The case has renewed calls for the next government to abolish England’s centuries-old leasehold system, which campaigners say is “feudal” and “exploitative”.
A ground rent is a charge leaseholders have to pay so they can have a home on land they do not own and does not require a service in return.
Image: Derek Taylor owns his home but under the leasehold system, is required to pay rent to the owner of the land it is built on
The Tories promised to effectively abolish these charges in their 2019 manifesto, but the long-awaited legislation aimed at doing this now hangs in the balance following Rishi Sunak’s decision to hold a snap general election.
Derek, who has lived in the property for 50 years and paid off his mortgage, told Sky News: “We were asked to send £17,000 plus pounds and about a fortnight later we got a letter saying this amount is outstanding and if it’s not paid in five days, we have no course but to take you to court.
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“That caused a lot of upset because who can simply pay that amount of money?
“The letter upset me because it was very threatening. You wake up in the night and can’t get to sleep again because it’s on your mind.”
The letter was sent to Derek by solicitors Salter Rex on behalf of the freeholder Quadron. They did not respond to a request for comment.
‘Let down by government’
Image: The ground rent for these properties is now over £2,000 a year
It said £17,169 is outstanding on his account and if he does not pay “we will have no alternative but to commence legal proceedings”. It added that a £120 administration fee will be charged on top of that if no money is paid within five days.
The ground rent increase is allowed under the terms of Derek’s lease, drawn up in the 1960s, which said the fee could be reviewed in March 2018 and every 50 years after in line with the annual value of the land.
Derek and his neighbours, who were not aware of the clause, took the case to arbitration but it was ruled that the rise was allowed and the lease agreement “includes no requirement for the level of rent to be “reasonable”.
Derek, a former print worker, said: “It’s simply because they can. Legally that may be so but whatever way you look at it we can’t see that this is fair.
“We feel let down (by the government). This has been going on so long, it should have been sorted out a long time ago and when this bill does eventually get passed we don’t know if it will apply to our situation at all.”
Derek is due to meet his local MP Bim Afolami, who is also the economic minister, next week to discuss the issue.
In a newsletter to constituents seen by Sky News, Mr Afolami said he was aware of the situation and the government is “committed to removing these terrible practices”.
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2:35
Labour’s Barry Gardiner says leaseholders face ‘exorbitant’ ground rents for ‘no service’
‘Leaseholders in limbo’
At the last election in 2019, the Tories promised to reduce ground rent to a zero “peppercorn” rate.
But the Leasehold and Freehold Reform Bill, which was meant to be the mechanism for doing this, was only introduced to the House of Commons in November last year and is yet to be given Royal Assent.
The policy will be considered in the House of Lords later as part of the “wash-up” period, when the final bills that will become law are rushed through parliament before it is dissolved for an election.
The National Leasehold Campaign (NLC) has welcomed this news, amid fears the bill would be killed, but said the “devil is in the detail” as it is not clear if a cap on ground rents will be included in the final draft of the legislation.
This was due to be added to the bill as an amendment, but there have been reports for months that the Treasury wants to block the policy because it is worried about spooking insurers and pension funds that have amassed vast freehold portfolios.
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Katie Kendrick, co-founder of the NLC told Sky News: “Leaseholders remain in a state of ‘Leasehold Limbo’ wondering if they will be helped by this bill.
“It remains to be seen how far this bill will go but rest assured that there will still be some way to go to achieve our goal of abolishing Leasehold and a move to Commonhold.
“Abolishing the medieval leasehold system must be in all manifestos and any incoming government must prioritise this.”
Where do the parties stand on leasehold reform?
The issue could be a dividing line in the general election campaign, amid a wider housing crisis which at its heart is a problem of insufficient supply and spiralling affordability.
Housing Secretary Michael Gove initially said he wanted to abolish the system, calling it “feudal”, but his bill only went as far as to ban leasehold on the sale of new houses.
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0:44
Gove speaking in 2023 says he wants to abolish ‘unfair’ leasehold system
Houses make up a small portion of around five million leasehold properties across England, most of which are flats.
Other provisions of the legislation include making it cheaper and easier for people to extend their leases, buy the freehold and gain the right to manage their buildings.
But whatever measures are ultimately enacted, for some leaseholders it will be too little too late.
Freeholders ‘cashing in’
Derek’s neighbour David Pickett ended up borrowing £54,000 from family members to change the terms of his lease so that moving forward, his ground rent will be £0.
The rise in ground rent risked leaving him trapped as it significantly devalued the property he poured his savings into, putting him at risk of negative equity and reducing his chances of selling it.
