Closed consultation

Modern leasehold: restricting ground rent for existing leases

Updated 8 December 2023

Applies to England and Wales

Scope of the consultation

Topic of this consultation:

This consultation seeks views on limiting the level of ground rent that leasesholders can be required to pay in England and Wales. It asks for views on the the following:

• the full range of problems that existing ground rents can cause for leaseholders, and the scale of these problems
• which option to cap ground rents respondents believe is the right one to deliver our aim of giving leaseholders a fairer deal
• whether there should be a period of delay before implementing any cap, and
• the types of leases which need to be exempted from any cap to ground rents

Geographical scope:

These proposals relate to England and Wales.

Impact assessment:

An impact assessment will be published alongside this consultation. The information gathered through this process will then inform government policy and any subsequent assessments required under the government’s Better Regulation Framework for this Parliament.

Basic Information

Body/bodies responsible for the consultation:

The Department for Levelling Up, Housing and Communities.

Duration:

This consultation will close at 23.59 on 17 January 2024.

Enquiries:

For any enquiries about the consultation please contact: Groundrents.Consultation@levellingup.gov.uk

How to respond:

You may respond by completing an online survey at Citizen Space.

Alternatively you can email your response to the questions in this consultation to Groundrents.Consultation@levellingup.gov.uk

If you are responding in writing, please make it clear which questions you are responding to.

Written responses should be sent to:

Ground Rent Consultation
3 SW, Fry Building
2 Marsham Street
London SW1P 4DF

When you reply it would be very useful if you confirm whether you are replying as an individual or submitting an official response on behalf of an organisation and include:

• your name,
• your position (if applicable),
• the name of organisation (if applicable),
• an address (including post-code),
• an email address, and
• a contact telephone number

We strongly encourage responses via the online survey, particularly from organisations with access to online facilities such as local authorities, representative bodies and businesses. Consultations receive a high-level of interest across many sectors. Using the online survey greatly assists our analysis of the responses, enabling more efficient and effective consideration of the issues raised.

Foreword from the Secretary of State

People work hard to own a home. They plan, they toil, they sacrifice, they save. It is an achievement of which they are rightly proud. Owning a tangible piece of your community provides, for many, the security they need to put down roots. For those roots to flourish, they must be in healthy soil, tended by a responsible gardener.

For too many, this has not been the case. Leaseholders have paid many tens or hundreds of thousands of pounds for their homes, only to find themselves locked into a tenure that has denied them the full benefits of ownership, and committed them to certain expenses over which, historically, they have had little control. 

For centuries, ground rents were typically small sums, even a peppercorn. But in this century, we have seen an increase in these rents, often rising at frequent intervals. This can blight people’s homes and lives, leaving them facing ever rising costs yet unable to sell the property easily due to these charges.

This government is already standing up for leasehold homeowners to address the unfairness they face and redress this imbalance. Last year, we freed future leaseholders from ever having to pay ground rent through the Leasehold Reform (Ground Rent) Act 2022 and we have asked the Competition and Markets Authority to investigate and crack down on some of the worst abuses over recent years. But we must now act to provide broader support for those with existing anachronistic leases which are not suitable for a modern housing market.  

There are nearly five million leasehold homes around the country and 86% of owner-occupier leaseholders report paying a ground rent. These people have already paid huge sums – sometimes their life savings – to get onto the property ladder. They are often paying hefty service charges to cover the costs of maintaining and managing their homes.

There is no legal requirement for these ground rents to be reasonable or linked to any service provided. While a freeholder or investor may see ground rent as a useful income stream for a leaseholder it can appear to be simply an annual reminder that you do not own the land your home stands on, that your lease on it is finite, and that there is a payment for the privilege of staying there. It is a historical anachronism, already eliminated for new leases, and we now wish to take action to help those with existing leases. 

At present the most financially vulnerable leaseholders are those let down most by the system – these are the families who cannot afford to buy their freehold or extend their lease and remain stuck paying ground rents they can often ill afford.

Service charges, which already exist, offer a way for freeholders to charge leaseholders for legitimate expenses. Putting legitimate costs into the service charge would make them transparent to leaseholders and allow for any that are unfair to be challenged.

We know that there are ways to manage buildings effectively without exploiting leaseholders – many freeholders are already effective, responsible building owners; others need help in adjusting their business models so that they are fit for the 21st century: and I want to hear views from all interested parties on how we can help them do that.

I understand that this is a complex area, with many different interests and I want to hear those views through this consultation to inform my final decision.

In this consultation, I am outlining 5 options to reform ground rent for people who already pay it. We must make sure that leaseholders are better protected from some of the egregious examples of poor practice we have seen in recent years. This government believes all leaseholders should be treated fairly and equally, with greater confidence about the costs of managing property.

Through this consultation we want to understand better the challenges these options may present. This includes understanding any blockers to moving towards a fair and transparent model of charging for legitimate expenses through the service charge, and how we can address them.  

On this point, I am immovable: it is time to address these unregulated costs once and for all, protecting leaseholders and making not only the dream of home ownership, but everyday household bills, more affordable. 

The Rt Hon Michael Gove MP
Secretary of State for Levelling Up, Housing & Communities
Minister for Intergovernmental Relations

Glossary

Existing leases: For the purpose of this consultation, by existing leases, we mean all leases which were first signed before the introduction of the Leasehold Reform (Ground Rent) Act on 30 June 2022. The “Making our proposals to cap ground rent work” section of this document, sets out the relationship between our new proposals and the Leasehold Reform (Ground Rent) Act 2022.

Freehold: The freehold interest in land (sometimes referred to in legal terms as fee simple absolute in possession) is a title in property that can be held in England and Wales. In practice a residential freehold interest applies to the outright ownership of land or property for an unlimited period and applies to the majority of houses. However, there may be legal and planning related restrictions on what a freeholder can do to modify their property and land.

Freeholder: For the purpose of this consultation, we mean any party who is owed ground rent. Often this will also be the party who granted the lease. Other times, it may be an intermediate landlord. There may be several layers of landlords. For example, the freeholder (who owns the building and land forever) may grant a lease of the whole building to a leaseholder who may then grant further subleases of the individual flats and would be the intermediate landlord for the subleases. 

Freeholder management function: For the purpose of this consultation, a freeholder management function is a management function performed by the freeholder (the party who is owed ground rent) to the benefit of their leaseholders, which falls outside of the management, maintenance and repair obligations set out in the lease. These may be funded in total or in part, through ground rent revenue.

Ground rent: A payment made by the leaseholder to the freeholder under the terms of a lease that was granted in return for a premium. Ground rent can vary from a nominal value to a significant amount that increases over the term of the lease. Ground rent is a specific requirement of the lease and must be paid on the due date.

Lease: A lease is a legally binding contract giving the leaseholder the exclusive possession of a property for a fixed period of time. The terms of the lease determine the rights and responsibilities of the freeholder and leaseholder in respect of the property and cannot usually be changed without the agreement of all parties or an application to a tribunal or court for a variation.

Leasehold: A long leasehold is a form of property ownership normally used for flats and sometimes for houses. It is simply a long tenancy, providing the right to occupation and use for a long period – the ‘term’ of the lease. This can be a period of over 21 years and the lease can be bought and sold during this term. The term is fixed at the beginning and decreases year by year, until the property returns to the freeholder or intermediate landlord (although an assured tenancy would then become a possibility). A person who buys a leasehold property on a lease is called a leaseholder.

Summary

Please read this document in full before turning to answer the questions.

1.1. Where a home – be it a leasehold house or leasehold flat - is sold on a long lease, the leaseholder will usually be obliged to pay an annual charge to the freeholder, known as ground rent.

1.2. The lease will set out how much ground rent is payable, whether it can increase, by how much and when. It can allow for ground rent to increase both substantially and frequently.

1.3. Ground rent is distinct from a service charge. Freeholders can invoice leaseholders for service charges to cover the cost of general property maintenance and repairs, cleaning of communal areas and insurance. Service charges can also be used to establish a sinking fund for major renovations, such as replacing a roof.

1.4. Freeholders are, however, free to use any ground rent that they collect as they see fit. There is no requirement for the freeholder to provide anything in return for a payment, nor does the level of ground rent have a bearing on the quality of service or maintenance provided and, unlike variable service charges, the amount leaseholders can be required to pay does not have to be reasonable. Even if the freeholder were to neglect the building entirely, its entitlement to collect ground rent would be undiminished.

1.5. The Leasehold Reform (Ground Rent) Act 2022 has put an end to ground rents for most new long residential leasehold properties. And we are going further through the upcoming Leasehold and Freehold Reform Bill, by banning the sale of new leasehold houses - other than in exceptional circumstances - to provide the benefits of freehold ownership from the outset.

1.6. Yet, problems remain for existing leaseholders. Many of these leases allow ground rent to increase substantially, be reviewed frequently, and it may be confusing as to how much the increase will be. We have seen examples of ground rent clauses leaving some leaseholders responsible for thousands of pounds worth of charges annually. If the leaseholder falls behind on payments, they risk losing their home. Leaseholders may find that they cannot re-mortgage or sell if their ground rent goes above a certain level. Those who cannot afford to buy their freehold or extend their lease are worst affected, stuck paying ground rents and without the means to escape the trap.

1.7. We continue to hear examples of sales falling through multiple times because the freeholder will not agree to vary a lease and limit the ground rent, meaning that lenders view the investment as too risky. Some leaseholders must pay an additional charge to their freeholder for the collection of the ground rent, in addition to the ground rent itself. Leaseholders have contacted the department to describe the pressure that they feel in these circumstances and the detrimental impacts it is having on their wellbeing and mental health.

1.8. A large number of leaseholders, particularly those who wanted to or needed to buy flats, would have had little option other than to agree to such ground rent terms in order to get onto the property ladder. For many, this was not what they had in mind when they decided to buy a home.

1.9. The current situation can also make the process of buying and selling a home more difficult even for relatively modest ground rents if they contain clauses which allow them to escalate substantially in the future. Buyers need to consider not just the purchase price of a property but the ongoing ground rent costs when determining the best choice for them and their family. This opacity can make it harder for people to take informed decisions about what is best for them and make the process of buying a home more complicated.

