Labour's leasehold reforms, announced by housing secretary Angela Rayner, are a step in the right direction but fall far short of the party's manifesto promise to "finally bring the feudal leasehold system to an end", according to a Guardian editorial. The government plans to legislate for a new independent regulator and consult on capping "rip off" administrative fees, but no action is proposed on annual service charges set by distant firms.
Leasehold system turns homes into income streams
In its modern form, leasehold in England and Wales turns homes into income streams for freeholders, with powerful vested interests – billionaires, aristocrats and big businesses – opposing abolition. The system is crippling the housing market because exorbitant costs put off prospective buyers. The average annual service charge for a flat in England and Wales is now £2,405, up 32.6% since 2020 and 55.6% over a decade. Owners of flats in high-rise blocks in London pay more than £7,000 a year.
The government proposes a £250 annual cap on ground rents for existing residential leases and limits on fees for requests such as keeping a pet. Ministers are consulting on whether residents could pay less to buy out freeholds. Last year, 37% of flats across England and Wales had a service charge exceeding 1% of their value, making them hard to mortgage and sell.
Leasehold becomes election flashpoint
The issue has become a campaign flashpoint in the Holborn and St Pancras byelection, where six out of seven homes sold last year were leasehold. Green leader Zack Polanski, standing for MP, has made it a test of Labour's credibility, pairing leasehold abolition with rent controls and affordable housing as part of a claim to end "rip-off Britain". Labour denies favouring developers.
It is remarkable that while legislation banning new leasehold properties is expected before the next election, it is unlikely to come into force until after it. Ministers are said to fear court action by freeholders, though government has already won against them defending Michael Gove's housing bill.
Credible route out of dependency needed
The question is whether proposed reforms give owners of the existing 5m leasehold homes a credible route out of dependency – or just regulate continued subservience. Ministers must show how a trapped leaseholder will take back control, through the right to manage property, buying the freehold or converting to commonhold. If they offer just another complaints mechanism, they will have broken their promise to end an injustice.
