Home » General Election: Where the political parties stand on leasehold reform

General Election: Where the political parties stand on leasehold reform

modern block of flats

The Leasehold and Freehold Reform Act 2024 was one of the last pieces of legislation that made it onto the statute book after the General Election was called.

However, there was considerable disappointment among leaseholders that the Conservative’s manifesto commitment to reduce ground rent to a “peppercorn” was not included in the Bill, and that forfeiture still remains. The Act also does not include provisions to make commonhold the default tenure, as recommended by the Law Commission in 2020.

In this blog post, I compare the policies of the three main political parties about the continuation of leasehold reform. The short version is that there is a good deal of consensus that leasehold reform needs to continue, but many of the commitments are (inevitably?) vague.

>> Show Notes: Good Landlording – Election special: Manifesto pledges on leasehold reform

Overview of policies for leasehold reform of the main political parties

PolicyConservativeLabourLib Dems
Cap ground rentYes – at £250Yes – no figuresYes – nominal fee
Ban forfeiture“Ban misuse”??
Commonhold“Make it easier to take up”Yes – default tenureYes – “abolishing leaseholde”
Cladding remediation “continuation of developer-funded
remediation programmes”
“renewed focus”Yes
Policies private rented sector of the 3 key political parties for 2024 election in England at a glance
(based on information available on 14 June 2024)

Key terminology

All of the manifestos refer to “commonhold” and “ground rent”. Before we dive into the detail of the policies, here is a quick explanation of what these terms mean.

What is commonhold?

Commonhold is an alternative to the leasehold and freehold model whereby the owner of a “unit” would own the freehold of their own unit, and have a share in a Commonhold Association, which is company limited by guarantee which owns the common parts.

It’s a complicated concept, and you can read more in this summary by the Leasehold Advisory Service.

Here is a link to the proposals of the Law Commission to “reinvigorate” commonhold from 2020.

What is ground rent?

Leaseholders pay “ground rent” each year to the owner of the freehold. The precise amount will be set out in the lease.

Unlike the service charge, the freeholder does not do anything in return for the ground rent.

Historically, ground rent was a nominal amount, a peppercorn, but in recent years, many developers have included terms in their leases which would increase the ground rent, for instance, doubling every 10, 15 or 20 years. This has been very controversial as these clauses have made it difficult for leaseholders to sell their properties or to obtain a mortgage.

The Leasehold Reform (Ground Rent) Act 2022 abolished ground rent for leases granted on or after 30 June 2022. The Conservatives had promised to restrict ground rent to a peppercorn in their 2019 manifesto, but they did not include this in the Leasehold and Freehold Bill.

>> Related Post: Guide to the reform of ground rent

Labour’s election manifesto commitments for leasehold reform

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. […]

Labour will also take decisive action to improve building safety, including through regulation, to ensure we never again see a repeat of the Grenfell fire. We will review how to better protect leaseholders from costs and take steps to accelerate the pace of remediation across the country. We will put a renewed focus on ensuring those responsible for the building safety crisis pay to put it right.

Labour commit to implementing the proposals of the Law Commission in their 2020 report: The Future of Home Ownership. This includes further leasehold enfranchisement, the right to manage, making commonhold the default tenure, and banning new leasehold flats.

Beyond that, their policies are vague and rhetoric-laden. Their policy regarding ground rent just refers to tackling “unregulated and unaffordable ground rent charges”, without saying whether they will cap ground rent. Likewise for estate charges and

The Conservative Party’s election manifesto commitments for leasehold reform

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.

After delivering landmark new laws that freed leaseholders from cladding bills following on from the awful tragedy of Grenfell Tower, we will continue our support for leaseholders affected by historic building safety problems by requiring the continuation of developer-funded remediation programmes for mid- and high-rise buildings.

The Conservative Party promise to “complete” the process of leasehold reform, including finally doing something about ground rent for existing leases, stopping the “misuse” of forfeiture and making encouraging noises about commonhold.

They also include a reference to continuing to support leaseholders affected by “historic building safety problems”, but do not provide any detail on what the developer-funded remediation programme would look like.

The Liberal Democrat’s commitments for leasehold reform

Liberal Democrats know that a home is a necessity and the base on which people build their lives. So we will ensure that everyone can access housing that meets their needs. […]

Liberal Democrats are committed to tackling these housing failures head-on by: […]

* Abolishing residential leaseholds and capping ground rents to a nominal fee, so that everyone has control over their property. […]

In addition we will:

* Remove dangerous cladding from all buildings, while ensuring that leaseholders do not have to pay a penny towards it.

The Liberal Democrats election manifesto is the most leaseholder-friendly, promising to abolish leasehold, cap ground rents and ensure leaseholders do not have to pay for the removal of “dangerous cladding”.

Final thoughts

Regardless of who wins the election, given the consensus on the key issues relating to leasehold reform, it is clear that leaseholders can expect to receive more rights over the course of the coming parliament.

2 thoughts on “General Election: Where the political parties stand on leasehold reform”

  1. As an older lady with health issues I am keen to know when the recent reforms relating to making it easier and cheaper to extend my 64 year lease will take effect. Or is it a ‘how long is a piece of string’ situation? Thank you

    1. Sherry, I’m a leaseholder (new build house, doubling ground rent 20 years), and not a legal expert.

      The Act which was passed will rely on secondary legislation (Regulations) to bring it into effect. There was cross Party support for the Act, so hopefully the Regulations will follow soon after a new Government is formed, though is likely it will be introduced over a couple of years.

      The Regulations will give the commencement date for the new rules and contain schedules for calculating the costs to purchase the freeholds and lease extensions etc.

      The Home Owners Alliance provided a guide for homeowners. This may answer some questions you may have. It’s worth noting the new rules may make it more expensive for some leaseholders.

      https://hoa.org.uk/advice/guides-for-homeowners/for-owners/leasehold-reform/

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