By Harry Scoffin
Campaigners calling for commonhold homeownership received a boost last night as Tower Hamlets voted against landlord-controlled leaseholds.
The motion put forward by Tower Hamlets’ two Tory councillors, and amended by the dominant Labour party, passed unanimously.
It makes the local authority the first London borough to formally acknowledge the controversies surrounding the spread of leasehold tenure.
In 2018, both of Tower Hamlets’ parliamentary constituencies featured in the top five for areas with the highest proportion of leasehold sales in England and Wales. Poplar and Limehouse beat historic leasehold hotspot Cities of London and Westminster by a percentage point, at 96%, with Bethnal Green & Bow on fourth place at 91%.
The Labour group pulled their motions last night because of the general election, but the Conservative group insisted that they would go ahead with their ‘purdah-proof’ initiative to “promote fairness and transparency for the growing number of leaseholders in our borough and to address the unfair practices that exist in the leasehold market”.
Speaking for the motion, Cllr Peter Golds praised the emerging cross-party push on leasehold and commonhold reform in parliament and across local government, saying “councillors of all political parties, hung councils, and those of no political party, are passing resolutions on the subject of leaseholders, because we have an enormous responsibility, not only to the people we represent, to bring their concerns.”
“The subject of leaseholding and leaseholding of properties is a very, very strangely British phenomena. It doesn’t exist in other parts of the world. When you meet, as we do in our borough, and indeed in local authorities across the country, people who have moved to this country, they are absolutely staggered by the pitfalls of the leasehold system and the consequences it can have on them when they purchase something,” he said.
Cllr Golds added that leasehold ownership gives rise to “absolutely extraordinary situations”, including doubling ground rent clauses which are now preventing leaseholders in Tower Hamlets from re-mortgaging or selling their property.
He also registered his opposition to the trade in freehold titles, with “the developer long gone, having sold the freehold to a distant investment company, frequently investment companies from another country”, leaving “poor residents” “stuck” with the management of their buildings and what they pay in service charges determined by an unaccountable third party.
In his closing remarks, Cllr Golds urged Tower Hamlets “to pass this tonight because this will enable us, this authority, to go to London councils, where we are well represented by mayor John Biggs, to the Local Government Association, where we have representation, and ultimately to parliament, to make sure that the voice of leaseholders is not forgotten, that they are not forgotten people within our country.”
He was flanked by Conservative group leader Cllr Andrew Wood, who represents Canary Wharf ward.
Cllr Wood said that the motion grew out of his party’s caseload:
“So the inspiration came from this because, probably like many of you, we deal with leaseholders and we hear horror stories of some of the problems going on and I know there are some active groups on the Isle of Dogs talking about some of these issues and how they affect them personally.
“It also came from Harry Scoffin, a local resident in my ward who has been very passionate about this issue.”
He said that in the spirit of cross-party cooperation, which helped St Helens borough council pass a “not dissimilar motion” unanimously in September, the Conservative group would concede the amendments demanded by their Labour opponents, but “with one slight quibble”.
“The term commonhold and its introduction into English law was actually done by a Labour government in 2002 in the Commonhold and Leasehold Reform Act,” the opposition group leader told the meeting.
“It’s really interesting when you read the comments of Labour ministers in 2002, as to why they thought this Act was important, we live with those same issues today,” he added.
Cllr Wood suggested that even his own party must take some of the blame for commonhold’s dismal failure:
“I think it’s fair to say that that [Labour] government, the coalition government and the current government have not really done enough to push this agenda, and therefore we decided to introduce this motion to try and do what we can locally. I accept, you know, there are limits to our powers, but we can certainly use our moral authority given the huge numbers of apartments I talked about earlier that are being built locally within Tower Hamlets. The more we can do to solve these issues, I think the less our casework will be in future years.”
The motion commits council officers to “hold a discussion with developers about commonhold ownership at the next bi-annual Developers Forum” following the conclusion of the review into the leasehold market by the Competition and Markets Authority.
It also encourages Tower Hamlets to do more to “signpost advice for leaseholders looking to buy their freehold often against freeholders who are unwilling to negotiate fairly” and improve the way in which the council communicates to leaseholders looking for information “from expert agencies about service charges, their calculations, how to complain and what support is available to them in respect of unscrupulous landlords.”
Interestingly, the monitoring officer – the council’s senior legal adviser – issued special dispensation for the vote to go ahead because a large number of members declared their interest as leaseholders in the borough.
The vote heaps pressure on other London councils to endeavour to curb their leasehold addiction.
The original and final motions can be compared against each other here: TowerHamletsLeaseholdVoteNov2019