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New Rules Around Ground Rent
June 30, 2022

The Leasehold Reform (Ground Rent) Act 2022, which comes into effect at the end of June, introduces changes that affect property purchases involving leasehold dwellings. If you represent buyers or landlords, you should be aware of the upcoming changes. These include:

  • If any ground rent is demanded as part of a regulated new residential long lease, it cannot be for more than one literal peppercorn per year. In effect, most future residential leaseholders will not face financial demands for ground rent.
  • The updated Act bans Landlords from charging administration fees for collecting a peppercorn rent, closing a possible loophole where a landlord could try to make a monetary charge via another route.
  • Landlords who require payment of ground rent in contravention of the Act will face penalties of between £500 and £30,000 enforced by way of a civil penalty regime.
  • For existing leaseholders entering into voluntary lease extensions after commencement, the extended portion of their lease will be reduced to a peppercorn.


Further details will follow in due course regarding regulations to specify the form and content of written notices that are required to be exchanged by the landlord and tenant to qualify for the business lease exception. Statutory lease extensions for both houses and flats remain unchanged and are therefore exempt from the provisions of the Bill.

Read the full Leasehold Reform (Ground Rent) Act 2022 for further information.

At the start of the year, the SRA published guidance on what Standards and Regulations are required when acting for clients who are buying leasehold properties to avoid possible breaches of the requirements. You can read our previous post, which discussed these guidelines in more detail:

Advising on Leasehold provisions including ground rent clauses

The guidance reminds firms that where the regulator receives complaints about a failure to advise appropriately on lease clauses, they will apply their enforcement strategy. Generally, rather than penalising a single negligent act or an omission, the SRA will be focusing on cases “where there is evidence of seriously or persistently poor levels of competence demonstrating a pattern of behaviour; an example of which might be an overly mechanical ‘copy-and-paste’ approach to advising”.

However, the SRA stressed that single cases could attract action too, particularly “where a firm or an individual has knowingly acted outside their competence or has failed to take reasonable steps to update their knowledge and skills, or those of their employees.”


Effective Risk Management and Control – Solutions & Actions

The Strategic Partner is a law firm knowledge hub. We work with both law firms and professional indemnity insurers, advising and guiding on risk management techniques to assist and reduce instances of claims or regulatory breaches.


Our risk and compliance solutions provide guidance and support to firms on a range of topics and include: –

Our Risk, Regulation and Compliance Service (including AML), provides firms with the necessary Policies Control and Procedures (PCP’s) alongside training, supervision structure, an annual independent assessment and reporting. This solution ensures firms, and their staff are compliant and remain there. It also clarifies what to do in the event of a mistake and/or a breach occurs.

Our extended service, Risk, Compliance, AML Guidance and Register Administration, provides an outsource solution for firms where The Strategic Partner manages and maintains the risk registers and provides guidance to all staff (inc Partners). We also produce monthly risk and compliance reports.


Combining these two solutions provides a law firm with robust and cost-effective risk and compliance strategy that ensures staff have access to expert guidance as needed.


Accreditation and Quality Marks – CQS

In much the same way as for Lexcel, WIQS and SQM, The Strategic Partner can work with firms to provide the needed resources and expertise to maintain and renew the CQS kitemark, including the management of any assessments, completion of applications and updates to applications.

We are fully aware of the requirements of each of these kitemarks and how firms should act to ensure they maintain them throughout the provision of legal services.

Our focus is to provide firms with the necessary resources and expertise to control and maintain all regulatory requirements and quality kitemark.

Our services are all charged on either fixed fees or on a timely basis, all of which will be agreed upfront for the service required.


All services we provide will include:

  • Completion of any application, be that a new application or for renewal
  • Development and maintenance of policies and procedures that are in line with the firm’s requirements and the Standard of the relevant quality mark.
  • Preparation for audits and assessments on an annual basis
  • Provision of auditing solutions and reporting on such audits
  • Liaison with the body to oversee assessments
  • Reporting to the Partners/Directors on any issues as they arise
  • Provision of solutions to overcome the issues.


The solutions we provide are either a complete outsource and maintenance programme or project-based assistance, as required.


How we can help

For more information about The Strategic Partner, you can call us on 0203 911 9710 or you can email us at info@thestrategicpartner.co.uk.


Read and download the PDF version of this article here.

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