Committee publication · Correspondence · 22 April 2026
Letter from the British Property Federation to the Chair dated 1 April 2025 following up oral evidence given on 17 March
From: Housing, Communities and Local Government Committee
Inquiry: Pre-legislative scrutiny of the draft Commonhold and Leasehold Reform Bill
Summary
The British Property Federation (BPF) follows up on oral evidence to the Housing, Communities and Local Government Committee regarding pre-legislative scrutiny of the Draft Commonhold and Leasehold Reform Bill. The BPF expresses serious concerns about the proposed £250 ground rent cap, arguing it is disproportionate to the problem it aims to solve and will damage investor confidence and pension funds. It supports commonhold reform but warns against repeating mistakes from 2002 legislation, and raises concerns about building safety funding and housing-with-care schemes.
Key findings
- BPF argues the £250 ground rent cap lacks evidence: no data shows rents above £250 categorically prevent mortgage availability, and mortgage lenders already finance properties with varying percentage restrictions.
- The cap creates a windfall for wealthy property owners in prime locations while potentially harming pension funds and charities that invested in ground rents as fixed-income assets worth £10–12 billion.
- Ground rents are already regulated through the 1999 Notice of Rent Regulations, 2015 Consumer Rights Act, and the 2019 Public Pledge for Leaseholders.
- Freeholders use ground rent income to fund cladding remediation shortfalls; the cap will undermine financial models supporting building safety work, risking freeholder insolvency and leaving leaseholders in unsafe buildings.
- BPF supports commonhold reform but warns against repeating 2002 failures; recommends sequenced implementation: ban new leasehold flats first, then develop conversion provisions. Missing from the Draft Bill: mandatory managing agent regulation and enhanced service charge transparency, which are leaseholders' primary complaints.
Tone
AdversarialTopics
Key actors
British Property Federation, Housing, Communities and Local Government Select Committee, Government, Law Commission, Associated Retirement Community Operators, Competition and Markets Authority, Property Ombudsman, Nationwide
Notable line
“… cap, as proposed, represents an unprecedented retrospective interference in existing economic assets that were acquired in good faith.”
Key Quotes
“The Draft Bill will not bring leasehold to an end in the short term, and fostering a sense of crisis among the majority of leaseholders, for whom the tenure works well, does not serve the public interest.”
“No evidence has been presented to demonstrate that ground rents above £250 categorically prevent mortgage availability.”
“… the primary transfer of asset value occurs in 2028 when the cap takes effect, not in 40 years' tim e, and secondly, that fixed-income investors cannot simply ' adjust ' their investments.”
“Regulatory certainty is a principal determinant of where investors choose to deploy capital. The proposed cap – and the introduction of the Draft Bill itself – sends a signal to investors, not only in the ground rent sector but across UK asset classes, that the Government is willing to interfere retrospectively with legitimate …”
“… freeholders have relied on ground rent income to fund cladding remediation shortfalls not covered by Government subsidy schemes, and to meet their obligations under Grant Funding Agreements.”
“The 2002 commonhold legislation failed because it was not sufficiently prepared and lacked the supporting infrastructure and market confidence to work in practice. The same mistakes must not be repeated.”
“The central complaints leaseholders bring to the Property Ombudsman, and that the Committee noted constituents raise with them, relate not to ground rents or tenure structure …”
Source · parliament.uk record ↗