Daily Post Article -Leasehold Reform

Posted on 6th September, 2023

The autumn Parliamentary term started on Monday this week after the summer recess. The first few weeks of the term will be somewhat disjointed, with another recess scheduled for the party conferences at the end of September and early October.

The State Opening of Parliament, with all its pageantry, is scheduled for 7th November. The occasion, always important, will be especially significant this year. The King’s Speech, which sets out the Government’s legislative programme, will be keenly watched, given that it is likely to be the last before the general election, widely expected to be held in October of next year.

There are almost always surprises in the King’s Speech, but one anticipated announcement is the introduction of legislation by Levelling Up Secretary Michael Gove to cap increases in ground rents on long leasehold properties.

Gove has a long-standing ambition to abolish leasehold completely, considering it an outdated and unfair form of property tenure. As a move in that direction, the Government’s Leasehold Reform (Ground Rent) Act 2022 outlawed ground rents altogether on new long residential leases granted in England and Wales after 30th June last year.

However, that still leaves a large number of leaseholders paying round rents on previously-granted leases, despite the fact that the landlords are not obliged to offer any services in return.

This is a particular problem in many parts of North Wales, especially in the case of retirement properties. In the late 20th century, a number of property developers constructed blocks of residential flats for retirees in towns such as Colwyn Bay. The flats were usually let on long leases, subject to ground rents.

The leases almost invariably contained provisions for review of the ground rent in line with inflation. This is increasingly causing difficulty to leaseholders, who are usually not the original lessees.

As an example, a number of my constituents have leases of flats in a retirement block developed at the turn of this century. Their leases contain a review clause effective on the 23rd anniversary of the start of the tenancy, and afterwards at intervals of 21 years, increasing the ground rents in line with increases in the Retail Price Index.

The rents originally reserved were £330 per annum for a single flat and £385 for a double. The leaseholders have now received letters from the landlord’s agents demanding an increase of ground rent for a single flat to £723.84 per annum and £844.48 per annum for a double.

This has naturally come as a shock to the leaseholders, many of whom are living on relatively modest pensions.

I have referred the issue to the Competition and Markets Authority, which is taking an interest in what might reasonably be termed abusive ground rent practices, and hope that it will take action.

Contact David

Write a message to David online; make an appointment to speak with him in-person, virtually or by telephone; and enquire about arranging a visit to Westminster, including tickets to watch PMQs