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Labour’s Plan to End the Leasehold System

The Labour Party has announced that it will end leaseholds – a form of home ownership which gives people the right to inhabit a property for a certain number of years.

There is much concern about limited clarity on leases and huge charges incurred. Unlike a freeholder who owns a property and the land it is built on outright; a leaseholder owns a lease which gives them the right to use the property. They have to get permission to make changes to the home and sometimes must pay expensive ground rent. Leaseholders can also be subject to expensive legal fees if they want to extend their lease. Around 20% of homes in England are leasehold properties, many of them flats in cities.

The Labour Party has described the Government’s failure to remove legislation surrounding leaseholds as a ‘scandal’. 

Background

Secretary for Levelling Up, Housing and Communities, Michael Gove, previously established plans to remove the leasehold system. In 2022, he labelled leaseholds as ‘feudal’ and called for ‘fundamental reform’. However, last week, Gove backtracked – plans to end leaseholds have now been dropped as the Government believes there is not enough time before the next general election to fulfil the plans.

At the National Conservatism Conference, Gove suggested that legislation put forward too soon would tackle the “many abuses” that arise from leasehold, rather than eradicate it altogether.

A spokesperson for the Department for Levelling Up, Housing and Communities said: “We will bring forward leasehold reforms later in this Parliament, in line with our manifesto commitment.

“As the Secretary of State has made clear in the House many times, we remain determined in our promise to better protect and empower leaseholders to challenge unreasonable costs and make it easier and cheaper for them to extend their lease or buy their freehold.

“These build on the significant improvements we have already made to the market – including ending ground rents for most new residential leases.”

Labour’s stance on leaseholds

The Labour Party has put forward a vote on a motion that would call on Michael Gove to keep his promise by “ending the sale of new private leasehold houses, introduce a working system to replace private leasehold flats with commonhold and enact the Law Commission’s recommendations on enfranchisement, commonhold and the right to management in full”.

Shadow Housing Secretary Lisa Nandy stated that due to internal divisions within the Government, we can no longer have “more delays or broken promises”.

“It is nothing short of a scandal that despite near-universal agreement that leasehold is a feudal form of tenure that should be a thing of the past, there is still no timetable for ending leasehold on new builds and introducing a workable system of commonhold to replace existing leasehold homes.

“Today MPs from all parties can join Labour in voting to end the leasehold system, implement the Law Commission’s recommendations in full, and deliver long-overdue justice to millions of families.”

Final thought

The Government’s U-turn on leasehold legislation reveals cracks in their commitment to the levelling up agenda. The Labour Party has seized the opportunity to appeal to homeowners and allow them to have freedom over their property.

Curia’s Levelling Up Commission

Curia is holding the Levelling Up Commission this year, seeking to implement the Government’s Levelling Up White Paper and find pragmatic solutions to regional disparities across the UK.

Through roundtable meetings with MPs and senior leaders of local and regional government from across the UK, quantitative data analysis and regional sprints, the Commission intends to set out a series of recommendations to consider how regional inequalities can be reduced from the perspective of public services in four key areas:

Health and Social Care

Housing and Homelessness

Education, Skills and Training

Crime, Justice and Rehabilitation

To hear thought leaders discuss levelling up in health and social care, signup to the Commission first inquiry session here.

If you are interested in working with the Levelling Up Commission, please reach out to our policy lead Shivani Sen at shivani.sen@chamberuk.com

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