Leasehold campaigners have warned that government plans to introduce exemptions could lead to disputes and mean some leaseholders pay more than Labour’s promised £250 ground rent cap.

Its Commonhold and Leasehold Reform Bill plans to cap ground rents, changing to a peppercorn after 40 years, but ministers are now considering an exemption for ‘quid pro quo’ leases - arrangements where buyers agree to pay higher ground rents in exchange for a lower purchase price or a cheaper lease extension.

The Leasehold Knowledge Partnership believes creating an exemption for quid pro quo leases – beyond those identified and remedied by the Law Commission – risks years of litigation, uncertainty and opportunities for abuse.

Liam Spender, LKP trustee and city solicitor, (pictured left) adds that there’s a real danger that iniquities in the current leasehold system could persist after the promised reforms.

The government acknowledges the potential for abuse in its consultation and says: “The government is also conscious that any exemption risks creating uncertainty for both leaseholders and freeholders, while also adding complexity and additional costs in determining whether leases are quid pro quo leases.”

Assert

As the government recognises, unscrupulous freeholders may simply assert that leases are quid pro quo, says Spender. “The most likely way they will do this is by continuing to issue ground rent demands above £250 even when the cap kicks in. If no-one objects, or they succeed in ignoring or batting away questions, then they will keep receiving the full ground rent.”

A Ministry of Housing, Communities and Local Government spokesman tells The Telegraph: “We’re aware of some rare cases where higher ground rents are voluntarily negotiated in return for a lower upfront cost, and we are seeking further views to ensure the cap is fair for all parties.

Limited

“We’re clear that any exemption would be strictly limited to these voluntarily negotiated leases, and would come with strong safeguards to prevent misuse or avoidance of the cap.”

Ground rent costs an average of £298 a year, according to government data. The cap aims to crack down on these charges, which in some cases doubled every year and left leaseholders trapped in unaffordable or escalating contracts that made properties difficult to sell or remortgage.

The consultation runs until 27^th August.

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