Don't go too far with leasehold reform, experts warn

Government plans to shake up England’s leasehold system must avoid making the future worse for home buyers, according to industry experts.

Communities secretary Sajid Javid today unveiled a range of options being considered by the government to end what he called “unjust and unnecessary” practices. Javid launched an eight-week consultation on its proposals, which he said would “help make sure leasehold works in the best interests of homebuyers now and in the future”.

While some, including Mark Farmer, co-founder and chief executive of Cast, welcomed the move, the government has also been warned not to go too far in its reforms.

Stephen Barter, who heads KPMG UK’s Real Estate Advisory, acknowledged that some action was necessary but warned any future sanctions needed to be “carefully targeted in order to avoid making the disruption worse for homeowners or inhibiting the future development of new homes”.

Ministers needed “to consider outright sanctions very selectively but also needs to urgently promote the creation of industry best practice guidance on ground rent, landlord approval and service charge regimes, including the notification and right to buy arrangements for tenants.”

Others shared Barter’s concerns including Catherine Harrington, director of the National Community Land Trust (CLT) Network, who said Javid’s proposals “could have a significant impact on community land trusts, at the very moment the community-led housing sector stands ready for rapid growth”.

Leasehold is commonly used by CLTs as a means of ensuring that new homes remain permanently affordable for their local communities, she said.

Harrington added: “Leasehold works well for many community land trusts across the country, allowing them to help people to access home ownership while ensuring that housing remains genuinely affordable in perpetuity.

“We welcome the government’s commitment to stamping out abusive practices by the big developers but it shouldn’t stop communities from coming together to build the affordable housing they so badly need.”