1.10. We are seeking to better understand the full range of problems that existing ground rents are causing for leaseholders, and the scale of these problems (Q1-2).

1.11. The government is considering introducing a cap on ground rents through primary legislation. We want to understand which approach respondents believe is the right one to achieve our aim of giving leaseholders a fairer deal (Q3-4), whether there should be a period of delay before implementation, whether the chosen cap should be fixed or uprated by an index, the types of leases which may require exemptions to a cap that we choose to take forward (Q19-20) and any practical barriers to consider before introducing a cap (Q21-22). Additionally, we want input on the issues of compensation and reimbursement (Q15-17) and the enforcement process following the introduction of a cap (Q18), alongside suggestions for mitigations to any potentially negative impacts of a cap (Q23) and views on any equalities impacts that our proposals could have on groups with protected characteristics (Q24).

1.12. One option under consideration is to cap ground rents at a peppercorn. This would enable equal treatment between those who purchased a leasehold property prior to the Leasehold Reform (Ground Rent) Act (2022) and those who purchase after it. It would end the practice of leaseholders having to pay an ongoing charge, on top of the sum that they paid to buy their home, sometimes for no clear service in return. There would be a level playing field for all leaseholders in terms of the cost they face and it would help make the process of buying and selling homes more transparent for all concerned. We want to understand what the impacts of introducing a peppercorn cap would be on existing leaseholders, freeholders, investors, lenders, and the wider property market (Q5).

1.13. A core argument in favour of a potential ground rent cap is that leaseholders should only pay for costs from which they gain material benefits. Service charges already exist to cover the cost of delivering services performed by the freeholder to the benefit of leaseholders, like management and maintenance of the block. The service charge is the mechanism through which leaseholders should be invoiced for all costs related to the upkeep of their building.

1.14. So, if freeholders are undertaking legitimate freeholder management functions, this can be accounted for as part of the service charge regime so that fairness and transparency are provided for homeowners, the legitimate costs incurred by freeholders are subject to a test of reasonableness and freeholders can be held to account by leaseholders. Where such costs are currently funded through ground rent, we would act to support freeholders in making this change to their business models. In some cases, this might result in a change to the level of a service charge.

1.15. We want to understand whether there are any specific freeholder management functions which cannot be charged through the service charge, what these are and why they cannot be charged through the service charge (Q11) any unintended consequences of bringing these functions into the service charge (Q12) and how these functions operate in instances where the leaseholders have exercised the Right to Manage (Q13-14).

1.16. To help us understand the context that freeholders and investors are operating in we are also asking further specific questions of freeholders, investors in residential freeholds and other organisations involved in the wider property market (Q25-36).

Residential ground rents in a modern context

Ground rent as an investment

1.17. Ground rents have historically been of a low or nominal value paid under a long lease that was granted for a premium, on the basis that a freeholder who has already received a capital sum on the grant of a lease should not need to charge a tenant a full market rent as well. Ground rents have, however, now become something more than just a token amount and have instead evolved to be a means for a freeholder to continue to charge rent from a leaseholder throughout the term of a lease, regardless of the amount paid to buy the property.

1.18. We understand that institutional investors (such as pension funds) have become involved in the residential ground rent market over the last 20 years (PDF, 1,298 KB), either through lending against a residential portfolio owned by a freeholder, or directly investing and becoming the freeholder themselves. Investors put a proportion of their assets in very secure, long-dated, inflation-linked income streams (PDF, 1866KB) which will, over that long term, give them sufficient return to meet their financial obligations elsewhere. These decisions have often been by investors who bear leaseholders no ill will but are simply looking for the right income streams to meet their obligations, such as pensions and insurance. However, for investors to secure a sufficient return, ground rents have to increase (otherwise, in real terms, the income will lose value with inflation) and so, in tandem with the increased involvement from investors in the ground rent market, we believe that more frequent inflation linked increases which were previously rare, have become the common ratchet by which ground rents increase. Thus, an unfortunate consequence of this investment has been a leasehold system ever more focused on generating assets at the expense of the people who own these homes.

1.19. Data from developers and expert evidence put before the First-tier Tribunal (Property Chamber) (PDF, 3.9MB) supports this and indicates that index-linked ground rents became increasingly attractive to long term investors and their value has risen significantly since 2007. The Investment Property Forum undertook a survey of forty-two institutional investors in property in March 2012 and found that the value of residential ground rents held by ten respondents was £139 million. When the survey was conducted again in 2014, the value of investments held by eight respondents in residential ground rents was £1.51 billion and increased again in 2015, for eight respondents, to £1.9 billion (PDF, 1,866 KB).

1.20. We have heard arguments put forward that suggest the low-risk yield of ground rent incentivises institutional freeholders to play an active role and in turn they have been responsible for driving up standards in residential management.

1.21. However, a report by the Investment Property Forum in March 2021 highlights that in 2012 investors were concerned with the management intensity of the residential sector and that, as a consequence, investors often insist on the separation of management and ownership once they have the freehold, contracting out management of the building to a third party. An investor will then typically appoint a freehold manager who will in turn appoint a managing agent to achieve that separation.

1.22. So, from the outset, leaseholders are faced with a complex management structure that they have had no say in, all because of ground rent.

The experience of leaseholders

1.23. In the latest English Housing Survey (EHS) 2021-22, a representative survey of over 13,000 homes in England, 86% of surveyed owner-occupier leaseholders reported paying a ground rent.

1.24. Leaseholder owner-occupiers reported paying an average annual ground rent of £298 in response to the 2021-22 survey. With respect to age groups, the reported average age of owner occupier leaseholders in the 2021-22 survey was 56 years old and leasehold owner occupiers were the most likely to be 65 or over (37%). There was a significantly smaller proportion of 16-24 and 25-34 year olds in the owner-occupied sector (1% and 14%, respectively).

1.25. In research published for the Welsh Government on the sale and use of leasehold in Wales in 2021, the median rent of respondent leaseholders in flats was £150 and in houses was £200. 38% of flat respondents said that their ground rent could be increased, against 40% who did not have a ground rent that would increase and 21% who did not know. For respondents with leasehold houses, 96% said their ground rents could increase.

1.26. The last 20 years have seen a trend of escalating ground rents in the leases of new-build properties. In addition, leaseholders in these properties face ground rent levels that start off significantly higher in relative terms than those paid historically, compounding the issue further. Typically, these leases have ground rents starting in the hundreds of pounds a year and escalating over the term of the lease. The escalation can be by fixed increments (e.g., doubling every 10 years or every 20 years) or index-linked increases (e.g., linked to the Retail Price Index (RPI)).

1.27. Some leaseholders are unable to sell or re-mortgage their properties as a result of their ground rent terms. In a recent survey undertaken by Propertymark (PDF, 262 KB), a leading membership body for property agents, 78% of their members reported that a leasehold property with an escalating ground rent will struggle to sell, even if priced correctly.

1.28. Mortgage lenders consider ground rent as part of the affordability assessment. Where the level of ground rent has already escalated – or has the potential to escalate – significantly, then some mortgage providers refuse to lend. Evidence suggests that above certain thresholds (often £250 or 0.1% of the freehold value of the property) some either have policies that prevent lending, or, in the absence of a policy, are likely to exercise a discretion that may lead them not to lend. As a result, some homeowners are, essentially, trapped unless they can pay a large lump sum to the freeholder to remove their ongoing ground rent liability. These leaseholders were unaware that their homes would become unsellable in the future when leases were first signed and would likely not have agreed to escalating ground rent clauses if they knew the implications.

1.29. An escalating ground rent is the scenario faced by the majority of leaseholders who have bought a new build property after 2000. The Competition and Market Authority (CMA) estimated in February 2020 (429 KB) that this affected 670,000 new-build leasehold flats and over 100,000 new build leasehold houses and we expect this number to have increased before the Leasehold Reform (Ground Rent) Act came into force in June 2022. Data given to the CMA from developers indicates that the most prevalent form of increase in ground rent is by RPI. This is supported by the findings in the EHS 2020-21 which found that of the leaseholders who reported that their ground rent escalates over the term of their lease, 59% said it increased in line with inflation or RPI.

1.30. We are concerned that homeowners are being asked to pay ever more money for no clear service in return. We want to understand further what the key problems leaseholders face are, and the scale of these issues.

Action to date

1.31. The government has been clear and consistent in its messaging that we have concerns about the issue of existing ground rents and the adverse impact ground rents have on leaseholders. We have stated that we want to make sure that consumers only pay for services that they gain material benefit from and that we would consider how we can support existing leaseholders. We have also said that people’s homes are theirs to live in and enjoy, not designed as an income stream for third party investors.

1.32. We have already taken steps, alongside industry, to tackle the most egregiously high and increasing ground rents.

1.33. In March 2019, the Public Pledge for Leaseholders was developed to alleviate the most pressing aspects of the doubling ground rent issue. This was led by developers and freehold investors, in partnership with government. Signatories committed to reviewing their portfolios to identify leases that had ground rent terms which doubled more frequently than every 20 years and offering these leaseholders amended terms linked to RPI, as well as committing to not insert into any future lease agreement a clause whereby ground rent doubles more frequently than every 20 years.

1.34. Whilst the work achieved by signatories of the pledge is welcome, we continue to see evidence from leaseholders that some freeholders who signed it are exploiting loopholes in their commitments and continue to use lease terms with 10 or 15 year doubling clauses, which are the very worst examples of ground rents. We therefore do not see clear evidence that previous attempts at sector-led reform have gone far enough and delivered suitable outcomes for all existing leaseholders. We made a commitment in 2017 to consider further measures that could be pursued in the event that sector led reform did not go far enough and we are now delivering on that commitment.

1.35. Additionally, in 2019, the government asked the CMA to investigate potential mis-selling of homes and unfair terms in the leasehold sector. In the CMA’s view their investigation uncovered serious concerns and the CMA have sought redress for those leaseholders faced with the most egregious rents. To date, they have helped around 20,000 leaseholders by securing commitments from a number of developers and freeholders who have subsequently bought freeholds to remove doubling terms, change the ground rent back to what it was when the property was first sold and for it not to increase again for the duration of the lease.

