Leasehold reform remains a priority for future governments, says ALEP director

 According to Martin Chick, regardless of which party forms the next government, leasehold reform is far from complete.

“Whichever party forms the next government, leasehold reform is far from over,” Martin Chick stated. He pointed out that the Conservative party has pledged to cap all ground rents at £250 and phase them out over 20 years. “This does potentially put the ‘writing on the wall’ for ground rents in the mid to longer term,” he added.

On the other side, the Labour party has expressed its intention to abolish the “feudal leasehold system” and address unaffordable and unregulated ground rent charges. Martin Chick suggested that Labour's stance on ground rent would likely align with that of the Conservatives. “It has to be assumed therefore that their stance on ground rent would be similar,” he noted.

The Liberal Democrats have also weighed in on the issue, promising to abolish residential leaseholds and cap ground rents to a nominal fee. This move, they argue, would give everyone control over their property.

Martin Chick also highlighted the potential legal challenges that a complete ban on ground rents might face, particularly concerning human rights. “The prospect of a complete ban on all ground rents may not be possible for reasons connected to the possibility of a human rights challenge,” he explained. He called for the publication of the outcomes of the ground rent consultation that the Department for Levelling Up, Housing and Communities (DLUHC) ran in December 2023.

“At this stage, we don’t know exactly what a future government might look to do on the question of ground rents,” Chick continued. He suggested that the policy objectives gleaned from party manifestos indicate a move towards at least capping ground rents. He mentioned that ALEP members did not favor an outright ban on ground rents when surveyed earlier this year. “The suggestion of a cap rather than an outright ban might be seen as a victory for common sense,” Chick said.

He further elaborated on the potential impact of a phased cap and eventual ban on the property market, noting that it would allow time for adjustment. He also pointed out the uncertainty regarding the willingness of some freeholders to challenge these reforms. “The impact on the property market of a phased-in cap and eventual ban or ‘sunset’ clause will allow some time for adjustment,” he said. “What we don’t know at this stage is what the appetite of some freeholders may be to challenge these leasehold reforms together with the proposed valuation changes that the Leasehold and Freehold Reform Act 2024 will bring in.”

The manifestos of the three major parties provide more context to their respective stances:

The Conservative Manifesto: “We will complete the process of leasehold reform, to improve the lives of over four million leaseholders. We will cap ground rents at £250, reducing them to peppercorn over time. We will end the misuse of forfeiture so leaseholders don’t lose their property and capital unfairly and make it easier to take up commonhold.”

The Liberal Democrat Manifesto: “Abolishing residential leaseholds and capping ground rents to a nominal fee, so that everyone has control over their property.”

The Labour Manifesto: “For far too many leaseholders, the reality of home ownership falls woefully short of the dream they were promised. Labour will act where the Conservatives have failed and finally bring the feudal leasehold system to an end. We will enact the package of Law Commission proposals on leasehold enfranchisement, right to manage and commonhold. We will take further steps to ban new leasehold flats and ensure commonhold is the default tenure. We will tackle unregulated and unaffordable ground rent charges. We will act to bring the injustice of ‘fleecehold’ private housing estates and unfair maintenance costs to an end.”

As the political landscape continues to evolve, leaseholders and stakeholders await concrete actions and legislative changes that will shape the future of leasehold properties in the UK