The Guardian view on trapped leaseholders: Labour must keep its promise to set them free | Editorial
The Labour government has announced reforms to regulate the leasehold system, including plans for an independent regulator and consultation on capping "rip-off" administrative fees. However, these measures fall significantly short of Labour's manifesto promise to "finally bring the feudal leasehold system to an end". The leasehold system, which turns homes into income streams for freeholders, is crippling the housing market by imposing exorbitant costs that deter prospective buyers, particularly first-time purchasers seeking flats.
Service charges for flat owners have risen substantially, averaging £2,405 annually and increasing 32.6% since 2020 and 55.6% over the past decade, with some London properties charging over £7,000 yearly. Last year, 37% of flats across England and Wales had service charges exceeding 1% of their property value, making them difficult to mortgage and sell. The government proposes a £250 annual cap on ground rents and limits on certain fees, but does not address the annual service charges themselves. About five million leaseholders remain trapped in this system, with the issue becoming a political flashpoint in the Holborn and St Pancras byelection.
- Labour's leasehold reforms fall far short of manifesto promise to abolish system
- Service charges surge 55.6% over decade to average £2,405 annually
- Five million leaseholders trapped as government lacks courage to challenge freeholders
New here? Start with this
Britain's leasehold system works differently from outright home ownership. Flat owners purchase the right to live in their property for a fixed term, but the land and building remain owned by a freeholder. Every year, leaseholders must pay service charges and fees to the freeholder, who controls the amounts, often leading to unpredictable and rising costs for residents.
Service charges for flat owners have climbed steeply over the past decade, averaging over £2,400 annually and increasing by more than half in ten years. These escalating costs make flats hard to sell or mortgage, leaving owners trapped in their properties and deterring first-time buyers from entering the market. Around five million leaseholders across England and Wales are caught in this system.
The leasehold system affects millions of homeowners and has become a focus of political debate, particularly because it creates barriers for first-time buyers seeking to purchase flats. The system gives freeholders power to set costs that residents must pay, without leaseholders having equivalent control. This imbalance has prompted growing calls for reform and change.
Both sides, in good faith
The strongest fair case each way — we don't pick a winner.
The case for
Labour promised to end the leasehold system, and the current reforms fall far short of this commitment. Service charges have risen dramatically, with nearly 40% of flats now having charges exceeding 1% of property value, making them unmortgageable and unsellable. The government's proposed caps on ground rents and administrative fees ignore the real problem: spiralling annual service charges that trap five million people in financial difficulty. A political party that made this central promise to voters has a democratic obligation to deliver genuine transformation rather than incremental regulation.
The case against
Radically dismantling the leasehold system would require complex property law reform, compensation disputes, and potentially destabilise the housing market and mortgage lending. The government's approach—introducing an independent regulator and capping exploitative fees—represents practical progress that protects leaseholders without the legal chaos of system abolition. Service charge rises reflect legitimate costs for maintenance and building safety, not merely profiteering, and warrant careful regulation rather than wholesale system change. Incremental improvements that can be implemented quickly may better serve millions of struggling leaseholders than pursuing a manifesto promise that proves impractical to deliver.