Product Promotion Network

PPI-style compensation scheme for leaseholders being considered

Labour MP Justin Madders has secured a second reading of a Bill that aims to introduce a compensation scheme for existing home owners with unfair leasehold terms. Madders said his Leasehold Reform Bill would also seek to introduce a statutory pricing model for purchasing a leasehold at no more than 10 times the annual ground rent. Such a system would involve a simple formula based on a property’s ground rent and the number of years left on its lease, along with a cap.

Ground rent is usually fixed in the lease, but some leases – especially among new build homes – contain a rent escalation clause which causes the ground rent to increase at intervals. Problems with new-builds[1] are common, so know that you’re not alone and you do have rights.

Compensation for leaseholders?

A second reading of the Bill is scheduled for 2 February, where it will be debated further. It’s not known what the redress for mis-sold leaseholds could be.

So far, banks have paid out ?28.2bn in compensation for the PPI scandal[2] since January 2011, with the deadline for claims now set at 29 August 2019.

In July, the government launched an eight-week consultation into ‘unfair leasehold practices’ – with a particular focus on the sale of new-build homes as leaseholds and spiralling ground rent clauses.


  1. ^ Problems with new-builds (
  2. ^ compensation for the PPI scandal (

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