This week, the Government brought forward long-awaited legislation on leasehold reform. Whilst its Ground Rents Bill is in some ways a step forwards for future homeowners, it does nothing for current leaseholders or to address the exploitation inherent in this model of ownership. The leasehold scandal is particularly acute in London. Over the last decade, 71.9 per cent of all properties bought and sold in Streatham were leaseholds – higher even than the London average of 55 per cent. It’s no wonder that millions of people who have bought the leasehold on their home don’t really feel like they own it.
Leaseholders face an array of issues under the current system, from escalating and often hidden ground rent charges, to extortionate and opaque service charges, limits on the right to manage and buy freeholds and, of course, demands from freeholders to cover the costs of the cladding scandal.
Ground rent is an outdated practice which forces some house buyers to pay thousands each year to companies that own the land their property is on, often for nothing in return. This Bill makes the welcome change of setting future ground rents to zero, allowing new long residential leases to charge just a peppercorn rent.
But on the whole, these changes will do little to reassure the 13,304 people in my constituency who have taken on leasehold properties since the Tories came to power in 2010. The refusal to extend this policy to existing leases effectively creates a two-tier system. If more desirable properties without ground rents enter the market, existing leaseholders – who still have to pay ground rents – will find it harder to sell their properties, potentially trapping them in undervalued leasehold tenancies with escalating ground rents.
To add insult to injury, many leaseholders are still being asked to shell out just to make sure they don’t burn in their homes with the Government failing to deliver on its promise to protect homeowners from the cost of the cladding scandal.
The timidness of Tory housing policy is inseparable from the fact that £1 in every £5 donated to the party comes from developers, the very people who would lose out if the scandal of escalating ground rents were truly ended, or if they had to actually cover the costs of their own dodgy designs. Wholesale reform is needed, but this Government of landlords, developers and property speculators is far too close to the people who caused this mess to take action to support the vast majority of homeowners in my constituency.
This article was first published in the South London Press on the 3rd December 2021.