By Harry Scoffin
Labour will be tougher than the Tories when it comes to “feudal” leaseholds, shadow levelling-up secretary Lisa Nandy has insisted in reply to controversial government plans to boost homeownership through a Right to Buy “benefits to bricks” scheme for welfare claimants in housing association stock.
The opposition party’s intervention comes following widespread criticism that the promised second tranche of leasehold reform was mysteriously dropped from the Queen’s Speech last month despite being earmarked for the third session of parliament by ministers Michael Gove and Lord Greenhalgh.
Nandy and Labour are urging government to bring in a Leaseholder Reform Bill to not only ban the sale of new leasehold houses (a five-year-old Conservative policy that has yet to be turned into law) “with immediate effect after the Bill receives royal assent”, but also introduce a “workable system” so that “private leasehold flats” can be converted into fairer commonholds all at once.
Lisa Nandy has denounced the UK’s leasehold laws as “feudal” and “archaic” and urged the government to reform the system in a debate marking the fifth anniversary of the Grenfell Tower fire. Addressing the Commons this afternoon, the Shadow Levelling Up Secretary argued that ending the “arcane rules” for leaseholders could “give power and a voice back to people in their homes and their own communities”.
Labour parking its tanks on Tory homeownership lawn last week has chivvied prime minister Boris Johnson and levelling-up secretary Michael Gove into reviving reform talk and stressing their pro-leaseholder credentials to the 4.6 million households whose hopes of liberation via “easier, faster, fairer and cheaper” leasehold enfranchisement were dashed in the Queen’s Speech last month.
On Thursday June 9, in a speech aimed at restoring his fortunes after narrowly surviving a confidence vote a few days earlier, Johnson unveiled an eye-catching leasehold reform policy that offers freeholds at knock-down prices to leaseholders “trapped with egregious, escalating ground rents”, with discounts promised as high as 90 per cent off.
The resolutely pro-consumer measure was not put forward by the Law Commission or proposed by parliamentarians or leaseholder groups and suggests a sudden change of heart by Number 10 towards leasehold reform, perhaps conscious of the electoral dividends that may flow from successful policy delivery in this area as well as the Thatcher connection.
“In this Parliament we will supercharge leaseholders’ ability to buy their freehold, helping 4.6 million households genuinely to own their own home,” Johnson boasted to an audience in Blackpool.
The hard-hitting leasehold section of the comeback speech was overshadowed by the prime minister’s announcement of “benefit to bricks”, the proposed Right to Buy extension to housing association tenants on benefits, which has been criticised for being a uniquely English take on subprime mortgage lending and for risking the depleted social housing stock. Where the property is a flat, the low-income rental tenants will merely become mortgaged leasehold tenants with service charges and major works bills to contend with.
Even though it is more than 40 years old, the changes wrought by Margaret Thatcher’s right-to-buy policy can still be felt in Britain today. It established the story the Conservative party continues to tell about itself, of being crusaders for opportunity for all; it transformed the way people thought about what it meant to own or rent their homes; and it shifted almost 2m social housing dwellings into private hands.
But it was Labour on the Wednesday evening who pre-empted the prime minister’s big housing speech by launching an offensive on his government’s perceived stalling of leasehold and commonhold reform, putting out a press release (see below) that was picked up by Politico’s influential London Playbook briefing the next morning:
“Not good enough: Labour is this morning calling on the government for faster action to give renters and leaseholders more housing peace of mind. The opposition wants a second leasehold reform bill to, among other things, put an end to the insane leasehold regime that exists in England and Wales but nowhere else in the world, and which allows rich landowners to fleece those who purchase flats or houses on their land.”
Press play to listen to this article Presented by Amazon. By EMILIO CASALICCHIO PRESENTED BY Send tips here | Subscribe for free | Listen to Playbook and view in your browser BIG SPEECH TIME: Boris Johnson will seek to reset his wounded premiership this afternoon with a big speech about what the Conservatives can do to help ease the cost of living crisis and help more Brits onto the housing ladder.
In comments circulated ahead of a parliamentary debate on social housing and building safety to mark five years since the Grenfell Tower tragedy and Johnson’s wide-ranging Blackpool housing speech, Labour’s shadow levelling-up secretary Lisa Nandy said:
“The arcane [leasehold] system we currently have denies far too many people power, control or even a say over things as fundamental as the safety, security and future of their own homes and communities. We’ve known for years that the [leasehold] system is broken, but the reforms that people have been crying out for have not happened.
