Rayner and Gove attack ‘vested interests’ over leasehold reform

Two former housing secretaries have slammed the “vested interests of freeholders” over their response to the Commonhold and Leasehold Reform Bill.

Speaking to the Housing, Communities and Local Government Committee, Angela Rayner and Lord Michael Gove welcomed the bill but warned it would be a balancing act to get the reforms through Parliament.

The government have finally published the Commonhold and Leasehold Reform Bill, which will cap ground rents at £250 a year for leaseholders and claims “it will bring an end to the feudal leasehold system”.

Clear vested interests

At the committee, only one freehold organisation came to the meeting, with Ms Rayner claiming this showed the strength of vested interests opposed to the changes.

She told MPs: “It’s a balancing act between getting these reforms put in and striking the right balance, and ending the years of the feudal leasehold system we’ve had in this country.

“There are clear vested interests. The fact that only one freehold organisation turned up,  and the others haven’t bothered, gives you a hint of where they stand.

“In summary, it’s the world’s smallest violin for these organisations who think that ground rent, which is essentially a freebie, is acceptable when people are living in these conditions. We do need to end it, and I think we have struck the right balance with the bill.”

Institutional resistance by the Treasury

Lord Gove welcomed the bill but also warned of vested interests within the Treasury.

As previously reported by Property118, there have been rumours of the Treasury being concerned that capping ground rents could deter pension fund investment.

Treasury sources have admitted there are challenges in setting a cap on ground rents but have downplayed reports of tensions, insisting ministers are seeking a “balanced approach”.

Lord Gove explained: “Housing secretaries have been fighting a rear-guard action mounted by freeholders and supported by the Treasury.

“I witnessed that when I was in government and institutional resistance by the Treasury to the bill remains.

“It is striking that freeholders will not show their face in front of this committee, a clear invitation to defend their interests, and they will not take up.

“As the committee is aware, for many years they have benefitted from a system whereby they get money for nothing. The ground rent system is essentially extortion and it should end.”

Culture of buck-passing

Chair of the select committee Florence Eshalomi asked whether income from ground rents had been used to pay for building remediation.

Angela Rayner responded bluntly that it had not, describing a culture of buck-passing between developers and freeholders.

She told the committee: “It’s like whack-a-mole, they all blame each other. It’s not our fault, it’s the people who built the building, or it’s the freeholder who owns the building.

“For years, people have been living in buildings that were inadequate and not built correctly. Then, when problems come to light, those responsible say it’s not their problem and try to push the costs on to everybody else.

“I don’t accept that ground rents have been used to remediate buildings.”

A clip from the Committee can be seen below.