Leasehold houses have caused outrage among thousands of homeowners with ground rent clauses making homes unsaleable, but Labour has vowed to make changes.
This week, the Labour party released a new report outlining its plans to reform the leasehold system. The party claims that the government has failed to tackle the leasehold problem effectively, which affects nearly one fifth of England’s housing stock
According to the party’s report, six in ten leaseholders had no idea what being a leaseholder meant until they had already purchased the house; nine in ten regretted buying their leasehold properties.
Shadow Housing Secretary John Healey 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.”
“The scale of the problems faced by leaseholders, from rip-off ground rents to punitive fees to onerous contract conditions stating what they can and can’t do to their own homes, demands wholesale change.”
“We need a revolution in rights for leaseholders”
In England alone, there are an estimated 2.9 million leasehold flats and 1.4 million leasehold houses.
Leasehold properties mean that occupiers buy the right to live in the homes for a fixed period of time, while the landlords, known as the freeholders, often charge the leaseholders a rising ‘ground rent’ fee. Residents can also be tied in to make payments to contractors for the properties’ upkeep. While flats and apartments are commonly sold on a leasehold basis with few problems, it is new-build housing developments that have been causing issues for buyers.
Labour’s report outlines its intentions to undertake a “leasehold revolution” to end the broken housing model for good, tackling “rip-off” ground rents, contract terms and fees faced by millions of households. The report calls again for a full public inquiry into miss-selling across the leasehold market.
Labour critical of government’s failure to make changes
Labour’s report criticises the Conservatives’ efforts to deal with the problem: “Despite 37 government press releases and other announcements on leasehold over the last three years, there is still no sign of change for home-buyers locked into unfair leasehold contracts and no plans for the new legislation needed to make it happen.”
Labour’s proposed changes include a promise that the sale of new leasehold flats and houses will be banned by the end of its first term in office and provision for occupants to buy the freehold of their homes for 1% of the property value.
Further improvements include increasing leaseholders’ rights and being allowed to challenge unfair fees or poor service.
Shadow Housing Secretary John Healey said: “The truth is a Conservative government can’t help leaseholders because they won’t stand up to the vested interests in the property market who are profiting out of the leasehold scandal.”
Leasehold reform is underway
Last Thursday, the Ministry of Housing, Communities and Local Government announced that new houses will be sold on a freehold basis and ground rents on new leases will be reduced to zero.
Communities Secretary James Brokenshire said: “We have long recognised that we have a responsibility to confront unfairness in the leasehold market so we are taking bold action to reform the sector.”
“We will legislate to ensure that in the future – save for the most exceptional circumstances – all new houses will be sold on a freehold basis. Ground rents in future leases will be set at zero value and we’re looking at other leaseholder fees that should be capped or banned.”
“We are committed to taking bold action to reform the sector and will be pressing ahead as soon as parliamentary time allows.”
The government did not announce any other plans to act on penalties imposed on the owners of existing leasehold properties. Neither did ministers mention any plans to ban the sale of leasehold flats in new-build blocks.