long residential leases which are granted for a premium. Annual ground rents on these new long leases will now be restricted to a token ‘peppercorn’ rent.
There will be penalties of between £500 and £30,000 per qualifying long lease for any breaches of the LRGRA 2022, enforced by Trading Standards.
Any ground rent collected in breach of the provisions of the LRGRA 2022 must be returned within 28 days of the demand for payment.