Leasehold law change is overdue
It is rare for me to agree with well-paid lawyers, but in one area they are right.
Recently, I’ve had a big postbag from decent, hard-working families across Blyth Valley caught, like millions of others, in the “leasehold trap” and at the mercy of outrageous demands from freeholders for lease extensions.
A change in the law is long overdue, but that is being bitterly contested by those involved in lucrative estates.
Now the Law Commission has proposed that homeowners should be able to buy their freeholds at a fraction of the price currently demanded by ground rent companies. It has suggested a simple formula where leaseholders will pay just ten times their current ground rent to convert their property to freehold.
With ground rents averaging around £370 a year, that suggests a cost of £3,700 – far less than the £10,000 to £40,000 typically sought from a leaseholder for a flat valued at £200,000 with fewer than 80 years left on the lease.
The Commission also proposed new formulas for leaseholders who extend their lease rather than buying the freehold. It suggested that they could have a right to extend the lease for up to 250 years, and no longer have to pay ground rents.
This is not some arcane legal nicety – nationwide 4.2 million people are caught in the trap. Around one in five new-build houses in recent years, and almost every flat, has been sold as leasehold, some with rocketing ground rents that have made selling them virtually impossible.
Tory communities secretary Sajid Javid asked the Commission to find ways to make buying out a lease “much easier, faster and cheaper”. Now, almost eight months later, it has responded.
And will the government take action to end this scandal? Don’t hold your breath.
Theresa May’s administration is paralysed by rifts over Brexit, Parliament is heading into the long summer recess, and the plight of a few million householders does not seem high on the Tory agenda.