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Labour writes to Brokenshire attacking leasehold plans
Shadow housing secretary John Healey has slammed the government’s plans to tackle unfair leasehold practices as “too slow” and “too weak”.
Mr Healey criticised plans unveiled by housing and communities secretary James Brokenshire to cap leasehold fees to £10 per year and introduce measures to ensure the majority of home sales are freehold in nature.
In a letter to Mr Brokenshire, Mr Healey said: “I have serious concerns about the government’s actions on leasehold reform to date, which have been too slow, too weak and largely overlooked existing leaseholders.
“This consultation seems to weaken significantly the government’s previous proposals.”
Mr Healey noted that in response to a consultation in 2017 Mr Brokenshire’s predecessor Sajid Javid pledged to prohibit new residential long leases from being granted.
Mr Healey also raised concerns over the lack of measures to cover existing leaseholders. He stated: “There are some 4.2 million leasehold homes in England – also one of five properties – but once again there are no specific steps to do what’s needed to help existing leaseholders in this consultation.
“I stand by to offer our Labour support in parliament to measures which will allow leaseholders to inexpensively purchase the freehold to their properties – will you bring forward legislation before Christmas to do this?”
The government estimates that on average leaseholders pay more than £300 in ground rent each year, with some paying as much as £700. If the new cap comes into force the fees are expected to be reduced to a nominal £10.
Commenting on the plans Mr Brokenshire said: “The government is committed to making the economy work for everyone by helping people with the cost of living.
“Unfair ground rents can turn a homeowner’s dream into a nightmare by hitting them in the back pocket, and making their property harder to sell.
“That’s why I’m taking concrete action to protect homeowners and end those unscrupulous leasehold practices that can cost tenants hundreds of pounds.”
The leasehold scandal saw thousands of people who had bought homes find themselves paying extra costs to cover increases in the ground rent, which is a nominal rent paid to the freeholder, on the property. A number of other charges were also uncovered.
A number of major house builders including Taylor Wimpey were forced to pay compensation to homeowners who paid onerous grounds rents. In November last year Taylor Wimpey set aside £130m to cover leasehold claims.
A number of banks also refused to approve mortgage applications for the homes due to the problems posed by increasing ground rents.
The government had initially announced plans to stem the practice in late 2017.
A Ministry for Housing, Communities and Local Government spokesperson said: “The Secretary of State is determined to end the unfair practice of unnecessary leaseholds which leave homeowners hundreds of pounds out of pocket and can make their properties harder to sell.
“We have clearly set out plans to take these important reforms forward to make sure leasehold works in the best interests of homebuyers, as well as work to support existing leaseholders purchase their freehold faster, fairer and cheaper.”
