THE UK will cap ground rents at 250 pounds a year as part of changes to its property system, prime minister Keir Starmer said on Tuesday, saying the move would ease financial pressure on households.
Starmer said the policy followed a promise made by his Labour Party in its 2024 election manifesto to address unregulated and unaffordable ground rent charges for people living in leasehold properties.
In the UK, homes are generally sold as either freehold, where the owner controls both the property and the land, or leasehold, where the buyer owns the right to occupy the home while paying charges such as ground rent to the freeholder.
Under the leasehold system, millions of people do not own the land beneath their homes and can face higher fees or restrictions set by landlords.
PARTY DIVISIONS OVER HOW TO WIN BACK SUPPORT
The move is expected to reassure lawmakers on the left of Starmer’s Labour Party after a drop in support following its 2024 landslide election victory, amid internal divisions over how to win back voters.
Freeholder groups, however, said a retrospective cap would interfere with existing property contracts.
M&G, one of Britain’s largest asset managers, said in a statement the changes would harm savers and companies invested in UK assets and set “a worrying precedent” for the country’s reputation as a stable investment location.
SYSTEM DATES BACK TO MEDIEVAL LAND LAW
Ground rents in Britain date back to medieval land law, evolving from charges for land use and later formalised in the 1920s through long-term residential leases.
The government said the reform would apply to more than 5 million leaseholders in England and Wales and would eventually reduce permitted ground rents to a nominal “peppercorn” after 40 years.
“This is a promise that we said we’d deliver and I’m really pleased that we’re delivering,” Starmer said in a TikTok video announcing the cap.
The government said the changes would save some families thousands of pounds over the life of their lease and help unblock stalled home sales linked to high or rising ground rent clauses.
The government also said it would ban new leasehold flats.
(With inputs from agencies)
