First reported in the Sunday Times, this could see leaseholders continue to pay ground rent for up to 20 years through changes under the Leasehold and Freehold Reform Bill.
Instead of immediately introducing a peppercorn ground rent for current leaseholds, the policy will be phased in over time. This is expected to be formally announced this week.
Last month, it was reported that the proposal to introduce a peppercorn ground rent, which would be a small amount each year, was under threat following pushback from the Treasury.
The Treasury reportedly warned the introduction of a reduced peppercorn ground rent would impact pensioners, as it would wipe out around £37bn of investment into pension and insurance funds.
The government held a consultation on ground rent restrictions for existing leases, which closed on 17 January.
A spokesperson for the Department of Levelling Up, Housing and Communities (DLUHC) said: “We are committed to strengthening protection for leaseholders and are bringing forward reforms through the Leasehold and Freehold Reform Bill. It is not fair that many leaseholders face unregulated ground rents for no guaranteed service in return – that is why we consulted on a range of options to cap ground rents for existing leases. We are pleased to note that the Competition and Markets Authority recently found that ground rents are ‘neither legally nor commercially necessary’.
“The government is currently considering the responses to the consultation and will set out its policy in due course.”
Ground rent charges for most new leases were banned in June 2022 through the Leasehold Reform (Ground Rent) Act.
House of Lords examination
The Leasehold and Freehold Reform Bill will go through the committee stage from today until 1 May over the course of four days.
This will allow members of the House of Lords to put forward amendments to the bill.
The Leasehold and Freehold Reform Bill also sets out to make it easier and cheaper for leaseholders to buy the freehold, extend the lease by up to 990 years and provide transparency around service charges.