Image: David Pickett had to pay £54,000 to renegotiate his lease and remove the ground rent clause
The payment included £15,000 in backdated ground rent and a £34,000 premium – a fee David says is around seven times higher than three other neighbours in identical properties who renegotiated their lease terms in 2016. They have a fixed ground rent of £100 a year and paid a premium of between £4,000 to £5,000.
However, for communications worker David that was not an option.
“Everything is done in mathematical formulas that are hard to understand, the language they use is so cold,” he said.
The 31-year-old said delays to leasehold reforms have allowed freeholders to “cash in” on people like him and Derek.
“Part of the reason we delayed to arbitration and tried to push this as far back as possible is because we thought these reforms were coming soon and when we were getting legal advice they were talking about this bill so we always had this hope.
“Now it just feels like that flame has been extinguished.
“It feels like there is nowhere to turn for help and anyone that can help wants £200 an hour.”
Nigel Farage has told Sky News he would allow some essential migration in areas with skill shortages but that numbers would be capped.
The Reform UK leader said he would announce the cap “in four years’ time” after he was pressed repeatedly by Sky’s deputy political editor Sam Coates about his manifesto pledge to freeze “non-essential” immigration.
It was put to Mr Farage that despite his criticism of the government’s migration crackdown, allowing essential migration in his own plans is quite a big caveat given the UK’s skills shortages.
However the Clacton MP said he would allow people to plug the gaps on “time dependent work permits” rather than on longer-term visas.
He said: “Let’s take engineering, for argument’s sake. We don’t train enough engineers, we just don’t. It’s crazy.
“We’ve been pushing young people to doing social sciences degrees or whatever it is.
“So you’re an engineering company, you need somebody to come in on skills. If they come in, on a time dependent work permit, if all the right health assurances and levies have been paid and if at the end of that period of time, you leave or you’re forced to leave, then it works.”
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28:27
‘We need to reduce immigration’
Reform’s manifesto, which they call a “contract”, says that “essential skills, mainly around healthcare, must be the only exception” to migration.
Pressed on how wide his exemption would be, Mr Farage said he hopes enough nurses and doctors will be trained “not to need anybody from overseas within the space of a few years”.
He said that work permits should be separate to immigration, adding: “If you get a job for an American TV station and you stay 48 hours longer than your work permit, they will smash your front door down, put you in handcuffs and deport you.
“We allow all of these routes, whether it’s coming into work, whether it’s coming as a student, we have allowed all of these to become routes for long-term migration.”
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1:51
Sky’s Sam Coates questions PM on migration
Asked if he would put a cap on his essential skills exemption, he said: “We will. I can’t tell you the numbers right now, I don’t have all the figures. What I can tell you is anyone that comes in will not be allowed to stay long-term. That’s the difference.”
Pressed if that was a commitment to a cap under a Reform UK government, he suggested he would set out further detail ahead of the next election, telling Coates: “Ask me in four years’ time, all right?”
Mr Farage was speaking after the government published an immigration white paper which pledged to ban overseas care workers as part of a package of measures to bring down net migration.
The former Brexit Party leader claimed the proposals were a “knee jerk reaction” to his party’s success at the local elections and accused the prime minister of not having the vigour to “follow them through”.
However he said he supports the “principle” of banning foreign care workers and conceded he might back some of the measures if they are put to a vote in parliament.
He said: “If it was stuff that did actually bind the government, there might be amendments on this that you would support. But I’m not convinced.”
The combination of full prisons and tight public finances has forced the government to urgently rethink its approach.
Top of the agenda for an overhaul are short sentences, which look set to give way to more community rehabilitation.
The cost argument is clear – prison is expensive. It’s around £60,000 per person per year compared to community sentences at roughly £4,500 a year.
But it’s not just saving money that is driving the change.
Research shows short custodial terms, especially for first-time offenders, can do more harm than good, compounding criminal behaviour rather than acting as a deterrent.
Image: Charlie describes herself as a former ‘junkie shoplifter’
This is certainly the case for Charlie, who describes herself as a former “junkie, shoplifter from Leeds” and spoke to Sky News at Preston probation centre.
She was first sent down as a teenager and has been in and out of prison ever since. She says her experience behind bars exacerbated her drug use.
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Image: Charlie in February 2023
“In prison, I would never get clean. It’s easy, to be honest, I used to take them in myself,” she says. “I was just in a cycle of getting released, homeless, and going straight back into trap houses, drug houses, and that cycle needs to be broken.”
Eventually, she turned her life around after a court offered her drug treatment at a rehab facility.
