Ex-housing secretary hails Bill

Property reforms should include setting a deadline for when no new leasehold properties can be built, according to a Tory former housing secretary.

Robert Jenrick hailed the Leasehold Reform (Ground Rent) Bill as an ‘important step on the road’ to reform, but he urged future legislation should go further to end a ‘feudal system’.

Mr Jenrick explained a ‘major’ government intervention will be required to shift towards commonhold and his preferred approach would be for ministers to set an end date for new leasehold properties.

A freeholder owns both the property and the land it stands on while leaseholders only own the property, paying ground rent to the freeholder.

But the commonhold model, widely used around the world, allows homeowners to own their property on a freehold basis, giving them greater control over the costs of home ownership.

Under the scheme, housing blocks are jointly owned and managed, meaning that when someone buys a flat or a house, they own it outright and any decisions about its future lies with them.

The Bill under discussion in the Commons will restrict ground rents on most newly-created long residential leases in England and Wales to a token one peppercorn per year.

This effectively restricts ground rents to zero financial value and in a bid to make leasehold ownership fairer and more affordable for leaseholders, according to the House of Commons Library briefing on the Bill.

Mr Jenrick told the second reading debate: ‘The destination to me of these reforms is not just a better situation for leaseholders, but is actually the gradual elimination of leasehold altogether.

‘It is, as some have said here today, essentially a feudal form of tenure, a product of our rich and ancient history as a country, but one which is no longer fit for purpose.

‘It doesn’t exist in any other developed country in the world and it doesn’t, in essence, have a place in a modern society.’ Mr Jenrick said he established the Commonhold Council to chart the course to a ‘world beyond leasehold’.

For Labour, shadow housing secretary Lucy Powell said the party would not oppose the ‘long overdue’ measures but argued they should go further.

She said the Bill ‘does nothing’ to protect people ‘facing overbearing ground rent increases today or yesterday, nor does it put an end to some of the most egregious practices like selling new houses as leasehold’.

The Bill later received an unopposed second reading and will undergo further scrutiny at a later date.