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Government will not abolish leasehold ownership, say reports
The government will not bring forward plans to abolish leasehold ownership and will instead reform the existing system, according to reports.
The Guardian newspaper reported yesterday that plans will involve a cap on ground rents, more powers for tenants to choose their own property management companies and a ban on building owners forcing leaseholders to pay any legal costs incurred as part of a dispute.
But it will stop short of banning the tenure – which sees residents take a mortgage to buy a long lease of a property ultimately owned by a freeholder – entirely.
Housing secretary Michael Gove told The Sunday Times in January that leasehold is “an outdated feudal system that needs to go”.
According to The Guardian, his plan to abolish the ownership structure was quashed by Number 10, which felt it was too ambitious and unachievable before the 2024 election.
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Labour shadow housing secretary Lisa Nandy has previously backed scrapping leasehold.
Matthew Pennycook, the party’s shadow housing minister said on Twitter yesterday that Labour remained committed to “enacting the Law Commission’s recommendations on enfranchisement, commonhold and right to manage in full”.
The focus of these reports, published in July 2020, was to improve the leasehold system until a time where it is no longer needed and commonhold – where blocks of flats are owned jointly by the residents – replaces it.
The vast majority of flats in the UK are sold under a leasehold system, where residents buy a long lease on the flat which is still owned by the freeholder.
But the system has been criticised for allowing exploitation of leaseholders, who pay ground rent to the freehold investor and have no say over expensive works to their building for which they are billed.
This has come particularly sharply into the spotlight in recent years as leaseholders are hit with fire safety costs resulting from the building safety crisis that has emerged since the Grenfell Tower fire.
As the years run down on the lease, they are also subject to costly renewals, with many mortgage lenders unwilling to lend on a term of less than 80 years.
Shared ownership affordable housing tenures – in both flats and houses – are also sold as leasehold properties.
A spokesperson for the Department of Levelling Up, Housing and Communities said: “We are determined to better protect and empower leaseholders to challenge unreasonable costs.
“We have already made significant improvements to the market – ending ground rents for most new residential leases and announcing plans to make it easier and cheaper for leaseholders to extend their lease or buy their freehold.
“In line with our manifesto commitment, we will bring forward further leasehold reforms later in this parliament.”
