Community housing leases to be exempt from new rules on ground rents

Draft bill excludes community housing leases from new rules prohibiting the charging of financial ground rents on new, long residential leases.

Draft legislation was announced in the Queen’s Speech last week, which will restrict the charging of financial ground rents on new long residential leases.  The purpose of this new legislation is to tackle inconsistency and ambiguity in ground rents for new leaseholders, fixing them at a peppercorn.

We are pleased that the draft legislation includes an exemption for community land trusts and some housing co-operatives, permitting them to continue charging financial ground rents.  In some cases, a CLT might want to charge a ground rent, for example where properties are leased by a CLT to a housing association, which then grants tenancies to residents.  The CLT may rely on the ground rent as a source of income, which they can then plough back into the local community or use to develop further projects.  A ground rent gives them the ability to extract value from land without needing to charge a housing association for it up-front.

The exemption follows extensive discussions with the Ministry of Housing, Communities and Local Government, which the Wrigleys team have been closely involved with.  To secure these exemptions, we worked alongside the National CLT Network and UK Cohousing and recognise their tireless lobbying, which has resulted in this good news for the CLH sector.  We look forward to seeing the progress of the bill through Parliament.