The UK government has unveiled a huge plan to overhaul the rules around home ownership in England and Wales. Specifically, it wants to impose a long-awaited ban on leaseholding.
Campaigns to get rid of the centuries-old leasehold system have gone on for years, with people who own homes under leasehold left to feel like second-class homeowners. The previous government promised to bring in reform and although former housing minister Michael Gove pledged to abolish it entirely, those plans were dropped when Downing Street intervened.
But now it looks like major reform could finally happen. In a White Paper published today, Labour MPs have outlined their proposals for getting rid of leaseholds for good. Housing minister Matthew Pennycook has called the reforms the ‘beginning of the end’ for the system. Here’s a breakdown of everything you need to know.
What is a leasehold?
A leasehold is when you have a legal agreement with a landlord to own property within their building or on their piece of land for a fixed period of time. The leases can be anything from 90 and 999 years long and ownership in meant to go back to the landlord once they come to an end. Right now, around five million properties in England and Wales are under a leasehold. Around 70 percent of them are flats.
If you own a leasehold property, you’re responsible for repairs and maintenance but normally need to get the landlord’s permission to make any significant changes. Often, tenants are asked to pay tens of thousands of pounds, even if they don’t agree with the work being done. Leaseholders also have to pay ‘ground rent’, an additional annual fee that the owner pays to the landlord.
Why are leasehold properties controversial?
Leaseholding has been bashed as an outdated practice for a long time now. The 2017 Grenfell disaster in particular exposed major flaws in the system, with flat owners forced to pay for fixing dangerous cladding that they had nothing to do with designing or constructing.
Landlords and building managers have been accused of imposing fees for services that do not exist and failing to make repairs for which tenants have charged.
What does a leasehold ban mean?
In today’s White Paper, the government has promised that new leasehold flats will be banned to ensure that commonhold becomes the new default. Commonhold allows people to fully own their properties, with no expiry date and no ground rent. Within apartment buildings, each owner will become part of a commonhold association, which oversees the governance and management of the building.
The government is also ‘determined’ to make conversion to commonhold easier for existing leaseholders. Its aim is to give homeowners more power, control and security over their homes. Pennycook said the reforms would put an end to ‘unfair practices and unreasonable costs at the hands of landlords’.
When are leaseholds being abolished?
There’s no exact date for the end of the leasehold system, but the housing minister said that the leasehold system will be abolished before the end of this parliament (which will be this summer). A draft Leasehold and Commonhold Reform Bill will be published later this year.
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