The consultation, announced by Communities Secretary Rt Hon James Brokenshire MP on 14 October, will run from 15 October until 26th November 2018. The consultation proposes that ground rents for new leases will be capped at £10.00 p.a. (the current average is £300.00 p.a.).
The consultation hopes to make things fairer for tenants generally and also includes proposals for action against rogue landlords to end unfair charges for tenants. Greater recognition for tenant associations to give tenants better opportunities to enforce collective rights is also being mooted.
The new consultation expands on existing plans:
- the ‘Fixing our broken housing market’ white paper, published in February 2017; and
- the ‘Tackling unfair practices in the leasehold market’ consultation which took place between July and September 2017.
This approach is likely to attract mixed responses. Although the proposals will be good news for residential purchasers/tenants, the plans will cause concern for developers and owners of freehold reversion investments (which include pension funds). Hopefully a fair balance of those competing interests can be achieved.
Under the government’s proposals, which are subject to consultation, the majority of new houses will be sold as freehold and future ground rents will be reduced to a nominal sum. The consultation will also seek views on what are the appropriate and fair exemptions, such as shared ownership properties and community led housing to ensure consumers’ best interests are at the heart of the property market.