Ahead of July 4, Labour and the Conservatives have drawn up competing plans for how they aim to tackle housing in England. Both parties have promised to build more homes, help first-time buyers get on the property ladder and make homes, both rentals and purchases, more affordable.
Any buyer, first-time or veteran, will be familiar with the conundrum of considering a leasehold purchase. There are 4.77 million leasehold dwellings in England. These are homes held under a lease, which is ultimately a wasting asset with a fixed-term. The tenant does not have the freehold of their home, which is owned by a landlord.
In 2019, the Conservatives first pledged to ban the sale of new leasehold homes. The housing secretary Michael Gove then promised, in January 2023, to abolish leasehold entirely for residential properties
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The second promise made concerned restricting ground rents (the rent paid to the landlord under a residential lease) to a peppercorn, in other words, a nominal amount. Such annual sums can often be a few hundred pounds and can be increased under the terms of the lease.
A further Conservative pledge was to abolish no-fault evictions. This is the ability for landlords to remove tenants at the end of a fixed-term residential lease, typically short leases of six months to three years. Under S21 Housing Act 1988 landlords can apply to court to remove tenants at the end of a fixed-term tenancy, without any fault on the part of the tenant (such as a failure to pay rent).
In 2023, Rishi Sunak’s government made a fourth promise, to force social landlords to fix damp and mould within their properties. This was following the death of two-year-old Awaab Ishak in 2020, which the coroner ruled was due, in part, to exposure to mould in his housing association flat.
When parliament was dissolved for the election, however, progress on these pledges was spotty. Reasons include lack of a viable alternative to leasehold and concern about the ability of the court system to deal with the abolition of no-fault evictions. Revolts from back-bench Conservative MPs (some of whom are landlords have also been a spanner in the works.
Read more: Conservative manifesto puts home ownership up top – but ignores housing affordability
Unsatisfactory results
Legislation that improves a leaseholder’s ability to extend their lease or buy the freehold has seen some progress made. But in terms of the following four key promises, the Conservatives have not delivered in full.
First, the government prohibited the sale of new residential leases of houses (with some exceptions) through the Leasehold and Freehold Reform Act 2024, which received royal assent on May 24 2024. However, this does not apply to flats, which make up 72% of residential leaseholds (3.44 million flats). It also does not apply to existing leasehold houses.
As the housing secretary, Michael Gove, himself admitted, it is enormously difficult to unravel years of leasehold law. There are also good reasons why leaseholds are used for flats rather than freehold.
It is easier, for example, to enforce a positive covenant (one that requires effort or expenditure to comply with) in a lease rather than in a freehold.
One would therefore question the wisdom of the extended promise to abolish leasehold entirely. Indeed, the Labour party has also dropped its commitment to abolish leasehold within the first 100 days if elected.
There is an alternative. Commonhold is effectively another form of freehold ownership that could be the answer, because it removes the problems of enforcing positive covenants.
The problem is that it is incredibly unpopular. In 2020, the Law Commission noted that fewer than 20 commonhold schemes exist.
This is because commonhold is seen as being at a greater risk of insolvency to mortgage lenders. Also, conversion to commonhold requires unanimous approval of all interested parties (including freeholders, all leaseholders and any mortgage lenders with a mortgage over the property).
Read more: Starmer and Sunak agree the UK needs more houses to ease the crisis – here's how their plans compare
Second, the Leasehold Reform (Ground Rent) Act 2022 did reduce ground rents (for leases granted on or after 30 June 2022) in long residential leases to a peppercorn. However, proposals to decrease all ground rents in existing residential leases were dropped before the Leasehold and Freehold Reform Act 2024 was passed. This means that many residential tenants of long leases are still vulnerable to ground rent increases.
Third, the renters (reform) bill, introduced to parliament in May 2023, was intended to pave the way for banning no-fault evictions, but it had still not gone through the House of Lords by the time parliament was dissolved.
Between 2022 and 2023, there was a 49% increase in bailiffs carrying out such evictions, and the numbers continue to increase and affect more and more people. The latest statistics show that 18,154 possession orders were granted between January and March 2024, up from 17,644 the previous year.
Data from the homelessness charity, Homeless Link, shows that, in the five-years from when the Conservatives made their 2019 promise to end no-fault evictions, an average of 52 households per day have been threatened with homelessness through no-fault evictions.
Fourth, the Social Housing (Regulation) Act 2023 included Awaab’s Law (as it is now known). This will force social landlords to take action on prescribed hazards within set timeframes.
However, important secondary legislation to prescribe the hazards and timeframes has not yet been passed. Consultation on this detail closed in March 2024. Some key components are therefore still missing in the act.
Private renters have also raised concerns about why the changes required for social landlords were not going to apply to private sector tenants. The Labour party has promised to extend the law to the private sector in the 2024 manifesto to cover, for example, the 1.6 million children that were found to be living in cold, damp or mouldy private rented homes in England in 2023.
It is fair to say this is a poor effort on the government’s part. Making progress has been partly out of their control – parliament was dissolved before the renters (reform) bill had passed through both houses. But the 2024 Conservative manifesto makes many of the same promises (to end no-fault evictions, cap existing ground rents and make the uptake of commonhold easier). It remains to be seen whether they will have a second chance to meet them.
Chloe Sheppick does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.
This article was originally published on The Conversation. Read the original article.
