Leasehold And Freehold Reform Bill Could Become Law Today

Michael Gove

The proposed leasehold reforms, championed by the housing secretary Michael Gove, could still become law today.

Legislation is currently being rushed through as Friday is the last day MPs will sit in parliament before the election.

The Leasehold and Freehold Reform Bill promises to scrap leaseholds on new houses but not new flats, which make up 70% of leasehold properties. Given that the bill is still at committee stage in the House of Lords, where peers will consider it in detail, it was considered unlikely to make the wash-up period.

However, the bill to reform leaseholds will now be debated in the House of Lords on Friday. Labour sources have indicated that while they want to strengthen the bill, they are prepared to back the legislation as it stands.

Tory MPs had threatened to rebel in recent months over the government’s leasehold and freehold proposals.

In a letter to Chancellor Jeremy Hunt earlier this month, more than 30 Tory MPs stated their dissatisfaction with the current leasehold system and implored the government to scrap ground rent on leasehold properties.

Currently, there is no cap on the amount freeholders can charge existing leaseholders for “ground rent”.

It was widely reported recently that annual charges levied on leaseholders would be capped at £250 rather than being cut to zero, or “peppercorn” rate, as first outlined in the Conservative 2019 manifesto.

Gove, who last year referred to leasehold as a “feudal system that needs to go”, has faced opposition from Treasury to his plans. Given that insurance funds have invested huge sums in ground-rent portfolios and an internal Treasury analysis suggests that up to £37bn of investment could be wiped out, which may lead to compensation claims aimed at the government.

There are close to 5m leasehold dwellings in England, according to Department for Levelling Up, Housing and Communities data published last May, which is 20% of the English housing stock, and so naturally scrapping leaseholds would prove to be a popular policy with potential voters.

Former housing minister Robert Jenrick is among those that wants to see the leasehold system scrapped altogether.

“It’s an affront to the Conservative dream of homeownership, it’s not fair and it’s not right,” he said.

Harry Scoffin, founder of campaign group Free Leaseholders, said earlier this month: “Every single Conservative MP elected in 2019 stood on a manifesto committing their party to restricting ground rents to a peppercorn, or zero financial value.

“The Conservative Party has a clear choice: it is on the side of young homeowners and aspiring first-time buyers, or rent-seekers, extortionists and middlemen? Rishi Sunak must hold his nerve and stand up for the little guy.”

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