Long-awaited reforms to the leasehold system in England and Wales have been delayed for several months due to “flaws” in legislation passed by the previous Conservative government, the housing minister has said.
Matthew Pennycook told the Commons it would take longer than expected to enact reforms originally passed by the former housing secretary Michael Gove in the dying days of the last parliament.
Nevertheless, he told the Guardian he remained committed to ending what he called the “feudal” leasehold system, which means homeowners have little say over the charges they pay or the way their buildings are managed. He promised to abolish the system before the next election.
Pennycook said: “We are determined to act as quickly as possible to protect leaseholders suffering from unfair practices, but we’re equally determined to take the time necessary to ensure our reforms are watertight and to the lasting benefit of leaseholders.
“We committed in our manifesto to finally bringing the feudal leasehold system to an end and that is precisely what the government is determined to do over the course of this parliament.”
Gove had promised to end the system altogether, but ended up passing a more limited package of reforms, which included a ban on selling new houses under leasehold and making it easier for tenants to manage their own buildings.
Many of the measures in that bill needed secondary legislation to be enacted, which Labour promised to pass quickly, but which Pennycook said had proved more difficult than expected.
The delayed measures include calculating how much tenants should pay to buy out their leases, which officials say was undermined by a loophole in the original law that would have left the government open to legal action.
Another problem is that many building managers do not themselves own the freehold and so would be unable to comply with the original act.
A third flaw in the previous bill, Pennycook said, lay in provisions to allow more tenants to vote for the right to manage their own properties. The way the bill was written, he said, would have allowed some building owners themselves to vote in any ballot, potentially cancelling out the votes of the inhabitants themselves.
“The very fact that crucial measures, including the new process for determining premiums, cannot be brought into force until we’ve legislated to fix a number of serious flaws in the last government’s act should serve as a warming about the risks of rushing these vital reforms,” he said.
The delay to the Gove reforms was welcomed by freeholders.
Natalie Chambers, the director of the Residential Freehold Association, said: “We welcome the government’s recognition of the complexities around implementing leasehold reform, as well as the serious flaws in the legislative approach taken by the previous government.”
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Some leaseholders also welcomed the clarity provided by Pennycook’s announcement. Sebastian O’Kelly, director of the Leasehold Knowledge Partnership, said: “This is the death knell of leasehold … Pennycook is a cautious, detail-driven minister, but 5 million people are now living in homes with a flawed tenure the government wants to ban.”
Others, however, expressed dismay at the latest delay to the reforms. Harry Scoffin, the founder of the campaign group Free Leaseholders, said: “This isn’t the insurgent government-of-delivery we were promised. Instead, we face burial under yet more consultations. Leaseholders will remain financial captives for years to come. Deep-pocketed vested interests benefit from these delays.”
Pennycook promised, however, that Labour’s own leasehold reforms, which will go substantially further by extending the ban on new leasehold properties from houses to flats, would be passed before the end of the parliament.
The bill will also end so-called “fleecehold” estates, where private companies own entire estates and can charge substantial fees for basic services such as maintaining the roads. Pennycook said on Thursday that the government would consult on that bill with a view to publishing a draft in the second half of next year.
“Alongside other vital reforms such as ending the injustice of ‘fleecehold’ private housing estates and banning leasehold flats, the draft leasehold and commonhold bill we will publish next year will set us on the path away toward a commonhold future,” he said.
