Labour has unveiled proposals to scrap the sale of private leasehold flats if it gets into power, going further than the current government’s plans to end the sale of leasehold houses.
Consumer groups welcomed the policy but trade bodies representing house builders and property investors insist that the leasehold model is not broken.
Labour pledged that the sale of private leasehold flats would be abolished by the end of its first term in government if it gets into power.
It would also scrap ground rent for new leasehold homes and cap rents for existing leaseholders at 0.1 per cent of the property value up to a maximum of £250 a year.
Labour also promised to set the cost of buying the freehold (or commonhold in the case of flats) at 1 per cent of the property value, replacing the current complex formula.
The party would also crack down on unfair fees and contract terms by publishing a list of reasonable charges and give residents greater powers through Right to Manage rules.
The Leasehold Knowledge Partnership welcomed the plans as “by far and away the most radical proposals put forward by any party to bring to an end the abuses in the leasehold sector that have gone on for many decades”.
It says: “The proposals go much further than the current government which had originally proposed to bring forward proposals before the summer of 2018, but which have since been delayed or partly fallen away.”
The National Leasehold Campaign was equally enthusiastic about Labour’s plans, which it says “would be nothing short of life-changing for the millions of leaseholders across England and Wales”.
Most striking, the NLC says, is Labour’s intention to improve the rights of existing leaseholders.
“We are delighted that the Labour party is committed to commonhold ownership for flats.
“The Labour Party have upped the stakes in the competition for the votes of the millions of existing leaseholders.
“We look forward to seeing if other parties are prepared to be as progressive and brave on leasehold reform.”
There was also support for the changes beyond the leaseholder campaign groups in certain parts of the property sector.
Conveyancing Association director of delivery Beth Rudolf says: “We are delighted to see that the Labour Party has published a robust set of proposals as this confirms that leasehold reform is a cross-party issue and one which will not go away.
She says the abolition of forfeiture clauses that enable freeholders to repossess leaseholder’s properties in certain cases “will prevent leaseholders from losing their homes to unscrupulous landlords”.
Rudolf adds: “We also support the proposals for leaseholders to buy their freehold or convert to commonhold at reasonable and set premiums which will do away with the current confusing valuation mechanisms […] which mean nothing to the general public and have no place in providing security of ownership in someone’s hard earned home.”
NAEA Propertymark chief executive Mark Hayward cautiously welcomes Labour’s plans.
He says: “Anything that seeks to sort out the inherent issues of leasehold must be welcomed, however it needs to be done in a thoughtful and considered manner in order to tackle the big issues with leasehold properties in this country.”
But other parts of the property sector set out the case against such radical reform.
Speaking to The Times, Home Builders Federation policy director David O’Leary said: “Abolishing the leasehold system entirely will inevitably see homeowners take on greater responsibility for the management and health and safety of buildings.
“The leasehold system is in need of reform, but care should be taken to ensure that if the system is scrapped entirely whatever replaces it is fully understood by future flat owners and does not severely affect the value or saleability of the millions of existing leasehold flats.”
British Property Federation director of policy Ian Fletcher added: “The leasehold system is not broken, but it has been abused.
“These proposals would impinge on property rights and that is why the Law Commission has been asked to look at these issues, so it can propose workable legal solutions.”