Ground rents for leaseholders to be capped at £250 a yr in Starmer bid to placate Labour MPs – regardless of Treasury alarm over hit to enterprise

Ground rents are set to be capped at £250 a year for leaseholders in England and Wales despite Treasury alarm over the impact on businesses.

The government insisted the change will save many people £4,000 over the course of their lease, and free up householders who have struggled to sell because of eye-watering annual charges.

New leasehold flats are also being banned and existing leaseholders will get the right to switch to commonhold under the shake-up.

The plans are seen as ‘red meat’ for Labour MPs, as Keir Starmer fights to cling on amid dire polls and rivals on manoeuvres. They have been championed by former deputy PM Angela Rayner among others. 

However, there have been concerns about the impact on construction and development firms. 

Making the major announcement in a TikTok video, Sir Keir said: ‘I’ve spoken to so many people who say this will make a difference to them worth hundreds of pounds.

‘That’s really important because the cost of living is the single most important thing across the country.’

The reforms will be published in the draft Leasehold and Commonhold Reform Bill, which will be introduced later today.

he plans are seen as ‘red meat’ for Labour MPs, as Keir Starmer fights to cling on amid dire polls and rivals on manoeuvres

The government insisted the change will save many people £4,000 over the course of their lease, and free up householders who have struggled to sell because of eye-watering annual charges

Curbs on leasehold ground rents have been championed by former deputy PM Angela Rayner among others

Housing Secretary Steve Reed said the policy would save ‘almost a million people’ money.

He told Times Radio: ‘We’ve had this, frankly it’s a scam, where if you own a flat, you’re a leaseholder, you have to pay ground rent to an individual or organisation even though they’re not providing you with any service at all and the amount that you pay is uncapped so you can pay through the nose more and more money year after year you don’t know how much it’s going to be.

‘People have been campaigning for decades, centuries even, to get these changes through and it’s this Government that’s bringing it through and we’re bringing it through today. We’re going to cap ground rents at a maximum of £250-a-year which is going to save almost a million people money, as well as the worry of seeing their ground rent go up and up and up.’

Mr Reed said the Government expects it to become law by next year and that there will be a date for introducing the change within this Parliament.

He told the programme those who own the freehold will not receive compensation and that it ‘won’t be possible’ for freeholders to simply increase service charge to make up the difference as The Leasehold Reform Act, to be introduced to Parliament on Tuesday, will provide ‘further support and protections’ for leaseholders.

He also said the Government has ‘taken all the measures we can’ to make sure the proposals are ‘legally watertight’ to avoid court action.