What does leasehold ground rent reform mean for existing leaseholders?

Full answer

Ground rent reform has happened in stages, and it is important for existing leaseholders to understand exactly what has and has not changed for leases signed before the newest rules took effect. **The ban on ground rent for new leases** The Leasehold Reform (Ground Rent) Act 2022 banned ground rent above a token "peppercorn" (effectively zero financial value) on most new long residential leases granted from 30 June 2022 onwards. This stopped the practice of new leases being sold with escalating ground rents (sometimes doubling every 10 years) that had trapped many leaseholders in properties that became difficult to sell or mortgage. **Why existing leases were NOT automatically changed** Critically, the 2022 Act only applies to NEW leases granted after it came into force -- it did not retrospectively reduce or remove ground rent obligations in leases that already existed at that point. Someone who bought a leasehold flat in 2015 with a lease specifying a doubling ground rent clause still owes that ground rent under the original contractual terms, unless they successfully renegotiate, extend, or enfranchise (buy the freehold or extend the lease) separately. **Wider reform proposals for existing onerous ground rents** Separately, the government has consulted on and proposed further measures specifically targeting existing "onerous" ground rents (particularly those that double every 10 years or otherwise escalate rapidly) -- potential options discussed have included capping ground rent at a fixed low amount, converting escalating ground rents to a fixed peppercorn rate, or other consumer-protection style interventions. As proposals in this area have evolved and faced legal challenge risk (from a compensation/human-rights perspective, since freeholders could argue lost income constitutes an unlawful deprivation of property), leaseholders should check the current, up-to-date position rather than assuming a specific historic proposal has definitely become law. **Leasehold and Freehold Reform Act 2024** Separate from ground rent specifically, wider leasehold reform legislation has also made lease extensions and freehold purchases (enfranchisement) cheaper and easier for many leaseholders, by removing the requirement to have owned the lease for 2 years before extending, standardising lease extension terms (990 years, peppercorn ground rent) and changing valuation rules used to calculate the premium payable. **What existing leaseholders can do now** Leaseholders with an onerous, escalating ground rent can consider: a statutory lease extension (which sets ground rent to a peppercorn for the extended term, though a premium must be paid, calculated partly based on the current ground rent being extinguished); collective enfranchisement (the leaseholders in a building collectively buying the freehold); or negotiating directly with the freeholder to vary the ground rent terms voluntarily (sometimes offered by freeholders under separate voluntary schemes following past criticism). **Worked example** A leaseholder bought a flat in 2016 with a lease specifying ground rent starting at £300 a year, doubling every 10 years (so rising to £600 in 2026, £1,200 in 2036, and so on). This existing lease is unaffected by the 2022 ban on new-lease ground rent, since that ban only applies going forward to new leases. To escape the escalating ground rent, the leaseholder could pursue a statutory lease extension, which would reset ground rent to a peppercorn for the new extended lease term, in exchange for paying a one-off premium calculated under the relevant valuation formula. **Practical tip** Check your specific lease terms and current government guidance before assuming any ground rent reform automatically applies to you, and consider specialist leasehold enfranchisement advice if your ground rent is escalating rapidly, since acting sooner rather than later can reduce the eventual cost of extending or enfranchising.

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