Labour Promise To Help Current Leaseholders Trapped In Onerous Contracts

As the gloss on recent Government leasehold announcements seems to fade, the Labour party has offered their preferred policy ideas regarding the future of the controversial leasehold sector.

Whilst the Government’s legislative changes to leasehold property benefited new build homes, many have accused the Government of overlooking the needs of leaseholders trapped in properties with onerous conditions, making them more difficult to sell.

The Labour party’s leasehold paper, ‘Ending the Scandal: Labour’s New Deal for Leaseholders’, offers a more inclusive approach to existing homeowners trapped in onerous leasehold contracts.

A Labour Government would cap ground rent for existing leaseholders at 0.1% of a property’s value up to a maximum of £250 per year. This will avoid unnecessary risks of the property being classed as an assured tenancy under the 1988 Housing Act which could make a property unsaleable.

Labour have claimed that, based on the average price of property at the time of publication, all but four regions of England would pay an average fee of less than £250.

To ensure permission fees are capped, unfair fees and contract terms are regulated, freeholders would be policed by a standard reference list of reasonable charges.

The agreement will also look to provide a clear framework for allowing the freehold title to be bought on both houses and flats. Leaseholders with longer leases will be permitted to buy their freehold at a maximum of 1% of the property’s value which would be considerably cheaper than the current unpredictable models. If the freehold title is being sold by developers, the leaseholder will also be offered the first refusal.

For new property, a Labour Government have also followed the Conservative’s promise to end the sale of leasehold houses with immediate effect.

However, they have also promised to end the sale of leasehold flats by the end of their first term in Government. They also aim to promote Commonhold property ownership as the viable alternative to current leasehold models.

John Healey, Shadow Housing Secretary, said:

“Leasehold is a symbol of our broken housing system, with millions of England’s homeowners feeling like they’ve bought their home but still don’t own it.

“The scale of the problems faced by leaseholders – from rip-off ground rents, to punitive fees, to onerous contract conditions stating what they can and can’t do to their own homes – demands wholesale change. We need a revolution in rights for leaseholders.

“This consultation document sets out the next Labour Government’s ambition [to] end the broken leasehold model for good.”

Beth Rudolf, Director of Delivery at the Conveyancing Association, said:

“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.

“Positive measures announced in this paper include the proposed capping of ground rent to £250 and the abolition of forfeiture – both will prevent leaseholders from losing their homes to unscrupulous landlords.

“We hope that the reference to administration and permission fees in the report also means that we can ensure any fee paid to a lease administrator during the home moving process, or when a leaseholder wishes to change their property or the use of it, will be reasonable.  The CA’s own research shows that as many as 80% of leaseholders are overcharged for some administration expenses by lease administrators when they buy their property. We have already provided a list of the fees which should be permitted at a rate set by the Secretary of State to MHCLG and hope that reasonable administration fees will be supported in Lord Best’s report on the Regulation of Property Agents due to be submitted to the Government later this week.

“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 such as ‘hope value, development value, marriage value, relatively and the graph of graphs’ which mean nothing to the general public and have no place in providing security of ownership in someone’s hard earned home.”

Do you think these policies would offer a better deal for new and existing leaseholders?

Click here to read the full paper.

1 Comment

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    Have emailed the following to Sarah Jones this morning:-

    I shall be posting the following bullet points in Today’s Conveyancer in the hope that this will prompt reaction. A response to your consultation will follow but I feel that these matters need consideration ahead of detail

    1 A one nation political approach

    1.1 Leasehold reform is inevitable

    1.2 Yours is the best presentation of political leasehold intentions that I have seen

    1.3 Offer it to other parties as a basis for their ideas so that areas still needing consensus can be identified and worked on positively

    2 A leaseholder’s guardian angel

    2.1 The churn of housing ministers in recent decades has hindered reform

    2.2 A non-political body to promote this is needed

    2.3 Volunteering for management is daunting for leaseholders

    2.4 The body should also have the power and duty to take properties with failing management into special measures

    3 Tech based regulation

    3.1 In the last 50 years, the Land Registry has used technology to transform presenting snapshots of title information from a laborious paperchase to a few keystrokes

    3.2 Management information should be set on the same journey but faster

    3.3 There are proposals for professionalising residential property management

    3.4 This should require professionals to process all matters using approved software

    3.5 The software should transmit the data to a national database capable of issuing easily available reports and statistics

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