1.36. Whilst we welcome the work undertaken by the CMA to put right consumer protection issues, the CMA have only been able to help leaseholders where they had significant concerns around consumer protection law that merited taking enforcement action. Their investigation was not a holistic study of ground rent as a whole.

1.37. To reiterate, we believe very strongly that people’s homes are theirs to live in and enjoy. The opportunities for existing leaseholders to stop having to pay ground rents are currently limited, the principal options being to buy out the freehold for those living in a leasehold house, or for leasehold flat owners to collectively enfranchise by buying out the freehold, removing the ground rent altogether as part of the purchase, or through a statutory lease extension of a flat, thereby reducing the ground rent to a peppercorn. However, this can be at considerable expense and the higher the ground rent, the greater the cost of enfranchising or extending the lease. Even once our forthcoming reforms have made it easier and cheaper to enfranchise, some leaseholders may not be in a position to do so and it is the most financially vulnerable leaseholders who suffer most.

1.38. This is in contrast to most people who will enter into a new lease contract in the future, because we have already acted to ban financial ground rents in new leases through the Leasehold Reform (Ground Rent) Act 2022.

Proposals to cap ground rent in existing leases

Options for government to go further

1.39. The continued existence of ground rent charges in their current form stands in the way of government achieving our commitment for a fairer and more transparent model of homeownership.

1.40. The CMA acknowledge in their Leasehold Housing Update Report that justifications for ground rent are at best limited. They also acknowledged that they can only partially address the issues their investigation identified and that the most comprehensive way to tackle ground rent is through legislation.

1.41. Although we recognise that there may be alternative methods of intervention available, given the limited success of sector led reform so far, we agree with the CMA that legislative measures would be the most effective way to remedy the issues caused by ground rents.

1.42. We have identified 5 different options to cap existing ground rents and are seeking views from leaseholders, freeholders and other interested parties on those.

Options for intervention

1.43. Option 1: Capping ground rent at a peppercorn. This would remove the obligation to pay a financial ground rent from a given date. In theory the freeholder could still demand the ‘peppercorn’, but in effect it would mean that there was no ground rent to pay.

1.44. This proposal would align ground rents in existing and new leases. It also has historical precedent– before the 20th century, instead of requiring a financial ground rent, many ground rents were set at a ‘peppercorn’, to save the freeholder having to collect the nominal rent. Additionally, this approach would also protect leaseholders from being required to make a payment for no explicit services in return.

1.45. This option would deliver the most favourable result for leaseholders, but would mean the most significant impact on freeholders, including institutional investors. We are aware that there are potential risks that some freeholders may leave the market if a peppercorn cap was introduced. We would particularly encourage stakeholders to share any evidence of the likelihood of this happening, and if it were to happen, the potential impacts on freeholders, leaseholders, investors and the wider market.

1.46. Through the Building Safety Fund and the Cladding Safety Scheme, the government already provides funding to freeholders who need to remediate cladding on their blocks (if they are the party with the legal right to carry out the works to the building). For non-cladding related defects, we understand that freeholders may need to raise funds to meet such costs and that contributions from qualified leaseholders are firmly capped and spread over 10 years. However, we are also aware that many freeholders who are responsible for these buildings have other avenues available to raise funds to meet their remediation obligations. If evidence exists that freeholder’s ability to meet their obligations will be detrimentally impacted by a peppercorn cap on ground rents, we encourage stakeholders to share it (Q5).

We are interested in the impacts on a range of stakeholders, if we were to introduce a peppercorn cap (Q5).

1.47. Option 2: Capping ground rent at an absolute maximum value. This would mean that there would be an upper financial value that ground rents could rise to. Ground rents which are currently below that amount would be permitted to rise to that value, but never to exceed it.

1.48. We see merit in the simplicity of this option, in that it would be clear to freeholders and leaseholders alike over the highest financial value which could be charged for a ground rent. It would also put an end to some of the most troubling examples of current practice while having lower impacts on freeholders and investors than a peppercorn. However, this option would not achieve a fundamental change to the ground rent practices and eliminate the anachronism of ground rents for existing leases. It would fail to resolve the issue of leaseholders paying a charge without receiving a transparent service in return and does not deliver fairness and equality between new and existing leaseholders.

1.49. Additionally, we have previously heard from stakeholders, including some investors, that a maximum figure of £250 per annum may be a suitable upper threshold for ground rent. This £250 figure has been suggested as the cap at this level would bring a lease within the assured tenancy trap (outside of London) which can ultimately, in rare circumstances, lead to forfeiture of a lease if ground rent remains unpaid. However, government is bringing the assured tenancy trap to an end through our Renters Reform Bill and we are therefore seeking views as to what an appropriate threshold might be

We would encourage stakeholders to share views on whether capping ground rent at a maximum value permitted in a lease is a workable and preferable option (Q6).

1.50. Option 3: Capping ground rents at a percentage of the property value. Through our 2017 consultation “Tackling unfair practices in the leasehold market”, many consultees argued for a cap as a percentage of the value of the property for new residential leases. The arguments in favour focused on tackling the issues created by so-called “onerous” ground rents, particularly where leaseholders face difficulties with re-mortgaging or selling their property. However, in the responses to our 2017 consultation, there was no consensus on what an onerous ground rent term is in practice nor on what percentage of the value the cap should be set at. At a high level this option would likely have lower impacts on freeholders than a peppercorn but lower benefits for leaseholders.

1.51. The percentage that we hear called for most often is a cap of 0.1% of the property value, on the basis that ground rent above this can adversely affect a person’s ability to get a mortgage on that property, according to the criteria set by some mortgage providers.

1.52. We have concerns that pursuing this approach could be difficult to implement and enforce, in practice requiring a programme of valuation, with provision for resolution of disputes, and a mechanism for periodic review.

1.53. This option would continue to allow for a system where leaseholders make payments for no transparent services in return and fail to deliver an equal playing field between new and existing leaseholders.

1.54. From proponents of a cap at the percentage of the property value, we encourage stakeholders to share views on why this might be a preferable option, what the appropriate percentage of the property value should be, how our concerns can be addressed and how it could be made to work in practice (Q7).

1.55. Option 4: Capping ground rent at the original amount it was when the lease was granted. This option would provide for ground rents to revert to, or remain at, the initial level provided for in a lease. To achieve this, we could legislate to prevent any further escalation beyond the initial amount set out in the lease. This means that there could be no rise in the financial value for the lifetime of the lease.

1.56. This option has merit in that it recognises that there is a contract entered into between the leaseholder and freeholder to pay rent and sets the ground rent obligation to the level that the leaseholder is most likely to have been aware of. It may be relatively simple to implement if the necessary ground rent value can be easily identified. However, we think that this option could prove challenging to implement in instances where the original value of the ground rent in individual leases proved difficult to establish. The impacts of this approach on individuals could also differ in seemingly arbitrary ways. For instance, two people currently paying similar ground rent could have widely different caps depending on what the value was when the lease was issued.

1.57. This could be mitigated by setting a scope for the reforms, for instance, applying the new rules only to those leases signed on or after a given date. Those leases falling outside of this scope would continue to be bound by the existing terms. Even this, however, creates a risk that leaseholders who fall outside of the reforms have their current situation perpetuated.

1.58. Additionally, this option, once again, would create inequality between leaseholders who have new or existing leases. Nor does it fix the problem of “something for nothing”, as leaseholders might continue to have to pay a financial ground rent for no clear service in return.

We are interested in hearing from those who favour a cap limiting ground rent to its original level, and their justification for why this is a preferable option and how it could be implemented (Q8).

1.59. Option 5: Freezing ground rent at current levels. This option would provide for ground rents to remain at the value provided for in the lease at the date that such a measure was implemented. As part of this option, we would legislate to prevent any further escalation of ground rent value beyond what it is at the point of time that legislation was enacted. This means that there could be no further rise in the financial value for the lifetime of the lease.

1.60. This has the advantages of being simple to understand and implement and respects the existing contract between freeholders and leaseholders. It might also have lesser impacts on the revenue and business models of freeholders than other options and would remove concerns from lenders about future escalations becoming unaffordable for leaseholders with mortgages.

1.61. However, like the other options that continue with a material ground rent , this option does not guarantee equality between new and existing leases and does not fix the problem of leaseholders paying a financial ground rent for no clear service in return. Additionally, it does not guarantee help to leaseholders who already pay very high amounts for their ground rent including those who already pay a ground rent amount above 0.1% of their property’s value, where lenders may continue to be uncomfortable with the cost. This approach would therefore fail to provide the immediate support needed to some of the leaseholders facing the most excessive costs.

We are interested to hear views about why this option may be preferable and how it could be made workable (Q9).

Uprating of the chosen cap

1.62. Often, ground rent terms specify that ground rent charges can be uprated across time. These uprating’s are either by fixed increments (e.g., doubling every 10 years or every 20 years) or index-linked increases (e.g., linked to RPI) or by an open market review (e.g., in line with the capital value of the property).

1.63. As part of these proposals, we are considering whether any future ground rent cap should be allowed to be uprated across time.

1.64. Due to the nature of some of the proposed options, uprating would not be necessary. This includes, a peppercorn cap (Option 1 above), capping ground rent at its original value (Option 4 above) or freezing ground rent at its current value (Option 5 above), all of which are fixed values.  

1.65. On the other hand, for capping at a maximum value (Option 2 above) and capping at a percentage of the property’s value (Option 3 above), we recognise that it would be possible to permit an uprating mechanism, so that the value of the ground rent charge could increase across time.

1.66. However, changing ground caps rents over time is likely to be complex for consumers and more difficult to understand and budget for as opposed a clear and consistent maximum ground rent. There is therefore an argument that once a cap is introduced maximum ground rents should be fixed for the lifetime of the lease (and new leases would be set at peppercorn under the existing Ground Rent Act). This would mean, in the case of capping at a maximum value (Option 2 above) that ground rent could not rise after it reached the upper maximum value, and that for a cap at a percentage of the property’s value (Option 3 above), ground rents should be limited to 0.1% of the value of the property when the valuation occurred and could not rise any further for the lifetime of the lease.

