Propertymark calls for ground rent at peppercorn value
Propertymark says that setting ground rent at peppercorn value will lead to a “fairer leasehold system”.
In response to a government consultation on leasehold, the professional body for property agents said that one advantage of a peppercorn cap on ground rent for leaseholders would be that existing leaseholders would not have to pay an annual fee for no guaranteed service.
Other advantages include it being easier for leaseholders to sell their property and lowering the cost of living in a leasehold property as ground rent is often charged alongside annual service charge, estate charges or additional administration charges.
The suggested ground rent reforms, which are included in the Leasehold and Freehold Reform Bill, are in addition to extending the standard lease extension term for leaseholds to 990 years from 90 years which will mean leaseholders could be thousands of pounds better off and the value of their property could increase.
Research from Propertymark show that 78 per cent of property agents said that leasehold properties with escalating ground rent will struggle to sell, even if priced correctly.
Ground rent at a peppercorn creates ‘level playing field’
Timothy Douglas, head of policy and campaigns at Propertymark, said: “Out of the options provided by the UK government, setting ground rents at a peppercorn value is the only real way to create a level playing field between existing and new leaseholders.
“Action must be taken through legislation as we know from Propertymark member agents that leasehold properties with escalating ground rent are harder to sell. Additionally, the UK government need to ensure that property professionals can better identify freeholders so they can support consumers with their lease and these proposals can be enforced.”
Anna is a reporter for Mortgage Solutions and assistant editor for Specialist Lending Solutions, both B2B sister titles of YourMoney.com. She has worked as a journalist for over four years, initially in the specialty insurance sector before moving onto mortgages.