Leasehold Reform (Ground Rent) Act 2022

Overview of the Act

1. Through this Act the Government has made leasehold ownership fairer and more affordable for leaseholders by ensuring that freeholders/landlords are no longer able to make financial demands for ground rent. The Act also prohibits the charging of administration charges in relation to peppercorn rents.
2. This Act achieves this by restricting ground rents on regulated newly established leases of houses and flats where a premium is paid to a token one peppercorn per year, effectively restricting ground rents to zero financial value. There is no obligation on a landlord to levy a peppercorn rent and it is not envisaged that landlords will request their tenants pay a peppercorn as a rent in practice.
3. A ground rent is a payment specified in the lease that the leaseholder is required to make to the landlord (directly or indirectly through an agent or representative) without obligation on the landlord (or person acting on behalf of the landlord) to provide a clear service in return to the leaseholder. 
4. The Act defines a peppercorn rent as an annual rent of one peppercorn.
5. Note: In the following sections of these Explanatory Notes, unless otherwise stated, the terms "leaseholder" and "tenant" refer to the person who currently owns the leasehold interest in the property. The term "landlord" refers to the person who is the immediate landlord of that person (either the freeholder or another leaseholder with a superior interest in the property).
6. The Act places a duty on trading standards authorities in England and Wales to enforce the Act. District Councils that are not trading standards authorities have power under the Act to enforce in England if they choose to do so. This Act also makes provision for leaseholders to recover unlawfully charged ground rents through the appropriate tribunal.
7. A breach of the ground rent restrictions is a civil offence with a financial penalty of between £500 and £30,000. Local authorities are able to retain the money raised through financial penalties with this money reserved for covering the cost of enforcement in relation to residential leasehold property.
8. The Act makes exceptions for a small number of types of leases: business leases, statutory lease extensions of houses and flats, community led housing and home finance plan leases (either a type of equity release financial product known as a Home Reversion Plan or a rent to buy arrangement). Rent may continue to be charged on the landlord’s share of shared ownership leases, and where it is agreed on leases replacing pre-commencement leases on the remaining term of the pre-commencement lease (known as voluntary lease extensions).