MPs have attacked freeholders for creating a “rentier structure” in England and Wales and charging “exorbitant” ground rents.
The government’s long-awaited Leasehold Reform Bill, which would make it easier and cheaper for leaseholders to extend their lease and buy the freehold, and ban leaseholds on newly built houses – but not flats – in England and Wales, is at the committee scrutiny stage.
Jack Spearman, head of leasehold at the Residential Freehold Association, told MPs that plans to cap ground rents on existing leases to a peppercorn level would put off investors.
It is estimated that such a change would result in a £27.3bn loss in asset values for freeholders.
But Labour MP Barry Gardiner said the idea that the housing market would collapse without the ability of pension funds to extract revenue from ground rents was “a nonsense”.
“Freeholders have over the past 15 years created a rentier structure where they can extract revenues from the ground rent that are exorbitant, in some cases £8,000 a year for no service,” he said.
The Department for Levelling Up, Housing and Communities said less than 1% of pension fund assets were invested in residential property.
