As the Labour government grapples with plans to reform the leasehold system in England and Wales, a cabinet division has come to a head. Former deputy prime minister Angela Rayner has urged party leader Keir Starmer to uphold the campaign pledge to cap ground rents for leaseholders.
The proposed measure was part of a draft leasehold bill that was delayed last year after concerns were raised by Chancellor Rachel Reeves. Reeves feared that capping ground rents could deter property investors, including pension funds that own freehold properties.
Rayner, writing in The Guardian, argues that “ordinary homeowners have increasingly been charged high and escalating amounts of ground rent, leaving them in financial distress and often unable to sell or re-mortgage their homes.” She adds that the Labour manifesto promised to “fix this injustice,” but ministers are now facing “furious lobbying from wealthy investors trying to water this manifesto commitment down.”
The housing minister, Matthew Pennycook, had been working on the draft bill, including a measure to cap ground rents at £250 per year for current leaseholders. However, the plans were postponed at the last minute after Treasury officials raised concerns about the potential impact on pension funds.
Labour MPs have expressed growing frustration over the delays, given that there are an estimated 5 million leasehold homes in England. Ruth Cadbury, one of the MPs, told The Guardian: “I am very keen that momentum isn’t lost. My constituents and those of us who have been working on this issue were disappointed that the bill hadn’t been published, so I hope it is published very soon.”
The debate over leasehold reform highlights the tension between protecting the interests of leaseholders and ensuring that any changes do not deter property investment, which could have broader economic implications. As Starmer prepares to make a decision, he will need to balance these competing priorities and determine the best path forward for the Labour government.
