Is the betrayal narrative over leasehold reform being over-played?

Not much more than 100 days in office and the Labour government is under attack on social media from leaseholders – and a former Conservative housing minister – complaining that it has not announced immediate leasehold reforms.

The almost total silence from ministers – particularly housing minister Matthew Pennycook, doubtless on orders from above – on when it will meaningfully reform leasehold has fanned the flames.

But over the weekend Mr Pennycook did give renewed pledges in an interview to LBC radio, which echoed reassuring Tweets on Twitter / X:

“We have got to turn on the Leasehold and Freehold Reform Act that was passed in the wash up in the last Parliament.

“That is more complicated than it sounds, it requires an extremely complex programme of secondary legislation … and then it requires further reforms, not least ensuring that commonhold is the default tenure going forward.

“But our commitment to make that change over the Parliament remains in place and I hope at a point in the not too distant future to be able to say more about precisely [what] the plan of action [is and] how we intend to take that forward over the coming years.”

This then set off a flurry of indignant speculation that the reforms would be sidelined until the end of Parliament and risk being a compromise, just as the Conservative’s Leasehold and Freehold Reform Act 2024 turned out to be as the election intervened.

Before the LBC interview, Mr Pennycook had been keeping pretty schtum, beyond addressing lawyers on planning and housing supply at an event hosted by Landmark Chambers last week. Unfortunately, these are precisely the barristers leading some of the judicial review challenges by freeholders questioning the legality of the 2024 reform:

Housing Minister Lobbied at Event With Pro-Leasehold Lawyers

Eyebrows have been raised in SW1 over Housing Minister Matthew Pennycooks’s attendance at an event hosted by Landmark Chambers last week. Tickets went for

Freeholders on course for judicial review showdown against leasehold reforms in January

And Pennycook was not helped by Landmark barrister Camilla Lamont KC commenting on LinkedIn: “Privilege to be able to advocate in favour of saving leases with the minister in attendance. Let’s hope the plan to abolish the ‘feudal’ system of leasehold is just a sound-bite.”

So this wasn’t exactly an audience sympathetic to the cause of leasehold reform. Justin Bates KC, the lawyer who has turned demolishing leaseholders right to manage applications into a cottage industry, is also at Landmark (and a member of the Society of Labour Lawyers.

As it happens, he is busy at it again this week in the Upper Tribunal on behalf of long standing client Israel Moskovitz, of Avon Freeholds.

Avon Freeholds Limited v Cresta Court E RTM… – Landmark Chambers

Explore ‘Avon Freeholds Limited v Cresta Court E RTM Company Ltd [2024] UKUT 335 (LC)’ at Landmark Chambers for in-depth analysis and expert commentary on…

Former Conservative housing minister (and now ex-MP) Rachael Maclean, who became very enthused by the cause of reforming leasehold but was replaced by Lee Rowley when it came to getting the Act through the Commons, added to the excitement on Twitter / X claiming: “We said this many times in Parliament to Mr Pennycook yet he pretended it was easy and they bought votes on the back of it.

“Leaseholders are yet another group to be let down by this terrible Labour government. We made significant progress while I was the minister and those reforms will help …”

Er … On the other hand, the Conservative government had 14 years to fix the leasehold system – and getting them to do so was a massive task by the Leasehold Knowledge Partnership working together with the All-Party Parliamentary Group under Sir Peter Bottomley and, later, the National Leasehold Campaign – so blaming the Labour government after 100 days seems a little hasty.

The Daily Telegraph, which one can’t help suspecting is not an enthusiast of the Labour government, also had some fun and jumped on board:

Leasehold reforms could take five years, Labour MP admits

Revelation comes just weeks after Matthew Pennycook promised his party would ‘act quickly’

Obviously, LKP is not privvy to Matthew Pennycook’s thinking, but when he has spoken he has been consistent: Labour will introduce the secondary legislation of the 2024 Act and introduce a Bill further to reform leasehold and advance commonhold and address the “fleecehold” issue of money-earning private estates.

Clearly, he is under no obligation to see through the entire agenda of former Conservative housing secretary Michael Gove, whose consultations over ground rent reform included a proposal to set existing ground rents to zero.

In fact, all the proposals to end or restrict existing ground rents would almost certainly have resulted in legal challenge, but we will have to try to salvage what we can. In this context, consultations – which leaseholders are going to encounter with increasing frequency in the months ahead – are an essential part of the strategy to prevent this lawfare against reform being successful.

We have had consultations ad nauseam in the past but the next set is about how something should be implemented rather than whether or not it should be done. Leaseholders would be very cross if the government just decided how the new service charge accounting rules should work without asking consumers for a view. The supply side of the sector also needs to input on how to make the rules work effectively.

With the Budget now out, and the government’s main agenda set, we hope that Mr Pennycook will be in a position to announce the leasehold reforms.

In meanwhile, LKP is reassured because the talented officials – of a different league to the ones we encountered in early years of LKP – are still in place and have not been scattered around Whitehall.

Were that to happen, we would be feeling out of sorts.

The work on policy development takes years of work before legislation gets anywhere near Parliament.

Work on what became the Leasehold Reform (ground rent) Act 2022 and the Leasehold and Freehold Reform Act 2024 began before 2017, when the law commission was tasked with reporting on key problems with the law.

The 2022 Bill was essential for two things: it ended all new ground rents, and perhaps even more important banned any ground rent on an extended part of any existing residential lease. These measures were essential to help bring about the end of the leasehold system.

It was LKP’s urging that led the government to reform leasehold in stages, and robbing ground rents of a future was the essential first step. Only after it, could the far more complex leasehold reforms come in.

Our enemies in the sector, of course, would have much preferred one long meandering Bill, with ample scope for obfuscation and dark arts, that would have subsequently failed. Just as they managed to sabotage the Commonhold and Leasehold Reform Act of 2002.

The work on the Leasehold and Freehold Reform Bill 2024 began a long time before leaseholders were aware of it, with dozens of officials working on policy options considered on every issue. LKP has been part of the stakeholder engagement, meeting officials on a monthly basis since 2017 on behalf of the All-Party Parliamentary Group on leasehold and commonhold reform, of which it is the secretariat.

The Law Commission noted in their reports the particular input of two LKP trustees who are no longer with us: Louie Burns and Professor James Driscoll.

Had the July election not intervened, important additions would have been made to the 2024 Bill. Those changes will now have to wait for a new draft Bill, hopefully to be introduced in the next 12 months.

LKP has exposed the forfeiture issue for many years and we would expect that to be addressed in any future Bill along with changes to the Right to Manage, “fleecehold” and commonhold.

The commonhold issue is a project that LKP restarted in 2014 and has always been the end goal of our efforts to reform the leasehold system.