Homebuilders and contractors have come out against Michael Gove’s decision to U-turn on scrapping leasehold.
Despite previously promising to abolish what he defined as a “feudal” system of property ownership, the plans have now been dropped by the levelling up secretary.
Through leasehold, people buy the right to live in their flat, but not the property itself, which is owned by the freeholder.
Campaigners and industry insiders have floated commonhold as a reasonable alternative to leasehold. Under commonhold, flat owners own their properties and manage the building themselves.
Rico Wojtulewicz, head of housing and planning policy at the National Federation of Builders, said its members have been supportive of introducing commonhold and had welcomed the government’s previous plans to scrap leasehold.
“It’s disappointing that another ambition to fix the housing crisis has been watered down, especially as there is cross-party consensus on the issue”, Wojtulewicz said.
The Home Builders Federation, the trade association representing private sector homebuilders, also previously supported the government’s plans on commonhold reform.
“We will support whichever sensible route the government decides to take, but are keen to ensure there is a system that is workable for residents”, said Steve Turner, the Federation’s director of communications.
The government has already introduced key reforms for leaseholds. Through the Leasehold Reform Act introduced last year, for instance, people buying new leases won’t have to pay ground rent – a sum paid annually by owners of long leases to their landlords.
Gove is also expected to introduce new measures next month to increase transparency in how freeholders select property management companies and how much leaseholders have to pay for them.
Nicola Kravitz, head of real estate and private client at law firm Memery Crystal, welcomed Gove’s decision.
“With the building safety act, to bring in another complex piece of legislation would have been very challenging” for developers, she said.
According to Kravitz, commonhold is not the solution because it doesn’t ensure that the management of the building will be fairer, as different flat owners will have different interests, priorities and financial situations.
“What I think is the remedy is taking the parts of the system that are unfair and making them more fair”, said Kravitz, pointing to the measures the government has implemented or plans to implement on ground rent, extended leases and service charges.