Labour MPs have warned the government against diluting its manifesto commitment to cap ground rents for leaseholders, saying it could prompt a backbench rebellion.
Ahead of the 2024 general election, Labour pledged to cap ground rents at £250.
The pledge formed part of Labour’s wider plans to reform the leasehold system in England and Wales. However, delays to the draft Leasehold and Commonhold Reform Bill, which ministers had promised to publish late last year, have raised concerns among MPs that the commitment may be weakened.
Former minister Justin Madders told the BBC that the prime minister could face a “mass rebellion” if the government watered down the reforms, saying Labour must stick to its commitment on ground rents. Labour’s manifesto promised to tackle “unregulated and unaffordable ground rent charges”, but there are concerns the policy may be scaled back because of its potential impact on pension funds that own freeholds.
Earlier this week, former housing secretary and deputy prime minister Angela Rayner urged the government not to back down, warning in an article for The Guardian that ministers were facing lobbying pressure from investors to soften the policy. Rayner has repeatedly called on Labour to deliver on its manifesto commitments to leaseholders.
The government said it remains committed to legislating on leasehold reform and will set out further details in due course. Treasury sources have acknowledged difficulties over where to set a cap on ground rents but have played down reports of tensions between departments, saying ministers are seeking a balanced approach.
There are around five million leasehold homes in England and Wales. Ground rents were abolished for most new residential leasehold properties in 2022, but they still apply to existing homes, where charges can run into hundreds of pounds a year. Many leases include clauses allowing ground rents to rise at fixed intervals, which can make properties harder to sell or mortgage.
Madders – a close ally of Rayner who worked alongside the former housing secretary on the Employment Rights Bill – said Labour had “a clear manifesto commitment” and “a lot of backbenchers feel very strongly about this”.
In December, he coordinated a letter from more than 80 Labour MPs urging the prime minister to cap ground rents.
Madders, who was an employment minister until last September’s reshuffle, said capping rents at a peppercorn would be the ideal scenario but “the risk of elongated legal challenge is quite significant” so he could accept a limit of £250 a year.
Fellow Labour MP Florence Eshalomi, who chairs the Commons Housing Committee which will scrutinise the draft law, said the bill’s delay was disappointing and the government need to “end the feudal leasehold system”.
The National Leasehold Campaign (NLC) has long called on the government to take action on leasehold reform, and has been critical of the government for failing to publish the long-awaited draft Leasehold and Commonhold Bill.
Emails from NLC member sent to parliamentarians earlier this month expressed frustration and disappointment at being left without updates, with many leaseholders describing the delay as unacceptable. The correspondence highlighted growing dissatisfaction and a loss of confidence in the government’s ability to deliver meaningful reform and, ultimately, the abolition of leasehold.
Jo Darbyshire, co-founder of the NLC, said: “The government must deliver full justice for leaseholders – no more excuses or delays. The history of leasehold reform is one that repeats itself and has done for decades. This government has the chance to break this cycle.”
Campaigners urge MPs to take immediate action on leasehold reform