The leasehold reform bill has passed its third reading through the House of Commons.
The bill, which aims to restrict ground rents on newly created long residential leases to one peppercorn per year, is likely to become law. But an amendment that would see ground rents removed for all existing leasehold properties was defeated by 306 votes to 162.
The bill is the first of a two-part reform. A second bill is promised in the future to address issues with existing leases.
Commenting on the Conservative majority win, Labour MP Justin Madders, co-chair of the all-party parliamentary group on leasehold and commonhold reform said:
“Four years ago… communities secretary, Sajid Javid promised an outright ban on leasehold houses, and we all hoped that by now a law would be in place for everyone so that these wrongs could be righted.
Those people deserve an end to this. They deserve hope that something will finally be done to make their lives a little better.”
Conservative MP Eddie Hughes said:
“We understand that many leaseholders feel trapped in a system that is not working for them, and we are determined to provide greater protection and support for all leaseholders.
The government are committed to undertaking an ambitious and far-reaching programme of reform of the leasehold system, and I can assure the House that we are working apace to bring about those reforms.”
Industry experts have also reacted to the news. Linz Darlington, CEO of lease extension specialists Homehold, commented:
“In January 2021, the government promised to introduce changes to leasehold which would resolve injustices for those owning existing leasehold properties. This promise, while welcome, creates greater uncertainty for leaseholders while they wait for legislation.
Despite the wide support from members of the house, the government response was lacklustre. Eddie Hughes’ (The Parliamentary Under-Secretary of State for Levelling Up, Housing and Communities) response was that ‘given that we have just gone through two years of a rather unexpected global pandemic, it is best not to pin these things down too firmly’.
Until the Government commits to a timeline for wider reforms, it actually puts many leaseholders in a worse position. For example, if you are a leaseholder who is left in a unmortgageable and unsellable flat because of a short lease or a high ground rent, you are left in a limbo – do you pay more to resolve the issue now, or put your life on hold to wait for changes which might make it fairer in the future?
The rejection of this bill by a majority of 144 votes will be very disappointing to leaseholders and those campaigning for leasehold reform. This was summed up by Sir Peter Bottomley, who voted with his party but stated afterwards ‘I am sorry that I got back in time to vote on new clause 1 – I probably voted in the wrong way and I apologise for that’.”
Jonathan Frankel, head of the Property Litigation Department at Cavendish Legal Group, said:
“The defeat of the amendment aimed at removing ground rents from all existing leasehold properties means that when this bill becomes law it will not provide a remedy for the millions of owners of leasehold properties trying to address difficulties with their ground rents.
There is good news for newly-created leases, which will be limited to a nominal ground rent of one peppercorn per year. Existing leaseholders, however, will instead have to find their own legal solutions and exercise their right to claim a statutory lease extension in order to turn their ground rent into a peppercorn.”
One Response
Presumably this will have the effect (again) of artificially inflating the value of new builds as opposed to existing stock. It is certainly a good marketing point.