1.67. This approach would, however, increase impacts on freeholders and investors since they would not benefit financially from ground rent caps rising over time and we are seeking views on this potential approach (Q10).   

Impacts on social housing supply and local authority budgets

1.68. We are aware that some local authority landlords charge up to £10 a year annual ground rent to leaseholders who live in a property which has been subject to the Right to Buy. It is likely that the only option which would impact on this situation is the peppercorn option. As part of our questions on the impact on freeholders, we are particularly keen to understand the financial impact for stock holding local authorities of introducing such a cap (Q5), alongside any experience or input they can share on the other options (Q6-9). We encourage local authorities who are freeholders to respond to our deep-dive questions on freeholders (Q31-32).

1.69. Additionally, we are aware that some local authorities have invested in residential leasehold blocks in recent years and collect the ground rent revenue provided for in existing leases to meet their wider financial obligations. We are interested to hear from local authorities who act as investors, about the extent of such investments and the impact that a cap might have on their financial position (Q5-9). We encourage local authorities who are investors in residential blocks to respond to our deep-dive questions on investors (Q31-32).

1.70. Whilst we are not aware of any Private Registered Providers of social housing for whom ground rent currently represents a significant component of overall income, we would be interested to hear about any particular impacts that could affect this sector (Q5-9).

Freeholder management functions and the transparency of costs

Freeholder management functions and the incentives to deliver them

1.71. Freeholders have previously put forward arguments that ground rent, as currently constituted, provides the economic incentive for freeholders to play a role as an engaged owner and that this long-term interest driven by the ground rent income stream in turn provides benefits to leaseholders.

1.72. The government believes that having properties well-maintained is vital so that people have safe, attractive housing of high quality for many years. Those responsible for managing a block should be concerned with the long-term stewardship and other functions. However, ground rent is not a necessary ingredient for that. Freeholders who collect ground rent are not required to look after their asset and their right to this money would not be diminished if they neglected the building entirely. Leaseholders should not be required to insulate freeholders from the risks associated with investing in the market. We do not see how such arrangements can incentivise freeholders to act in the interests of their leaseholders.

1.73. This is particularly evident where freeholders currently do not perform any additional freeholder management functions, and where all maintenance of the block is already set out in the lease and funded through the service charge. Blocks can be managed effectively in this way. Elsewhere, many of the functions provided by freeholders can, and in some resident led blocks of flats already are, performed effectively by homeowners - as set out by the House of Commons Select Committee in their 2019 report on leasehold reform. (PDF, 1,658 KB)

Making sure that freeholder management functions are delivered transparently

1.74. All costs should be transparent, reasonable and challengeable. Any monies that a leaseholder hands over to a freeholder that are said to either contribute to or enable proper management of the building should be subject to those requirements.

1.75. Government is already acting to improve the service charge regime for leaseholders. We recognise that the existing statutory requirements do not go far enough to enable leaseholders to identify and challenge unfair costs. That is why we will take action to better protect and empower leaseholders by giving them more information on what their costs cover. This will help them more effectively challenge their freeholder if they consider their fees are unreasonable.

1.76. Several freeholders have proposed a a code of conduct (PDF, 1126) to protect all stakeholders in the sector. At its heart is a commitment to greater transparency by introducing the notion of “a fair ground rent” to pay for functions like stewardship. This code would create an outcomes-based framework and encourage freeholders and leaseholders to use reasonable endeavours at reasonable cost to achieve the outcomes and to adhere to principles of fairness, accountability, integrity, transparency and helpfulness. The suggestion has been to give this code regulatory backing and give leaseholders the ability to contest a breach of the code.

The outcomes set out by freeholders in the proposed code of conduct are:

Outcome 1: Properties must be well managed in accordance with the Code, the Relevant Redress Scheme and RICS Code of Practice.

Outcome 2: Properties must be maintained to the highest standards of safety in accordance with the Relevant Redress Scheme and RICS Code of Practice.

Outcome 3: Stakeholders which grant new initial Leases after signing up to this Code must not grant Unfair Leases, particularly in relation to any Ground Rents, Lease term, extension and enfranchisement.

Outcome 4: The process for Consumers to acquire the freehold of their home or extend the terms of the leasehold must be uncomplicated, transparent and in accordance with the law of England and Wales.

Outcome 5: Subject to compliance with the law of England and Wales, stakeholders must not unfairly frustrate or hinder leaseholders who wish to take over the collective management of their homes and any communal areas.

Outcome 6: There must be transparent complaint processes whereby complaints will be heard and dealt with, and redress given in a timely manner.

Outcome 7: There must be transparent processes and guidance on rights for leaseholders to buy and sell their Homes.

1.77. We agree that leaseholders should expect a level of genuine management and oversight of their buildings. We do not agree with arguments that ground rent imposes and underpins an obligation on the freeholder to realise these outcomes. Rather, service charges are the route through which freeholders should charge leaseholders for their management and maintenance costs.

1.78. We are determined to guarantee transparency of costs for leaseholders and guarantee accountability for the provision of all management functions. Where costs for freeholder management functions are currently funded through ground rent, we would act to support freeholders in making this change to their business models. In some cases, this might result in a change to the level of a service charge that leaseholders pay.

1.79. We want to hear about what, if any, freeholder management functions are currently delivered by freeholders and funded outside of the lease through ground rents, and why these are not and cannot be charged through the service charge regime (Q11, Q29-30) as well as any unintended consequences that stakeholders foresee from doing so (Q12).

1.80. It has previously been claimed that some freeholders pool monies collected from several buildings and use this funding to fulfil freeholder management functions across their portfolio. We do not think leaseholders should be having to pay towards the upkeep of other buildings with which they have no relationship, save for having the same freeholder.

1.81. We are interested in hearing views from freeholders on the management of their portfolio (Q26-30).

Freeholder management functions in blocks managed by residents

1.82. We are interested in understanding better the role that freeholders take in blocks that have exercised the Right to Manage and whether there are any specific considerations that we should give to blocks where leaseholders have exercised their Right to Manage, to make our proposal work effectively in these settings (Q13-14).

1.83. We also know that some Resident Management companies use income streams other than the service charge to meet company costs. We would be keen to understand the extent of this and the factors driving it.

Making our proposals to cap ground rent work

Striking a fair balance between compensation and reimbursement

1.84. We understand that freeholders, collectively, would very likely lose revenue as a result of implementing a cap on existing ground rents. The scale of this loss may be dependent on which option of a cap was taken further. Regardless of the option taken forward, we would not expect to compensate freeholders for lost revenue, nor do we expect freeholders would be able to capitalise this lost income stream through other means. Where freeholders incur legitimate costs for service provision, they should be met through the service charge. We are seeking views on whether consultees agree with this position (Q15).

1.85. Regardless of the option taken forward to reform the system of ground rents in existing leases, we do not think that it is desirable to reimburse leaseholders for payments of ground rents already made before a cap comes into force - even if the ground rent which they were charged in the past was above the limit of the new cap. We do not believe that it would be proportionate to seek financial renumeration from either freeholders or government for charges already settled as part of the lease. Therefore, we think that the cap should only apply to money that becomes due after it is introduced. We are seeking views on whether consultees agree with this position (Q16).

1.86. Our plan is to override lease terms through primary legislation. We believe this would limit costs relative to an option of inserting new clauses or varying existing clauses for all existing leases. However, we are aware that there may still be some costs associated with the changes we are proposing such as adaptation or administration costs or any other direct legal costs associated with this reform. We believe that leaseholders should not face any charge for meeting these costs. For instance, if capping ground rents at a percentage of the value of the property (option B above) were pursued, then the costs associated with setting up the system and of valuing the property should not be borne by leaseholders (although, if an individual leaseholder then wanted to contest the valuation of their property, they could expect to pay for this). We are seeking views on whether consultees agree with this position (Q17).

Transitional arrangements

1.87. We could introduce a period of delay before implementing a cap, so it would apply to existing residential leases at a given date after the legislation passes. If we did pursue this, we would like any such period to be as short as possible so that current ground rent practices can be brought to an end and leaseholders can see benefits swiftly.

1.88. However, we understand that if we were to bring forward these options and particularly a peppercorn cap, freeholders and investors may need time to adapt their business models to accommodate such a change.

1.89. An alternative option to a blanket period of delay might be to grant leeway to some types of leasehold properties, giving them a longer period to adapt before applying the cap to them. For each of our proposals, we are interested to know whether consultees believe there should be a period of delay before implementation, why and what length of time such a period should be (Q5-9). If there is a period of delay, we would consider whether any steps should be taken in the interim to support leaseholders ahead of full implementation.

1.90. An alternative option to a blanket period of delay might be to grant leeway to some types of leasehold properties, giving them a longer period to adapt before applying the cap to them. For each of our proposals, we are interested to hear whether stakeholders think that there are particular types of property or particular circumstances which warrant a different approach to the ground rent cap, or different transitional arrangements and why (Q5-9).

Enforcement of a ground rent cap

1.91. Regardless of which option government chooses to pursue, we would seek to override existing leases with new terms to apply only to future ground rent payments. This means that following implementation of legislation, leaseholders who receive ground rent demands which exceed the limits of our chosen cap would be able to refuse to pay them. Freeholders would not be able to take leaseholders to the First-Tier Tribunal (Property Chamber) to recoup any such ground rents.

1.92. An absolute cap of a peppercorn or a maximum financial value are both unequivocal, and if government does pursue either of these options then it would be clear to freeholders, leaseholders and lenders alike how much could be charged for ground rent. The need for redress should therefore be limited. Other options might result in inadvertent breaches of the rules – for instance, a cap of a percentage of property value may be contestable.

