Ground rent to be outlawed for new houses in England and Wales

Minister of State (Housing and Planning) Rachel Maclean MP, has confirmed that plans to phase out leasehold will form part of the King’s Speech on 7 November 2023. The Bill is expected to ban leaseholds for houses, but not new flats.

Mclean recently stated that the UK Government will restore true home ownership to millions of people. She did not provide further details, but posted a link to an article in the Sunday Times which reports that the UK Government would cap all existing ground rents at a very low rate, known as a “peppercorn” rate, and extend the standard contract lease extension from 90 years to 990 years.

The Department for Levelling Up, Housing and Communities (DLUHC) estimates that there are almost 5 million leasehold homes in England, 70% of which are flats. Almost all flats are sold on a leasehold basis compared to 7% of houses.

Shadow Minister for Levelling Up, Housing, Communities and Local Government, Matthew Pennycook MP, responded to the announcement by stating that if no further measures will form part of the King’s Speech leaseholders will have been failed, adding that Labour would fundamentally and comprehensively reform the leasehold system.

Timothy Douglas, Head of Policy and Campaigns at Propertymark

“Many agents and leaseholders will be relieved to hear of plans for new legislation to further reform the leasehold system. Enfranchisement must be made easier, loopholes in redress must be closed, ground rent restrictions must be extended, and the UK Government must ensure any legislation to abolish leasehold improves consumer confidence and is fit for purpose.”

Propertymark has undertaken lobbying and research into the leasehold market since 2017 when problems with new-build leaseholds first hit the headlines.

In 2018 Propertymark published a report titled ‘Leasehold: A Life Sentence?’ Based on the findings of that report, it helped to drive legislative change that has so far culminated in the Leasehold Reform (Ground Rent) Act 2022 and a New Homes Ombudsman via the Building Safety Act 2022. Despite these reforms property agents and consumers still experience difficulties with several areas of leasehold law and we continue to shine a light on ongoing issues affecting the buying and selling of leasehold properties.