Plans to cap ground rents on leasehold properties are set to be walked back after lobbying from pension funds and investors, according to reports.
Housing secretary Michael Gove has been forced to abandon his plans to bring in a cap and reduce annual payments to ‘peppercorn’ rates or almost nothing, the Financial Times reported.
It came after the story first emerged in The Sunday Times that pension fund managers had urged No10 not to go ahead with the proposals, warning that up to £40bn could be at risk.
Now the Financial Times has confirmed the scheme, a Conservative 2019 manifesto pledge, which would have benefited leasehold homeowners in England and Wales, will have to be shelved after successful opposition saw the Treasury and No10 reportedly “cave in to the lobbying”.
Gove was aiming to reform the process, which dates back hundreds of years, of leasehold owners buying the right to occupy a property, which is ultimately owned by a freeholder.
It comes after the House of Lords Industry and Regulators Committee wrote to Gove on Friday warning delays to establishing a regulator of property agents is affecting the public.
Peers argued that the Leasehold and Freehold Reform Bill did “not sufficiently address the issues that leaseholders face, and needs to be supported by greater regulation”.
The policy was broadly popular among Conservative voters.
Research from pollsters at Opinium, according to PoliticsHome, found 64 per cent of Tory voters were either strongly or tended to be in favour of abolishing ground rents, which government data says applies to 86 per cent of the almost 5m leasehold homes in England and Wales.
Leasehold campaigner Harry Scoffin said: “Unsurprisingly, Conservative voters want Rishi Sunak and the Conservatives to deliver the 2019 manifesto commitment.”
He added: “Ministers attempting to thwart peppercorn ground rents are out of step with their own voters. There’s still time for No10 and the Treasury to come to their senses.”
Shadow housing secretary Angela Rayner said: “This latest dithering from the government on leasehold reform is yet another sign that Rishi Sunak is too weak to deliver.”
The deputy Labour leader added: “If the Tories are abandoning another manifesto pledge, leaseholders need to know why.
“Labour is committed to comprehensive leasehold reform, enacting the Law Commission’s recommendations on enfranchisement, commonhold and right to manage in full.”
The Department for Levelling Up, Housing and Communities (DLUHC) said: “We are committed to strengthening protection for leaseholders and are bringing forward reforms through the Bill.
“It is not fair that many leaseholders face unregulated ground rents for no guaranteed service in return – that is why we consulted on a range of options to cap ground rents for existing leases, and we have already legislated to put an end to ground rents for most new residential properties in England and Wales.
“We are pleased to note that the Competition and Markets Authority (CMA) recently found that ground rents are ‘neither legally nor commercially necessary’.
“The government is currently considering the responses to the consultation and will set out its policy in due course.”