The above picture is a commonhold development in Bristol where a local community formed a commonhold association to buy and convert a derelict office site.
Land reform and leasehold reform
1>Problems with leasehold in England and Wales :
- When your lease expires if you do nothing you become a mere tenant.
- Leaseholders merely own the right to live in their property, they do not own the flat itself which is owned by the freeholder.
- They must pay service charges to the freeholder which are often expensive.
- Problems with ground rent in the North of England on leasehold houses with escalating ground rent charges that are sold on to third parties.
- Leaseholders being asked to pay for huge fire safety charges through no fault of their own.
- Freeholders have the nuclear weapon of forfeiture.Leaseholders can be evicted for minimal arrears.
- The leasehold system is not climate change friendly. Permission fees are required for solar panels and ground pumps. Tories recently given freeholders the right to build up to 2 stories on existing block without planning permission. They will be reluctant to approve leaseholder applications if this means loses the right to build extra storeys.
- Problems with new build in the form of fleecehold where the builder controls the management of communal areas in new build estates.
- For a map by Anna Powell -Smith of land owned by builders near your address see here.
2> Alternatives to leasehold
- Virtual all the English-speaking world has moved away from the leasehold system. Scotland abolished feudal dues.
- The Commonhold and Leasehold reform Act 2002 introduced new form of freehold tenure in the form of commonhold. All leaseholders would own a share of the freehold via the commonhold association and their own flat. All properties in a commonhold association would be bound by a commonhold community statement. This would set out the responsibilities of all parties and would reduce legal disputes.
- For a review of the commonhold units that have been set up in England and Wales see here. The Isle of Shepey site in Kent is the largest commonhold site in England and Wales.For more details of this site see here.
- The Act failed as the new system was not made compulsory for new build and required the consent of all leaseholders in existing blocks to convert to commonhold.
- One success of the Act was to introduce right to manage companies.
- The law Commission has recommended a series of reforms including reinvigorating commonhold. See here and this utube video by the leading lawyer. https://www.youtube.com/watch?v=Hgebds_Ek00&t=798s
3>Why leasehold reform should be politically important for Labour?
- Labour needs more votes to form a majority Government. More owner occupiers tend to vote tory than Labour. If Labour can persuade more owner occupiers to switch votes this will mean one less vote for the Conservatives and one more for Labour.
- Many leaseholders were supported by their parents to buy their flats. Their parents are now angry that their children have been hit by huge fire safety bills : some are saying on twitter that they will never vote Tory again.
- See my analysis by parliamentary seats https://redbrickblog.co.uk/author/dermot-mckibbin/ and http://getcommonholddone.co.uk/campaign-news/2021/01/27/winning-elections-leasehold-reform-and-the-co-op-party/
- Labour promised leasehold reform in 1966 and 1997 prior to election victories.
- The Conservatives are slowing addressing this issue. However, the Building Safety Bill will when enacted imposes extra costs on leaseholders. The government claims to be committed to commonhold. However, the commonhold council will be stuffed full of Tory cronies.
- Recent research for the first time has revealed that there are over 4 million leasehold dwellings in England Wales. See the House of Commons library report here and their attached spreadsheet showing the number of leaseholders by parliamentary constituency.
- Many leasehold retirement properties on the south coast and elsewhere would benefit from benefit from forming right to manage companies. See Age Concern report here
4> Land Reform and leasehold reform
- If commonhold is be introduced successfully, it must be mandatory for all new developments. Builders will resist. It must be easier for existing leaseholders to convert to commonhold.
- The discussion document “Land for the many “issued by the previous labour leader does not even mention leasehold reform or commonhold. When was the last time leasehold reform was discussed at the Labour party conference?
- You will look in vain for any mention of commonhold in Guy Shrubsole’s Who Own England? and Rethinking the Economics of land and Housing by Josh Ryan-Collins et al.
- Nor does the Labour Land Reform Campaign address this issue with their land tax proposals.
- The Welsh Labour Government has published research on leasehold reform but the latest agreement with Plaid Cymru fails to include any mention.
- The Co-Operative Party lacks a clear view on leasehold reform.
- In the 1930s the Roosevelt Government responded to help defaulting homeowners who were struggling in the depression with the Homeowners Loan Corporation.Loans were reschedulred by a federal agency so that home owners could avoid eviction.
- In my view land reform is likely to be more successful if it responds to the injustices that people suffer. In the victorian era, the Scottish Crofters on the Isle of Skye fought a pitched battle with local police to protest about their conditions. The Government was astute enough to set up a royal commission which ultimately led to statutory improvements. The leasehold system is unfair. Progressive politicians need to mobilise this dissatisfaction If this issue was widely embraced by the entire Labour and Co-operative Movement, this would be to the Labour Party’s political advantage.
Beckenham CLP and Bromley Co-op party.
For more details see the FB page of the national leasehold campaign and the leasehold knowledge partnership website www.leaseholdknowledge.com/