UK to cap ground rents in sweeping property overhaul

[LONDON] Britain will cap ground rents at £250 (S$433.6) a year in an overhaul of its antiquated property system, UK Prime Minister (PM) Keir Starmer announced on Tuesday (Jan 27), a move he said would ease pressure on millions of households facing rising costs.

His Labour Party promised in its 2024 election manifesto to tackle unregulated and unaffordable ground rent charges for those living in leasehold properties, a commitment he said had now been fulfilled.

In Britain, homes are generally sold as freehold – where the owner controls the property and the land it sits on – or leasehold, where the buyer owns only the right to occupy a home, while paying charges such as ground rent to the freeholder.

Ground rents in Britain originated in medieval feudalism, having evolved from landholders charging fees for land use. They were formalised in the 1920s as long-term residential leases.

The reform will apply to more than five million leaseholders in England and Wales, and will ultimately reduce permitted ground rents to a nominal “peppercorn” after 40 years, the government said.

“This is a promise that we said we would deliver and I am really pleased that we are delivering,” Starmer said in a TikTok video announcing the cap.

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The plan would save some families thousands of pounds over the life of their lease, and help unblock stalled home sales blamed on high or escalating ground-rent clauses, the government said.

It also pledged to ban new leasehold flats. REUTERS