Want to understand what’s really going on in Britain, and how we can fix it?
Join Vicky’s subscriber-only newsletter, The State We’re In, where she breaks down the big issues shaping the country. You can sign up to get it sent straight to your inbox, every single week, here.
Good afternoon. Yesterday, the Prime Minister confirmed to the Liaison Committee that the Government’s long-awaited Leasehold and Commonhold Reform Bill is, indeed, delayed.
When questioned about the bill’s whereabouts by the chair of the Housing Select Committee, Florence Eshalomi, Sir Keir Starmer could not confirm that these landmark reforms of the leasehold system in England and Wales would be presented to Parliament before Christmas.
That’s a world away from the emphatic assurance that the bill would be delivered to Eshalomi’s committee just a few weeks ago by Housing Secretary Steve Reed.
What’s coming up in today’s newsletter?
Millions of leasehold homeowners are anxiously awaiting news of Labour’s Leasehold and Commonhold Bill The Treasury seems to have cold feet over ground rent reforms promised before the election After cutting affordable housebuilding targets in London and effectively giving a tax break to developers, Labour could betray leasehold homeowners by failing to legislate against onerous ground rents, which have stalled the housing market Plus… behind the scenes of my exclusive interview with the Chancellor herself, Rachel Reeves…So, what’s going on? And, why does it matter so much?
It seems that there is currently something of a disagreement brewing between No 10 and No 11 about how much reform Labour’s leasehold reforms should do, particularly when it comes to ground rents.
As I reported just over a week ago, this standoff was always on the cards. Treasury officials resisted ground rent caps under the Conservative Government, much to the frustration of former Tory housing secretary Michael Gove.
As Lord Gove told me recently: “The Treasury has always resisted justice for leaseholders.”
He said this was because they believe it “sends the signal that the UK is not a good place for investment, because we legislate retrospectively”.
However, in the end, the Tories did agree to cap ground rents at a peppercorn. In effect, that’s nothing. And, prior to the election, the minister now responsible for this legally complex and politically perilous piece of legislation, Labour’s Matthew Pennycook, made it clear that his preference was also for a peppercorn cap.
The freeholder lobby – that’s landlords who own buildings across England and Wales with the sole aim of making money on ground rent – argues that restricting what they can charge could cause problems for the British economy because pension funds and other investors have serious skin in this game.
However, as Gove told me and, as former deputy prime minister Oliver Dowden has corroborated, despite the continued campaigning of this incredibly well-funded lobby, no evidence could be found to support their claims.
And, so, if Labour rows back on Pennycook’s pledges, all of which are in Hansard, they will be betraying millions of leasehold homeowners. “Hoodwinked,” as one insider put it to me, “by a powerful lobby that often looks out for the interests of offshore interests.”
Indeed, Gove went as far as to tell me that failing to address this issue was relying on a “butler economy” where “the interests of foreign investors are put ahead of British citizens”.
If Labour fail to do anything less than cap ground rents at £250 a year maximum, this Government will be less radical than the Conservatives on this crucial area of housing policy.
Why does it all matter so much?
Millions of leaseholders hit as £250 rent cap faces axe
Put simply, it is a huge issue.
Firstly, Treasury officials reportedly think that ground rents only impact wealthier homeowners in London. Well, they’ll be shocked to learn, in fact, that millions of people – all of them leasehold homeowners – are affected by this.
The Government has assumed there are 4.98 million leasehold properties in England and 235,000 in Wales.
It has further assumed that 18 per cent of leaseholds (about 900,000 leases in England and about 43,000 in Wales) have escalating ground rent terms where the ground rent will increase in line with the Retail Price Index (RPI) measure of inflation pre-2030, and the CPI measure from 2030 onwards every 10 years.
This is based on the Competition and Markets Authority, which carried out the investigation into mis-sold properties with aggressive ground rents.
The remaining leases that pay ground rent (about 3.4 million in England and an estimated 160,000 in Wales) have fixed ground rents.
The pain of onerous leases for people who have done everything right and bought a home of their own cannot be underestimated. Some particularly problematic leases allow freeholders to double ground rent every 10 years, causing bills to run into tens of thousands of pounds over time.
One leaseholder told The i Paper that her ground rent would reach more than £1m a year in 50 years without a cap. As a result, she cannot sell her home.
Secondly, this is impacting the housing market. Most (but not all) leasehold homes are flats. And, as I’ve reported, flats are either not selling or losing their value. That is largely because buyers are, quite rightly, concerned about getting entangled with the leasehold crisis.
In my own small block of flats in east London, two sales have now fallen through on homes because mortgage lenders were concerned about our leases.
