The government’s plans associated with the long-awaited leasehold reform could be derailed by “deep-pocketed” lobbyists, Housing Secretary Michael Gove has warned.
The bill seeks to make it easier for leaseholders to extend their lease and buy their freehold. The act also aims to increase standard lease extension terms from 90 to 990 years and reduce ground rent reduced to zero.
Leasehold homeowners in the UK don’t own their homes outright. Instead, they have a tenant–landlord relationship with the landowners, who are called freeholders, for a fixed period of time.
When the lease comes to an end, the ownership of the property returns to the freeholder.
Mr. Gove suggested that he was “on the side of homeowners” who “have worked hard, who have saved up and secured a mortgage.”
He told MPs that the bill is “likely to face a lobbying exercise from deep-pocketed interests outside attempting to derail it.”
He then assured the house that he was against “shadowy foreign entities that are essentially attempting to rip off British citizens.”
“I’m sure that some of London’s finest legal firms and some of London’s most eloquent solicitors will be putting in some very thoughtful contributions, but the question will be: who is paying for them? To my mind you can buy silver-tongued eloquence, but what is far more important is actually being on the right side of justice,” the housing secretary added.
The leasehold bill will ban the sale of new leasehold houses, but not new leasehold flats. According to Mr. Gove the ban on new leasehold homes will amount to the “effective destruction of the leasehold system.”
The latest data estimates that around 20 percent of all housing stock and 82 percent of all flats in England are owned on a leasehold basis.
By excluding flats from the new leasehold ban, the government fails to give leaseholders “control and autonomy over their costs and their building management,” the group Free Leaseholders has warned.
Conservative MP Bob Blackman said that while all provisions in the bill are welcome, many of them “need to go further.”
“The promise to do away with leasehold—or ‘fleecehold’—completely was clear in the manifesto; in my view, that promise should be honoured, particularly on the sale of new-build flats,” he said.
He told MPs that in London, flats were the most common property type.
“Almost all flats are sold on leasehold basis, compared to just 6 percent of houses,” the Tory MP added.
Mr. Gove vowed that the government plans to “squeeze every possible income stream that freeholders currently use,” which will effectively mean the “destruction of the leasehold system.”
He also said he was open to “improve” the bill in its future stages.
Labour deputy leader Angela Rayner called for the abolition of the “medieval” leasehold system.
According to Ms. Rayner, Prime Minister Rishi Sunak was being affected by lobbyists opposing the reform. She told the house that Mr. Gove was “stuck in the daily Tory doom loop in which vested interests always come before the national interest.”
Ms. Rayner said that the leasehold ban on new houses was hardly an “ambitious pledge,” given the small proportion of leaseholds that are houses, rather than flats.
The leasehold bill will be scrutinised by the Public Bill Committee, which will report to the house by Feb. 1.
