Despite this news being warmly welcomed, it remains unclear as to how, or if, this will impact existing leasehold homes. New research from StripeHomes highlights just how much is already paid in ground rents each year across England.
There are some 4.5m leasehold homes in England accounting for an estimated 18.5% of all properties. The vast majority of those are flats (69%) and it’s thought the average leasehold homeowner will pay £319 a year in ground rent for the land their property occupies.
As a result, it is estimated that total ground rents paid on an annual basis across England could sit as high as £1.439bn.
London is home to by far the largest proportion of leasehold homes, accounting for 33.7% of all housing stock in the capital. As a result, it’s also home to the highest sum of ground rents paid, with an estimated £386m paid every year.
Perhaps surprisingly, it’s the North West that ranks with the second-highest level of ground rents.
Leasehold homes account for 30.8% of housing stock in the North West, making it the only other region outside of London with more than a million leasehold homes. It’s also the only other region outside of London where ground rents top more than £300m a year, with an estimated £324m paid on an annual basis.
The South East (£196m), the South West (£118m) and the East of England (£110m) also rank high with annual ground rents surpassing £100m a year.
In contrast, the North East pays the lowest sum of ground rents each year. Leasehold homes account for just 9% of the region’s housing stock and leasehold homeowners pay out an estimated £58m a year in ground rents on them.
James Forrester, Managing Director of StripeHomes, commented: “The decision to scrap ground rents on all new leasehold properties will be warmly welcomed by the nation's homebuyers, many of whom rely on leasehold properties in order to get a foot on the ladder.
"For far too long, we’ve seen these homeowners held at the mercy of big housebuilders deploying backhanded tactics such as the sale of leases to third party entities. These third parties then unjustifiably increase ground rents at extortionate rates based on no other motive than greed, leaving homeowners in financial turmoil.
"It’s understandable that like any business, the nation’s big housebuilders must operate as such but nurturing profit margins shouldn’t come at the expense of homeowners. Hopefully, this reform will further encourage more ethical practices by those responsible for delivering much of the sorely required housing stock this nation needs.”
