No plans to cap service charges for leaseholders, housing minister tells MPs
The Government has no plans to cap service charges for leaseholders as part of its reforms of the “feudal” system, a housing minister has said.
In the Commons, Matthew Pennycook argued a cap on service charges would “prevent necessary funds being raised for legitimate purposes”, but confirmed ground rent will be “tackled”.
This comes as the Government announced its plans to ban new leasehold flats and make commonhold the default tenure, in a bid to give homeowners greater control over their properties.
Under the current system, third-party landlords can own a building’s lease and therefore make decisions on behalf of homeowners.
The Government has proposed to bring the leaseholds system to an end, in line with its manifesto commitment, and give homeowners more of a say over their bills.
Homeowners will not have to pay extra costs such as ground rent under the proposed reforms.
Mr Pennycook said the reforms “mark the beginning of the end” for the leasehold system, which subjects homeowners to “unfair practices and unreasonable costs”.
During housing, communities and local government questions, Labour MP for York Central Rachael Maskell asked whether the Government would bring in transitional arrangements until new proposed laws are passed.
She said: “I welcome this Labour Government getting a grip on the feudal racket which enslaves leaseholders to ever-rising management fees and ground rents, making it impossible to pay and impossible to move.
“Would the minister provide transitional arrangements to cap these costs while ensuring that all new development, even if soon to be in planning like in York Central, can transition to commonhold as soon as the law changes?”
These reforms mark the beginning of the end for a system that has seen millions of homeowners subject to unfair practices and unreasonable costs at the hands of their landlords
Mr Pennycook replied: “The Government has no plans to cap service charges for tenants and leaseholders given this will prevent necessary funds being raised for legitimate purposes. We do plan to tackle unregulated and unaffordable ground rent provisions through legislation.”
A Commonhold White Paper published on Monday states commonhold will be “reinvigorated” through a new legal framework and the sale of new leasehold flats will be prohibited.
Mr Pennycook said: “This Government promised not only to provide immediate relief to leaseholders suffering now but to do what is necessary to bring the feudal leasehold system to an end – and that is precisely what we are doing.
“By taking decisive steps to reinvigorate commonhold and make it the default tenure, we will ensure that it is homeowners, not third-party landlords, who will own the buildings they live in and have a greater say in how their home is managed and the bills they pay.
“These reforms mark the beginning of the end for a system that has seen millions of homeowners subject to unfair practices and unreasonable costs at the hands of their landlords, and build on our Plan for Change commitments to drive up living standards and create a housing system fit for the twenty-first century.”
The Government has also said it is “determined” to make conversion to commonhold easier for existing leaseholders.
A draft Leasehold and Commonhold Reform Bill, which will include the detail of how reformed commonhold will work, will be published later this year, the Ministry of Housing, Communities and Local Government has said.
Legislation will apply to England and Wales, where there are around five million leasehold homes.
