Pressure mounts on government over leasehold reform

Leaseholders have warned the government not to betray them by watering down promised leasehold reforms.

Press reports suggest a growing Labour rebellion over the issue, amid rumours that Chancellor Rachel Reeves is concerned that capping ground rents could deter pension fund investment.

However, a leaseholder campaign group has pushed back strongly, saying there is no evidence to support the Chancellor’s concerns.

Growing Labour rebellion

Labour’s manifesto promised to tackle “unregulated and unaffordable” ground rents, the annual charges paid by leaseholders to freeholders.

Ground rents were scrapped for most new homes in 2022, but millions of existing leaseholders are still stuck paying fees that can run into hundreds of pounds a year. Some leases allow these charges to rise at regular intervals, making homes harder to sell or mortgage.

Labour pledged to cap ground rents at £250 under the Leasehold and Commonhold Reform Bill, but the long-awaited bill failed to appear as promised last year.

A growing Labour backbench rebellion has now emerged over leasehold reform, with former housing secretary Angela Rayner warning the party must fix the injustice and resist furious lobbying by wealthy investors seeking to water down ground rent reforms.

Writing in the Guardian, Ms Rayner said government figures show that just 1% of UK pension fund assets are linked to ground rents.

Enough is enough

The National Leasehold Campaign told Property118 the government must take action now to cap ground rents and deliver leasehold reform.

The group told Property118: “If the recent press articles are to be believed, this government, elected with a manifesto committed to meaningful leasehold reform, is about to be hoodwinked by the professional lobbyists acting on behalf of rich freeholders, and commit a terrible betrayal on millions of voting leaseholders.

“That they hide behind the facade that this is damaging to pension funds is typical of their duplicitous approach.

“As the government considers the next stages of leasehold reform, it is essential that decision-making is guided by evidence rather than narratives that have been repeatedly raised by parts of the property sector despite limited factual basis.

“Protecting consumers and ensuring fair, transparent residential property arrangements should remain the priority. Pension funds and wealthy investors have had years of exploiting leaseholders via this unethical income stream; they have ample opportunity to divest from these schemes. Enough really is enough. The 5.3 million leaseholders will not forgive this government if they are not on the side of leaseholders.”

Government committed to leasehold reform

According to the BBC, Treasury sources have admitted there are challenges in setting a cap on ground rents but have downplayed reports of tensions, insisting ministers are seeking a “balanced approach”.

A spokesperson for the Ministry of Housing, Communities and Local Government, claimed they are committed to leasehold reform.

A spokesperson told the BBC: “Far too many leaseholders face unregulated and unaffordable ground rent charges. We will legislate to address this and will set out further details in due course so we can bring the feudal leasehold system to an end.”