In their general election manifestos published this week, each of the three main parties made a commitment to leasehold reform with the Tories pledging to cap ground rents at £250, Labour calling the current system ‘feudal’ and the Lib Dems have committed to abolishing residential leaseholds altogether.
Rumblings amongst legal professionals have questioned that manifesto promises regarding leasehold reform ‘may not be possible’, despite promises from warring political parties.
Mark Chick, director of ALEP (the Association of Leasehold Enfranchisement Practitioners) and a Partner at Bishop & Sewell LLP has questioned the viability of potential changes for the next government and stated that ALEP did not favour an outright ban on ground rents. The ALEP head favoured a cap on ground rents, calling it a ‘victory for common sense’.
Sunak et al have said in their manifesto that they will complete the process of leasehold reform, to improve the lives of over four million leaseholders. They propose to will cap ground rents at £250, which they say will ‘reduce them to peppercorn over time’. The Tories say they aim to end the misuse of forfeiture so leaseholders don’t lose their property and capital unfairly and make it easier to take up commonhold.
However Labour say that for ‘far too many leaseholders’, the reality of home ownership falls woefully short of the dream they were promised. ‘Labour will act where the Conservatives have failed and finally bring the feudal leasehold system to an end’. The party claims they will enact the package of Law Commission proposals on leasehold enfranchisement, right to manage and commonhold. They aim to take further steps to ban new leasehold flats and ensure commonhold is the default tenure. Labour proposes to tackle ‘unregulated and unaffordable ground rent charges’. They claim to act in ending what they are calling the injustice of ‘fleecehold’ private housing estates and ‘unfair maintenance costs’ to an end.
The Liberal Democrat stance proposes to scrap residential leaseholds altogether, so ‘everyone will have control over their property’.
Mr Chick commented:
“Whichever party forms the next government, leasehold reform is far from over.
“The prospect of a complete ban on all ground rents may not be possible for reasons connected to the possibility of a human rights challenge and we clearly wait to see what the next government will do with the outcomes of the ground rent consultation that DLUHC ran in December 2023. We would like to see this published.
“At this stage we don’t know exactly what a future government might look to do on the question of ground rents the policy objectives that can be gleaned from the manifestos clearly indicate the suggestion of capping them at the very least.
“ALEP members did not favour an outright ban on ground rents when surveyed in the early part of this year – and as we have said before the suggestion of a cap rather than an outright ban might be seen as a victory for common sense. For those looking to achieve a ban on ground rents under existing leases this is more likely to be resistant to a challenge on human rights grounds. Also, the impact on the property market of a phased in cap and eventual ban or ‘sunset’ clause will allow some time for adjustment. What we don’t know at this stage is what the appetite of some freeholders may be to challenge these leasehold reforms together with the proposed valuation changes that the Leasehold and Freehold Reform Act 2024 will bring in. This can only really be assessed once the relevant compensation rates in the new valuation methods in the new Act have been set.”
