In a significant move for homeowners across England and Wales, Prime Minister Keir Starmer has announced that ground rents for leaseholders will be capped at £250 per year. This landmark policy forms part of a broader consultation aimed at reforming the controversial leasehold system, which has long been criticised for burdening property owners with escalating costs.
Major Announcement Made on TikTok
Starmer revealed the ground rent cap in a video posted on the social media platform TikTok, marking the first time a British prime minister has used the platform for a major government announcement. In his address, Starmer emphasised the practical benefits for countless leaseholders.
"Good news for homeowners, we're capping ground rent at £250," Starmer stated. "That means if you are a leaseholder, and your ground rent is more than £250, you'll be paying less. 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."
Comprehensive Leasehold and Commonhold Reform
The proposed changes are detailed in the draft leasehold and commonhold reform bill, set to be introduced on Tuesday. The legislation includes several key provisions designed to empower homeowners and phase out the traditional leasehold model for flats.
The core proposals include:
- A ban on the creation of new leasehold flats, moving future developments towards alternative ownership structures.
- Granting existing leaseholders the right to switch to a commonhold model, giving them greater collective control over their building's management and finances.
- The abolition of forfeiture, a process where leaseholders could lose their home and all built-up equity for defaulting on debts as low as £350. A new enforcement regime will replace it.
- Enhanced protections for those in commonhold buildings, including a say in the annual budget and building management.
Government Pledges Support for Homeowners
Housing Secretary Steve Reed underscored the government's commitment to siding with leaseholders, many of whom have faced financial strain due to the current system. "If you own a flat you can be forced to pay ground rents that can become completely unaffordable," Reed said. "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."
Reed further criticised the existing framework, stating, "The leasehold system has tainted the dream of home ownership for so many. We are taking action where others have failed – strengthening home ownership and calling time on leasehold for good."
This reform package represents a decisive step towards addressing long-standing grievances within the housing market, promising tangible financial relief and increased autonomy for millions of property owners in England and Wales.
