Ground Rent Cap of £250 – What it could mean for Citizen Leaseholders and Shared Owners

The good news is that most Citizen leaseholders already pay £10 a year or less in ground rent. A few leases have a “peppercorn” rent, which is a symbolic £0.

You can check your ground rent in your annual Actual Accounts statement. Most customers receive this around August or September each year.

If the £250 cap becomes law, it would apply in the same way. No matter what the lease says, the maximum ground rent that could be charged each year would be £250.

Most Citizen shared owners already pay less than £250 a year in ground rent. Ground rents were also abolished for most new residential leasehold properties in England and Wales in 2022, so some of our more recently built shared ownership homes do not have any ground rent at all.

However, a small number of shared ownership homes have ground rents above £250. These are usually homes where Citizen does not own the freehold. In these cases:

• A freeholder owns the building or land.
• An external managing agent may provide services.
• Citizen holds a lease from the freeholder.
• You hold a shared ownership lease (known as an underlease) from Citizen.

The freeholder sets the ground rent in these situations. We do not control the amount, and it is passed onto shared owners.

If the new legislation goes ahead, the freeholder would not be able to charge Citizen more than £250, and we would not charge you more than £250. You can check your ground rent in your annual Actual Accounts statement.

Leases are legal documents and are often written for a specific building or estate. While many leases are similar within the same building, the wording can vary depending on when they were created and which organisation or solicitor drafted them.

Some leases – particularly in the wider private sector – include clauses that allow ground rent to increase over time, for example doubling every five years.

This has been more common on some newer housing estates. In some cases, this has made it harder for people to remortgage or sell their home.

We want to reassure you that we’re not aware of any Citizen leaseholder being unable to remortgage or sell because of a ground rent clause. If you ever experience an issue, please contact us. We’re here to help.

Ground rents are sometimes linked to investment funds, including pension funds. The proposed £250 limit is believed to strike a balance between reducing costs for leaseholders and avoiding legal challenges from those investors.