Ground rent reforms

mills112

What is the current situation with ground rent reforms for properties with old leases?

My FIL is interested in a retirement bungalow which has 61 years left on the lease but it has ground rent of £564pa (in Surrey so that makes it an AST).

MyRealNameToo

As it's over £500 then the freeholder can treat it in a way very similar to a AST in terms of their ability to repossess the place for non-payment. Doesnt actually make it an AST though. 

mills112

MyRealNameToo said:

As it's over £500 then the freeholder can treat it in a way very similar to a AST in terms of their ability to repossess the place for non-payment. Doesnt actually make it an AST though. 

yeah, my understanding is that if the ground rent is more than £250pa (outside of London) then the property becomes an AST and so the lenders may not lend on it.  Makes it harder to sell.

however, i have heard news about reforms on ground rent so wonder where this has got to.  whether these properties will be forced to change these ground rents to peppercorn.  i guess they may do when you extend the lease as all new leases now (including extended ones) can't have ground rent anymore.

but i think we are still waiting for the lease reforms on lease extension.

user1977

The rent limit referred to above is already being fixed by the Renters Reform Bill, so that will (almost certainly) become law soon. I think the other reforms are for future legislation.

mills112

user1977 said:

The rent limit referred to above is already being fixed by the Renters Reform Bill, so that will (almost certainly) become law soon. I think the other reforms are for future legislation.

that is interesting.  so the renters reform bill will force the ground rent on the bungalow to be peppercorn? or do you mean that having high ground rent no longer make it an AST under the renter reform bill?

user1977

mills112 said:

user1977 said:

The rent limit referred to above is already being fixed by the Renters Reform Bill, so that will (almost certainly) become law soon. I think the other reforms are for future legislation.

that is interesting.  so the renters reform bill will force the ground rent on the bungalow to be peppercorn? or do you mean that having high ground rent no longer make it an AST under the renter reform bill?

The latter.

mills112

user1977 said:

mills112 said:

user1977 said:

The rent limit referred to above is already being fixed by the Renters Reform Bill, so that will (almost certainly) become law soon. I think the other reforms are for future legislation.

that is interesting.  so the renters reform bill will force the ground rent on the bungalow to be peppercorn? or do you mean that having high ground rent no longer make it an AST under the renter reform bill?

The latter.

that is helpful.  thanks.