Government unveils ground rent ban including retirement homes

Housing secretary Robert Jenrick has confirmed a ground rent ban for millions of leaseholders in the biggest reform to English property law for 40 years. The government will allow leaseholders to extend their leases up to 990 years at zero ground rent. The reform includes retirement properties, despite promises that the sector would be exempt. It is the first step in a package of reforms advocated by the Law Commission last year and is expected to support 4.5m leaseholders. The government will also establish a Commonhold Council of industry experts and advocacy groups to prepare for wider take-up of commonhold reform to replace leasehold with freehold ownership. It will also abolish the “marriage value” charge and give leaseholders the right to prevent future development of their buildings. Jenrick said: “We want to reinforce the security that home ownership brings by changing forever the way we own homes and end some of the worst practices faced by homeowners.” However, industry experts and developers have been less positive about the plans, warning of several unintended consequences in a blanket reform. John Tonkiss, chief executive of retirement living developer McCarthy & Stone, said: “Following three years of engagement with government on this matter, today’s news is disappointing. The retirement community industry has been caught in the crossfire of leasehold reform which was intended to address bad practices elsewhere in the housebuilding industry.” He said ground rents support shared spaces and removal could see purchase prices increase, ultimately reducing the supply of specialist retirement housing. Tonkiss added: “While we are supportive of government efforts to protect the elderly, this decision will likely have the opposite effect.” Brian Dowling, real estate partner at Irwin Mitchell, said: “It is hard to see how making every flat owner in England re-mortgage and restructure their building into a commonhold would work. Any ‘one size fits all’ approach would be doomed to fail and could cause real problems with dealing with mixed-use properties and with re-mortgaging or selling converted commonhold units.” Dowling said further complications could arise around section 106, the contaminated land regime, or liability for overage and other covenants. He said: “There could be unpleasant legal consequences .. that could be dumped onto people unless great care is taken.”   To send feedback, e-mail emma.rosser@egi.co.uk or tweet @EmmaARosser or @estatesgazette