1.93. Therefore, if things go wrong for leaseholders or they believe that they have paid ground rent which falls outside of the new rules, we want to provide an easy and low-cost route for it to be put right. One such way would be to mimic the provisions in the Leasehold Reform (Ground Rent) Act 2022. The Act places a duty on trading standards authorities in England and Wales to enforce breaches of the Bill, where a freeholder or intermediate landlord is charging a financial ground rent on a new lease. District councils in England have the power to do the same. These authorities are able to order freeholders to repay the prohibited rent. We could replicate these measures to apply to breaches where a freeholder of an existing lease has charged ground rent outside of any future restrictive system or cap, so that where freeholders do attempt to charge higher ground rents than what they are permitted, trading standards would have a duty to provide enforcement. We think the advantages of mirroring the enforcement mechanisms of the Leasehold Reform (Ground Rent) Act are that it keeps costs low for leaseholders seeking to bring a claim, due to the work undertaken by the enforcement authorities.

1.94. Additionally, through the Leasehold Reform (Ground Rent) Act 2022, we have strengthened our enforcement approach with a system of fines to discourage rule breaking. Under the Leasehold Reform (Ground Rent) Act 2022, if a freeholder charges ground rent in contravention of the Act, they may be liable to receive a financial penalty between £500 to £30,000. We could also seek to mirror this in our new reforms.

1.95. We encourage views from consultees on whether the enforcement of our reforms to existing ground rents could mirror that set out in the Leasehold Reform (Ground Rent) Act 2022, including mirroring the financial penalties if the freeholders impose a ground rent on leaseholders which falls outside of the reformed system. Specifically, we are interested to know whether the enforcement provisions of the Leasehold Reform (Ground Rent Act) would be workable for each of the options we have set out in this consultation (Q18).

Exemptions from a ground rent cap

1.96. Government is considering whether there are any types of lease which may, for legitimate reasons, need to be exempt from having their ground rent terms overridden.

1.97. We have introduced the Leasehold Reform (Ground Rent) Act 2022, which put an end to ground rents for most new long residential properties from 30 June 2022. Certain types of leases are, however, exempt from the Act, which means a leaseholder can be required to pay a rent which is more than a peppercorn rent. These are leases for community-led housing, leases that are not regulated leases, leases for certain financial products, business leases and shared ownership leases, where rent is payable on the freeholder’s owned share. We permitted these narrow exemptions to the peppercorn cap, where there is clear rationale for the continued use of a lease such as:

• to avoid interference with legitimate commercial practices.
• to avoid interference with a landlord’s ability to determine a market rent for a rented property.
• making sure that home purchase financial products that rely upon rent to operate as a route to purchase a home, such as Islamic finance compliant products, can continue to serve their purpose.

1.98. We need to make sure that any ground rent cap introduced for existing leases works effectively with the excepted leases set out in the Leasehold Reform (Ground Rent) Act 2022.

1.99. For existing leases (i.e., those that were first signed before the Leasehold Reform (Ground Rent Act 2022) came into effect) we propose the following exemptions to any future cap. This would mean that any cap would not apply to the following leases:

A. Where a lease has been granted for fewer than 21 years in length
B. A long residential lease where the current freeholder can prove they have negotiated an agreement resulting in the current leaseholder not having to pay a premium.
C. Where leases are for community-led housing: where it is a community housing lease (where the freeholder or landlord is a community land trust) or it is in a building controlled or managed by a co-operative society.
D. Leases that are for home reversion plans, ‘rent to buy’ arrangements or sharia compliant finance, that rely upon rent to operate as a route to purchase a home.
E. Business leases as defined by the Leasehold Reform (Ground Rent) Act 2022.

1.100. We have considered the complexities related to an exemption where the current freeholder can prove they have negotiated an agreement resulting in the current leaseholder not having to pay a premium (i.e., where a voluntary or non-statutory lease extension on a house has been agreed where the leaseholder pays no initial fee and a higher ground rent for the remainder of the original lease period). Where such an agreement has already taken place, we think that this ground rent does not necessarily represent a payment for nothing, as the ground rent represents payment for foregone capital to the freeholder. We are particularly interested in views on whether this assessment is correct. We have already announced that in the future, both house and flat leaseholders will now be able to extend their lease to 990 years with a ground rent at zero.

1.101. We would like to test whether consultees agree with the list we have developed above, of leases which should be exempt from a future cap on existing ground rents and whether we should consider any other exemptions (Q19).

1.102. Shared Ownership in England is an affordable homeownership scheme that enables people to purchase an equity stake in a home worth between 10% and 75% of the home’s full market value. The equity stake in the home not purchased by the shared ownership leaseholder is retained by the landlord. The shared ownership leaseholder must then pay rent to their landlord in respect of their retained equity stake in the home. This rent is known as a ‘specified’ rent. Specified rents are different from ground rents. Over time, the shared ownership leaseholder can increase the size of their equity stake in their home through ‘staircasing’ (usually all the way to 100%).

1.103. Currently, landlords who granted shared ownership leases before the Leasehold Reform (Ground Rent) Act 2022 came into force can charge a ground rent on the shared ownership leaseholder’s equity stake in their home. We believe that the cap on ground rents should be applied to these existing leases, limiting any ground rent charged on the shared ownership leaseholder’s equity stake to the chosen cap. Our proposal for a cap on ground rents would have no impact on the ability of landlords to charge a specified rent. This mirrors the position taken previously by the Leasehold Reform (Ground Rent) Act 2022. We invite consultees to comment on this proposal (Q20).

Equality assessment

1.104. The Equality Act 2010 requires the government to pay due regard to the need to:

• eliminate unlawful discrimination, harassment and victimisation and other conduct prohibited by the Act
• advance equality of opportunity between people who share a protected characteristic and those who do not
• foster good relations between people who share a protected characteristic and those who do not.

1.105. Based on an initial analysis, our view is that the options we have set out to cap ground rent will not have a negative impact on individuals who have the protected characteristics of:

• age
• disability
• sex
• gender reassignment
• marriage or civil partnership
• pregnancy and maternity
• race
• religion or belief
• sexual orientation.

1.106. As well as views on the broader impacts across a range of stakeholders, we would also welcome views on whether any of our options to cap existing ground rents, or proposals to make a cap work, have any impacts on groups with protected characteristics (Q24). We would also welcome views on whether these proposals have any impacts on groups with protected characteristics.

Questions

1.107. Please make sure that you have read all sections of this document before turning to answer the questions.

1.109. We are keen to test the assumptions made above and hear details on the impact of these proposals with stakeholders, so we invite consultees to respond to the specific questions set out below.

1.109. Once this consultation has concluded, the responses will be considered. Government will then make decisions relating to capping existing ground rent and a final Impact Assessment and consultation response will be published.

1.110. In order to understand the scale and impact of any potential problem with existing ground rents, we encourage developers and freeholders who respond to this consultation to be forthcoming with information on the ground rent value and terms assigned to the leases they have been involved with.

1.111. For each of the following questions, please set out your reasoning and evidence to support your answer.

Demographic questions

Are you based in England or Wales?

☐ England
☐ Wales
☐ Other

What is your name?

What is your email address?

Are you responding as a leaseholder? (Please select “No” if: you are not a leaseholder and/or if you are responding on behalf of an organisation)

☐ Yes
☐ No

If “Yes”, which of the following statements best describes you?

☐ I own and live in a leasehold flat
☐ I own and live in a leasehold house
☐ I own one or more leasehold properties and rent it/them out in the private rented sector
☐ Other (Please specify)

If “No”, are you responding on behalf of an organisation?

☐ Yes
☐ No

If “No”, which of the following best describes you:

☐ I am responding as an individual with a portfolio of ground rents (i.e. a freeholder or intermediate landlord)
☐ I am responding as an private rented sector tenant who lives in a leasehold house or flat
☐ I am responding as social rented sector tenant who lives in a leasehold house or flat
☐ I am responding as an individual who owns a freehold house
☐ I am responding as private rented sector tenant who lives in a freehold house
☐ I am responding as social rented sector tenant who lives in a freehold house
☐ I am responding as a commonhold unit owner
☐ Other? (Please specify)

Questions for leaseholders

Do you pay a ground rent charge?

☐ Yes
☐ No

Do you know how much your ground rent is per year?

☐ Yes
☐ No

If “Yes”, how much is your ground rent per year, in £?

If you pay a ground rent, has it ever increased

☐ Yes
☐ No
☐ Not sure

If “Yes”, how often does your ground rent increase. Is it

☐ More frequently than 5 years

☐ Every 5 years
☐ Every 10 years
☐ Every 15 years
☐ Every 20 years
☐ Every 25 years
☐ Over 25 years
☐ Not sure

If “Yes”, how is your ground rent increase calculated?

☐ By the Retail Price Index (RPI)
☐ By an index link other than RPI
☐ By fixed increments (i.e. doubling every set number of years)
☐ By an open market review (i.e., in line with the increase in capital value of the property)

☐ Other

[Please specify]

☐ Not sure

Have you ever refused to pay your ground rent because it was too much?

☐ Yes
☐ No

Questions for organisations

What is the name of your organisation?

If you are responding to this consultation on behalf of an organisation, what is the main interest of your organisation? Choose the most relevant option:

☐ A Freeholder / Building Owner / Intermediate Landlord
☐ A Pension fund or investment company that has a portfolio of ground rents
☐ A company that buys and sells ground rents
☐ A local authority
☐ A Housing Association / Registered Provider
☐ A Developer
☐ An Insurer
☐ A lender
☐ An organisation representing lenders
☐ An Insurer
☐ A lender
☐ Other type of investor
☐ A Residents Management Company/Right to Manage Company
☐ An organisation representing leaseholders
☐ An organisation representing freeholders
☐ A Managing Agent
☐ An Estate Agent
☐ A Professional Body
☐ A Government Body
☐ A Trade Association
☐ A solicitor / conveyancer
☐ A Charity
☐ A Commonhold Association
☐ Other (please specify)

We understand that some organisations will have a diverse interest in this consultation. If your organization has a diverse interest, please select all of the below which apply. My organisation is:

☐ A Freeholder / Building Owner / Intermediate Landlord
☐ A Pension fund or investment company that has a portfolio of ground rents
☐ A company that buys and sells ground rents
☐ A local authority
☐ A Housing Association / Registered Provider
☐ A Developer
☐ An Insurer
☐ A lender
☐ An organisation representing lenders
☐ An Insurer
☐ A lender
☐ Other type of investor
☐ A Residents Management Company/Right to Manage Company
☐ An organisation representing leaseholders
☐ An organisation representing freeholders
☐ A Managing Agent
☐ An Estate Agent
☐ A Professional Body
☐ A Government Body
☐ A Trade Association
☐ A solicitor / conveyancer
☐ A Charity
☐ A Commonhold Association
☐ Other (please specify)

Do you receive ground rent revenue?

