Today the Labour Party launched its long-awaited proposals on leasehold and commonhold.
Labour’s reform package promises to bring to an end a racket by property opportunists and financiers to deprive ordinary families and new generations of the benefits of real home ownership.
The detailed 28-page report jointly launched by Shadow Housing Secretary John Healey MP and Shadow Housing Minister Sarah Jones MP can be read HERE.
The proposals set out two streams of work.
For prospective consumers homebuyers
The policy proposes:
- An immediate ban on the creation of new leasehold houses.
- Ending the sale of new-build flats as leasehold by the end of Labour’s first term in office and replacing leasehold with a revised form of commonhold, which is currently under independent review by the Law Commission.
For existing leaseholders
The proposals go much further than the current government which had originally pledged to bring forward proposals before the summer of 2018, but which have since been delayed or partly fallen away. The Labour proposals set out:
- Leaseholders would be able to individually or collectively buy their freeholds on leasehold houses and flats under a fixed formula paid to the landlord. A plan which seems to be a development on Justin Madders’s backbench ten-minute rule bill introduced the other year.
- Existing ground rents for those not buying their freehold would be capped at the lower of £250 per year or 0.1% of capital value which ever the lower. The cost of buying the freehold will be limited to 1% of the capital value of the home.
- Limits on fees and charges that can be made. This commitment seems to impact those living in freehold homes subject to what has become know as fleecehold charges.
These are by far and away the most radical proposals put forward by any party to bring to an end the abuses in the leasehold sector that have gone on for many decades.
Labour has set out plans to ban the sale of new private leasehold houses and flats in an overhaul of property ownership rules that could slash the costs for homeowners of buying their freeholds.
The Law Commission is currently reviewing the enfranchisement legislation. It has already made clear that it will be for the government to decide on the particular model of payment due to the landlord among the range of potential options. A fixed formula-type approach as now supported by the Labour Party is among the potential options set out by the Law Commission.
LKP is particularly pleased with the proposals to return to one of the very first issues we raised with the government in setting out ideas on how to make it easier to form residents groups.
While this may seem one of the less important proposals, LKP has always argued that without effective residents groups it is always difficult for leaseholders to act collectively in representing their interests.
It has emerged recently that the government either did hold information about how few residents groups exist or should have held that information. With raw data finally released by the government leasehold advisory service (LEASE) after many years, it shows that just 7.4 per cent of leaseholders contacting LEASE advised they had a residents’ association (no records were collected on the number of Recognised Tenants Associations). There has been just 661 enquiries on RTAs in the period 2014/15 to 2018/19.
Labour’s Shadow Housing Secretary, John Healey MP said:
“Leasehold is a symbol of our broken housing system, with millions of England’s homeowners feeling like they’ve bought their home but still don’t own it.
We need a revolution in rights for leaseholders. This consultation document sets out the next Labour Government’s ambition end the broken leasehold model for good.”
Labour’s Shadow Housing Minister, Sarah Jones MP said:
“Leaseholders have everything stacked against them. Too often they suffer extortionate fees, appalling service and restrictive contract terms, and no way to easily challenge them.
England is one of the only places in the world which has failed to move away from this feudal system. Across the world, modern alternatives like commonhold have flourished. Labour will improve and revitalise commonhold for flats, and make freehold mandatory for all new houses, as the Conservatives should have done years ago.”
Tenants will be given new powers to escape rip-off leases and soaring ground rents if Labour wins power, the party is promising. They would be able to buy freehold ownership of their home for just one per cent of the property value, instead of being charged tens of thousands of pounds.
Labour’s reform package has been the product of months of careful research, but the opposition party is still keen for feedback. As part of the technical consultation, they have posed eleven questions:
- Should there be any exemptions to the prohibition on new private leasehold properties, and if so what should they be?
- What changes need to be made to commonhold to ensure it can become the default tenure for new flats?
- Do you agree with our proposals to restrict ground rents to zero, or a peppercorn, for new build properties?
- Do you agree with our proposal to set the maximum ground rent chargeable at 0.1% of property value, with a cap of £250 a year?
- Do you agree with our proposed formula to allow leaseholders to buy the freehold to their home, or convert to commonhold?
- What should we define as a ‘longer lease’ for the purposes of a new, simple formula for enfranchisement?
- Do you agree that there should be a new route for redress for leaseholders suffering from unreasonable costs and conditions?
- What types of covenants or administration fees should be permitted and what is a reasonable level to charge?
- Do you agree with our proposals to abolish forfeiture on long leases?
- What more could be done to give leaseholders more control over management of their buildings?
- How can we best ensure effective management of commonhold or Right to Manage sites?
Leaseholders have until September 30 to respond. Emails should be sent to firstname.lastname@example.org
A Labour government would try to abolish leasehold ownership for all homes as part of radical plans to be put forward by shadow ministers today.More than four million homes in England are owned on a leasehold basis. The tenure has been subject to multiple scandals, with leaseholders subject to unfai