Chris Lennie on a major flaw in the otherwise sound aims of the Leasehold Reform Bill
When ministers first announced plans to end ground rents for new leasehold properties, it represented a long overdue acceptance that the system is in desperate need of reform. Ground rent is an almost feudal practice that involves homeowners paying thousands of pounds each year to a leaseholder, with usually nothing in return. Millions of people are trapped into these contracts and the government is right to prevent any new agreements including such provisions. That is why Labour is generally supportive of the aims of the Leasehold Reform Bill.
A sticking point, however, relates to those households already trapped in the system of ground rents, as the proposed legislation offers nothing for them. That’s why I’ve tabled an amendment that, if accepted, would bring about further legislation to end ground rents for existing leaseholders.
The government’s own figures suggest that almost five million properties in England are leasehold dwellings – around one in five of all homes. And many of these households have seen their ground rents increase at unmanageable rates – something that has seen the Competitions and Market Authority take up cases against two companies found to be doubling their charges every ten or fifteen years.
The principle behind my amendment is the same principle behind the Bill, with wide agreement – withing and beyond Parliament – that the entire ground rent system is wrong. Where we differ from the government is in our desire to end to this outdate practice for all leaseholders, not just new ones. Ministers should therefore have no problem in backing the amendment, but they’ve so far been rather coy in indicating how they will respond.
During Committee stage, Peers from across the House raised the same issue – including the government’s own backbenchers. The Communities Minister in the Lords responded with warm words but, while clearly understanding the unfairness of the situation, appeared unwilling to act urgently. And his suggestion that new legislation could be on the way to make it easier for existing leaseholders to buy out their ground rent or purchase their leasehold, misses the point. If leaseholders are presented with premiums of many thousands of pounds to leave the ground rent cycle, many will not be able to afford to do so.
Tuesday 20th July will see us debate the Report stage of the Bill, and I’m planning to press the issue on behalf of the many millions of existing leaseholders stuck in the system. I hope the government uses the time between now and then to reflect on its position, accept the amendment, and send a message that the days of this outdated practice are well and truly numbered.
Lord Chris Lennie is a member of Labour’s frontbench team in the House of Lords
Publish 9th July 2021