Landlords: caution when varying leases

The Ground Rent Act 2022 is now in force.

Landlords can no longer charge their tenants ground rent of more than a peppercorn on the grant of a long residential lease, and they cannot charge an administration fee for collecting peppercorn rent.

The aim of the Act is to end the rising annual costs of ground rent for owners of leasehold property and to make homeownership more affordable, fairer and more secure.

For landlords, these ground rents form an income stream and they are likely to wish to keep these rents in place where possible.

For now, the Act applies only to new leases granted after the Act came into force, on 30 June 2022, and is not being applied retrospectively.

For landlords wishing to maintain ground rents, they need to take care when varying, surrendering or regranting any existing leases, for example to deal with adding extra garden ground, or extra rooms, to the demise of a leasehold property, as this could bring the lease within the provisions of the Act and prevent them from collecting ground rent in the future.

For more information contact Philip Askew