Ground rents for leaseholders will be capped at £250 a year before dropping to a peppercorn rent after 40 years, Steve Reed has announced.
The housing secretary confirmed the move on Tuesday morning, hitting out at ground rents as a “a bit of a scam”, “a racket” and “paying money for nothing”.
Ground rents are a charge that leaseholders pay to live on land they do not own. It does not require a service in return and is regarded by critics as emblematic of the feudal nature of England’s centuries-old leasehold system.
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Under the new changes, ground rents will be capped from 2028, before dropping to a nominal amount, which Mr Reed told Sky News will “lead to abolition” of ground rents altogether.
The reforms will also see new leasehold flats banned, while existing leaseholders will get the right to switch to commonhold.
There are currently around five million leaseholders in England and Wales.
Announcing the move, the housing secretary told Mornings with Ridge and Frost: “People have been campaigning to abolish this for decades. So today is quite a historic moment for leasehold reform because this government is going to do what we said in our manifesto.
“Once that comes into force – and it’ll happen in this parliament – nearly a million people are going to see their ground rents reduced and nearly five million people will know that their ground rents will never go above £250.”
Mr Reed also confirmed that his junior colleague, Matthew Pennycook, will formally unveil the changes, as part of the Commonhold and Leasehold Reform Bill, in the Commons later on Tuesday.
When challenged that leaseholders continue to face other expensive costs and expenses, Mr Reed replied: “We launched a consultation last summer about the service charges leaseholders have to pay… ‘Fleecehold’, a lot of people call it, because they feel they’re being literally fleeced of their money without ever being told what the money is being used…
