Keir Starmer revealed today a new limit on ground rents, benefiting leaseholders significantly. The announcement was made on TikTok, with the Prime Minister emphasizing the anticipated savings for nearly a million families. This reform aims to modernize the leasehold system, described as exploitative by Housing Secretary Steve Reed.
Starmer stated, “We’re introducing a ground rent cap at £250 to ease the financial burden on homeowners. If your current ground rent exceeds £250, you will see a reduction in your payments.” He highlighted the positive impact this change will have on households struggling with the rising cost of living.
The government confirmed that ground rents will be restricted to £250 annually, transitioning to a nominal fee after 40 years. Additionally, the ban on new leasehold flats was announced by the Ministry of Housing, Communities, and Local Government, signaling the end of an outdated feudal system.
Notably, this marks the first time a British Prime Minister has chosen TikTok for a major policy announcement. The Labour party’s manifesto commitment to address excessive ground rent charges has now materialized with this move. Former Housing Secretary Angela Rayner urged the government to honor this pledge.
Mr. Reed, the Housing Secretary, condemned the current leasehold system as a deceptive practice, emphasizing the uncertainty and escalating costs faced by leaseholders. The upcoming legislation, the Leasehold Reform Act, will cap ground rents at a maximum of £250 per year, benefiting nearly a million individuals and providing crucial protection for leaseholders.
The government aims to enact this law by the following year, ensuring freeholders do not receive compensation and cannot offset the cap through increased service charges. While ground rents were eliminated for new residential leasehold properties in 2022, existing leasehold properties continue to be subject to these charges. Data from the English Housing Survey reveals that in 2023/24, leasehold owner-occupiers paid a median annual ground rent of £120.
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