☐ Yes
☐ No

What proportion of your revenue (as a percentage of your total revenue) comes from ground rent?

☐ <1%
☐ 1-10%
☐ 11-20%
☐ 21-30%
☐ 31-40%
☐ 41-50%
☐ 51-60%
☐ 61-70%
☐ 71-80%
☐ 81-90%
☐ 91-100%
☐ Not sure

Has your approach to residential ground rent changed since the government announced its intention to significantly reform the leasehold system (c.2017)? If so, how?

☐  Yes
☐  No
☐  Not relevant to my organisation

If ‘Yes’, how? Tick as many boxes as apply.

☐ We have bought new freeholds
☐ We are no longer taking on new business/investments in residential ground rent

☐ We have disinvested interests in residential ground rent

☐ We have sold some of our freeholds

☐ We have sold lots of our freeholds

☐ We have changed the way that we value our assets

☐ Other

☐ Not relevant to my organisation

If “other”, please specify

Residential ground rent in the modern context

Questions on the experience of leaseholders

Question 1: Think about how leaseholders experience ground rent. What do you see as the key problems that ground rents are causing for leaseholders? (select all which apply)

☐  No problem
☐  That the full terms related to ground rent payments are not initially made clear when buying the property
☐  That leaseholders have to pay a ground rent payment for no clear service given in return
☐  That ground rent payments are unaffordable
☐  That ground rent payments get more expensive over time
☐  That leaseholders do not know or understand when their ground rent will increase
☐  That leaseholders do not know or understand how much their ground rent will increase
☐  That the property cannot be bought or sold because mortgage providers do not like the ground rent terms
☐  Other problem

If “other” please specify

Question 2: Do you have any evidence about the scale of any problems that ground rents cause to leaseholders?

☐  Yes
☐  No

If you answered “Yes”, please expand on this by providing evidence

Proposals to cap ground rent in existing leases

Question 3: If government were to legislate to rectify problems with ground rents in existing leases, which of the proposed options could achieve this? (Tick all which apply)

☐ Option 1 - Capping ground rents at a peppercorn
☐ Option 2 - Capping ground rent at an absolute value
☐ Option 3 - Capping ground rent at a percentage of the property value
☐ Option 4 - Capping ground rent at the original amount it was when the lease was granted
☐ Option 5 - Freezing ground rent at current levels
☐ None of the above

If you selected “None of the above” please explain why

Question 4: Considering all options to cap ground rent, please rank the following in order of preference (1 being your most preferred option and 5 your least) and/or provide an alternative option.

☐ Option 1 – Capping  ground rents at a peppercorn
☐ Option 2 - Capping ground rent at an absolute value
☐ Option 3 - Capping ground rent at a percentage of the property value
☐ Option 4 - Capping ground rent at the original amount it was when the lease was granted
☐ Option 5 - Freezing ground rents at current levels
☐ A different option to those listed

Please explain why you have ranked them in this way. You may wish to consider why you believe that your chosen option/s  Is the best approach for government to take.

Impacts of the options to cap ground rent

Question 5: Please consider Option 1 of capping ground rent at a peppercorn.

Please think about the impacts that this cap would have on:

• leaseholders,
• freeholders/intermediate landlords,
• investors (including local authorities, pension funds and others),
• mortgage lenders and the wider property market (developers, conveyancers, estate agents etc.)

A. Would capping ground rents at peppercorn have a positive, neutral or negative impact on the following groups:

	Positive Impact	Neutral Impact	Negative Impact	Not sure
Leaseholders
Freeholders/intermediate landlords
Investors (including local authorities, pension funds and others)
Mortgage lenders
The wider property market (developers, conveyancers, estate agents etc).

B. Please consider the impacts of a peppercorn cap on leaseholders.

What are the advantages of a peppercorn cap for leaseholders? Please explain your answer with reference to the scale of the advantageous impacts.

What are the disadvantages of a peppercorn cap for leaseholders? Please explain your answer with reference to the scale of the disadvantageous impacts.

C. Please consider the impacts of a peppercorn cap on freeholders/intermediate landlords.

What are the advantages of a peppercorn cap for freeholders/intermediate landlords? Please explain your answer with reference to the scale of the advantageous impacts.

What are the disadvantages of a peppercorn cap for freeholders/intermediate landlords? Please explain your answer with reference to the scale of the disadvantageous impacts.

D. Please consider the impacts of a peppercorn cap on investors – including local authorities, pension funds and others.

What are the advantages of a peppercorn cap for investors? Please explain your answer with reference to the scale of the advantageous impacts.

What are the disadvantages of a peppercorn cap for investors? Please explain your answer with reference to the scale of the disadvantageous impacts.

E. Please consider the impacts of a peppercorn cap on mortgage lenders.

What are the advantages of a peppercorn cap for mortgage lenders? Please explain your answer with reference to the scale of the advantageous impacts.

What are the disadvantages of a peppercorn cap for mortgage lenders? Please explain your answer with reference to the scale of the disadvantageous impacts.

F. Please consider the impacts of a peppercorn cap on the wider property market (developers, conveyancers, estate agents etc.).

What are the advantages of a peppercorn cap for the wider property market (developers, conveyancers, estate agents etc.)? Please explain your answer with reference to the scale of the advantageous impacts.

What are the disadvantages of a peppercorn cap for the wider property market (developers, conveyancers, estate agents etc.)? Please explain your answer with reference to the scale of the disadvantageous impacts.

G. Imagine government chooses a peppercorn cap. Consider whether there should be a period of delay between the legislation passing and a peppercorn cap coming into force. Which of the following statements do you agree with the most?

☐ I would prefer for there to be immediate implementation of the peppercorn cap (once the necessary legislation had passed)
☐ I would prefer for there to be a period of delay before a peppercorn cap was introduced.
☐ I do not support a peppercorn cap on ground rents, regardless of any period of delay.

Please explain why you have given this response

H. If you selected “I would prefer for there to be a period of delay before a peppercorn cap was introduced”, imagine that a peppercorn cap was introduced. What do you think would be the best time period between the law being passed and implementing the cap?

☐ 6 months
☐ 1 year
☐ 3 years
☐ 5 years
☐ More than 5 years
☐ Not applicable

Please explain why you have given this response

I. Imagine that a peppercorn cap was introduced with a period of delay before implementation. Which of the following statements do you agree with the most?

☐ The value of ground rents should be frozen during the period of delay
☐ Ground rents should continue as they are, including the potential to increase, until the new cap is implemented

J. Imagine that the peppercorn cap was introduced. Are there any circumstances or types of property which should be subject to different transitional arrangements?

☐ Yes
☐ No

If you selected “Yes”, please list each circumstance or type of property you are thinking of. For each, please explain i) why they need for the additional leeway and ii) what should the transition period look like? Please provide evidence and account for all types of circumstance to which your response applies.

Question 6: Please consider Option 2 of capping ground rent at an absolute value. Please think about the impacts that this cap would have on:

• leaseholders,
• freeholders/intermediate landlords,
• investors (including local authorities, pension funds and others),
• mortgage lenders
• the wider property market (developers, conveyancers, estate agents etc.)

A. Please consider whether this cap would have a positive, neutral or negative impact on the following groups:

	Positive Impact	Neutral Impact	Negative Impact	Not sure
Leaseholders
Freeholders/intermediate landlords
Investors (including local authorities, pension funds and others)
Mortgage lenders
The wider property market (developers, conveyancers, estate agents etc).

B. Considering those impacts, what are the advantages of a cap at an absolute value? Please explain your answer with reference to the key groups listed above and the scale of the advantageous impacts.

C. Considering those impacts, what are the disadvantages of a cap at an absolute value? Please explain your answer with reference to the key groups listed above and the scale of the disadvantageous impacts.

D. What should the absolute value figure be (£)?

☐ £1-100
☐ £101-200
☐ £201-300
☐ £301-400
☐ £401-500
☐ Over £500
If you selected “Over £500” please enter a £ value

Please explain why you have opted for this figure

E. What do you think would be the best time period between the law being passed and implementing the cap?

☐ I would prefer to see an immediate implementation this option (once the necessary legislation had passed)
☐ 6 months
☐ 1 year
☐ 3 years
☐ 5 years
☐ More than 5 years

Please explain why you have opted for that time period

F. Imagine that the absolute value cap was introduced. Are there any circumstances or types of property which should be subject to different transitional arrangements?

☐ Yes
☐ No

If you selected “Yes”, please list each circumstance or type of property you are thinking of. For each, please explain i) why they need for the additional leeway and ii) what should the transition period look like? Please provide evidence and account for all types of circumstance to which your response applies.

Question 7: Please consider Option 3 of capping ground rents at a percentage of the property value.

Please think about the impacts that this cap would have on:

• leaseholders,
• freeholders/intermediate landlords,
• investors (including local authorities, pension funds and others),
• mortgage lenders and the wider property market (developers, conveyancers, estate agents etc.)

A. Please consider whether this cap would have a positive, neutral or negative impact on the following groups:

	Positive Impact	Neutral Impact	Negative Impact	Not sure
Leaseholders
Freeholders/intermediate landlords
Investors (including local authorities, pension funds and others)
Mortgage lenders
The wider property market (developers, conveyancers, estate agents etc).

B. Considering those impacts, what are the advantages of capping ground rents at a percentage of the property’s value? Please explain your answer with reference to the key groups listed above and the scale of the advantageous impacts.

C. Considering those impacts, what are the disadvantages of capping ground rents at a percentage of the property’s value?? Please explain your answer with reference to the key groups listed above and the scale of the disadvantageous impacts.

