Making the announcement on TikTok, Keir Starmer said this could save leaseholders over £4,000 over the course of their lease and unlock sales for homeowners whose properties are hard to sell because of the ground rent.
In a policy statement published today, the government said around 3.8 million leasehold properties in England and Wales had ground rent obligations, and around 770,000-900,000 leaseholders were paying more than £250 per year.
It added that properties with ground rents accounting for at least 0.1% of the value, or £250, went through additional checks by mortgage lenders. It said ground rents could slow, delay and derail people’s ability to move homes and “limit their access to competitive mortgage finance”.
Forfeiture will also be banned, where a leaseholder could lose their home over debts as small as £350. The government will also introduce a process to make it easier for leaseholders to transition to commonhold and give homeowners more say in how their property is managed.
The government has also published a draft Commonhold and Leasehold Reform Bill and a consultation on the banning of new leasehold flats. The consultation explores the idea of making commonhold the default tenure for new flats, other than in exceptional circumstances.
It said it also wanted its goal to build one-and-a-half million new homes to include the delivery of new commonhold flats. It said there would be developers who have either started selling leaseholds when the ban is in place or own a plot of leased land, so wanted the industry to inform the government how to treat such sites or aid the transition without disrupting the supply of homes.
In the TikTok video, Prime Minister Starmer said: “Good news for homeowners – we’re capping ground rent at £250. That means if you are a leaseholder, and your ground rent is more than £250, you’ll be paying less.
“And I’ve spoken to so many people who say this will make a difference to them of hundreds of pounds.
“That’s really important because the cost of living is the single-most important thing across the country.
“So this is a promise that we said we’d deliver and I’m really pleased that we’re delivering on that promise.”
Steve Reed, Secretary of State for Housing, added: “If you own a flat, you can be forced to pay ground rents that can become completely unaffordable. We said we’d be on the side of leaseholders – which is why today, we are capping ground rent – helping millions of leaseholders by saving them money and giving them control over their home.
“The leasehold system has tainted the dream of homeownership for so many. We are taking action where others have failed – strengthening homeownership and calling time on leasehold for good.”
