Cap for floor lease in England and Wales as a consequence of be introduced | EUROtoday

The authorities will announce a cap on floor rents paid by leaseholders in England and Wales on Tuesday morning, the BBC understands.

Labour’s 2024 election manifesto promised to “tackle unregulated and unaffordable ground rent charges”.

However, there had been solutions the federal government might retreat from its pledge as a consequence of concern concerning the potential impression on pension funds.

The authorities has not but confirmed the place it should set the cap, however campaigners have stated they consider £250 a yr is probably going.

Earlier this month, former Housing Secretary Angela Rayner had urged the federal government to stay to its manifesto pledge on floor rents.

There are round 5 million leasehold properties in England and Wales, the place folks personal the best to occupy a property through a lease for a restricted variety of years from a freeholder.

Leaseholds is the default tenure for privately-owned flats, and the Land Registry estimates that 99% of flat gross sales in 2024 in England have been leasehold.

Ground rents have been abolished for many new residential leasehold properties in England and Wales in 2022, however stay for current leasehold properties.

The English Housing Survey has estimated that in 2023/24, leasehold owner-occupiers reported paying a median annual floor lease of £120 a yr.

In 2024, when Labour have been in opposition, the present Housing Minister Matthew Pennycook stated his desire was for floor rents to be capped at successfully zero.

Recent reviews have steered that the Treasury and the housing division have been at loggerheads over the difficulty, with issues over how a cap would impression pension funds which personal freeholds.

Last week, former Labour minister Justin Madders advised the BBC that the prime minister might face a “mass rebellion” if the federal government deserted its pledge on a floor lease cap.

He stated setting the restrict at a peppercorn fee can be his most popular selection however that he might settle for a £250 cap as a result of “risk of elongated legal challenge”.

A spokesperson for the Residential Freehold Association has beforehand stated that capping floor rents “would be an unprecedented and unjustified interference with existing property rights, which would seriously damage investor confidence in the UK housing market”.

Harry Scoffin, founding father of the Free Leaseholders marketing campaign group, has stated: “At the election, Labour promised to end the feudal leasehold system and if they backtrack on reducing ground rates to a peppercorn or zero financial value they’re not ending the leasehold scam.”