Government’s new law to ban leasehold, doesn’t ban leasehold

Government’s new law to ban leasehold, doesn’t ban leasehold

0:01 AM, 1st December 2023, About 3 months ago 3

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The housing secretary, Michael Gove, has been accused of breaking his pledge to end the ‘feudal’ leasehold system in England and Wales, after it emerged that his flagship new Bill does not ban developers from selling new houses under leasehold.

The leasehold reform bill, which was unveiled this week after being announced in the King’s speech, was supposed to fulfil a long-standing Conservative manifesto commitment to end leaseholds on new houses.

Mr Gove has repeatedly criticised the leasehold system as ‘unfair, unjust and unacceptable’, and promised to ‘end it once and for all’.

‘Ban new leaseholds for all houses’

In a press release, his department said the bill would ‘ban new leaseholds for all houses, unless there are exceptional circumstances’.

However, The Times has revealed that the bill does not actually contain any clauses to implement this ban.

Instead, it only includes measures to cap ground rents at £10 a year for new and existing leaseholders, and to make it easier and cheaper for leaseholders to buy their freeholds or extend their leases.

‘Doesn’t even do what it says on the tin’

The shadow housing minister, Matthew Pennycook, said: “Not only does this long overdue piece of legislation not ensure that new flats will be sold as freehold, contrary to what ministers have claimed it doesn’t even do what it says on the tin and ban the sale of new leasehold houses.”

Officials from the Department for Levelling Up, Housing and Communities (DLUHC) admitted that they had not been able to include the clauses on banning new leasehold houses because of a last-minute dispute between Mr Gove’s department and Downing Street over whether the bill would be included in the King’s speech at all.

They said they had not had time to finalise the complex legal text, but added that the measures would be inserted into the bill via a government-backed amendment in the Commons or Lords.

Ban leasehold for newly built flats

Leaseholders have been annoyed by the omission – and they were already upset by the government’s refusal to ban leasehold for newly built flats.

The founder of campaign group Free Leaseholders, Harry Scoffin, said: “It is absolutely surreal that the leasehold new-build houses ban, the one leasehold policy that has survived six years and four prime ministers, doesn’t feature in the actual wording of this government’s supposedly landmark leasehold and freehold reform bill.

“More seriously, the bigger crime is not to commit to a ban on future leasehold flats, where the real money is being made and abuse of homeowners [is] routine.

“While government has dodged commonhold, they could at least give new-build apartment buyers a share of the freehold for resident control from day one.”

‘Government’s long-term plan for housing’

A government spokesperson said: “Liberating leaseholders forms a vital part of the government’s long-term plan for housing.

“That’s why we are bringing forward the biggest changes to the system for a generation by giving leaseholders significant new rights, powers and protections through the leasehold and freehold reform bill.

“As we laid out on Monday, we will bring forward amendments as the bill progresses through parliament and that includes the ban on leasehold houses.”

Labour is promising to end leaseholds on new flats, while Tory MPs say the leasehold ban will be extended to new-build flats.


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Comments

Judith Wordsworth

11:12 AM, 1st December 2023, About 3 months ago

It would be very difficult to get buildings insurance for some leasehold flats or maisonettes if Leaseholds were ended and the Leaseholder has the responsibility to take out buildings insurance.

Many insurance companies, and certainly mortgage lenders may not lend, if the leaseholder has to take out buildings insurance and hasn't paid the premium and the building burnt down. There would be no obligation for that insurance company to rebuild. If others had taken out insurance how would the building be re-instated, especially if the ground floor flat had not paid the premium and was uninsured.

But we can never get rid of the feudal system as the Crown owns all the land in essence whether you have a freehold or a leasehold property. Only have to die intestate and who gets the property? King Charles III. Interestingly our late Queen did not take the proceeds of sale but gave it to the Treasury for the benefit of the nation. However, King Charles, it has been reported, in The Times I think, doesn't. He keeps the money to pay for the upkeep of his estates.

Dylan Morris

11:45 AM, 1st December 2023, About 3 months ago

A simple measure with leasehold flats would be to legislate that all new developments have an RMC in place so the freeholder is prevented from appointing their own managing agent. And this ensures that there will be no need for leaseholders to go down the Right To Manage route.
Also with RTM legislate that multi block sites can be managed (as previously prior to Triplerose v Ninety Broomfield Road 2015) by way of just one RTM company which covers all the blocks.

JB

13:19 PM, 1st December 2023, About 3 months ago

If ground rents for existing leaseholders is going to be capped at £10, will they be compensating the freeholder for loss of rent and depreciation of their asset? If not, that is theft

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