Leaseholders in England and Wales are set to breathe a sigh of relief, with ground rents being capped at £250 a year.
The move comes as Labour leader Keir Starmer seeks to reassure MPs and voters alike, even as Treasury officials express concerns about the potential impact on businesses and property developers.
The new rules are designed to help homeowners who have struggled under sky-high ground rents, saving many an estimated £4,000 over the life of their lease.
For those who have found selling their homes tricky because of escalating fees, this reform could finally remove one of the biggest hurdles.
New Protections and a Ban on New Leasehold Flats
The shake-up goes further than just capping ground rents.
New leasehold flats will no longer be allowed, and existing leaseholders will gain the option to switch to a commonhold arrangement.
This gives people far greater control over their homes and removes the uncertainty that has long frustrated flat owners.
The policy has been championed by high-profile Labour figures, including former deputy prime minister Angela Rayner, and is being framed as a “red meat” issue for MPs keen to see tangible reforms amid waning public confidence in the party.
Starmer Highlights the Cost-of-Living Angle
In a TikTok video announcing the changes, Sir Keir Starmer highlighted the everyday impact of the reforms.
“I’ve spoken to so many people who say this will make a difference to them worth hundreds of pounds,” he said.
“That’s really important because the cost of living is the single most important thing across the country.”
The changes are set to be outlined in the draft Leasehold and Commonhold Reform Bill, which will be introduced later today.
Housing Secretary Steve Reed added that the policy would benefit nearly a million people, helping them avoid ever-increasing charges.
Government Frames Old System as Unfair
Steve Reed was candid about the problem: “We’ve had this, frankly it’s a scam. If you own a flat, you’re a leaseholder, and you have to pay ground rent to someone who provides no service.
The amount is uncapped, so you can end up paying more and more each year without knowing how high it will go.”
Decades of campaigning, he said, have finally paid off.
“This government is bringing it through today. Capping ground rents at £250 a year will save almost a million people money and remove the worry of seeing charges rise endlessly.”
Freeholders Won’t Be Compensated
Reed emphasized that freeholders will not receive compensation for the change, and the government expects the law to take effect next year.
New measures in the Leasehold Reform Act will prevent freeholders from simply increasing service charges to offset their losses.
“We’ve taken every step we can to make these proposals legally watertight,” Reed added, aiming to avoid costly court challenges and ensure the reforms provide lasting protections for leaseholders.
What’s Next for Leaseholders
With the draft bill now set to hit Parliament, the focus shifts to implementation.
Leaseholders can look forward to clearer rights, capped charges, and the possibility of converting to commonhold—all steps that could finally level the playing field in England and Wales’ property market.
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