A Labour Government would give leaseholders security from rip-off ground rents - Healey

John Healey MP, Labour’s Shadow Secretary of State for Housing, commenting on new government statistics showing that there are four million leasehold dwellings in England, said:

“These new figures confirm for the first time the scale of leasehold ownership in England.

“Home-owners who own their home as leaseholders are currently unprotected from rip-off rises in ‘ground rents’ from developers or management companies.

“At its worst this is little better than legalised extortion and too many leaseholders are having to pay hefty bills as a result. Under a Labour Government this sharp practice would end.

“This is unfinished business for Labour – we gave leaseholders more protection in government, but the continuing problem now means we must do more.

“A Labour Government would give leaseholders security from rip-off ground rents and end the routine use of leasehold ownership in new housing developments.”

ENDS

Notes to editors

-          This figures released today are a new experimental set of statistics estimating the number of leasehold dwellings in England: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/606387/Estimating_the_number_of_leasehold_dwellings_in_England__2014-15.pdf. It estimates that there are four million leasehold dwellings, equal to 21% of private sector stock, and with 30% of these houses rather than flats.

-          Leasehold dwellings are those where the property is owned for a fixed period of time, on a ‘lease’ to a freeholder. The leaseholder typically pays a ‘ground rent’ to the freeholder in recognition of their ownership status. They may also pay other costs such as management fees for the upkeep of communal areas.

-          Labour has previously said that it will cap rising charges that leaseholders pay in so-called ‘ground rents’, and plans to end the routine use of leasehold ownership in developments of new houses.

-          A survey from insurer Direct Line found that average ground rents on new build properties are £371 a year, though there have been reports of much higher figures, which are escalating sharply: https://www.theguardian.com/money/2016/nov/05/ground-rent-scandal-engulfing-new-home-buyers-leasehold.

-          Labour’s shadow secretary of state for housing, John Healey MP said this was “unfinished business” for Labour after they introduced legislation in 2002 (Commonhold and Leasehold Reform Act 2002) to try to deal with the scourge of leaseholders being ripped off by unscrupulous developers or managing agents. The Act aimed, among other things, to make it easier for leaseholders of flats and houses to buy their freeholds or extend their leases.

-          While Labour would consult on the appropriate level of a ground rent cap, it would be designed to rule out the large rises that some home-owners have found themselves hit by, and give leaseholders security against unforeseen rise in housing costs, including when they come to sell their home.