Proposed leasehold reforms risk delivering a multi-billion pound windfall to wealthy investors rather than supporting owner-occupiers according to new analysis.
Campaign group Justice for Property Rights said plans to abolish or cap ground rents and remove marriage value could result in an estimated £8.7bn transfer of wealth to landlords and overseas investors.
The warning comes ahead of an expected reform bill on ground rents in the next King’s Speech, with MPs being urged to consider the unintended consequences of the changes.
The analysis suggests a significant proportion of leasehold properties are held as investment assets rather than owner-occupied homes, meaning financial gains from reforms may not flow to those most in need.
UNEARNED GAINS
Justice for Property Rights says buy-to-let landlords could benefit from “unearned gains” as ground rent liabilities and marriage value are reduced or removed. Overseas investors and ultra-wealthy owners are also likely to benefit due to their exposure to leasehold assets.
The group also warns that retrospective changes to existing contracts could undermine confidence in the UK property market and its reputation as a stable investment environment. It adds that any compensation claims linked to reform could ultimately fall to taxpayers.
Separate analysis cited by the group suggests that while investors could gain £8.7bn, up to £18.7bn could be wiped from the value of ground rent assets, potentially creating wider market disruption.
UNINTENDED CONSEQUENCES
A spokesperson for Justice for Property Rights says: “This policy is being sold as a win for ordinary leaseholders. It risks becoming the largest unintended wealth transfer in living memory.
“A large share of leasehold homes is owned by buy-to-let investors – including non-doms and overseas wealth – so abolishing both ground rents and marriage value without fair compensation is wrong. This is not a progressive reform. It is a windfall.”
The group says reform should focus on tackling unfair lease terms, supporting a transition to commonhold and ensuring fair compensation where policy changes materially affect property rights.
