Keir Starmer made an important announcement today regarding a limit on ground rents, offering significant relief to leaseholders. The Prime Minister utilized TikTok to reveal the upcoming change, anticipated to result in savings for nearly a million families. This move aims to modernize the leasehold system, which Housing Secretary Steve Reed criticized as exploitative.
Starmer stated, “Great news for homeowners – we are capping ground rent at £250. This cap means that leaseholders paying more than £250 in ground rent will see a reduction in their payments.” He emphasized the positive impact this change will have on households, particularly in light of rising living costs nationwide.
The government confirmed that ground rents will be capped at £250 annually, with a transition to a nominal fee after 40 years. Furthermore, the ban on new leasehold flats was announced, marking an end to the archaic leasehold system with roots in medieval times.
This groundbreaking announcement on TikTok represents the first instance of a British Prime Minister using the platform for a major government declaration. The Labour party, in its general election manifesto, pledged to address excessive and unregulated ground rent charges, a commitment echoed by former Housing Secretary Angela Rayner.
Housing Secretary Steve Reed highlighted the long-standing issue of unregulated ground rent fees, labeling it a deceptive practice where leaseholders are burdened with escalating costs without receiving corresponding services. The government’s initiative to cap ground rents at a maximum of £250 per year is expected to benefit nearly a million individuals, shielding them from unpredictable and escalating expenses.
Reed noted that the legislation is projected to be enacted next year, with a specific timeline for implementation during the current parliamentary session. He emphasized that freeholders will not be compensated under the new regulations and emphasized protections for leaseholders against potential exploitation through service charge adjustments.
While ground rents were eliminated for most new residential leasehold properties in England and Wales in 2022, existing leasehold homes still face this issue. Recent data from the English Housing Survey indicates that in 2023/24, leasehold owner-occupiers paid a median annual ground rent of £120.
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