Plan To Scrap Leaseholds… Another Policy Kicked Into The Long Grass

Hello readers,

Back in January 2021, I reported on some radical reforms to the leasehold system in the UK which included the abolition of ground rents, abolition of the marriage value and replacing leasehold with commonhold.

If you have been following the news closely, back in January this year Housing Secretary Michael Gove promised to seemingly use these reforms to effectively abolish most leaseholds and bring them into common ownership; make it much easier for leaseholders in flats to take over their buildings.

This announcement looked like a continuation of the plans announced in January 2021 and it looked like they were going to happen this year until, earlier in May, things changed and half the plans were seemingly scrapped.

The most recent data I could find highlighted that in 2020 – 2021, 20% of housing stock (around 4.86 million properties) were leasehold. Recent data reveals how the estimated number of leasehold dwellings has been on the rise over recent years and I’m sure we all know someone who has been stuck with a significant bill to renew their lease!

Let’s look at the reason plans have been scrapped. Reading the various releases, it looks like there was simply not enough time to enact such significant reforms amidst other changes such as the standards in social housing, PRS reform and the Building Safety Act.

As you can imagine, the scrapping of these plans have caused outcry, with campaigners calling the u-turn a complete betrayal. But what exactly has the Government u-turned on? Well, here we go – plans initially covered three main areas, with just one remaining now:

  • Abolition of the marriage value – seemingly scrapped
  • Replacing of leasehold with commonhold – seemingly scrapped
  • Ground rent reform – remaining

When it comes to ground rents, the Government eliminated them for the majority of new residential leasehold properties in England and Wales last year however, the abolition only applies to new leases that are granted after June 2022.

Interestingly, it looks like there are a fresh set of measures to be announced in June which include:

  • A cap on ground rents
  • More powers for tenants to choose their own property management companies
  • A ban on building owners forcing leaseholders to pay any legal costs incurred as part of a dispute

More loose, pithy legislation that is toothless? I really thought that this was a great reform when it was first announced nearly 18 months ago and it certainly is another demonstration of how you just cannot form any absolute plans on Government ‘proposals’ until they actually go through.

A closing comment from Mr Gove suggested that commonhold proposals are potentially still on the agenda, however perhaps it really is just one reform too many for the current time when he explained:

“I don’t believe leasehold is fair in any way… it is an outdated feudal system that needs to go. And we need to move to a better system and to liberate people from it.”

I will endeavour to keep a close eye on this one for you as new proposals come out and when legislation comes forth in the autumn, so keep tuned in for updates!


Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s