Calls for urgent action on leasehold reform

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The housing minister, Luke Hall, has caused frustration amongst MPs, after saying that Covid 19 was to blame for the government’s three year failure to properly address leasehold reform, ground rents and the building of more leasehold properties.

There have been an estimated sixty consultations on leasehold reform since December 2017, when Sajid Javid first announced a ban on new build leasehold homes, saying ground rents would be set to zero for future leases. James Brokenshire endorsed the proposed leasehold reform proposals in June 2019 and in December it became part of the government’s party manifesto.

However, the Housing, Communities and Local Government Committee July report Building more social housing has warned that the government’s latest changes to permitted development rights will further threaten leasehold reform, as well as the delivery of social housing. The report says:

Permitted development rights can be a route to provide fast and cost-effective housing, but given that the Government is aware of concerns around their use, it should publish its review as soon as possible. We remain concerned about the lack of affordable housing obligations and lack of safeguards for quality. Without reforms, it is likely the planned expansion will further reduce the delivery of social housing through the planning system.

Sir Peter Bottomley MP has warned the Commons that the latest planning changes will result in profound negative consequences.

The government says the changes could create 8,120 new flats over the course of the next ten years and hopes the new permitted development rights will enable families to build ‘granny flats’ or more bedrooms.

However, in allowing residential freehold owners to build up to two storeys of flats above existing properties, it is estimated that landowners and developers as owners of freehold properties will benefit from up to £41.9 billion in increased development value – whether or not they choose to build. It will also cause the detrimental effect of devaluing existing flats, perhaps by as much as £200 million.

Sir Peter said the measure would “wreck the lives of leaseholders who want to get their freeholds.” He has asked the government to review its plans urgently.

Read more on commonholds: Why aren’t more homes being bought under commonhold law?

Whatever type of property you’re buying, whether it’s freehold, commonhold or leasehold, always ask a Chartered Building Surveyor for a building survey.