Unfair hidden ground rent costs on new builds has hit the press recently. We consider the effect on community-led housing groups using leaseholds.

Background

The press has written a lot recently about unfair hidden ground rent costs on new builds. Commercial developers have been issuing long leaseholds with ground rents that double every few years. The starting level for the ground rent tends to be very minimal but soon escalates to extremely high levels. It is not clear whether the developers have been doing this by accident or by design but it has meant that various properties have become all but unsaleable. Before the announcement of the general election, there were indications from MPs that they would ask Parliament to consider a ban on new residential leaseholds to avoid such issues.

What is the impact on community-led housing groups?

This, of course, would have an impact on community-led housing groups who often depend on a leasehold structure. The announcement of the general election, together with moves by developers such as Taylor Wimpey to help their tenants, may have taken the spotlight off this issue. However, please keep an eye on the press and consider raising any concerns you may have with your MP if it looks like a ban on new leaseholds may be proposed.