She says that after decades of addiction and criminality, one judge’s decision was the turning point.
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“That was the moment that changed my life and I just want more judges to give more people that chance.”
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0:22
How to watch Sophy Ridge’s special programme live from Preston Prison
Also at Preston probation centre, but on the other side of the process, is probation officer Bex, who is also sceptical about short sentences.
“They disrupt people’s lives,” she says. “So, people might lose housing because they’ve gone to prison… they come out homeless and may return to drug use and reoffending.”
Image: Bex works with offenders to turn their lives around
Bex has seen first-hand the value of alternative routes out of crime.
“A lot of the people we work with have had really disjointed lives. It takes a long time for them to trust someone, and there’s some really brilliant work that goes on every single day here that changes lives.”
It’s people like Bex and Charlie, and places like Preston probation centre, that are at the heart of the government’s change in direction.
“As far as I’m concerned, there’s only three ways to spend the taxpayers’ hard-earned when it comes to prisons. More walls, more bars and more guards.”
Prison reform is one of the hardest sells in government.
Hospitals, schools, defence – these are all things you would put on an election leaflet.
Even the less glamorous end of the spectrum – potholes and bin collections – are vote winners.
But prisons? Let’s face it, the governor’s quote from the Shawshank Redemption reflects public polling pretty accurately.
It’s a phrase that is frequently used so carelessly that it’s been diluted into cliche. But in this instance, it is absolutely correct.
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Without some kind of intervention, the prison system is at breaking point.
It will break.
Inside Preston Prison
Ahead of the government’s Sentencing Review, expected to recommend more non-custodial sentences, I’ve been talking to staff and inmates at Preston Prison, a Category B men’s prison originally built in 1790.
Overcrowding is at 156% here, according to the Howard League.
Image: Sophy Ridge talking outside Preston Prison
One prisoner I interviewed, in for burglary, was, until a few hours before, sharing his cell with his son.
It was his son’s first time in jail – but not his. He had been out of prison since he was a teenager. More than 30 years – in and out of prison.
His family didn’t like it, he said, and now he has, in his own words, dragged his son into it.
Sophie is a prison officer and one of those people who would be utterly brilliant doing absolutely anything, and is exactly the kind of person we should all want working in prisons.
She said the worst thing about the job is seeing young men, at 18, 19, in jail for the first time. Shellshocked. Mental health all over the place. Scared.
And then seeing them again a couple of years later.
And then again.
The same faces. The officers get to know them after a while, which in a way is nice but also terrible.
Image: Sophy Ridge talking to one of the officers who works within Preston Prison
The £18bn spectre of reoffending
We know the stats about reoffending, but it floored me how the system is failing. It’s the same people. Again and again.
The Sentencing Review, which we’re just days away from, will almost certainly recommend fewer people go to prison, introducing more non-custodial or community sentencing and scrapping short sentences that don’t rehabilitate but instead just start people off on the reoffending merry-go-round, like some kind of sick ride.
But they’ll do it on the grounds of cost (reoffending costs £18bn a year, a prison place costs £60,000 a year, community sentences around £4,500 per person).
They’ll do it because prisons are full (one of Keir Starmer’s first acts was being forced to let prisoners out early because there was no space).
If the government wants to be brave, however, it should do it on the grounds of reform, because prison is not working and because there must be a better way.
Image: Inside Preston Prison, Sky News saw first-hand a system truly at breaking point
A cold, hard look
I’ve visited prisons before, as part of my job, but this was different.
Before it felt like a PR exercise, I was taken to one room in a pristine modern prison where prisoners were learning rehabilitation skills.
This time, I felt like I really got under the skin of Preston Prison.
It’s important to say that this is a good prison, run by a thoughtful governor with staff that truly care.
But it’s still bloody hard.
“You have to be able to switch off,” one officer told me, “Because the things you see….”
Staff are stretched and many are inexperienced because of high turnover.
After a while, I understood something that had been nagging me. Why have I been given this access? Why are people being so open with me? This isn’t what usually happens with prisons and journalists.
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1:10
Probation centres answer to UK crime?
That’s when I understood.
They want people to know. They want people to know that yes, they do an incredible job and prisons aren’t perfect, but they’re not as bad as you think.
But that’s despite the government, not because of it.
Sometimes the worst thing you can do on limited resources is to work so hard you push yourself to the brink, so the system itself doesn’t break, because then people think ‘well maybe we can continue like this after all… maybe it’s okay’.
But things aren’t okay. When people say the system is at breaking point – this time it isn’t a cliche.