Leaseholders fear higher bills as ministers hold back on changes

The government has been accused of watering down leasehold reforms after it said it did not want to use “prescribed rates” as a means of reducing costs for people to extend their lease or buy the freehold on their home. Leasehold campaigners said they feared a “capitulation” to the property industry over the issue which relates to rate-setting powers introduced by the Conservative government. Most commented 1 Russian strikes ‘leave half a million Ukrainian homes without power’ Russia-Ukraine war 374 comments 2 Third of investors ready to stop UK spending after budget Politics 189 comments 3 ‘We’re 34 — we can’t wait to start being landlords’ Property & Home 75 comments 4 Douglas Dunn obituary: Scottish poet and academic Obituaries 23 comments 5 The beauty expert’s all-time favourite hair products Beauty 18 comments This gave ministers the ability set “capitalisation” and “deferment” rates, which help underpin the costs to extend a lease, buy a freehold or buy out ground rent liability. Leaseholders to be protected from ‘punitive hidden costs’ In a consultation on the issue due to close on Wednesday, the government said there “might be good reasons” for instead sticking with deferment rates established in a 2007 court case of 4.75 per cent for houses and 5 per cent for flats. Advertisement Lower rates make it more expensive for people to extend their lease or buy their freehold because they raise the value of what the freeholder is giving up. Top stories 1 Clodagh McKenna: I always get up at 6am on holiday. I love the calm Inspiration 2 16 of the best safaris in Africa Africa 3 13 of the best affordable hotels in New York New York City 4 The Marylebone pop-up for Christmas-maxxers LUXX 5 The best luxury gifts for Christmas 2026 LUXX Top stories 1 Caitlin Moran: People hate me, my hair, my face, my feminism Life 2 Tony Hadley: Fans still threw their knickers on stage after I became a dad Parenting 3 The ten companies fund managers think will make them billions Saving & Investing 4 ‘Mum is dating a fraudster. What can I do?’ Family Finances 5 Prepare now for the inheritance tax mess coming for your pension Tax Leasehold campaigners are calling for the deferment and capitalisation rates to be revised upwards to about 9 per cent, which they argue would substantially reduce the costs to leaseholders, and also better reflect market rates. When in opposition, Matthew Pennycook, now housing minister, said that “when setting the rate there should be this guiding principle [of] … reducing premiums for leaseholders to its lowest possible level”. Matthew Pennycook GETTY IMAGES According to government estimates, there were about 4.9 million leasehold homes in England in 2025, the majority of which are flats. Labour pledged in its 2024 manifesto to “finally bring the feudal leasehold system to an end”. Andy Burnham has said leasehold reforms are long overdue and new legislation is expected to be introduced by the end of the year to begin to phase out the system for new flats. Advertisement However, leasehold campaigners say the reforms are too slow and not radical enough, particularly for existing leaseholders, and their concerns are likely to be heightened by the latest consultation. Complaints about leasehold include rising ground rents, leaseholders’ lack of control over property management, repair and maintenance and high and opaque insurance costs. Property bill is biggest change in 1,000 years — so how does it work? When the consultation was launched, Pennycook said: “The current leasehold system in England and Wales has a number of fundamental, structural flaws that mean it is weighted against the interests of leasehold homeowners.” The gap between flat and house prices is at its widest for 30 years , according to Zoopla. Advertisement Harry Scoffin, founder of Free Leaseholders, accused the government of “doing the opposite” of its pledge to take on “vested interests”. “Matthew Pennycook has turned his back on his own words. It’s a total capitulation. “This important consultation, which is poorly written and appears to have flown under the radar, is geared towards entrenching a 2007 court ruling secured by the freeholder lobby, a policy that would be ridiculous and grossly unfair given the subsequent collapse in the values of residential freeholds and ground rents in the secondary market.” A government spokesman said: “We’ve switched on specific measures to make it easier and cheaper for leaseholders. This includes the capping of ground rent at 0.1 per cent of property value.”