Leasehold reforms risk handing billions to wealthy investors in “perverse windfall”
With the Kings Speech expected to include a further reform bill to ground rents MPs urged to confront “unintended consequences”
Justice for Property Rights today warns that proposals to abolish or sharply cap ground rents and remove marriage value risk triggering a multi-billion-pound transfer of wealth to some of the richest property owners in Britain and overseas, in what campaigners are calling a textbook case of the law of unintended consequences.
Economic analysis shows that changes intended to help ordinary leaseholders could instead deliver an estimated £8.7 billion windfall to property investors, including buy-to-let landlords and overseas owners including sanctioned individuals.
The research highlights a critical flaw at the heart of current reform proposals: a significant proportion of leasehold properties are not owner-occupied but held as investment assets.
While Ministers have framed leasehold reform as a cost-of-living intervention, the evidence suggests the gains will not flow evenly to struggling homeowners.
Instead:
Buy-to-let landlords stand to receive billions in unearned gains as marriage values and ground rent liabilities are removed or reduced.
Foreign and ultra-wealthy investors are also among the likely beneficiaries, due to their substantial holdings in leasehold property.
The policy risks rewarding absentee ownership, rather than supporting those living in their homes.
Any change would require the retrospective rewriting of existing contracts in which both parties received legal advice, thus undermining Britain’s global reputation for the rule of law and a safe investment environment.
Damages claims against the government will ultimately be borne by the taxpayer.
A spokesperson for Justice for Property Rights stated: “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.”
Justice for Property Rights argues this is a classic example of well-intentioned reform producing the opposite of its intended effect. By transferring value embedded in ground rents directly to leaseholders without targeting, risks:
Delivering windfall gains to those already benefiting from property investment
Exacerbating inequality between owner-occupiers and investor landlords
Undermining confidence in the UK’s property market through sudden, uncompensated value shifts
Analysis suggests the current approach to leasehold reform risks triggering a profound market distortion: while buy-to-let landlords and investors could receive an estimated £8.7 billion windfall from the removal of ground rents, the same reforms could simultaneously wipe out up to £18.7 billion from ground rent asset values, undermining investment across the housing sector.
Crucially, because a significant share of leasehold properties is investor-owned, including by absentee landlords and overseas wealth, the financial gains are unlikely to flow primarily to struggling homeowners, exposing what campaigners describe as a stark example of the law of unintended consequences.
A spokesperson for Justice for Property Rights added, “We support meaningful leasehold reform. But reform must be fair, targeted and economically responsible - not a blunt instrument that rewards absentee ownership and will ultimately lead to a regressive outcome. Ground rents were seen by savers much like UK government bonds, that is why so many of us trusted our savings and pensions would be safe: surely no UK government would ever dream of retrospectively undermining British contract law?”
Justice for Property Rights is urging policymakers to think before bringing in new legislation including:
Action to address genuinely unfair or exploitative lease terms
A balanced approach to support the transition to commonhold
Clear safeguards to protect existing lawful property rights
Fair compensation where government policy changes materially affect those rights
Notes to editors
Justice for Property Rights is a newly established campaign created to represent small-scale property investors, retirees, shared freeholders and other individuals with lawful existing interests in residential freeholds.
The campaign supports proportionate leasehold reform and the development of commonhold as a long-term alternative.
It is focused on ensuring that reforms distinguish between abusive practices and legitimate, long-standing arrangements.
The group is particularly concerned about the potential retrospective impact of proposed changes on individuals who invested in good faith under existing legal frameworks.
‘Marriage Value’ is the legal definition of the increase in value of a flat after a lease extension, which is currently equally split between freeholder and leaseholder. The government proposes giving 100% of it to the leaseholder.