The Housing, Communities and Local Government Committee has published a report into Leasehold Reform which calls for wide ranging reforms to tackle abuse of the leasehold system.
The report states that leaseholders have been treated as “a source of steady profit” by developers and freeholders, rather than as homeowners or consumers, and calls on the Government to establish commonhold as the primary model of ownership of flats in England and Wales.
Leasehold reform campaigner Louie Burns, Managing Director of the enfranchisement specialists the Leasehold Group of companies, said, “This report is welcome news indeed, as it proposes numerous recommendations that will improve the circumstances of leaseholders affected by the profound failures in the leasehold market.
“For years we have been calling for reforms that will limit ground rents, tackle unfair service charges and permission fees, outlaw the sale of leasehold houses and the mis-selling of leasehold properties, and address the systemic imbalances of power that have favoured freeholders’ interests for far too long.
“Freeholders have been arguing that their human rights will be affected if their contractual income streams are reduced. It is particularly encouraging that the select committee has supported leaseholders’ human rights to pay a lower premium to enfranchise and called on Government to remove onerous terms from existing leases.”
The report makes a series of recommendations to Government, which include:
- Establish Commonhold as the primary model of ownership of flats.
- Investigate mis-selling in the leasehold sector and make recommendations for compensation.
- Developers prohibited from offering financial incentives to customers to use a particular solicitor
- Ground rents limited to 0.1% of a property’s value, never higher than £250 or linked to RPI.
- Ground rents on newly established leases to be set at a peppercorn.
- Legislation to restrict onerous permission fees in existing leases.
Louie Burns added, “The Government has already acknowledged that the leasehold system is not working in consumers’ best interests. We urge the Government to look at the committee’s very sensible recommendations and enact legislation that will end the exploitation of leaseholders and create a system that works for consumers.”
Download the full report at: https://publications.parliament.uk/pa/cm201719/cmselect/cmcomloc/1468/full-report.html