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Cabinet Reshuffle Delays Ground Rent Ban … ?

When Sajid Javid announced on 21st December 2017 the government’s intention to ban ground rents on houses and all new flats, I emailed everyone on my database. A month or so later I emailed again to express concern that Sajid Javid was one of those rare MPs who actually does something. Well, that positive trait has got him noticed – and today he was moved to the Home Office, replacing Amber Rudd who resigned a few days ago.

See the full reshuffle results here > http://www.bbc.co.uk/news/uk-politics-42615109

So what does this mean for ground rents?

Well hopefully, the new Housing & Communities Minister; James Brokenshire will take a while to get to grips with his new department and all the unfinished business left by his proactive predecessor. That will hopefully delay the process of preparing the Bill … and then the Act … which is needed to bring about the proposed change. Add to that the continuing Grenfell Tower fallout … and Brexit … and we may not see change for a couple of years.

Whilst the government’s intention is to “ban ground rents” Sajid Javid did not clarify whether this would be a ban on all ground rents … or just new ground rents. My intuition tells me it will not be retrospective. Banning ground rents on existing leases will create all sorts of Human Rights issues and will only serve to make lawyers and barristers rich. But banning ground rent on new leases will create a level playing field with Commonhold – the alternative property tenure which never took off following its introduction in 2004. If new developments have no ground rent – the developer does not have a valuable freehold asset to sell … and therefore he/she might be tempted down the Commonhold route (which the government would applaud).

With all that in mind, my developer clients are full steam ahead – getting leases optimised and exchanging on freehold sales as urgently as possible. The reshuffle may delay matters, but that delay is by no means certain – so best to play safe and get new leases registered at HMLR sooner rather than later. Busy times for me therefore – and I’m not complaining.

Best wishes.

Bernie Wales

P.S.  If you haven’t watched my short video on maximising freehold value, look here > https://youtu.be/VBbwkVNzDOE

or here > https://berniewales.co.uk/property-investment/

Bernie Wales

In the world of residential property, Bernie Wales 'The Leasehold Expert'. He can help you resolve your leasehold problems - whatever they are. He provides great advice and his Property Management Company provide a cost-effective and pro-active management service for leaseholders in London, the Home Counties and along the south coast.

  1. Connie Cheuk on 13th May 2018 at 3:31 am

    Hello Bernie, I am a buy to let landlord based in the South West who would like to attempt my first conversion of a 4 bed house into 2 flats. I am fearing I may have skipped a step (of single refurb flips). However, I am determined to make it work as the numbers will be much better than a single freehold flip. Are you able to offer some advice or problems to anticipate? I have a good building team I will be using, but wondered whether I should employ an architect first to ensure this will work in the first instance?

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