The Tories have one shot at fixing our housing crisis

By ending the leasehold rip off, the party could help beleaguered tenants – and woo younger voters

In 1883 the Liberal MP for Hanley addressed his electors, describing “a great and growing evil and injustice in our towns and suburban districts, vitally affecting the welfare of our tradesmen as well as our working classes. It is called the leasehold system.” Some 141 years later, the ghost of leasehold still haunts UK housing policy. It is now accompanied by other gremlins: failure to build, insane rules about the shape of windows, political inertia, the impact of mass migration – but the spectre remains.

Yesterday, the Government’s Leasehold and Freehold Reform Bill came before the Commons, courtesy of the Tories’ 16th housing minister since 2010. Depressingly, Lee Rowley and Michael Gove probably deserve credit even for introducing this Bill, which has faced extensive lobbying from vestedinterest groups in the sector.

Ostensibly, this should be a natural win for the Tories. The leasehold system has contradicted conservatism’s raison d’etre for well over a century: we don’t, after all, call it “a property-leasing democracy”. How does it work? Well, put simply, you buy a home, but you don’t really own it. While the home is yours for a set period of time, a landlord – often a property company or housing association – retains the legal rights to the property and can levy “service charges”. In return, they commit to fulfilling certain obligations, like maintenance. Full disclosure, I am a leaseholder. During the seemingly endless rain at the end of 2022, water began to drip through my roof. It took months for the freeholder to survey the leaks, then a full year to begin “consulting” on roof repairs. In the interim, the bathroom flooded, taking out the electricity supply, meaning that brushing my teeth is now an exercise that risks either electrocution or immolation.

I have resigned myself to meeting the costs of these repairs in addition to my “service” charges – even though, as the freeholder takes great delight in reminding us, we are not homeowners but “tenants”. Not only do improvements happen on their timeframe, you invariably end up paying over the odds for building insurance and “management fees” for shared spaces, though with my flat in a two-storey terraced house boasting a communal area of 32sq ft there seems little to manage. I am not alone in wishing I had known more before I moved in; but first-time buyers often cannot avoid the trap, especially in urban areas where 94 per cent of owner-occupier flats are leasehold.

What’s more, we are among the lucky ones. Our “service” charges are dear but not ruinous; the bigger gripe is that we get nothing tangible in return and, due to the monopolistic setup, cannot easily switch to a service provider willing to fulfil its obligations. Many are in a far worse position. This newspaper recently reported the case of Nicola Hawkins, a flat-owner threatened with homelessness after contesting a service charge bill nine times higher than the estate agent’s initial quote (£600).

This instability is fundamentally un-conservative, leaving residents unable to plan and save for the future. For some, the situation may be worse than renting; with the responsibilities and risk, but only the illusion of ownership. At least in a functioning market, you can leave a bad landlord behind with your capital intact. Then there is forfeiture, a medieval tool freeholders use to extract opaque service charges from leaseholders, meaning that you can lose your whole home based on a debt of more than £350. Unlike mortgage foreclosure, where you at least recoup the remaining positive balance, all equity is surrendered to the freeholder. While forfeiture is relatively rare, its threat is routine and reinforces the misaligned incentive structure of leasehold.

Crucially, leasehold exacerbates other housing problems, trapping people in unlivable homes while deterring mobility elsewhere. Why, for example, would an empty-nester risk downsizing if the alternative is a leasehold flat? The Conservatives’ current greenbelt policy renders urban densification even more important for resolving the housing crisis. Making apartment living more attractive will play an important role.

There is still time for the Bill to insist that future flats operate a “share of freehold” policy. This, too, is a form of leasehold but provides some commonhold benefits, mainly resident control, while cutting out opportunistic middlemen.

Many conservatives are naturally squeamish about any intervention, yet free-market capitalism needn’t mean championing private monopolies that harm consumers. Genuine “popular conservatism” should defend the “little guy” against rent-seeking, just as Mrs Thatcher took on the vested interests of union barons and local bureaucrats (on council houses). No surprise that in 1986, Thatcher herself commissioned a working group to devise a viable alternative to long leasehold. By significantly enhancing their Leasehold and Freehold Reform Bill, the Tories could set themselves up for a Right to Buy 2.0, and a chance for renewal.

Unlike in Britain, where young and even middle-aged Tory voters are becoming an endangered species, the Canadian Conservatives are enjoying a seven-point lead among 24-29 year olds, largely due to leader Pierre Poilievre’s unashamedly pro-housing pitch. Aping their Canadian counterparts in opposition will require decisive action on housing now. Tackling feudal leaseholds would be a good place to start.