UK Government reverses decision to exempt retirement villages from ground rent ban

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The UK Government has unveiled changes to the leasehold laws which will now allow English leaseholders to extend their lease by up to 990 years with zero ground rent – but with a catch for village operators.

The Government has also doubled back on a decision which would have seen retirement villages exempt from ground rent fees, infuriating some operators.

Under the UK’s freehold versus leasehold system, leaseholders are required to pay the annual ground rent fee to the freeholders of the property, in most cases an investment firm, which grants the rights of the leaseholder to live there.

Spencer J McCarthy, chair and chief executive of Churchill Retirement Living, slammed the decision, saying that nominal ground rent fees contribute to funding used to upgrade communal areas, which could now impact on retirees’ quality of life.

“This abrupt last-minute change of heart from government will seriously impact our ability to provide older people across the country with the specialist housing they need,” he said.

However, the Government said the changes are needed to protect older people from “uncertain and rip-off practices” and all new retirement villages will now be sold without ground rent.