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The Ground Rent Bill is a missed opportunity to end the leasehold scandal

The Ground Rent Bill is a missed opportunity to end the leasehold scandal
4 min read

The scandal of new homes with doubling ground rents goes back years, impacting a potential 4.5 million leaseholders. People shouldn’t have to wait for the glacial pace of government to fix this unfair system.

Hundreds of thousands of home owners are caught in a leasehold scandal that sees them clobbered by spiralling hidden costs and trapped in unsellable homes.

The government’s Ground Rent Bill debated in the House of Lords last week, is a tentative attempt at reform. However while a small and welcome step, it represents a missed opportunity to transform a leasehold sector that continues to scam working people on an industrial scale. 

Leasehold reforms have been a very long time coming with a plethora of consultations, reports, false starts and announcements by the government.

Wholesale reform is needed but the government is too close to the major developers entangled in this mess to take meaningful action

For more than a decade now, many leaseholders have faced escalating ground rent charges attached to the ground on which their property sits. Often, they were unaware of this hidden cost at point of purchase, in a mis-selling swindle dubbed the ‘PPI scandal of the property industry’.

Sometimes, they didn’t realise the scale of ground rents because their ‘independent legal advice’ wasn’t in fact independent, but was someone working for both the seller and buyer. 

Some leaseholders have experienced ground rents doubling every ten years on top of their mortgage and any service charges, with no prospect of ever selling the property on. Their only way out has been to buy the freehold, only to discover this is yet another area targeted by the profiteers.

This was the case for leasehold campaigners, Jo and Mark Darbyshire who spent £400,000 on their dream home in Bolton. They found themselves paying £295 annual ground rent, due to double every ten years up to 50 years, to a maximum of £9,440 a year.

So they explored buying out the freehold, having been told this would cost around £5,000 when they first bought the property. They were never warned their housebuilder might sell the land beneath their home to an investment company meaning the freehold cost soared to an astronomical £50,000.

The Leasehold Reform (Ground Rent) Bill aims to abolish ground rent but only on future leasehold properties so will do nothing for the Darbyshires and thousands like them. 

While a move in the right direction altering the market over time, the scandal of new homes with doubling ground rents goes back years, impacting a potential 4.5 million leaseholders. The reforms as proposed will create a two-tier system, one that applies to my own constituency where on one side of the estate in Northwich, the feudal status quo of grounds rents will apply while those on later phases will have the new protections.

And it’s not just ground rents that are the problem. Leaseholders have sometimes discovered down the line about obscure rip-off administration charges such as a £200 bill for owning a pet or a £2,000 fee for adding a conservatory. 

To add insult to injury hundreds of thousands of leaseholders are now expected to pay for historical remediation of flats as a result of the building safety scandal not of their making with an untold number facing bankruptcy. Ministers have promised 17 times that they would not foot these costs, yet they haven’t used this Bill to make good on that pledge.

Wholesale reform is needed but the government is too close to the major developers entangled in this mess to take meaningful action, as evidenced by the painfully slow progress in this matter. 

Labour is on the side of leaseholders. We’ll continue to expose the flaws in the government’s plans and strengthen the Ground Rents Bill as it passes through Parliament. People shouldn’t have to wait for the glacial pace of government to fix this unfair system. 

We will champion action now to reduce ground rents for existing leaseholders, end all leasehold arrangements for houses, give leaseholders a right to challenge fees or poor performance from service companies, cap service charges for shared ownership properties and reform forfeiture. 

Leasehold is a symbol of our broken housing system, with millions of England’s homeowners still beholden to a landlord despite buying their own home.

The government must listen to campaigners and join us to end this archaic and outmoded system that goes back to feudal times. 

Justice must be done for the millions of leaseholders trapped in this unfair system.

 

Mike Amesbury is the Labour MP for Weaver Vale and Shadow Minister for Housing.

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