Keir Starmer has announced a new cap on ground rents in a significant move to assist leaseholders. The Prime Minister made the announcement on TikTok, revealing that the change is projected to benefit nearly a million families financially. This initiative aims to modernize the outdated leasehold system, which Housing Secretary Steve Reed criticized as a fraudulent practice.

Starmer highlighted the positive impact of the ground rent cap, stating that it will limit ground rents to £250 per year. Leaseholders paying more than £250 in ground rent will see a reduction in their expenses, potentially saving them hundreds of pounds. Emphasizing the importance of addressing the cost of living nationwide, Starmer expressed his satisfaction in fulfilling this promised reform.

Under the new regulations, ground rents will be limited to £250 annually, with a transition to a symbolic peppercorn cap after 40 years. Additionally, the government has decided to prohibit the creation of new leasehold flats. The Ministry of Housing, Communities and Local Government stated that this move signifies the end of the archaic leasehold system dating back to medieval times.

This landmark announcement marks the first time a British Prime Minister has utilized TikTok for a major governmental declaration. The Labour party’s manifesto during the general election had committed to addressing unregulated and unaffordable ground rent charges. Former Housing Secretary Angela Rayner urged the government to honor this pledge.

Housing Secretary Steve Reed described the ground rent system as exploitative, where leaseholders are compelled to pay escalating fees without receiving any tangible services. The government’s initiative to cap ground rents at a maximum of £250 per year aims to provide relief to nearly a million individuals, preventing unpredictable and burdensome increases.

Reed anticipates that the legislation will be enacted by the following year, with a clear timeline for implementation within the current parliamentary term. He emphasized that freeholders would not receive compensation, and attempts to offset the capped ground rents through service charge hikes would be prohibited by the upcoming Leasehold Reform Act. This act will introduce additional safeguards for leaseholders.

While ground rents were eliminated for most new residential leasehold properties in England and Wales in 2022, the practice persists for existing leasehold homes. Data from the English Housing Survey in 2023/24 indicated that leasehold owner-occupiers paid a median annual ground rent of £120.