D. If the government did pursue this option, what percentage of the property value should this be and why?

☐ <0.1
☐ 0.1
☐ 0.2
☐ 0.3
☐ > 0.3

If you chose “>0.3%” please specify your preferred percentage 

Why have you chosen this percentage?

E. Who should be responsible for undertaking such valuations?

☐ The freeholder
☐ The leaseholder
☐ Other
If you selected “Other” please specify 

Please feel free to explain your response.

F. What do you think would be the best time period between the law being passed and implementing the cap?

☐ I would prefer to see an immediate implementation this option (once the necessary legislation had passed)
☐ 6 months
☐ 1 year
☐ 3 years
☐ 5 years
☐ More than 5 years

Please explain why you have opted for that time period

G. Imagine that the cap limiting ground rent to a percentage of the property’s value was introduced. Are there any circumstances or types of property which should be subject to different transitional arrangements?

☐ Yes
☐ No

If you selected “Yes”, please list each circumstance or type of property you are thinking of. For each, please explain i) why they need for the additional leeway and ii) what should the transition period look like? Please provide evidence and account for all types of circumstance to which your response applies.

Question 8: Please Consider Option 4 of limiting ground rents in existing leases to the original amount in the lease.

Please think about the impacts that this cap would have on:

• leaseholders,
• freeholders/intermediate landlords,
• investors (including local authorities, pension funds and others),
• mortgage lenders and the wider property market (developers, conveyancers, estate agents etc.)

A. Please consider whether this cap would have a positive, neutral or negative impact on the following groups:

	Positive Impact	Neutral Impact	Negative Impact	Not sure
Leaseholders
Freeholders/intermediate landlords
Investors (including local authorities, pension funds and others)
Mortgage lenders
The wider property market (developers, conveyancers, estate agents etc).

B. Considering those impacts, what are the advantages of capping ground rents at their original value? Please explain your answer with reference to the key groups listed above and the scale of the advantageous impacts.

C. Considering those impacts, what are the disadvantages of at their original value? Please explain your answer with reference to the key groups listed above and the scale of the disadvantageous impacts.

D. Will ascertaining the original ground rent value in leases (i.e., the ground rent charged in the first year of the lease) create a significant problem for implementing this option across existing leases?

☐  Yes
☐  No
[If you selected Yes, please explain your answer]

E. If the original ground rent amount (i.e., the ground rent charge in the first year of the lease) cannot be ascertained, how should the value of the cap be determined?

F. What do you think would be the best time period between the law being passed and implementing the cap?

☐ I would prefer to see an immediate implementation this option (once the necessary legislation had passed)
☐ 6 months
☐ 1 year
☐ 3 years
☐ 5 years
☐ More than 5 years

Please explain why you have opted for that time period

G. Imagine that the cap limiting ground rents in existing leases to the original amount was introduced. Are there any circumstances or types of property which should be subject to different transitional arrangements?

☐ Yes
☐ No

If you selected “Yes”, please list each circumstance or type of property you are thinking of. For each, please explain i) why they need for the additional leeway and ii) what should the transition period look like? Please provide evidence and account for all types of circumstance to which your response applies.

Question 9: Please Consider Option 5 of freezing ground rents at their current value. Please think about the impacts that this cap would have on:

• leaseholders,
• freeholders/intermediate landlords,
• investors (including local authorities, pension funds and others),
• mortgage lenders and the wider property market (developers, conveyancers, estate agents etc.)

A. Please consider whether this cap would have a positive, neutral or negative impact on the following groups:

	Positive Impact	Neutral Impact	Negative Impact	Not sure
Leaseholders
Freeholders/intermediate landlords
Investors (including local authorities, pension funds and others)
Mortgage lenders
The wider property market (developers, conveyancers, estate agents etc).

B. Considering those impacts, what are the advantages of freezing ground rent at their current value? Please explain your answer with reference to the key groups listed above and the scale of the advantageous impacts.

C. Considering those impacts, what are the disadvantages freezing ground rent at their current value? Please explain your answer with reference to the key groups listed above and the scale of the disadvantageous impacts.

D. What do you think would be the best time period between the law being passed and implementing the cap?

☐ I would prefer to see an immediate implementation this option (once the necessary legislation had passed)
☐ 6 months
☐ 1 year
☐ 3 years
☐ 5 years
☐ More than 5 years

Please explain why you have opted for that time period

E. Imagine that the cap freezing ground rents at their current level was introduced. Are there any circumstances or types of property which should be subject to different transitional arrangements?

☐ Yes
☐ No

If you selected “Yes”, please list each circumstance or type of property you are thinking of. For each, please explain i) why they need for the additional leeway and ii) what should the transition period look like? Please provide evidence and account for all types of circumstance to which your response applies.

F. Imagine that the cap freezing ground rents at their current level was introduced. Are there any circumstances or types of property which should be subject to different transitional arrangements?

☐ Yes
☐ No

If you selected “Yes”, please list each circumstance or type of property you are thinking of. For each, please explain i) why they need for the additional leeway and ii) what should the transition period look like? Please provide evidence and account for all types of circumstance to which your response applies.

Question on uprating the chosen cap

Question 10: Imagine that a ground rent cap comes into force. Which of the following mechanisms for increasing ground rent do you most agree with?

☐ Ground rents should not be able to increase again after a cap is introduced. (If there was a maximum value cap in place, it should be able to rise to that fixed maximum value but never beyond it)
☐ Ground rents should increase by a pre-determined index link, such as the retail price index (RPI)
☐ Ground rents should increase by a fixed increments (e.g., a doubling term at a given interval)
☐ Ground rents should increase by an open market review (e.g., in line with the increase in capital value of the property)
☐ Ground rents should increase by a different mechanism
[Please specify]

If you chose an option which allows for ground rents to be uprated, how regularly do you think ground rents should be reviewed, in years?

If you chose an option which allows for ground rents to be uprated, please share further details on how you think your preferred mechanism should work

Questions on freeholder management functions and the transparency of costs

Question 11: Are there any specific freeholder management functions which cannot be charged through the service charge?

☐ Yes
☐ No

11a If you selected “yes” above, please set out what these functions are. Please provide this in the form of a list if there are multiple functions.

Please explain, for each function identified, why it cannot be charged for through the service charge.

Question 12: Our aim of making sure that freeholder management functions can be funded through the service is to improve the transparency and accountability of costs. Can you foresee any unintended consequences of bringing all freeholder management functions into the service charge regime?

☐ Yes
☐ No

If “Yes”, please explain your thinking

Question 13: Do you believe there are any specific considerations we need to give to blocks that have exercised the Right to Manage?

☐ Yes
☐ No
☐ Not sure

Please explain why you have given this response, including what any such considerations should be

Question 14: In instances where leaseholders have exercised the Right to Manage, does the freeholder or intermediate landlord continue to provide any specific freeholder management functions which contribute to the ongoing maintenance or smooth running of the building?

☐ Yes
☐ No

If yes, please give details of the role of the freeholder or intermediate landlord in these instances

Questions on making our proposals work

Questions on compensation

Question 15: Imagine that a ground rent cap was introduced. Do you think that compensation should be paid to freeholders or intermediate landlords for any loss of ground rent revenue?

☐ Yes
☐ No

Please explain why you have given this response

Question 16: Imagine that a ground rent cap is introduced. Do you think that leaseholders should be reimbursed for past payments of ground rent where they were above the newly introduced cap?

☐ Yes
☐ No

Please explain why you have given this response

Question 17: Imagine that a ground rent cap is introduced. Do you think that leaseholders should pay any related administrative or legal costs?

☐ Yes
☐ No

Please explain why you have given this response

Questions on enforcement

Question 18: For each option to cap ground rents, please indicate whether you agree or disagree that the enforcement provisions could mirror those set out in the Leasehold Reform (Ground Rent) Act 2022, including the financial penalties if freeholders and intermediate landlords impose a ground rent on leaseholders which falls outside of the reformed ground rents regime?

☐ A cap at a peppercorn
[Agree/Disagree]

☐ A maximum financial value
[Agree/Disagree]

☐ A cap at a percentage of the property value
[Agree/Disagree]

☐ A cap to the original amount in the lease
[Agree/Disagree]

☐ A cap freezing ground rents at the existing value
[Agree/Disagree]

For any options where you indicated ‘disagree’ please explain your rationale.

Questions on exemptions

Question 19: Please select any type of leases which you agree should be given an exemption to a cap on existing ground rent?

☐ Where a lease has been granted for fewer than 21 years in length
☐ A long residential lease where the current freeholder or intermediate landlord can prove they have negotiated an agreement resulting in the current leaseholder not having to pay a premium
☐ Where leases are for community-led housing: where it is a community housing lease (where the landlord is a community land trust) or it is in a building controlled or managed by a co-operative society
☐ Leases that are for home reversion plans or ‘rent to buy’ arrangements that rely upon rent to operate as a route to purchase a home
☐ Business leases as defined by the Leasehold Reform (Ground Rent) Act 2022.
☐ Other

If “other” please specify, with reference to which types of leases should be exempt.

☐ None of the above

Please explain your rationale for selecting the options that you chose.

Question 20: Do you think that Shared Ownership leases should be subject to the ground rent cap, for the share owned by the leaseholder?

☐ Yes
☐ No

If “No”, please explain your answer

Questions on impacts:

Practical considerations

Question 21: Are you aware of any costs – other than lost ground rent revenue – that introducing a cap on ground rents would generate?

☐ Yes
☐ No

If “Yes”, please explain your answer

Question 22: Are you aware of any practical barriers to introducing a cap on existing ground rents, which you have not addressed in your previous answers?

☐ Yes
☐ No

If “Yes”, please explain your answer

Question 23: We want to hear about additional measures that could minimise the impacts of a cap on different stakeholder groups (leaseholders, freeholders and intermediate landlords, investors, mortgage lenders, the wider property market). What other measures, if any, should be considered to minimise any negative impact that a cap may have.

Which of the following stakeholder groups would stand to benefit from what you have proposed?

