Labour last night pledged to crack down on toxic leaseholds and save homeowners thousands of pounds.
The party set out radical plans to end leasehold ownership of houses and flats – and make it far easier and cheaper for people to buy the freehold of their homes.
Ground rents would be scrapped for all new builds and would be set at a maximum of £250 a year for existing leaseholders.
Labour has announced plans to crack down on toxic leaseholds in a bid to save homeowners thousands of pounds
And Labour said their proposals could save a person buying the freehold on an average home almost £8,000.
At least 4.3million homes across England are owned on a leasehold basis, with tens of thousands of them facing exploitative ground rents and onerous contract terms.
Many are forced to pay arbitrary fees paid to their freeholder for minor changes to their property.
Under the ‘leasehold revolution’ set out by shadow housing ministers John Healey and Sarah Jones MP, there will be a ban on the sale of new leasehold houses and flats.
And leaseholders would be able to buy the full, freehold ownership of their home for 1 per cent of the property value.
Labour said the changes will overturn the current rules disadvantaging leaseholders, which stretch back to the middle ages.
For a property in England priced at £250,000 with a 90 year lease, Labour’s proposals could mean the cost of buying the freehold is slashed from over £10,000 to £2,500 – a saving of almost £8,000, plus expensive legal fees.
Shadow secretary of state for housing John Healey has worked on the plans with shadow housing minister Sarah Jones
The proposals set out by Labour last night would also see an end to ground rents for new leasehold homes.
Ground rents would be capped at 0.1 per cent of the property value, up to a maximum of £250 a year.
And Labour pledged to hold a public inquiry into mis-selling in the leasehold market which saw thousands of properties sold with extortionate terms such as doubling ground rents.
The Mail has led the way in highlighting the scandal, which has seen families trapped in homes rendered unsellable and unmortgageable because of toxic clauses in their contracts, such as charges for permission to build conservatories and change carpets.
Miss Jones, the shadow housing minister, said: ‘Leaseholders have everything stacked against them. Too often they suffer extortionate fees, appalling service and restrictive contract terms, and no way to easily challenge them.
‘England is one of the only places in the world which has failed to move away from this feudal system. Across the world, modern alternatives like commonhold have flourished.
‘Labour will improve and revitalise commonhold for flats, and make freehold mandatory for all new houses, as the Conservatives should have done years ago.’
The party also promised a crackdown on unfair fees and contract terms, and a right to challenge unfair fees or poor service.
There would be new rights to empower leaseholders to hire and fire their managing agent, or to take over management of their homes themselves.
Labour also promised a crackdown on unfair fees and contract terms, and a right to challenge unfair fees or poor service
And Labour pledged to revitalise commonhold, a fairer alternative to leasehold used successfully across the world.
Residents would be given greater powers over the management of their homes, with new rights for flat-owners to form residents associations and by simplifying the Right to Manage.
The party set the proposals out for consultation, and is seeking views from leaseholders and others on next steps.
Mr Healey, the Shadow Housing Secretary, said: ‘Leasehold is a symbol of our broken housing system, with millions of England’s homeowners feeling like they’ve bought their home but still don’t own it.
‘The scale of the problems faced by leaseholders, from rip-off ground rents, to punitive fees to onerous contract conditions stating what they can and can’t do to their own homes demands wholesale change. We need a revolution in rights for leaseholders.
‘This consultation document sets out the next Labour Government’s ambition end the broken leasehold model for good.’
‘Every home should be owned outright’ says shadow housing minister SARAH JONES as Labour pledges to ban leasehold ownership
Shadow housing minister Sarah Jones says: ‘The Conservative Government has been promising for years to crack down on this scandal’
Millions of England’s homeowners who bought as leaseholders have been caught up in a scandal which has left them with a property they feel like they don’t own, and in some cases cannot even sell.
Leaseholders buy the right to live in a property over a long period – usually more than 100 years.
Almost all flats are sold as leasehold, meaning ownership and responsibility for the whole block sits with a single freeholder. The relationship is closer to a tenant-landlord structure than true homeownership.
The roots of leasehold ownership stretch back to the feudal middle ages and though the law has changed since then, the same fundamental inequality remains at the heart of the modern leasehold system.
At its most acute, this power imbalance means residents left trapped in contracts with unfair terms, extortionate costs and unable to sell their properties, with big barriers in place for those leaseholders who try to act to achieve greater control or ownership over their homes.
The Conservative Government has been promising for years to crack down on this scandal.
Over 60 announcements, consultations and press releases on leasehold have been published since 2010. And yet not a single piece of legislation has gone through parliament.
The evidence shows that leaseholders have been routinely mis-sold. Nine in ten leasehold homeowners regret buying leasehold.
This is no surprise considering that most only find out after purchase the scale of fees and restrictions they are faced with – having to ask for permission to have a pet, to change the carpet or even install a new doorbell. Not only that, they have to pay freeholders for the privilege.
Miss Jones says: ‘Labour’s plans, developed closely with leaseholders, campaigners and legal experts, are nothing short of a revolution in rights for leaseholders’
One leaseholder I met, Jay, was charged £50,000 in ongoing service charges and one-off ‘major works’ fees after buying her flat – only to see the same problems return. Another, James, saw his service charge increase by thousands in one year with no explanation.
In recent years unscrupulous developers have realised this cash cow isn’t limited to flats, and have sold leasehold houses too. There is absolutely no reason a house should be anything other than owned outright, yet leasehold houses have seen some of the biggest abuses.
Jo had her life turned upside down after finding out the ‘ground rent’ she must pay each year to her freeholder – for no service in return – is due to double periodically until it reaches £10,000 a year by the middle of this century, costing millions over her whole lease.
Prospective homeowners like Jo were told they could buy their freehold for just £5,000, only for it to be sold to a shady offshore company without their knowledge. When asked, the new company demanded an astonishing £50,000 to relinquish the freehold.
The government has even propped up this scandal in recent years. Help to Buy has subsidised the sale of 18,000 leasehold houses at a public cost of nearly £1bn.
The human impact of this is a swathe of well-meaning homeowners trapped in homes they can’t sell, suffering mental health problems, one surprise bill away from financial ruin. What if your life savings were wiped out by a huge bill you couldn’t challenge? What if you had to fight every six weeks to get the hot water fixed in your building?
The latest set of government promises, released just two weeks ago, have a bitter irony: change is promised for future leaseholders, people who have not yet entered this broken market and haven’t had to bear any of the cost. But absolutely nothing is offered for the 4.3 million people in existing leases.
Not a single person currently suffering through the leasehold scandal will be helped by the Government’s proposals, and ministers have rightly been slammed by campaigners for creating a ‘two-tier market’. Today, Labour is publishing plans to bring justice to current and future leaseholders alike.
Our plans, developed closely with leaseholders, campaigners and legal experts, are nothing short of a revolution in rights for leaseholders.
At the centre is a plan to move away from this broken model for good, for new houses and flats. England is one of the only places in the world which has failed to move away from the feudal leasehold system. Across the world, modern alternatives like commonhold have flourished.
Also at the heart of Labour’s plans are new proposals to allow leaseholders to save thousands in buying full ownership of their home for a simple 1% of their property value,, caps on extortionate ground rents at a maximum of £250 a year, and a crackdown on unreasonable service charge fees and contract terms.
Our detailed plan sets out our ambition to break the stranglehold that developers and freeholders have on millions of families trapped in leasehold homes. The Conservatives have shown they won’t take on the vested interests in this market. Only Labour will give leaseholders the right to a home they really own.