In a significant policy announcement delivered via TikTok, Prime Minister Keir Starmer has confirmed that ground rents for leaseholders in England and Wales will be capped at £250 per year. This move forms part of the government's broader proposals to reform the leasehold system, which includes banning new leasehold flats and granting existing leaseholders the right to switch to commonhold arrangements.
Major Housing Reform Announced on Social Media
Starmer made the announcement in a video posted on the social media platform TikTok, marking the first time a British prime minister has used this channel for a major government policy reveal. In his statement, Starmer emphasised the practical benefits for homeowners, stating: "Good news for homeowners, we're capping ground rent at £250. That means if you are a leaseholder, and your ground rent is more than £250, you'll be paying less."
The Prime Minister further highlighted the impact on household finances, noting: "I've spoken to so many people who say this will make a difference to them of hundreds of pounds. That's really important because the cost of living is the single most important thing across the country." He framed the measure as a fulfilment of election promises, adding: "So this is a promise that we said we'd deliver and I'm really pleased that we're delivering on that promise."
Comprehensive Leasehold Reform Package
The ground rent cap represents just one element of a comprehensive reform package that will be published in the draft leasehold and commonhold reform bill, scheduled for introduction on Tuesday. The proposed legislation includes several key measures designed to strengthen homeowners' rights and protections.
Under the new proposals:
- New leasehold flats will be completely banned
- Existing leaseholders will gain the right to switch to commonhold arrangements
- The practice of forfeiture will be abolished, preventing leaseholders from losing their homes and equity over debts as low as £350
- A new enforcement regime will be implemented to replace the current system
Greater Control for Flat Owners
The shift toward commonhold models represents a fundamental change in how multi-occupancy buildings are managed. Under commonhold arrangements, those living in a building will have:
- A direct say in the annual budget for building maintenance and services
- Greater control over how their building is run and managed
- Enhanced protections when problems arise with building management
Housing Secretary Steve Reed emphasised the government's commitment to supporting homeowners, stating: "If you own a flat you can be forced to pay ground rents that can become completely unaffordable. We said we'd be on the side of leaseholders – which is why today we are capping ground rent – helping millions of leaseholders by saving them money and giving them control over their home."
Reed was particularly critical of the existing system, adding: "The leasehold system has tainted the dream of home ownership for so many. We are taking action where others have failed – strengthening home ownership and calling time on leasehold for good."
Practical Implications for Homeowners
The ground rent cap will provide immediate financial relief for leaseholders currently paying more than £250 annually. For those with significantly higher ground rents, the savings could amount to hundreds of pounds each year, providing meaningful assistance during the ongoing cost of living challenges.
The broader reform package aims to address long-standing criticisms of the leasehold system, which has been accused of creating unfair financial burdens and limiting homeowners' control over their properties. By facilitating the transition to commonhold and banning new leasehold flats, the government seeks to create a fairer system that better serves homeowners' interests.
These proposals represent the most significant reform to property ownership structures in England and Wales in recent years, with potential implications for millions of homeowners across both nations.
