Modern Ground Rent

Press release
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Published : 26 Mar 2018

The National Trust has agreed to remove modern ground rent (MGR) for most of its long leaseholders.

The charity hopes that this significant change will help to resolve the situation for those long leaseholders who were not aware of the financial impact of MGR when they acquired their properties.

Modern ground rent arises when, under the terms of the Leasehold Reform Act 1967, long leaseholders may have the right to statutorily extend their leases by up to 50 years. This is in return for payment of a higher rent known as ‘modern ground rent’. This is likely to be significantly more than the nominal annual amount payable before the extension begins.

The Trust has been looking at this issue for the past four years when it first became aware of how little MGR was understood among many of its long leaseholders. Since 2016, the Trust has been reaching agreements with a number of long leaseholders to lessen the impact of MGR.

However the Trust has continued to listen to its leaseholders and look for a resolution to this complex issue.

Mark Harold, Director of Land and Nature said:

“We have been listening to the concerns of our long leaseholders and looking to find ways to ease the impact of MGR where we could. However, we have increasingly seen that in many cases, finding out about the rises in modern ground rent has caused serious concerns for them.

“We also welcome the Government and Law Commission’s proposal to review the Leasehold Reform Act. It will take time for Ministers to implement any subsequent changes in the law and we have decided to act now.

“We are pleased that The Charity Commission has agreed to our request for an Order enabling us to remove the effect of modern ground rent altogether for most long leaseholders. In these situations we will replace modern ground rent with an index-linked rent based on the current nominal rent.

“We appreciate that it has been a difficult time for many of our long leaseholders and we hope that this significant change will help resolve the situation. We shall now be working with the individual leaseholders to put this into effect.”

More details about long leases and modern ground rents can be found on our website here at www.nationaltrust.org.uk/features/long-residential-leases