The Guardian view on leasehold reform: Labour must stand up to property investors | Editorial

"Cost-of-living pressures, including food and energy price rises, make it all the more urgent that their situation is addressed. Angela Rayner was right to argue in the Guardian last week that ministers must pick a side. This market should never have been allowed to develop in the way that it has. An investigation by the Competition and Markets Authority found no evidence that leaseholders get anything for these annual fees which are separate from service charges that pay for the maintenance of common areas."

"But while the case for reform is clearcut, wealthy freehold investors were never going to let it happen without a fight. In 2024, Matthew Pennycook, then in opposition and now Labour's housing minister, said that the then Tory government should be courageous in pressing ahead with reform, disregarding industry threats. Unfortunately, and despite this week's announcement of a ban on new leasehold flats and a ground rent cap of 250 on existing leases, Labour, too, is showing signs of timidity."

"For the leaseholders with the worst deals, the cap will come as a relief although it should have been set lower, and is unlikely to be in force before 2028. The 40-year period before ground rent is phased out, in favour of nominal peppercorn rent, is also too long. A reasonable grace period would have been much shorter. But even with the cap, and the overdue abolition of forfeiture enabling freeholders to seize properties if ground rent is unpaid plenty of problems remain."

Around 18% of leaseholders in England and Wales—about one million households—hold modern ground rent leases with escalating charges that often prevent remortgaging or selling. Those charges are separate from service charges and an investigation by the Competition and Markets Authority found no evidence leaseholders receive value for the annual fees. Recent measures include a ban on new leasehold flats, a ground rent cap of 250 on existing leases and abolition of forfeiture, but the cap may not take effect until 2028 and phasing out ground rents over 40 years is widely seen as excessively slow. Significant problems remain for affected leaseholders.

Read at www.theguardian.com