Labour vows to end 'rip-off' leasehold ownership with sales ban on new homes

Posted On: 
9th July 2019

Labour has announced its bid to ban the sale of leasehold homes and crack down on the controversial practice if it wins power.

Labour has pledged to scrap leasehold sales in its new report
Credit: 
PA

In a report released on Tuesday, the party laid out plans for a “leasehold revolution” to tackle “rip-off” ground rents, contract terms and fees faced by millions of households.

Leasehold properties see occupiers buy the right to live in the homes for a fixed period of time, while the landlords, known as the freeholders, often charge the leaseholders a rising ‘ground rent’ fee.

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Occupants are also tied in to make payments to contractors for the properties’ upkeep.

According to the party’s report six in ten leaseholders didn’t understand what being a leaseholder meant until they had already purchased the home, and nine in ten regretted buying their properties.

Shadow Housing Secretary John Healey said: “Leasehold is a symbol of our broken housing system, with millions of England’s homeowners feeling like they’ve bought their home but still don’t own it. 

“The scale of the problems faced by leaseholders, from rip-off ground rents to punitive fees to onerous contract conditions stating what they can and can’t do to their own homes, demands wholesale change. 

“We need a revolution in rights for leaseholders.

“This consultation document sets out the next Labour government’s ambition end the broken leasehold model for good.” 

Under Labour’s proposals, it promises the sale of leasehold flats and houses will be banned by the end of its first term in office, and that occupants will be able to buy the freehold of their homes for 1% of the property value.

The party also wants to boost rights to empower leaseholders, and the right to challenge unfair fees or poor service.

The report also renews calls for a full public inquiry into the miss-selling in the leasehold market.

Government ministers have also vowed to curb the practice, committing to ensure new homes will be sold on a freehold basis and to reduce ground rents to ‘peppercorn’ (zero financial value) rates on future properties.

But in its report Labour slammed the efforts which it said have seen “no sign of change”.

The report said: “Conservative Ministers can’t ignore the problem, but despite 37 Government press releases and other announcements on leasehold over the last three years, there is still no sign of change for home-buyers locked into unfair leasehold contracts, and no plans for the new legislation needed to make it happen. 

“The truth is a Conservative Government can’t help leaseholders because they won’t stand up to the vested interests in the property market who are profiting out of the leasehold scandal.”

Communities Secretary James Brokenshire said: “Exploitative and unfair leasehold arrangements have no place in a modern housing market so we are taking bold action to reform the sector.

“We will legislate so that all new houses will be sold as freehold unless there are exceptional circumstances.

“Ground rents in future leases will be set at zero value and we’re looking at other leaseholder fees that should be capped or banned.”