Angela Rayner has warned Sir Keir Starmer not to allow “scaremongering” freeholders to water down Labour’s campaign pledge to cap ground rents for leaseholders in England and Wales.
An announcement over reforms to the leasehold system is expected this week, following multiple delays since the draft leasehold bill was due to be published before Christmas.
The delay comes after The i Paper revealed Treasury officials are concerned that capping ground rents for leasehold homeowners at £250 would affect the investments of pension funds that own freehold properties.
Rayner told The i Paper “the time to deliver is now” for millions of leaseholder homeowners who were promised watershed housing reform by Labour in their 2024 manifesto.
“Labour made a promise to leaseholders that we would fix this injustice,” the former deputy prime minister said.
Her intervention comes after the Residential Freehold Association (RFA), which represents freeholder landlords, wrote a letter to Housing Secretary Steve Reed on Monday arguing that Labour’s reforms could “place a significant number of professional freeholders at risk of immediate insolvency”.
This, the RFA writes, “would undermine the contracts and legal obligations that currently underpin the Government’s building safety remediation programme” to make tower blocks of flats safe in the wake of the 2017 Grenfell Tower fire.
Rayner said: “This looks and sounds like desperation from vested interests because that is exactly what it is.
“After their bogus claims that pension funds are at risk if we tackle runaway ground rents, this latest scaremongering from unaccountable freeholders should get short shrift.”
She added the suggestion that “the remediation of unsafe buildings” would be “jeopardised by capping ground rents, not only defies logic but is beneath contempt.”
“The days of milking the system and squeezing ordinary residents for endless sums of money for nothing are now well and truly numbered,” Rayner said.
Leaseholders have campaigned for ground rent charges to be capped after suffering crippling bills (Photo: Vuk Valcic/Getty)Britain’s leasehold-freehold homeownership system means that blocks of flats, in particular, are owned by freeholder landlords. Some of these are major institutional investors, while others are backed by pension funds.
The RFA estimates that pension funds have invested more than £15bn in residential ground rents, and the total value of investment in UK ground rents is thought to be close to £30bn.
However, previous Tory housing secretary Michael Gove has dismissed these claims, saying that the Labour government “must not back down”.
It is estimated that there are almost five million leasehold homes in England alone.
In recent years, expensive ground rents, which sometimes run into thousands of pounds, have forced leaseholders into financial ruin and made homes impossible to sell.
One leaseholder from Salford told The i Paper that doubling ground rent meant their charges had gone up from £250 a year to £500 and then £2,000. The flat itself was bought for £125,000.
Another said that her ground rent would reach more than £1m a year in 50 years’ time without a cap.
The Leasehold Reform Act 2022, introduced under the Conservative government, brought an end to ground rents on new-build leasehold properties. Labour had pledged to go further and help people in existing leasehold homes whose charges were not addressed.
Labour ministers have been looking at capping what freeholders can charge at a maximum of £250 a year.
In opposition, Matthew Pennycook, who is now the Housing and Planning minister, told Parliament he wanted to “cap ground rents at a peppercorn”, as he urged the then-Conservative government to “act to protect leaseholders from ground rent exploitation”.
Labour’s manifesto pledged to “go where the Conservatives have failed and bring the feudal leasehold system to an end”.
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The i Paper understands that an agreement is close to being reached over this issue, with Starmer increasingly convinced that a cap is the right way to go.
However, the draft bill, which was expected by the end of December 2025, has yet to materialise, and backbench Labour MPs are saying that there could be a rebellion if Labour’s promise to leaseholders is broken.
The Ministry for Housing, Communities and Local Government (MHCLG) was contacted for a comment.
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