Ban the flaws with leasehold, not the system

Wednesday 20 March 2019

The Commons Housing, Communities and Local Government committee has published a new report on leasehold reform, recommending that the Government go further in replacing leasehold with commonhold.

Tom Chance, the National CLT Network Director, responds with our take on their recommendations.

I share the committee's view that leasehold has been abused and exploited by developers, and that too many leaseholders have been mistreated by affordable housing providers.

We do not object to commonhold becoming the primary model of ownership for flats.

But as not-for-profit organisations dedicated to community benefit, CLTs are highly unlikely to abuse leasehold.

I'm pleased that the Committee has acknowledged some cases where leasehold flats may still be appropriate. But the same is true of leasehold and houses.

The Government seems to have accepted our view that Community Land Trusts use leasehold ethically and responsibly for flats and for houses, both to protect affordable housing and to keep land in community - rather than private - hands.

It's disappointing that the Committee has recommended that ground rents in future homes should be set at no higher than a peppercorn (i.e. zero value) level.

We hope the Government will accept that modest ground rents can be ethical - for example when a CLT leases its land to a housing association; when it provides a small contribution to the CLT's running costs (distinct from a service charge); and when the CLT leases land from a local council and the ground rent replaces a capital payment. Cohousing communities may also use ground rents to achieve their model of shared governance and management.

I've not yet heard any views on this from officials since the consultation closed, and we're for the Government to publish its response to the views it has received.

The National CLT Network would really welcome commonhold being reformed so that it is more compatible with CLTs.

We set out our thoughts on how this could be achieved to the Law Commission's consultation. But the reforms need to go beyond those recommended by the Law Commission and the Commons committee. As it stands, banning leasehold would just entrench a form of private ownership (commonhold) and rule out the CLT approach to community land ownership that leasehold can achieve.

In fact, it's likely that CLTs will always need leasehold - that they cannot fully achieve their aims with commonhold alone, unless it was changed beyond recognition.

We also share the view of the Confederation of Co-operative Housing that commonhold is no panacea, and that without care it could also lead to some of the same problems with leasehold. Having been a leaseholder in a Right to Manage company, I know that it is all too easy for one or two neighbours to dominate proceedings - running a truly democratic and inclusive organisation is not easy. It is good that the Committe picked this up, recommending that training and support is provided to residents.

I don't know whether the abuses and problems can be ironed out with reforms to leasehold, and the routes for consumer redress. That is, without banning leasehold entirely. Perhaps that does need to happen for the majority of new homes, and it would be good if commonhold became the default.

But the Government has made clear that it wants to see the community led housing sector grow. To achieve that, it must exempt us from some of these proposals, to ensure that communities can continue to make ethical and responsible use of leasehold for houses and flats, and with reasonable ground rents, so that they can achieve their not-for-profit objectives.

You can read our detailed consultation responses on leasehold and commonhold on our campaign page.

Posted in: Policy and Campaigning