Buying an existing lease after a reform date is not necessarily the same as being granted a new lease covered by that reform. The distinction is central to understanding the Leasehold Reform (Ground Rent) Act 2022 and the government’s guidance for leaseholders, landlords and managing agents.
The Act restricted ground rent for most new regulated long residential leases to one peppercorn per year, effectively giving it no financial value. It took effect for most new leases on 30 June 2022, and for qualifying retirement-home leases on 1 April 2023. Those are commencement dates for the relevant lease arrangements, not a universal ground-rent exemption for every later property transaction.
Which leases are covered?
The guidance describes a regulated lease as generally a long lease exceeding 21 years, for a single dwelling, granted for a premium on or after the applicable commencement date, and not within an exception. A premium usually means the purchase price paid for the grant. The legal details and transitional provisions need checking against the actual documents.
The Act did not simply rewrite every lease granted before commencement. There are also specific arrangements for matters such as shared ownership and voluntary lease extensions. For a voluntary extension, the guidance explains that the existing ground rent can be retained for the remainder of the original lease period, with different treatment for the extended period.
Ground rent and other charges
A peppercorn ground rent does not mean that every payment connected with a leasehold property disappears. Service charges concern a different category of cost. A buyer needs to understand the lease’s complete financial and management arrangements rather than read one reform headline as a description of all future expenditure.
The guidance also says landlords cannot charge an administration fee for collecting a peppercorn rent. There is no requirement to demand an actual peppercorn.
Before exchange, ask the conveyancer to identify the lease grant date, relevant contractual history, ground-rent terms, review provisions and whether the 2022 Act applies. Obtain advice on the current law and any later changes separately. This explanation addresses the scope of the 2022 legislation; it does not assume that every subsequent reform proposal has become law.