This article is part of The Home Front, a special report on housing in Europe, from POLITICO’s Global Policy Lab: Living Cities. Sign up here.

LONDON — Britain touts itself as a model property-owning democracy, but its leaseholders might disagree.

The United Kingdom’s distinctive system of flat ownership — it rarely exists outside of England and Wales — dates back centuries. Residents occupy their property for a fixed period known as “leasehold,” but they don’t actually own the land on which it sits.

When the term ends, ownership reverts to the landlord. And residents are lumped with excessive service charges (meant to cover building maintenance) and high ground rents, which can plunge those living in them into financial distress.

U.K. government data indicates there are almost 5 million leasehold properties in England alone, comprising about 20 percent of the country’s housing stock.

The practice is deeply controversial — yet Britain still can’t shake it off.

“Leasehold has almost been an unhappy legacy of political stability,” said Harry Scoffin, founder of Free Leaseholders. “The fact that we’re talking about this hundreds of years later is just obscene.”

On the ground 

The U.K.’s capital is at the leasehold forefront. “London has the most leasehold property of anywhere in the U.K.,” said Jon Tabbush, senior researcher at Centre for London. It accounts for about 36 percent of London’s total housing stock and 62.8 percent of its flats.

Leasehold’s sway in London covers both historic and redeveloped neighborhoods.

Tabbush highlighted its prominence in “extremely established,” elite boroughs like the City of Westminster and the Royal Borough of Kensington and Chelsea, with Central London boroughs comprising the highest proportion of leasehold transactions.

Meanwhile, redeveloped areas — such as Battersea — have the largest absolute number of leasehold transactions due to “significant new flat construction.” Abolishing such an entrenched system is difficult, to say the least. 

Despite most new leasehold properties imposing no ground rent, its continuation in older flats is a source of frustration. Ground rent has “no service or benefit,” Scoffin says, arguing that unnecessary payments simply prevent people from contributing to the broader economy.

Proponents of leasehold, however, argue that abolishing ground rents could lead to a financial disaster.

“If ground rent is taken down to a peppercorn, there will be freehold entities that become technically insolvent very quickly,” said Mick Platt, director or the Residential Freehold Association (RFA). Property costs would increase, he warned — and the quality of life for residents would tumble if they lack the choice of a professional freeholder taking responsibility for the building.

Unfinished revolution

British politicians have long promised action on leasehold — but it’s an unfinished job as the country heads for an election in July.

The Leasehold and Freehold Reform Act, which became law days after Britain’s election was called, bans the sale of new leasehold houses in almost all circumstances.

Outgoing Conservative Levelling-Up Secretary Michael Gove had originally planned to abolish leasehold entirely, saying in January 2023 it was a “feudal system that needs to go.” In May, Gove said annual ground rents would be capped at £250.

The final legislation, however, didn’t outright abolish leasehold for flats — or set a cap on ground rents.

Tabbush said he thought the legislation was being left for a likely next Labour government, arguing the Conservatives had internally “become hostile to reform.” Sky News research in April found 83 Tories had earned over £10,000 a year as landlords since December 2019, compared with 18 Labour MPs and four Liberal Democrats.

Leasehold supporters, however, have their own criticisms of the new law. Platt of the RFA said his organization had tried convincing lawmakers of leasehold’s benefits and called for the bill’s abandonment. Platt spoke with peers in the House of Lords who said how “badly drafted” the bill was and “how poor the parliamentary process has been.” 

Life after leasehold?

Commonhold — a system in which residents own their flat units and communal parts of the block are collectively owned — is the international norm. Yet implementing some version of it in Britain remains an uphill struggle. 

“You’re basically the ones that appoint a managing agent who will then tend to the building and do the day-to-day management of the block,” said Scoffin of commonhold. That, he said, means tenants would have a personal interest in ensuring a well-maintained property. “When you buy a flat, you own it, you control it and you’ve got democratic self-rule.” 

The security of owning a flat indefinitely could, however, increase property prices, putting people off the traditional first rung of the housing ladder. Leasehold supporters use potential higher costs to argue for the system’s continuation; Platt said ground rent — spread across the duration of a lease — ultimately reduces flat prices.

The calling of a snap general election, in which the opposition Labour Party is expected to secure a landslide victory, has put the issue of leasehold back in the spotlight. While Labour is committed to abolishing leasehold — its manifesto pledges to “finally bring the feudal leasehold system to an end” — it has backed off an earlier commitment to do so within its first 100 days of government.

Expect the lobbying to continue if Labour does win. Platt said the RFA is keen to work with Labour on improving legislation. “We can really do something quite exciting that will hugely benefit residents because that’s what we all want,” he argued.

Come July 4, leaseholders through sheer numbers could form a substantial voting bloc — even if their home-owning brethren ultimately outnumber them.

“This is millions of people, many of whom are … single-issue voters,” said Scoffin. “This issue alone will decide who they vote for.”