Labour has unveiled a bold new Leasehold Reform Bill that proposes capping ground rents at just £250 per year from 2028 and banning new leaseholds altogether. The move is designed to tackle one of the most controversial parts of the UK housing market — the expensive and often unfair system of leasehold property ownership that has left thousands of leaseholders burdened with high ground rents and excessive service charges.
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Under
current arrangements, many leaseholders struggle with spiralling ground rents
that escalate over time, plus unpredictable service charges. Critics argue this
mirrors a feudal system and traps homeowners in long leases that erode
the value of their homes. Labour claims the new bill will make it simpler for
leaseholders to transition to commonhold, a form of ownership akin to
freehold where residents collectively own and manage their building.
Labour’s
proposals are intended to bring greater fairness and transparency. By
restricting future ground rents to a nominal £250 and preventing new leasehold
titles, the bill aims to end the creation of leaseholds and protect future
property buyers. More controversially, the legislation encourages — but does
not fully mandate — existing leaseholders to convert to commonhold. This raises
practical questions about how leaseholders with different lease lengths can all
switch. Critics warn that without compulsory mechanisms and clear valuation
rules, many families may still find it difficult or prohibitively expensive to
make the change.
Another
key debate centres on how the reforms will affect freeholders’ asset value.
Freeholders range from private owners to institutions and estates with
significant property portfolios. For example, the Duke of Westminster’s
estate, which holds high-value freeholds in Mayfair and Belgravia,
could see the future value of those assets reduced if new leaseholds can no
longer be created and if conversions proceed without compensation mechanisms.
Will
Labour’s Leasehold Reform Bill slash asset values for major freeholders,
or will it, like the 2025 Conservative Leasehold Reform Act, simply
“paper over the cracks” of a broken system? The effectiveness of the bill will
depend on detailed implementation, protections for existing leaseholders, and
the legal frameworks that govern commonhold conversions. For many leaseholders,
hope remains that meaningful reform could finally deliver a fairer property
market.
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