Discovering a ground rent clause in your lease that wasn't properly explained when you purchased your property can come as a shock. In some cases, it leads to serious consequences. Many leaseholders face the risk of paying significantly more than originally anticipated. Worse still, most mortgage lenders are hesitant to finance properties with this issue, limiting sales to ‘cash’ buyers.

Recent Developments in Ground Rent Legislation

On 9th November 2023, the UK government, led by the Conservative Party, initiated a consultation on banning or capping ground rents in leasehold properties. There was strong anticipation that following the consultation, changes would be introduced via the Leasehold and Freehold Reform Bill. However, after the General Election on 22nd May 2024, the situation remains unresolved.

Prior to the dissolution of the previous government, the House of Commons reviewed the final amendments, and the bill received Royal Assent on 24th May 2024. The newly enacted legislation includes several key changes for leaseholders, such as:

• Lease extension terms increased to 990 years for houses and flats.
• No longer requiring leaseholders to own the property for two years before qualifying for a lease extension or purchasing the freehold.
• Marriage value removal from premium calculations for lease extensions.
• Simplified and cheaper processes for lease extensions and freehold purchases.
• Expanding access to the Right to Manage by raising the commercial space limit to 50%.
• Leaseholders no longer responsible for paying freeholders' legal costs in enfranchisement cases.
• Standardised service charges and capped fees for property management services.

Impact of the New Leasehold Reform Act

While the new Leasehold Reform Act marks progress for leaseholders, it fails to address several crucial issues. For example, the Tory government had promised to eliminate ground rent for existing leaseholders or cap it at £250. Unfortunately, this commitment has not materialized.

Labour Party's Stance on Leasehold and Ground Rent

In its 2024 manifesto, the Labour Party made a bold promise to end what it termed the "feudal leasehold system." They pledged to enact a series of reforms, including:

• Abolishing new leasehold flats and making commonhold the default tenure.
• Capping or banning unregulated and unaffordable ground rent charges.
• Addressing the issues of ‘fleecehold’ private estates and unfair maintenance costs.

However, given the complex political landscape and other pressing issues, it remains uncertain whether a Labour government will move forward with these reforms.

Legal Recourse for Leaseholders Facing Ground Rent Issues

Leaseholders affected by ground rent clauses have often sought compensation through professional negligence claims against their conveyancing solicitors. These claims argue that solicitors failed to adequately advise them about ground rent obligations.

To protect against potential financial loss, many claimants opt for After-the-Event (ATE) insurance. This coverage ensures that, should they lose their case, they won’t be responsible for paying their opponent's costs or their own legal disbursements.

Secure Your Legal Coverage with ClaimSafe

At Box Legal, we provide comprehensive ATE insurance policies to safeguard your clients. For more information about our ClaimSafe policy, including premium details, or to arrange a consultation, please contact us:

Phone: 0870 766 9997

Email: info@boxlegal.co.uk 

Ensure your clients are fully protected with ATE coverage today!