Starmer makes huge u-turn over leaseholds

Keir Starmer has announced that the government will be capping ground rent for leaseholders at £250 per year.

@keirstarmerExclusive: We are capping ground rents for everyone♬ original sound – Keir Starmer

The government intends to introduce a legislative cap on ground rents of £250 a year, changing to a peppercorn after 40 years. This will apply to most long residential leases not already covered by existing legislation. It will deliver on the government’s manifesto commitment to “tackle unregulated and unaffordable ground rent charges” and “finally bring the feudal leasehold system to an end”. This policy will directly address cost of living pressures for leaseholders, and issues with buying, selling and mortgaging properties with high ground rents, before ending ground rents for good.

The government is also aiming to ban new leasehold flats, and

supports the long-term goal of moving to commonhold, by making conversion cheaper and easier by reducing the cost of acquiring the freehold.

‘Feudal leasehold system’

Most flats in the UK are leasehold, along with some shared ownership houses.

Freehold means a resident owning their property and the land it is built on. On the other hand, leasehold means owning the property for a fixed period, while still paying ground rent to the landlord, who either owns the building (such as a block of flats) or the land.

When the lease ends, ownership returns to the landlord.

In comparison, commonhold provides freehold ownership for flats or other interdependent buildings.

But what Starmer is failing to mention is that in the run-up to the 2024 General Election, Labour promised to:

act where the Conservatives have failed and finally bring the feudal leasehold system to an end.

Labour literally promised to end leasehold. Whilst we shouldn’t be surprised that Starmer has made yet another U-turn, a £250 cap is a shitshow when it should be zero. And yes, after 40 years, it will change to ‘peppercorn’, or zero. But why in 40 years and not now?

Time for Government to stop tinkering around the edges and scrap leasehold altogether. https://t.co/7963GGOzWM

— Zack Polanski (@ZackPolanski) January 27, 2026

In a statement on X, Free Leaseholders, a grassroots campaign to end leasehold, said:

Let’s be clear, freezing ground rents or even capping them at £250 per annum keeps leasehold on life support.

It would be the opposite of ENDING leasehold, which is what the @UKLabour manifesto promised.

If Labour announces a freeze or cap tomorrow, they will be betraying hardworking leaseholders to protect the ground rent grifters and offshore property mafia.

Extortionate service charges

However, it appears that Starmer has failed to assess the impact of service charges on leaseholders.

Looks to me that govt has shown a disturbingly naive view, in assessing against peppercorn ground rents, that freeholders would be left with no remaining value. Whereas leaseholders know that freeholders also extract huge profits via service charges. Big govt assessment error.

— Stuart Coster (@StuartCoster) January 27, 2026

But is it an assessment error? Or is it paying lip service to leasehold campaigners whilst allowing the big freeholders to continue extorting tenants and getting rich in the process?

Service Charge is the real issue! Let’s be capping that please. https://t.co/k6jlnahh1Y

— the grip reaper. (@mukandiful) January 27, 2026

In most cases, landlords or freeholders increase service charges each year. Unlike rent, this is not capped.

Don’t delay on service charges.
These are as, or often more, crippling than the ground rent for many thousands of working class people.
They can get away with upping charges by arbitrarily high %ages but provide nothing.
It’s criminal.
You want votes, get this sorted!#leasehold

— BostonRabbit 🇬🇧🇪🇺🇬🇱🇺🇦 (@Boston_Rabbit) January 27, 2026

This means there is nothing stopping landlords, freeholders, or management agencies from increasing service charges exponentially to make up for lost ground rent.

And just like that, everyone’s annual service charge amount has coincidentally shot right up. All of your policies are token gestures, none of them actually resolve the issues people are experiencing on a day to day basis. Pathetic politics.

— Nick Causer (@nickcauser92) January 27, 2026

Pointless virtue signalling.

Paying under £250 now? Expect it to increase to £250.

Paying over £250? Expect your service charge to increase.

Prick https://t.co/dab7z94TOt

— ➖ (@jakerosslake) January 27, 2026

In some parts of the country, leaseholders are paying £16,000 per year in service charges.

Imagine £500 of your monthly salary going towards service charge it’s madness pic.twitter.com/mBPgDsxxXH

— Dieudonne (@MrMass93) January 22, 2026

There’s a development in Colne where the apartments cost £59k but the service charge is £2,632 a year 🤯 https://t.co/2jPwUOoXn9

— PW (@waltonyeah) January 27, 2026

Ground rent is rarely higher than £250, service charge can be anything up to 30-40% of the mortgage repayments. This is meaningless. 👎🏼 https://t.co/P1SD4GKg6u

— Matt Ridout (@mridout196) January 27, 2026

Recently, Southwark News reported on leaseholders in Elephant and Castle who won a major tribunal case against large property developer Lendlease. In total, they overcharged them £2,500 in service charges.

The tribunal showed that Lendlease was massively overcharging leaseholders. The bills included a 150% overcharge for building management costs, £3,000 in late electricity fees and a 100% overcharge for security.

Lendlease also charged leaseholders for leisure facilities which they were unable to access.

In total, Lendlease will have to refund residents over £500,000.

Taking a stand

This shows that when leaseholders stand up to freeholders or massive property management companies, leaseholders can win.

It also shows that major property management companies and huge freeholders are running rampant in an unregulated market – and the government is letting them get away with it.

Labour has a real opportunity to take a massive weight off the shoulders of leaseholders, and the longer Starmer sits on his hands and skirts around the real issue, the heavier that weight will become.

Feature image via Jonny Gios on Unsplash