“People shouldn’t have to wait any longer for basic rights over their own homes. The government needs to tear up these rules and immediately bring forward new laws that end this scandal.”
In the Commons on June 9, Nandy paid tribute to the work of the Father of the House and longstanding Conservative APPG co-chair, Sir Peter Bottomley, and recounted first coming into contact with this policy agenda in 2001 – some two decades ago – as a researcher for the then Member of Parliament for Walthamstow, Neil Gerrard, who was one of many lawmakers poring over the Labour government’s flagship Commonhold and Leasehold Reform Bill, which became the 2002 Act:
“These debates were happening here in this place at that time, a full decade before I was elected to Parliament. They were happening when I was working for Centrepoint, the fantastic organisation to which Members have paid tribute today.
“Parliament was debating how too many people were being ignored and overlooked, and these arcane and archaic, feudal models of tenure were still being defended by some, even though they had clearly and completely outlived their usefulness. Almost every country in the world apart from Britain [sic, England and Wales] has either reformed or abolished this archaic, feudal model.”
Nandy reminded government of the strong cross-party consensus that has developed on these issues in recent years and said she was cheered by Michael Gove’s acknowledgment that it is right to press for legislation to help existing leaseholders gain control over their buildings and service charge bills to enjoy autonomy and dignity in their homes.
However, Nandy noted the absence of the second leasehold reform bill in the Queen’s Speech delivered only last month, which would ensure existing leaseholders take back control after the Leasehold Reform (Ground Rent) Act comes into effect on June 30 to ban ground rents on future leaseholds and thereby clear the path for a reinvigorated commonhold to take hold in the new-builds flats market:
“… but I say gently to him: where is it? He says legislation will be forthcoming in this parliamentary Session, but it was not in the Queen’s Speech. There are five Bills from the Department for Levelling Up, Housing and Communities in the Queen’s Speech; surely time can be found to ensure that we deal with this problem once and for all.”
(The ground rent ban risks creating a two-tier market if not followed by comprehensive reforms to empower those in the legacy stock to democratise their service charges and building management.)
In January, sources close to Gove briefed The Times on plans to bring forward leasehold reform in the 2021-22 parliamentary session.
Hundreds of thousands of homeowners will be given the power to buy the freehold to their property under plans to phase out the majority of “feudal” leaseholds in England. Ministers are preparing to scrap rules that bar flat owners from buying the freehold to their property if a small part of their building is given over to commercial use, such as shops.
“Hundreds of thousands of homeowners will be given the power to buy the freehold to their property under plans to phase out the majority of “feudal” leaseholds in England”, said the report.
“Michael Gove, the housing secretary, is understood to have told officials that ending leasehold abuses must be a priority, with further legislation planned in the next Queen’s Speech.”
He has privately said he is happy to be “taking on dukes and developers” who have made fortunes out of the system.
“There are people who say to him that you shouldn’t pick a fight with the developers as the government needs them to fulfil its house-building targets,” one source said. “His view is ‘bring it on’.”
Back in Parliament, Nandy urged action to cap ground rents in existing leases, in line with the 2019 recommendations on leasehold by the Clive Betts chaired select committee on Levelling Up, Housing and Communities, and the implementation of the Law Commission proposals from two years ago to modernise and make affordable leasehold enfranchisement.
“Surely, in the midst of a cost of living crisis, it is a no-brainer to crack down on unfair fees and contract terms by publishing a reference list of reasonable charges, by requiring transparency on service charges, and by giving leaseholders the right to challenge rip-off fees and conditions or poor performance from service companies,” she added.
In words that could almost have been lifted off LKP, Nandy called out the shadowy, often offshore, interests calling the shots in ordinary families’ blocks of flats and controlling their chequebooks:
“I started by saying that a group of people were rendered invisible to decision makers only a few miles away, which is completely unacceptable in modern Britain. How can we accept that these rip-off companies, on behalf of owners who we often do not know and do not have the right to find out about, are allowed to tell people whether they can change the doorbell on their own home or make minor changes that would make a big difference to their lives? How on earth is it right that we are siding with those rip-off management companies and opaque owners over people who live in their own homes, have a stake in this country and their communities, and deserve the right to something better?”
