In 2029, the ground rent on Terry Patterson’s one-bedroom leasehold flat in Tufnell Park, north London, is set to double from £750 to £1,500 a year.
Earlier this year, Terry thought she had been given a lifeline. In January, Labour announced plans to cap ground rent at £250 per year, which, when implemented, would not only have stopped her costs increasing, but reduced them by £500 a year.
However she says she has been “let down” afterThe i Paper revealed that a series of housing reforms by the Government may not come in until the 2030s.
The Government insists the ground rent cap is still on schedule to be introduced by 2028, but news of delays to leasehold reform has some homeowners fearing the worst.
In a leasehold system, homeowners do not really own their home; they merely own the right to lease it for a specified period of time and must pay ground rent as well as lease extension fees.
Speaking at the Institute for Government, housing and planning minister Matthew Pennycook outlined his plan to end the leasehold system of homeownership in England and Wales, by transitioning to a system known as “commonhold”.
However, in an interview following his speech, Pennycook said some parts of the Leasehold and Commonhold Bill may not come into force in this Parliament because of its complexity – the bill has 260 clauses.
If delays affect ground rent reforms, they may come too late for people like Terry.
Her lease is affected by a doubling clause, which means her ground rent doubles 25 years after the lease starts, and at other points.
The only way to avoid this happening was for Terry to pay to extend her lease, which would take the rent back to what is known as a peppercorn level – effectively zero. But this would cost her £25,000, which is money she can’t afford to spend.
The rise in her ground rent is set to happen in 2029 – just as the 62-year-old part-time psychotherapist hits state pension age. And she fears Labour’s reform will “never happen” if reforms don’t happen during this parliament, as the party may not be in government after that date.
“I can’t see this ever happening if it gets delayed further. Surely three years is enough time to get your act together,” said Terry, adding that the prospect of a delay until the 2030s had “plunged” her into a new dilemma over what to do.
“When the rise in ground rent comes in it will be very difficult to afford my flat, but it will also be hard to sell it,” she said. “But because it’s a one-bed, I won’t be able to downsize. I’ll probably have to leave London, where I’ve lived for decades.
“Extending the lease isn’t really an option as I don’t have a huge pot of money to pay for that and I am semi-retired so I can’t really increase my income to save.
“What Labour are doing is letting down leaseholders.”
In Labour’s 2024 general election manifesto, the party promised to “finally bring the feudal leasehold system to an end”.
However, while Pennycook suggested that he expects the legislation to pass in this Parliament, which is due to run until 2029, he warned that the laws may not come into force until later.
He spoke to The i Paper ahead of the Renters’ Rights Act coming into force on Friday, in what will be the biggest shake-up of tenants’ rights in England and Wales since 1988.
He said his plans would see “commonhold become the default tenure” of homeownership in England and Wales. “We do want to be ambitious. We’re going as fast as we possibly can, balancing speed with care,” he added.