☐ Leaseholders
☐ Freeholders and intermediate landlords
☐ Investors
☐ Mortgage lenders
☐ The wider property market (developers, conveyancers, estate agents etc).

Question 24: Thinking about the responses that you have given to Questions 1-23. Do you believe any of the proposals put forward could negatively or positively impact individuals who have a protected characteristic. Please explain your rationale, and evidence your thinking where possible.

☐ Age
Please explain your rationale

☐ Disability
Please explain your rationale

☐ Sex
Please explain your rationale

☐ Gender reassignment
Please explain your rationale

☐ Marriage or civil partnership
Please explain your rationale

☐ Pregnancy and maternity
Please explain your rationale

☐ Race
Please explain your rationale

☐ Religion or belief
Please explain your rationale

☐ Sexual Orientation
Please explain your rationale

Questions to freeholders and intermediate landlords

Throughout this section, please expand on answers given to previous questions. Where helpful, feel free to replicate evidence given previously.

Question 25: Do you wish to complete the questions aimed at freeholders/intermediate landlords and investors?

☐ Yes
☐ No

Question 26: As a freeholder or intermediate landlord, what income streams do you have available to you? Please indicate all which apply.

☐ Ground rent
☐ Income generated through lease extensions and/or sale of the freehold (ground rent capitalisation / reversion value)
☐ Income through marriage value
☐ Income through administration charges and other fees (such as commission charges, discretionary charges etc.)
☐ Other

[If other, please specify]

Please give any details that you are able to about the proportion of your income that each stream accounts for

Question 27: As a freeholder or intermediate landlord, what are the key uses for ground rents income (select all which apply)

☐ To service loans
☐ To meet statutory obligations
☐ To generate profit
☐ To fund the building of further homes
☐ To perform specific freeholder management functions which are not funded through the service charge
☐ Other

[If other, please specify]

If you selected “to fund specific freeholder management functions which are not funded through the service charge”, please provide the proportion of ground rent revenue that you collect which is spent servicing these freeholder management functions

☐ <1%
☐ 1-10%
☐ 11-20%
☐ 21-30%
☐ 31-40%
☐ 41-50%
☐ 51-60%
☐ 61-70%
☐ 71-80%
☐ 81-90%
☐ 91-100%

Please give any details that you are able to about the proportion of your ground rent revenue spent on the remaining uses listed above

Question 28: As a freeholder or intermediate landlord, could you meet any ongoing loan obligations if government were to cap ground rent in existing leases?

☐ Yes
☐ No
☐ Not applicable

28a If “Yes”, how would you meet those obligations?

If “Yes”, please explain how

Question 29: If you use ground rent revenue to perform freeholder management functions, would there be any impact on the management of your portfolio if you could no longer collect ground rent revenue?

☐ Yes
☐ No

29a. If yes, please set out what this impact would be? Feel free to replicate evidence supplied for Question 5 if helpful.

Question 30: If you use ground rent revenue to perform freeholder management functions, would there be any impact on the leaseholders in your block/s if you could no longer collect ground rent revenue?

☐ Yes
☐ No

If yes, what would the impact be?

Questions to investors:

Question 31: As an investor, have you lent against a residential portfolio and/or are you directly involved in the ownership and/or management of the property? If helpful, please provide further detail.

Drop down box:

☐ Borrowed against a residential portfolio
☐ Directly involved in the ownership and/or management of the property
☐ Both

Please feel free to expand on your response to this question, including details of your investments and how your model works.

Question 32: As an investor, what proportion of your portfolio is currently invested in residential freehold/leasehold? If helpful, please provide further detail.

[Drop down box]

☐ <1%
☐ 1-5%
☐ 6-10%
☐ 11-15%
☐ 16-20%
☐ 21-25%
☐ >25%
☐ Not applicable

Please feel free to expand on your response to this question.

Questions for organisations involved in the wider property market:

Question 33: As a property professional, do you recognise the statement “residential ground rents can have a negative or undesirable impact on the sale of leasehold properties” to be true?

☐ Yes
☐ No

“If “Yes”, what are the main causes of this?

Question 34: In your view, how often do ground rents considerations either slow down or cause the collapse of leasehold property sales?

☐ Frequently
☐ Sometimes
☐ Rarely
☐ Never

Please feel free to expand on this response

Question 35: As a lender, what are your key considerations when thinking about lending against a property? (Please select all which apply)

☐ The Assured Tenancy Trap
☐ Affordability concerns
☐ The price of ground rent relative to the property’s value
☐ Other

If other, please specify

Please feel free to expand on this response

Question 36: As a lender, have you ever refused to lend on a leaseholder property owing to the level of ground rent?

☐ Yes
☐ No

If “Yes”, please explain why

Annex A:  About this consultation

This consultation document and consultation process have been planned to adhere to the consultation principles issued by the Cabinet Office.

Representative groups are asked to give a summary of the people and organisations they represent, and where relevant who else they have consulted in reaching their conclusions when they respond.

Information provided in response to this consultation may be published or disclosed in accordance with the access to information regimes (these are primarily the Freedom of Information Act 2000 (FOIA), the Environmental Information Regulations 2004 and UK data protection legislation.  In certain circumstances this may therefore include personal data when required by law.

If you want the information that you provide to be treated as confidential, please be aware that, as a public authority, the Department is bound by the information access regimes and may therefore be obliged to disclose all or some of the information you provide. In view of this it would be helpful if you could explain to us why you regard the information you have provided as confidential. If we receive a request for disclosure of the information we will take full account of your explanation, but we cannot give an assurance that confidentiality can be maintained in all circumstances. An automatic confidentiality disclaimer generated by your IT system will not, of itself, be regarded as binding on the department.

The Department for Levelling Up, Housing and Communities will at all times process your personal data in accordance with UK data protection legislation and in the majority of circumstances this will mean that your personal data will not be disclosed to third parties. A full privacy notice is included below.

Individual responses will not be acknowledged unless specifically requested.

Your opinions are valuable to us. Thank you for taking the time to read this document and respond.

Are you satisfied that this consultation has followed the consultation principles?  If not or you have any other observations about how we can improve the process please contact us via the complaints procedure.

Annex B: Personal data

The following is to explain your rights and give you the information you are  entitled to under UK data protection legislation.

Note that this section only refers to personal data (your name, contact details and any other information that relates to you or another identified or identifiable individual personally) not the content otherwise of your response to the consultation.

1. The identity of the data controller and contact details of our Data Protection Officer    

The Department for Levelling Up, Housing and Communities (DLUHC) is the data controller. The Data Protection Officer can be contacted at dataprotection@levellingup.gov.uk or by writing to the following address: Data Protection Officer, Department for Levelling Up, Housing and Communities, Fry Building, 2 Marsham Street, London SW1P 4DF.   

2. Why we are collecting your personal data  

Your personal data is being collected as an essential part of the consultation process, so that we can contact you regarding your response and for statistical purposes. We may also use it to contact you about related matters.

We will collect your IP address if you complete a consultation online. We may use this to make sure that each person only completes a survey once. We will not use this data for any other purpose.

Sensitive types of personal data

Please do not share special category personal data or criminal offence data if we have not asked for this unless absolutely necessary for the purposes of your consultation response. By ‘special category personal data’, we mean information about a living individual’s:

• race
• ethnic origin
• political opinions
• religious or philosophical beliefs
• trade union membership
• genetics
• biometrics 
• health (including disability-related information)
• sex life; or
• sexual orientation.

By ‘criminal offence data’, we mean information relating to a living individual’s criminal convictions or offences or related security measures.

3. Our legal basis for processing your personal data

The collection of your personal data is lawful under article 6(1)(e) of the UK General Data Protection Regulation as it is necessary for the performance by DLUHC of a task in the public interest/in the exercise of official authority vested in the data controller.  Section 8(d) of the Data Protection Act 2018 states that this will include processing of personal data that is necessary for the exercise of a function of the Crown, a Minister of the Crown or a government department i.e., in this case a consultation.

Where necessary for the purposes of this consultation, our lawful basis for the processing of any special category personal data or ‘criminal offence’ data (terms explained under ‘Sensitive Types of Data’) which you submit in response to this consultation is as follows. The relevant lawful basis for the processing of special category personal data is Article 9(2)(g) UK GDPR (‘substantial public interest’), and Schedule 1 paragraph 6 of the Data Protection Act 2018 (‘statutory etc and government purposes’). The relevant lawful basis in relation to personal data relating to criminal convictions and offences data is likewise provided by Schedule 1 paragraph 6 of the Data Protection Act 2018.

4. With whom we will be sharing your personal data

DLUHC may appoint a ‘data processor’, acting on behalf of the Department and under our instruction, to help analyse the responses to this consultation.  Where we do, we will make sure that the processing of your personal data remains in strict accordance with the requirements of the data protection legislation.

5. For how long we will keep your personal data, or criteria used to determine the retention period.

Your personal data will be held for two years from the closure of the consultation, unless we identify that its continued retention is unnecessary before that point.

6. Your rights, e.g., access, rectification, restriction, objection

The data we are collecting is your personal data, and you have considerable say over what happens to it. You have the right:

a. to see what data we have about you

b. to ask us to stop using your data, but keep it on record

c. to ask to have your data corrected if it is incorrect or incomplete

d. to object to our use of your personal data in certain circumstances

e. to lodge a complaint with the independent Information Commissioner (ICO) if you think we are not handling your data fairly or in accordance with the law.  You can contact the ICO at https://ico.org.uk/, or telephone 0303 123 1113.

Please contact us at the following address if you wish to exercise the rights listed above, except the right to lodge a complaint with the ICO: dataprotection@levellingup.gov.uk or Knowledge and Information Access Team, Department for Levelling Up, Housing and Communities, Fry Building, 2 Marsham Street, London SW1P 4DF.

7. Your personal data will not be sent overseas.

8. Your personal data will not be used for any automated decision making.

9. Your personal data will be stored in a secure government IT system.

We use a third-party system, Citizen Space, to collect consultation responses. In the first instance your personal data will be stored on their secure UK-based server. Your personal data will be transferred to our secure government IT system as soon as possible, and it will be stored there for two years before it is deleted.