Angela Rayner has urged Keir Starmer to stick to his campaign pledge to cap ground rents for leaseholders in England and Wales, as cabinet divisions over the government’s plans to rip up the leasehold system come to a head.
The former deputy prime minister has intervened in a tense standoff between Steve Reed, the housing secretary, and Rachel Reeves, the chancellor, over whether to stand by Labour’s promise to limit annual charges for existing leaseholders.
The measure was part of a draft leasehold bill due to be published last year, which was delayed after Reeves became concerned that capping ground rents could deter property investors.
Government insiders say Starmer is due to decide between his warring ministers on Tuesday, as pressure mounts from Labour MPs to publish the draft bill as soon as possible.
In an article for the Guardian, Rayner writes: “Over recent decades … ordinary homeowners have increasingly been charged high and escalating amounts of ground rent, leaving them in financial distress and often unable to sell or re-mortgage their homes.”
She adds: “Labour made a promise to leaseholders that we would fix this injustice, but ministers are currently subjected to furious lobbying from wealthy investors trying to water this manifesto commitment down.
“There are those who argue we cannot act on our promise as it could risk a backlash from investors, including pension funds. It’s hardly surprising – the system works just fine for them.
“They get an annual return for doing absolutely nothing, they can raise ground rents and pile up service charges without transparency and with total impunity, regardless of the devastation it causes to families.”
Labour promised in its manifesto to “finally bring the feudal leasehold system to an end”, including banning the sale of new leasehold flats. The manifesto added: “We will tackle unregulated and unaffordable ground rent charges.”
Matthew Pennycook, the housing minister, has been working on the draft bill since Labour entered government, including a measure to cap ground rents at £250 a year for current leaseholders. New leasehold properties must be sold with peppercorn, or nominal, ground rents, under legislation passed by the last Conservative government.
He was supported for much of that time by Rayner, who was also the housing and local government secretary before she left government last year after admitting to underpaying property taxes on her new property in Hove, East Sussex.
Pennycook was due to publish the draft bill in December, but the plans were postponed at the last minute after Treasury officials became concerned that the ground rent cap could hit pension funds that own freehold properties.
Labour MPs have become increasingly frustrated by the delays, given there are an estimated 5m leasehold homes in England, and have raised the issue repeatedly with the prime minister in the Commons.
One of those MPs, Ruth Cadbury, told the Guardian: “I am very keen that momentum isn’t lost. My constituents and those of us who have been working on this issue were disappointed that the bill hadn’t been published, so I hope it is published very soon.”
