The government is seeking views on whether ‘quid pro quo’ leases should be exempt from, or treated differently to, proposals to a proposed cap on ground rents in residential leases.
The Commonhold and Leasehold Reform Bill legislates to cap ground rents at £250 per year, changing to a peppercorn after 40 years. The government is considering an exemption to this policy for ‘quid pro quo’ leases, where a higher ground rent is agreed between the leaseholder and freeholder for a corresponding reduction in premium.
The consultation seeks views on whether there should be an exemption, how it should be defined and how it should work.
Evidence is also sought from those who have agreed a quid pro quo lease or have professional experience in the area.
In the policy paper on addressing unregulated and unaffordable ground rent and Annex 5 to the draft impact assessment for the Commonhold and Leasehold Reform Bill, the Ministry of Housing, Communities and Local Government indicated it is considering a narrow exemption to the policy for quid pro quo leases.
The consultation is aimed at leaseholders and freeholders with first-hand experience of this specific type of lease, and professionals working in the sector. The information provided through the consultation will be used to determine whether any exemption for such leases is needed and, if so, how it should operate.
The consultation is open now and will close on 27th August.