A failure to deliver on thoroughgoing leasehold and commonhold reform would betray the government’s levelling-up mission and the legacy of the Grenfell Tower fire tragedy, Nandy argued:
“If the Secretary of State can secure time for the second part of the leasehold reform Bill that was promised, we could end these arcane rules and give power and a voice back to people in their own homes and communities. Was levelling up not intended to answer that clamour for more control and agency, and give people who have a stake in the outcome a greater ability to make decisions about their own lives? That is the legacy that we should seek to build in honour of those who lost their lives in Grenfell: everybody everywhere in the UK, regardless of the type of tenure that they happen to end up with, has the right to a decent, secure, safe home—full stop. We will make sure that that is delivered.”
Gove told MPs that the government are committed to “enfranchising leaseholders” – very specific language – “in the next parliamentary session – within this year, as it were. It is important that we do. That is a commitment we must uphold.”
“There are urgent measures, which we debated yesterday, about housing supply, but it is absolutely right that we end the absurd, feudal system of leasehold, which restricts people’s rights in a way that is indefensible in the 21st century.”
On the Friday before the Queen’s Speech, government sources briefed to the Telegraph – the prime minister’s former employer who he is said to consider his “real boss”, rather than the public – that sweeping leasehold changes were to be “signalled in next week’s Queen’s Speech” with “thousands of flat owners [set to enjoy] a better chance of owning a share of the freehold”, including through reform of the overly restrictive 25 per cent rule so that leaseholders seeking to buy out their ground landlord at mixed-use sites would only need a simple majority – 50 per cent – of residential space to qualify for collective enfranchisement.
Ministers are to pit homeowners against property developers in housing reforms to tackle “generation rent” to be signalled in the Queen’s Speech. In a shake-up inspired by the sale of council houses under Margaret Thatcher, 2.5m households in England who rent properties from housing associations will be given the power to purchase their homes at a discounted price.
The Telegraph also reported that developers were “unhappy with the reforms”, warning the changes will be a “death-knell for the high street” with “the effect … particularly pronounced in red wall seats”.
LKP understands Michael Gove and Lord Greenhalgh were overruled by Number 10, namely Boris Johnson’s senior aide and self-styled Thatcherite, David Canzini, who ordered the “boring” leasehold and commonhold reform package to be scrubbed from the Queen’s Speech at the last minute.
When Boris Johnson reshuffled his Downing Street team at the height of the lockdown parties scandal there was one new entrant to No 10 whose arrival slipped largely under the radar. Amid feverish speculation about the return to frontline politics of the Tories’ election guru Sir Lynton Crosby, the appointment of his protégé, David Canzini, as a senior adviser to the prime minister was not even formally announced.
Canzini is a former PR executive who until February was working for Sir Lynton Crosby’s CT Group, an advisory company which has lobbied government on behalf of the £1.8bn ground rents fund headed by William Astor, the aristocratic half-brother-in-law of former premier David Cameron.
Boris’s PR gurus Crosby Textor have NOT been nobbling government over ground rents (well, not since autumn 2017 anyway …) – Leasehold Knowledge Partnership
The PR firm managing the leadership campaign of Boris Johnson, Crosby Textor, says it has not been lobbying government on behalf of its ground rent fund clients. Or, at any rate, since autumn 2017. Crosby Textor, founded by election guru Sir Lynton Crosby, has the £1.6 billion Long Harbour fund as a client.
Since Canzini’s appointment, a number of key reforms to enhance the operation of business and boost confidence in the commercial world, such as legislation to deliver a shakeup of UK auditing and corporate governance, provide statutory powers for a technology watchdog, and establish a football supervisory authority, have been delayed, watered down or junked for being “unconservative”, “anti-business” or non-core priorities ahead of a general election where it is thought the Tories must have “clear blue water” between themselves and the opposition.
When Boris Johnson’s government on Tuesday unveils its legislative programme for the coming year, there will be some striking omissions. Legislation to improve UK auditing and corporate governance, provide statutory powers for a technology watchdog, and create a new football supervisory authority – all meant to enhance the operation of business or to enable fairer market conditions – have been dropped from the Queen’s Speech.
