New proposals could eliminate leaseholders’ ground rent charges

Homeowners stuck in the leasehold trap may be offered a lifeline under new proposals which could eliminate exorbitant ground rent costs entirely.

The Law Commission, which helps advise ministers, has proposed a raft of new rules which could give leaseholders the right to purchase unlimited longer lease extensions without a ground rent.

The proposals come in response to government action on a scandal that has seen thousands of homeowners fleeced with inflating ground rent costs and fees by developers and ground rent companies.

Many homeowners weren’t made aware that their ground rents would spiral out of control

The government announced last year that it would ban the sale of houses on a leasehold basis, and ban developers from selling leases that contain an obligation to pay any money as ground rent. 

These measures do not affect existing leaseholders however, who still have to pay the fees.

The Law Commission is now recommending that the government replaces the current right of leaseholders to purchase a one-off 50-year lease extension at a high ground rent, with a right to purchase unlimited longer lease extensions without a ground rent.

It is set to consult on the period of the extension, which it suggests could be 125 years or 250 years.

It has also proposed removing rules that require leaseholders to own the lease of their house for two years before making a claim, which would allow owners to make claims immediately and avoid premiums increasing while they are waiting.

In addition to this, the Commission has recommended the formula used to value leaseholds be simplified, which in theory could make it cheaper for leaseholders to purchase their freehold.

Martyn Gerrard, head of Martyn Gerrard estate agents, said: ‘The sale of new-build residential houses as leaseholds with exorbitant ground rents was a complete scandal that took advantage of those working hard to get on or move up the housing ladder.

‘The government’s announcement of a ban on this practice last year was roundly celebrated, but it provided absolutely no comfort for house owners already caught in the leasehold trap.

‘Today’s proposals from the Law Commission does show the victims of the house leasehold trap that they have not been forgotten.’

The Law Commission is set to publish a detailed consultation on leasehold houses and flats this Autumn, and will publish its final report next year.  

New proposals would allow homeowners to purchase lease extensions without a ground rent

New proposals would allow homeowners to purchase lease extensions without a ground rent

Why is there a scandal around leasehold properties? 

The leasehold scandal erupted last year after it emerged that property developers had been flogging leasehold properties with high fees and spiralling ground rents attached. Around 1.4million houses in the UK are leasehold properties.

Some developers included punitive ‘doubling clauses’ in sales contracts that hike ground rents at an alarming rate, ultimately trapping some people in homes they cannot sell.

Once the purchases were complete, in many cases property developers then sold on freeholds to third party companies without informing the homeowners.

In some of the worst cases, freeholders were slapping homeowners with fees to make elementary amendments to their own homes – £252 to own a pet or £60 to put up a doorbell. 

Last month a study revealed that 96.2 per cent of leasehold homeowners weren’t told what they were getting into before buying their properties, and a recent Which? investigation found that lawyers recommended by developers misled customers by not properly explaining to them the terms of their deals.   

This is Money asked Homeowners Alliance founder and chief executive Paula Higgins for her advice for leasehold property owners. click here to find out how to check the lease, get it changed and challenge your freeholder. 


Fees and charges associated with a leasehold property can be many and varied, and may not be immediately obvious to anyone who is thinking about purchasing or selling a leasehold property. 

To help understand the three types of charges commonly associated with leasehold property – ground rent, service charges and administration charges – the Conveyancing Association, the trade body for the conveyancing industry, has put together a guide which outlines what they cover, what they might cost you, and whether they are reasonable or not.

These fees tend to be payable to the lease administrator who will normally be a person or company employed by the landlord – who owns the freehold – to administer and manage the building. The guide can be downloaded from the CA’s website and should shed some light on the leasehold process, the costs that may be incurred, and what to do if you are charged excessive fees.