There are exceptions to the Leasehold Reform (Ground Rent) Act 2022

15 Nov The exceptions to the ground rent act

Posted at 00:00h in Commercial Property Law by

We have previously discussed the effect of the Leasehold Reform (Ground Rent) Act 2022 on lease extensions after 30 June 2022 (being the date that the act came into force).

This limited the ground rent to a peppercorn for all leases granted after that date but there are exceptions.

Different rules apply to leases that commenced before 30 June 2022 and upon lease variations, the landlord can charge rent for the period originally granted. The rent charged for that period cannot be higher than the original.

Here are some examples:

A lease was granted on 1 November 1975 for a period of 125 years. The rent reserved was £400 plus VAT for every year of the term. If the tenant wishes to extend that lease informally by a further 90 years the Landlord can charge rent of up to £400 per annum until the original term date (so, until 30 October 2100) but the rent payable after that date must be expressed to be a peppercorn.

But in doing so the Landlord may accept that they might receive a lower premium for such a lease if they wish to reserve ground rent up to the term date of the previous lease.

The act also only applies to leases granted for a premium.

For more information and tailored legal advice about leasehold reform contact HRJ Foreman Laws commercial property team.  You can learn more about our commercial property legal services here.

Meet the team

Nicholas Davies, Partner & Solicitor, Commercial Property Law

Harjeet Panesar, Solicitor, Commercial Property Law

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