Government to ‘announce plans to phase out leasehold’ in King’s Speech
Plans to phase out leasehold homes will be outlined in the King’s Speech, according to a report.
All new houses across England and Wales will have to be freehold properties, as part of a Leasehold Bill led by housing secretary Michael Gove, reports The Sunday Times.
Gove is also expected to overhaul lease extensions from a standard of 90 to 990 years, scrap the two-year residence clause before requesting an extension, and give residents more say over their building and service charges.
Leasehold means people own the right to live in their home, but the building itself or the land it’s built on is owned by a freeholder or landlord, often leading to extra costs like ground rent.
The Sunday Times reported that Whitehall sources said the reforms would mean millions of Brits found it less difficult and expensive to buy their own properties outright, with some ground rents doubling or increasing in line with retail price index (RPI) inflation, trapping owners.
It comes as Opinium polling, reported in the Guardian, revealed Labour have achieved a significant 20-point lead over the Tories on the issue of being the party of home ownership.
When asked which party would be better at helping people buy a house, 36 per cent of those surveyed said Labour, compared to just 16 per cent who said the Conservatives.
It comes after Labour’s party conference earlier this month where the party announced plans to build two new towns, and deputy leader Angela Rayner pledged to lead the biggest boost in affordable housing in a generation; toughening rules on developers and planning reform.
In January, Gove pledged to end leasehold, calling it “feudal”, but these plans were reportedly dropped in May after a dispute between the housing secretary and Downing Street.
But the suggestion now is that a gradual phasing out of the leasehold system will take place, with all new houses having to be sold as freehold, as opposed to abolishing it outright.
Ministers also want to cap existing ground rents at so-called ‘peppercorn’ rates, in the bill which The Sunday Times said could be brought to Parliament before Christmas.
A Department for Levelling Up, Housing and Communities (DLUHC) spokesperson said: “We have already made significant improvements to leasehold, ending ground rents for most new residential leases and will make it easier and cheaper for leaseholders to extend their lease or buy their freehold.
“The Secretary of State has been clear that we will bring forward legislation to protect leaseholders as soon as is possible.
“This will give them more information on their service charge costs and ensure they are not subject to any unjustified legal costs.”