Harry Scoffin is speaking on Tuesday at the Pension PlayPen (11th Nov) and has news for us about the difficulties he has had campaigning on behalf of those with leasehold agreements that are being charged by freeholders for services that don’t exist (ground rents).
He tells me
Two major players in the lobbying scene, working to save residential ground rents are M&G plc and Rothesay.
M&G (formerly Prudential)
M&G plc pressured the last government, meeting then chancellor Jeremy Hunt to lobby him on ground rent as the November 2023 – January 2024 consultation on ground rent reform was ongoing, according to government transparency disclosures
They also met the then housing minister twice while ground rent reforms of peppercorn or a £250 per annum cap were still being deliberated over in government, in February and March 2024, according to “DLUHC: ministerial meetings, January to March 2024”
Now Labour are in power, M&G raised concern about the July 2024 King’s Speech announcement of a Leasehold and Commonhold Reform Bill, where action on ground rents will go, saying the legislation will result “in a significant reduction in the cash flows that can be generated” from leasehold properties. They were a client of Labour-linked lobbying shop Global Counsel, who lobbied for them between July and September 2024, and M&G sponsored the Prime Minister’s high-profile business investment forum.
This was reported by Westminster blog, Guido Fawkes: More recently, the government has bestowed an honour, a KT, or Knights Bachelor, on M&G’s Chair, Edward Braham, for services to Corporate Law and to Business , while only last month M&G was featured in a government press release on plans to unlock British pension funds for regional growth with their CEO quoted
M&G invests in bonds backed by ground rent payments from residential leasehold properties. If the borrower or freeholder can’t repay, investors are instead repaid from the ground rent income. According to M&G’s half year results, residential ground rents make up only a tiny fraction of the company’s overall investments, little more than a rounding error
Rothesay
Rothesay’s 2024 report suggests they are hoping the secondary legislation for enfranchisement changes under the Leasehold and Freehold Reform Act 2024 — measures the Labour government had pledged to consult on in summer 2025 but has now delayed — may still come out favourable to their interests. It says:
Rothesay also invests in long-dated assets secured on cashflows from residential freehold properties. In 2024, the UK Parliament passed the Leasehold and Freehold Reform Act 2024 which impacts some cashflows derived from the underlying freehold properties. These legislative changes were anticipated and therefore the valuation of these secured assets had reflected these changes in advance of legislation being passed.
“Uncertainty remains surrounding the secondary legislation that is required to implement the Act, in addition to any further future legislative or regulatory changes which may further impact the residential freehold sector. The valuation of the assets continues to reflect legislative uncertainty informed by scenario analysis based on statements from the Government and wider discussions, including with legal experts and other market participants.”
It is public knowledge that Rothesay has lent money to at least two members of the leading freeholder lobby group, the Residential Freehold Association — E&J and Consensus Business Group – with those loans secured by a debenture against those freeholders’ ground rent income.
Ultimately, leaseholds and ground rent income have long been targeted by policymakers, who recognise that allowing third-party investors to extract excessive payments from captive leaseholders, with no relation to any service provided, is not only prone to abuse and can make homes un -mortgageable or even unsellable, but is also fundamentally immoral.
The Pensions Regulator
Harry has dug deep to get to the truth of the situation , asking the Pensions Regulator whether pension are, as the Freeholder Association intimate, dependent on ground rents being maintained at often extortionate rates (mine is).
Here is the Pension Regulator’s response, in summary the answer is “no pensions are not dependent on ground rents and don’t benefit from them very much at all”. Of course retirement savings do exist outside TPR’s knowledge, most notably SIPPs for the wealthy.
Society of Pension Professionals
Harry also points to comments from The Society of Pension Professionals last year:
Its Investment Committee Chair Simon Daniel’s influence is of interest – his comments were quoted in full by Baroness Pinnock in the debate on the Bill yesterday:
“The Society of Pension Professionals—which the noble Lord, Lord Truscott, referred to six hours ago—has examined this issue as a result of much being made about the potential impact on pension funds of reducing ground rents to either £250 or zero. The following is a statement from the Society of Pension Professionals:
“Freeholders are already prevented from charging ground rents on new long leases (of more than 21 years), so it’s perhaps understandable that the government wants something similar for existing long leaseholders. The government estimates that capping ground rents at £250 a year would decrease the value of affected property assets by £14.6 bn or £27.3 bn if rents are reduced to a peppercorn.
If these proposals become law, there may be some short-term impact on pension fund investors through asset values being written down. Certain pension funds may also be impacted where they own freehold titles directly, although that will be less common. The effect of these proposed adjustments is likely to be more significant for such investors than the loss of annual ground rent income over the term of the lease”—#
In short, the Ground Rent business is not a pension issue to any great degree and to suggest as the Freeholders do, that losing the right to exorbitant Ground Rents puts pensioner pensions at risk is a joke,
I emphasise this next part—
“but the scale relative to total assets is probably not that significant for most in the long-run”
That is an authoritative statement, and I would like to hear a full response from the Minister—probably in writing given the late stage of the evening—as this reform is a critical part of leasehold reform. Before Report, we need to see the detailed proposals from the Government and a full explanation of their reasons.
In conclusion, these Benches want the iniquitous system of ground rents to be abolished or at least reduced by introducing a peppercorn as the set fee. I beg to move.”
Unlike others (Pensions UK) there was no backtracking or issuing of different statements from The Society of Pensions Professionals ; they weighed in on the side of leaseholders and common sense!