Fortunately, we own the building collectively after buying it in 2019 and are in a position of power – we are paying to have our leases rewritten. But if you have a freeholder, that’s not so easy.
By stalling on ground rent and leasehold reform, Labour are contradicting their growth mission and undermining their own pledge to build 1.5 million homes and make it easier for people to buy.
To hit that enormous target, Labour will need to build lots of flats. Particularly in towns and cities. But, if nobody wants to buy flats, how, exactly, will Labour convince developers to build them at scale?
Developers ‘only interested in building luxury homes’
In my new BBC Radio 4 documentary series, Housing Britain, I interviewed a developer who made it clear that he is no longer interested in building anything other than luxury homes because he doesn’t think the demand for other types of housing is there.
Worse still, earlier this autumn, Labour made a very contentious and politically uncomfortable decision in London. They cut affordable housing requirements (via Section 106) for developers in London and, in effect, gave developers a tax break. The Government’s reasoning for this is that it would get London’s housing market going.
But, as experts like Neal Hudson have repeatedly warned, flats are simply not a good investment in London, and people do not want to buy them, in no small part because leasehold reform has not yet arrived.
If the Government does not act on ground rents and decides to go ahead with a watered-down version of Pennycook’s Leasehold and Commonhold Bill, they could find that the London housing market continues to remain in the painful stall it has now been in for more than a year.
Labour backbenchers unhappy
The i Paper understands that Labour backbenchers are very unhappy about what has unfolded. A letter was signed by a number of MPs and sent to both the Ministry of Housing, Communities and Local Government (MHCLG), and No 10 just over a week ago.
Since then, the decision on ground rents has been delayed. But the longer this goes on, the weaker and more indecisive this already embattled Labour Government looks.
Local elections are on the horizon. Housing concerns are a big issue for people. Across the country, Labour must fight both the Greens and Reform UK. To do that, they really need to decide what they stand for.
Leasehold reform may be a complex area of policy, but it speaks to one of the most fundamental problems this Government has: do they actually want to help people, or not? Do they want growth that improves people’s lives or growth that benefits business – not all of it domestic – at the expense of working people?
Siding with freeholders would send a clear message to voters. And that is that this Government does not care about them because they’re happy to fold under pressure from an obviously exploitative and extractive sector when even the Tories did not. In both policy and political terms, I believe the technical term for this is… a mess.
Housing Crisis Watch
Yesterday, I sat down in No 11 Downing Street with… the Chancellor herself.
We discussed the Financial Conduct Authority’s (FCA) move to deregulate mortgage lending in a bid to help first-time buyers into homeownership.
Will it work? Keep an eye out in the coming days for my exclusive interview with Rachel Reeves to find out.
Your next read
square DONALD TRUMP AnalysisTrump’s $10bn BBC lawsuit relies on one massive presumption
square POLITICSMI6 chief: Tech giants are closer to running the world than politicians
square MOTABILITYI’ve had to take out a £10k loan for a new car after Motability cuts
square WORLD AnalysisPutin fantasises about destroying UK cities. Britain must stop dithering and act
What I’m reading (and listening to)
I am afraid this is a shameless plug for Episode 2 of my Radio 4 documentary series, Housing Britain. This episode is all about affordability. I speak to a single mum in her 30s who has rented privately her entire life. And, a landlord who, at one point, owned more than 100 homes. Have a listen! Let me know what you think! This long-read from Kate Mossman in the New Statesman was incredible. Well-researched, full of eye-witness interviews with big names and, crucially, posing major questions about whether 9/11 was an avoidable tragedy. And, finally, on Saturday night, I was lucky enough to attend the annual carol service put on by the homelessness charity, Crisis, at Southwark Cathedral. I was incredibly moved by a reading from a man in his 60s who was homeless for the first time in his life until Crisis stepped in. His reading was accompanied by Rhys Wynne-Jones, on piano. Wynne-Jones is a formerly homeless musician who honed his skills by practising on the public piano inside King’s Cross St. Pancras station.Hence then, the article about inside labour s big leasehold battle with homeowners landlords and its own mps was published today ( ) and is available on inews ( Middle East ) The editorial team at PressBee has edited and verified it, and it may have been modified, fully republished, or quoted. You can read and follow the updates of this news or article from its original source.
Read More Details
Finally We wish PressBee provided you with enough information of ( Inside Labour’s big leasehold battle – with homeowners, landlords and its own MPs )
Also on site :
- Travel Warning Issued For Millions Across US
- ‘Change is inevitable’: What is next for Iran?
- Australian Open: Sinner overcomes cramps; Keys, Pegula advance; Osaka withdraws