Starmer Caps Ground Rents at £250 After Rayner Rebellion Fears
Prime Minister Sir Keir Starmer has moved to cap ground rents at £250 per year for leaseholders across England and Wales, a decision announced via TikTok in a bid to address longstanding housing concerns. This intervention comes amid fears of a potential rebellion led by former deputy Prime Minister Angela Rayner, who has been vocal in pushing for stronger leasehold reforms.
Addressing the Leasehold Crisis
The new measure, which Starmer described as making a "real difference worth hundreds of pounds" to many households, targets ground rents—regular payments made by leaseholders to freeholders or superior leaseholders. While ground rents were abolished for most new residential leasehold properties in 2022, existing leasehold homes have continued to face these charges, prompting Labour's manifesto pledge in 2024 to tackle unregulated and unaffordable ground rent charges.
Internal Tensions and Delays
However, the path to this cap has not been smooth. Chancellor Rachel Reeves reportedly expressed concerns that the cap could adversely impact pension funds, which have invested approximately £15 billion in ground rents. These reservations contributed to delays in the draft leasehold and commonhold reform bill, which was originally slated to include the ground rent measures.
Angela Rayner, who served as housing secretary before resigning over a stamp duty controversy, warned the government against diluting the reforms. She argued that poorer households would lose faith in change and urged Starmer to demonstrate "whose side we are on." Her stance echoed broader discontent within the party, with former Labour minister Justin Madders recently cautioning that ditching the pledge could trigger a mass rebellion among MPs.
Political and Legal Challenges
In opposition, housing minister Matthew Pennycook advocated for capping ground rents at effectively zero, a position some MPs still prefer. Madders acknowledged that while a zero cap would be ideal, the £250 limit is a pragmatic compromise to avoid prolonged legal battles. Nonetheless, the government may still face significant legal challenges, as an impact assessment from the previous Conservative administration suggested freeholders could demand nearly £27 billion in compensation.
According to reports, at least ten major City firms have issued direct warnings to the Treasury, highlighting the financial stakes involved. This backdrop of political pressure and economic risk underscores the complexity of implementing leasehold reforms, even as Starmer's cap aims to provide immediate relief to affected homeowners.
