Leasehold abolition plans dropped?
The Guardian has reported today that the Government’s much-reported plans to abolish the ‘feudal’ system of leasehold have been quietly dropped, and when Michael Gove unveils a range of measures next month designed to protect the interests of tenants, the end of the leasehold system will not be among them. If true, I’d wager it will come as a surprise to precisely…. zero property lawyers.
If the Government believes that leasehold reform will be a crucial vote winner amongst younger people, then it will need to focus on tackling the reasons why owning your own home is so unachievable to many. Changing the value imbalance between landlords and tenants, by removing ground rents and fixing the price of lease extensions or enfranchisement, may well be a good start. But the existence of a freehold/leasehold system is not in itself the root of all evil, and demonising leasehold in this way is unhelpful. In fact the leasehold system provides a practical way of managing properties which are physically dependent on one another. Flats do not float in thin air; they rely on support from the flats below them. Flats do not all have their own entrance and access arrangements; they must be shared. Human nature being what it is, disputes will inevitably arise about the impact one person’s use of a flat has on another’s. Someone has to have in mind the greater good of the entire building, and prevent tenants from acting wholly in their own self-interest – that person is the freeholder (who might be a disinterested investor, but who may well be a company controlled by the tenants themselves).
Despite its rhetoric against the evils of leasehold, the Government never satisfactorily answered the question of what might replace it. Commonhold has often been touted as the solution, but commonhold itself does not stop disputes arising between tenants. The fact that commonhold has been so rarely used in this country, despite it being on the statute books for the last 20 years, gives a pretty clear indication that property lawyers in practice have not found it to be the answer. It would seem that Gove and his team have reached a similar conclusion.
In the meantime, lawyers like me will continue their wait to see if the Government can come up with a radically different system of ownership that everyone agrees is fair and actually works in practice…. but I for one won’t be holding my breath.
Subcribe to news and views“I don’t believe leasehold is fair in any way,” he said. “It is an outdated feudal system that needs to go. And we need to move to a better system and to liberate people from it.”
https://amp-theguardian-com.cdn.ampproject.org/c/s/amp.theguardian.com/money/2023/may/10/plans-abolish-feudal-leasehold-system-england-wales