Homeowners are facing yet another delay in addressing the “feudal” leasehold system’s pitfalls, as reforms to eradicate sky-high ground rents and exorbitant admin fees have been shelved once more. In what appeared to be a policy on the verge of implementation this year after swift parliamentary action during the Conservative Party’s final days in power, hopes have been dashed.
Labour’s Housing Minister, Matthew Pennycook, informed the House of Commons on Wednesday that the brunt of The Leasehold and Freehold Reform Act 2024 is being kicked into the long grass.
Renowned consumer champion and founder of Money Saving Expert, Martin Lewis, sharply criticised the pause in proceedings. Mr Lewis voiced the frustration of numerous leaseholders, remarking, “I can almost hear the collective groan of leaseholders at yet another delay in sorting the leasehold mess out. Someone really needs to get a handle on this..”
At the heart of the debate lies a financial burden for countless homeowners who have taken on leasehold properties—usually set with a term of 99 years. These individuals find themselves at the mercy of their leaseholders, who not only levy substantial annual ground rents but also impose hefty “service charges.”
Labour has pledged to tackle the antiquated leasehold system “as quickly as possible” aiming to dismantle a framework dating back to the 13th century, designed for feudal lords to extract ground rents from peasant farmers. Yet, as the critical legislation was expedited during the “wash up” period before the July general election, Labour’s Housing Minister Matthew Pennycook highlighted significant shortcomings in the Commons, reports the Manchester Evening News.
He stated: “These serious flaws include a loophole which means the Act goes far beyond the intended reforms to valuation and that undermines the integrity of the amended scheme. In addition we must correct an omission that would deny tens of thousands of shared ownership leaseholders the right to extend their lease with their direct landlord given that the providers in question do not have sufficiently long leases to grant 990-year extensions.”
Pennycook added: “This government will not make the same mistakes as the last when it comes to reforming what is, without question, an incredibly complicated area of property law. While we intend to continue to work at pace, we will take the time necessary to ensure the reforms we pass are fit for purpose.”
Nonetheless, some simpler aspects of the Leasehold and Freehold Reform Act will be put into effect, with the minister finally announcing a schedule for when homeowners can anticipate an end to some of their financial woes.
Come January, the government is set to scrap the “two year rule” that currently prevents leaseholders from extending their lease or purchasing their freehold within the initial 24 months of ownership. Following this change, in spring, certain leaseholders will gain support to assume control of their freehold management and cut unnecessary expenses, particularly those residing in mixed-use developments.
Meanwhile, Labour has pledged to detail its plans to abolish new leasehold properties by the latter half of next year, although it has indicated that a public consultation on the proposed measures must be conducted beforehand. You can read the Housing Minister’s full statement here.