Rumours abound that the long-awaited phase two leasehold reforms were also a victim of Canzini’s “get the barnacles off the boat” approach to bringing discipline and coherence to Number 10, while sating the appetite of the restive Tory right with so-called red meat policies.
At the height of the partygate scandal around lockdown breaking parties, a stocky figure with a shaved head walked without fanfare into Downing Street. But the low-key arrival of David Canzini as the new deputy chief of staff in the prime minister’s office belied his outsize role in resetting Boris Johnson’s operation.
Since the razor-thin vote of confidence in the prime minister on Monday 6 June, however, Number 10 has been looking for distinctly Thatcherite policies on housing.
Interestingly, Margaret Thatcher had intended leasehold enfranchisement and commonhold tenure to replace anti-capitalist and rent-seeking medieval leaseholds as a sequel to her Right to Buy revolution – so as to turn yet more tenants into Tory-voting freeholders – but was removed from office on the day her Lord Chancellor’s consultation on draft commonhold legislation went live.
If the Tories are really the party of homeownership, reforming our feudal leasehold system should be a top priority – CapX
Last week the Mail on Sunday reported that young, property-less voters would punish the Conservatives at the next general election. Having dropped radical planning liberalisation, and facing accusations of having nothing to offer aspirant homeowners (save for allowing ‘Street Votes’), the Government is desperately trying to find a transformative housing policy that is electorally popular, […]
In Blackpool on June 9, Johnson finally made the Thatcher connection, saying:
“We will finish the right to own reforms Margaret Thatcher began in the 1980s, ending the absurd position where first time buyers spend their life savings on flats, only to find themselves being charged hundreds of pounds for painting their own doors or unable even to own a pet dog. That’s what being on your side is all about.”
On Monday this week, appearing before the cross-party group of MPs led by Labour housing expert Clive Betts, Gove was confronted by party colleague Andrew Lewer about the “expected” bill on leasehold reform having fallen out of the Queen’s Speech despite the legislative programme for the year ahead containing nearly 40 bills.
The Queen’s Speech last month contained 35 bills, the greatest number of legislative commitments made by any government in a Queen’s Speech since 2005, when 45 pieces of legislation were unveiled to usher in Tony Blair’s second last year as prime minister.
Clearly frustrated, Lewer said he “just wondered where we are now in terms of leasehold reform, which has been knocked around this [select] committee and around your department for quite some time”.
Gove was clear that his department are still working on the policy programme and that leaseholders will not have to wait much longer:
“There should be a Bill to enact leasehold reform and enfranchise leaseholders in the next parliamentary session, i.e. in less than a year from now, God willing.”
This position has since been affirmed by Gove’s colleague Eddie Hughes, the housing and rough sleeping minister who in the last week has announced the well received Social Housing Bill and renters’ reform white paper.
In a written answer to shadow treasury minister Tulip Siddiq, who asked whether the levelling-up secretary “has plans to abolish leasehold as a form of property ownership”, Hughes replied to confirm legislation would be presented to parliament next year:
“Homeownership should provide people with far greater control over their homes and their lives. In the next Parliamentary Session we will legislate to reform the leasehold system, including by supercharging leaseholders’ ability to buy their freeholds and take control of their homes. For new builds, we will ban use of leasehold for houses. For flats we want to see widespread take up of commonhold so people can fully enjoy the benefits of true homeownership from the outset.”
Hughes is a friend of the APPG on leasehold and commonhold reform and, during the Theresa May premiership, pushed for a statutory cap on ground rents for existing leaseholders at £250 per annum.
Tory MP Eddie Hughes moves private member’s bill to cap existing ground rents at £250 – Leasehold Knowledge Partnership
By Harry Scoffin Eddie Hughes, the Conservative Member of Parliament for Walsall North, launched a crackdown on ground rents in the Commons today. Ground Rents (Leasehold Properties) includes one of the Communities Select Committee’s headline proposals: regulating existing leases to have ground rents set at 0.1 per cent of the present value of a property, up …
LKP applauds the new enthusiasm from Number 10 for leasehold and commonhold reform and Gove’s strong commitment to bring in the phase two leasehold reforms in the next session of parliament and will continue to report developments.