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MPs call on Government to push through ‘promised’ leasehold reforms

Nick Cheek
Written By:
Nick Cheek

The Government will be going ahead with its plans to reform leasehold, housing minister Rachel Maclean told MPs in a Parliamentary debate.

The Labour Party’s Lisa Nandy called for an opposition debate to ask secretary of state Michael Gove to keep his promise to make changes to the leasehold system and make a statement to the House of Commons by 23 June detailing his plans. 

Gove did not attend the debate. 

This follows reports from earlier this month, which suggested that the Government had backtracked on plans to abolish leasehold, despite Gove saying that the system needed change in January. 

Nandy said: “We need new legislation to replace private leasehold flats with commonhold. Lots of promises have been made to that effect, but there has been little in the way of action.” 

She said despite the Government promising to reform leasehold in its 2019 election manifesto, “leaseholders [are] left waiting”. 

Nandy added: “The delay is a significant setback for leaseholders, who have been left waiting for far too long, and for all of those who have campaigned so hard and for so long and thought they could finally see the light at the end of a very long, very dark tunnel.” 

Lee Rowley, secretary of state for Local Government and Building Safety, said the Government would bring forward a ban on leasehold on newly-built homes, and said the market had already reacted with just 1.4% of houses in England being built as leasehold, as opposed to almost 15% previously. 

More to do tackle unfair practices

Labour MP Emma Hardy asked what would be done about management companies and the fees leaseholders were charged to maintain communal areas.  

She added: “Such fees can be increased every year, there are no rules about the extent they can reach, and there is no oversight or regulation of them.” 

Rowley said the Government was working on improving the process of right-to-manage applications by making it “simpler, quicker, more flexible and more effective”. 

He added: “We know that there is more to do to tackle unfair practices, however. We know that many leaseholders find the process for extending their lease or buying their freehold prohibitively expensive or complex or lacking in transparency.”  

He said the Government will “abolish issues such as marriage value and we will cap ground rents in enfranchisement calculations so that leaseholders who currently pay onerous ground rents do not also have to pay an onerous premium”.

An online calculator will also be set up to help leaseholders understand what costs will be attached to extending their lease or buying it out. 

Rowley added: “These changes should, and will, generate substantial savings for some leaseholders, particularly those with fewer than 80 years left on their lease, and also ensure that landlords are sufficiently compensated in line with their interest. These changes are therefore fair for all concerned.” 

Government moving away from reform

Sir Julian Lewis MP asked if the Government had moved away from its position to significantly reform leasehold and said it was just “tinkering at the edges” and “improving a fundamentally unfair system”. 

Rowley said the government was committed to reform and this will include “reforming unreasonable and excessive service charges”. He said current statutory requirements did not go far enough in allowing leaseholders to challenge unfair costs. 

Rowley added: “We will therefore act to improve this through better communication around these charges, and a clearer route to challenge or seek redress if things go wrong. That will ensure that leaseholders better understand what they are paying for and can more effectively challenge their landlord if fees are unreasonable, and make it harder for landlords to hide unreasonable or unfair charges.” 

He said the Government wants to see more leaseholders benefit from freehold ownership, as set out in the levelling up white paper, and added that commonhold would be a genuine alternative for flats. 

Labour MP Ashley Dalton said that while the Leasehold Reform (Ground Rent) Act 2022 made progress in abolishing ground rents for newly-purchased new builds, reforms for existing leaseholders had been “kicked into the long grass”. Dalton said the housing market risked becoming a two-tier system for leasehold. 

She said this could make new-build properties more attractive and cause existing leasehold properties to be unsellable. 

Still working towards reform 

Maclean said the entire debate was hinged on a “false premise” and media speculation. She said while she could not give details or timeframes, the Department of Levelling Up was “working flat out to bring further leasehold reform”. 

Maclean said the Government was “making significant progress to afford real relief to leaseholders… while reforming the system for the better.” 

Labour MP Clive Betts said Maclean made two commitments on banning the sale of new leasehold homes and bringing in a new process for enfranchisement and asked if any of these proposals would be presented in a bill. 

Maclean said she would commit to the measures that the government intended to enact but was unable to say what would be part of any forthcoming bill.