Last amended by Leasehold and Freehold Reform Act 2024 in 2024. Extended leasehold reform significantly: made it cheaper and easier to extend leases or buy the freehold; restricted new leasehold houses; reformed service charges, building insurance, and the landlord's right to recoup litigation costs from leaseholders; abolished the 2-year ownership requirement for lease extension.
Independent editorial summary — not the official statute text. Read the official version on legislation.gov.uk.
Summary
The Leasehold Reform (Ground Rent) Act 2022 is the first stage of the Government's programme to reform leasehold tenure in England and Wales. It addresses the 'leasehold scandal' in which developers sold long leases with ground rents that doubled every 10 years or were linked to RPI, creating onerous obligations and making affected properties difficult to sell or mortgage. The Act prohibits landlords from charging a 'prohibited rent' under most new long residential leases granted on or after 30 June 2022 — the permitted rent is limited to a peppercorn (zero financial value). A landlord who demands or accepts a prohibited rent is liable to a financial penalty of between £500 and £30,000, enforceable by local trading standards. The Act is expressly not retrospective: existing leases with escalating ground rents are not directly affected, though leaseholders with such leases may seek enfranchisement or lease extension under the Leasehold Reform, Housing and Urban Development Act 1993. The Act was followed by further reform in the Leasehold and Freehold Reform Act 2024, which made enfranchisement easier and cheaper and reformed the relationship between landlord and leaseholder more broadly.
Key Points
- Section 3: the only rent permitted under a regulated lease is a peppercorn rent (i.e. a rent of no monetary value); any provision requiring payment of a ground rent of financial value in a new regulated lease is ineffective
- Section 2: a 'regulated lease' is a long residential lease (over 21 years) of a single dwelling granted on or after 30 June 2022; excepted leases include business leases, community housing leases, home finance plan leases, and statutory lease extensions under the LRH&UD Act 1993
- Section 4: any sum paid as a prohibited rent must be repaid to the tenant; the obligation to repay arises automatically and does not require a court order
- Section 7: enforcement — a landlord who demands or accepts a prohibited rent is liable for a financial penalty imposed by the relevant local weights and measures authority; the penalty is between £500 and £30,000 per breach
- Section 8: right of appeal — a landlord may appeal against a financial penalty to the First-tier Tribunal (Property Chamber)
- Does not apply retrospectively — existing long leases granted before 30 June 2022 are unaffected; leaseholders with problematic ground rent terms must use enfranchisement or lease extension rights
Parts & Sections
Amendments History
2024 — Leasehold and Freehold Reform Act 2024
Extended leasehold reform significantly: made it cheaper and easier to extend leases or buy the freehold; restricted new leasehold houses; reformed service charges, building insurance, and the landlord's right to recoup litigation costs from leaseholders; abolished the 2-year ownership requirement for lease extension.
2022 — Leasehold Reform (Ground Rent) Act 2022 (Commencement) Regulations 2022 (SI 2022/694)
Brought the main provisions of the Act into force on 30 June 2022 for new regulated leases.
Frequently asked questions
- Does the new ground rent law apply to my existing lease?
- The Act applies to new long residential leases granted on or after 30 June 2022. It does not apply retrospectively, so existing leases granted before that date are unaffected. If you have an existing lease with escalating ground rents, you must use your rights to extend the lease or buy the freehold under the Leasehold Reform, Housing and Urban Development Act 1993.
- What counts as a regulated lease under the Act?
- A regulated lease is a long residential lease of more than 21 years for a single dwelling granted on or after 30 June 2022. It excludes specific types of leases, such as business leases, community housing leases, home finance plan leases, and statutory lease extensions under the 1993 Act.
- What is the maximum ground rent allowed on a new lease?
- Under a regulated lease, the only permitted rent is a peppercorn, which has no monetary value. Any provision requiring payment of a ground rent with financial value is ineffective. This means landlords cannot legally charge a financial ground rent on these new leases.
- What happens if a landlord charges a prohibited ground rent?
- If a landlord demands or accepts a prohibited rent, they are liable for a financial penalty between £500 and £30,000 per breach. This penalty is enforced by the local weights and measures authority, commonly known as trading standards. The specific amount is determined by guidance issued by the Secretary of State.
- Can I get my money back if I paid a prohibited ground rent?
- Yes, any sum paid as a prohibited rent must be repaid to the tenant. This obligation arises automatically and does not require a court order to enforce the repayment. The tenant is entitled to recover the full amount of the unlawful charge.
- Can a landlord appeal against a ground rent penalty?
- A landlord can appeal a financial penalty to the First-tier Tribunal (Property Chamber). The Tribunal has the power to confirm, vary, or cancel the penalty. The appeal proceedings must be brought within 28 days of receiving the notice imposing the penalty.