Housing minister Rachel Maclean pledged the imminent reform of the Leasehold Advisory Service, called out Churchill Retirement Living for gaming the ground rent ban, pledge to end the “assured tenancy trap” and reiterated the government’s commitments to reform leasehold in a strong speech to the APPG.
The speech repeated – again – the government’s now familiar commitments to reform leasehold, but did so with a degree of insistence that the moment was coming.
Before addressing these she said that the “assured tenancy trap” where leases are more than £250pa outside London and £1,000pa within the capital – where the properties are the principal home – will be dealt with in the Renters Reform Bill.
Rachel Maclean also criticised the “egregious issue” of Churchill Retirement Living ” who had chosen “to bend the rules of the Leasehold Reform (Ground Rent) Act”.
Churchill Retirement Living had issued a slew of new leases – 400, according to the minister – just before the new ground rent ban applied to retirement housing on 1 April 2023 that included ground rents which, in some cases exceeded £600.
“Churchill had issued leases on incomplete developments, so they could continue to charge ground rent on new properties after the 1 April [2023] cut-off date,” said Rachel Maclean.
“The Secretary of State Michael Gove himself wrote to Churchill to express his concerns. And in response to that, they decided to do the right thing, I am pleased to say, and remove ground rent terms from all developments launched after 1 April this year, irrespective of whether leases have been granted or not. And that is very good news for nearly 400 potential customers.”
Inheritances slashed as value of retirement homes plunges
The Times found that three quarters of homes built by Churchill Retirement Living have lost money when resold, with owners struggling to find buyers prepared to pay the ground rent and service charges.
The minister turned to the Leasehold Advisory Service, after hearing “many representations that this body needs to improve”.
“We are clear that it needs to be more impactful, more customer friendly and more efficient service. We want it to highlight and strongly advocate for the issues that leaseholders and park home owners face, because they really do face some shocking issues and things need to change to address them. And we want this new body to do just that. So we are recruiting a new chair of lease and a board to support them, and we hope to take forward this very important work.”
The minister also said that she had met with the Competition and Markets Authority, which “continues to work behind the scenes with developers and landlords and freeholders to secure settlements where properties were sold with aggressively escalating ground rents.
This is a particular issue now that inflation has made many ground rents rise more aggressively than 10-year doublers, which prompted the scandal that was brought to public attention by LKP in autumn 2016.
The minister paid tribute to campaigners who have repeatedly exposed the failings in leasehold, and emphasised the importance for campaigners to involve MPs in their disputes, such as Justin Madders, co-chair of the APPG and co-patron of LKP, who writes regularly to her and this has resulted in her acquiring “a huge amount of knowledge and real world experience from the ground”.
She then addressed the reforms, long advocated by LKP and articulated by the Law Commission as long ago as 2017.
“We know that leaseholders find the process for extending their lease or buying their freehold prohibitively expensive, complex and lacking transparency, and we understand many right to manage applications fail on technicalities.
“We want to make it cheaper and easier for leaseholders to extend their lease, and buy their freehold, which is why we’ve announced that we will abolish marriage value and we will cap ground rents in enfranchisement calculation. So leaseholders who currently pay onerous ground rents don’t also have to pay an onerous premium.
“And to make that process of enfranchisement simpler and more transparent, we will introduce an online calculator to help leaseholders understand what they all have to pay to extend their lease, or to it buy out. And we know that these will result in a substantial savings for some leaseholders, particularly those with fewer than 80 years left on their lease.
“We remain committed to banning new leasehold houses: we just don’t see any case at all for why a house should not be freehold from the outset.
“We remain committed to delivering a reformed commonhold system as an alternative to leasehold ownership.
It will be interesting to see whether this commitment sees light of day in the King’s Speech in November.
Rachel Maclean then turned to insurance, which the Financial Conduct Authority has reluctantly been investigating.
“We have committed to ban unfair, and opaque, building insurance commissions, from being passed on to leaseholders through the service charge and replacing it with the transparent and fair fee system commensurate with the work and time taken to place and managed insurance.”
She also condemned the unfair legal cost regime in the property tribunal, by which most leasehold rebellions are squashed:
“We don’t believe at leaseholders should be subject to unjustified legal costs and we believe they should be able to claim their legal costs from their landlord, and we’re taking action to address this.
“So the next stage of our reform package will be to build on the Leasehold Reform (Ground Rent) Act and it will support leaseholders by making home ownership cheaper fairer and more secure.
“And I believe that we should and we will act to correct the power imbalance that’s faced by leaseholders and put the power into the rightful hands of homeowners.”
In short, she addressed the shopping list of issues that LKP has been raising since 2012 and about which there is now overwhelming consensus.
Related posts:
Huw Merriman calls for zero ground rents for retirement leasehold at prime minister’s questions
Churchill Retirement donates £150,000 to Conservatives. To retain ground rents, by any chance?
Housing minister says LEASE must be on the side of leaseholders, and promises more money
Bottomley to raise with Churchill Retirement its decision to continue charging ground rents
At last a housing minister who seems to want to reform leasehold, and knows legal costs are being gamed to keep freeholders on top
War of attrition: FirstPort appeals St David’s Square leaseholder victory (after telling leaseholders everyone would be sharing in the win)
ABOLISH not REFORM.
I agree abolish were practicable but reform where there is no alternative to Leasehold.
For example in many Social Housing complexes where there is a mix of Leaseholders and Tenants. And possibly also in some Assisted Living Retirement complexes where there would be no chance of very elderly infirm ever being able to deal with the change.
Michael,
I agree with your valid comments and will continue to do my bit to support your point of view.
So there is recognition that Lease Advisory Service needs to improve – more impactful? More customer friendly? More efficient?
It would be helpful if you enlighten us (readers) as to what that actually means. In the process to explain what LEASE even exists for, too. Having referred to this service on countless occasions I can tell you what it is NOT, and that is it is NOT a free legal advice service. All of their ‘advice’ is stated on their web site. I complained directly to Mr.Gove about the shambolic disfunctional state of this government department. Like every other government department LEASE is broken, tinkering with the executives is not going to resolve anything.
Based on my experiences, my advice would be NOT to bother with making an appointment with LEASE at all. You will be disappointed and disillusioned.
The government has already abandoned any leasehold reform! To now promise action on leasehold when it is perfectly clear that Conservative landlord MP’s will continue to block measures which they perceive act against the landlord’s interest.
As the old saying goes, turkeys never vote for Christmas!
Fair and true, there will be no meaningful leasehold reform. The Conservative Party’s biggest donors come overwhelmingly from the property developing and owning sector. Anyway the death knell for meaningful leasehold reform in England came when Michael Gove started hyping it – this oleaginous charlatan has a lengthy track record of hype, commitments & promises, followed by failure to deliver before he hops off to the the next policy sound bite.
No need to be that pessimistic, Campaigns have led to reforms such as the recent abolition of ground rents on new leases.