Labour to implement Tory’s leasehold reforms but go ‘much further’

Labour has promised reform within the tricky issue of leasehold and freehold reform promising to both implement the Tory’s recently-enacted legislation, which got through the pre-election ‘wash up’ process, but also reform the leasehold system further.

This will include implementing the Law Commission’s recommendations relating to leasehold enfranchisement, which will see leaseholders given greater rights to extend their lease and/or buy the freehold and take over the freeholder’s building management functions or ‘right to manage’.

Labour says it also wants to tackle high ground rents and remove the “disproportionate and draconian threat of forfeiture as a means of ensuring compliance with a lease agreement”.

Much like the previous government, Labour is promising to take steps to “bring the feudal leasehold system to an end”, reviving commonhold through a new legal framework and banning the sale of new leasehold flats so “commonhold becomes the default tenure”.

‘Fleecehold’

Its briefing following the King’s Speech yesterday also says Labour wants to bring the injustice of ‘fleecehold’ private estates and unfair costs to an end, promising a consultation on the best way to achieve this.

“We estimate that 86 per cent of leaseholders pay a ground rent, averaging almost £300 per year in England,” the document says.

“Ground rent contracts that rapidly escalate can become unaffordable over time for leaseholders.

“In a recent survey undertaken by Propertymark, a leading membership body for property agents, 78 per cent of their members reported that a leasehold property with an escalating ground rent will struggle to sell, even if priced correctly.”

Careful consideration

Ian Fletcher, Director of Policy (Real Estate) at the BPF, says: “Leasehold reform is a complex area of the law which requires careful consideration, and we are supportive of the Government taking time to consider the best way forward, which must be done carefully and holistically.

“That means ensuring that other flaws in the system, such as an unregulated managing agent sector, are remedied. Any expansion of commonhold will work best if it has the confidence of developers.

“Responsible freeholders support reforms that make leasehold work better and would welcome dialogue with the new Government on this issue.”

Opportunity missed

Sheila Kumar, Chief Executive of the Council for Licensed Conveyancers, says: “Leasehold reform and a reinvigoration of commonhold are both welcome inclusions in the King’s Speech, but the government has missed an opportunity to make further improvements to the homebuying and selling process by failing to introduce measures to regulate property agents.

“Regulation of estate agents and managing agents could be immensely helpful for improving the operation of the property market, making better use of housing stock, supporting growth and providing increased confidence to consumers.

“The CLC is working with key organisations across the sector to pave the way to a better home buying and selling process that will benefit the nation and the new Digital Information and Smart Data Bill should support that work further.”