The ground rent quid pro quo consultation is a bear trap
Summary
The article critiques the government’s consultation on quid pro quo ground rents alongside the draft Commonhold and Leasehold Reform Bill, arguing that the proposed exemption test is likely to be difficult or impossible to satisfy in practice. It also questions the proposed fixed valuation approach for a £250 annual ground rent cap, suggesting it transfers value away from freeholders through a prescribed regulatory mechanism rather than case-by-case assessment.
Why it matters
Leasehold reform proposals can affect valuation assumptions, enfranchisement advice and the treatment of ground rent income in residential property transactions. Surveyors advising on leasehold value, investment yield and lease terms may need to monitor how any exemption criteria and prescribed capitalisation rates are ultimately implemented.
Key points
- The consultation proposes a potential exemption where higher ground rent was knowingly accepted in exchange for a lower premium.
- The article argues the evidence test may be impossible to meet because the relevant historic counterfactual cannot be proven.
- A fixed £250 annual ground rent cap for 40 years is criticised as a prescribed valuation outcome rather than a case-specific assessment.
- The consultation is said to transfer value from freeholders to leaseholders by regulation.
- The author suggests the process may function more as a barrier to exemption than a genuine route to it.
This is an RPSA summary of a publicly available article. The full content remains with the original publisher.
