Conservative MPs are considering rebelling against the government’s proposed housing policy changes.
Over 30 Conservative MPs wrote to Chancellor Jeremy Hunt expressing their unhappiness with the leasehold system and urging the government to eliminate the ground rent charged on leasehold properties.
Currently, there isn’t a limit on how much property owners can demand from leaseholders for ground rent, which is the fee for occupying the land.
Following pushback from the Treasury, Housing Secretary Michael Gove had to modify the proposed leasehold reforms, which will now see leaseholders paying a fixed annual ground rent.
Reports suggest that the new cap on this annual charge will be set at £250 instead of being completely removed, as originally promised in the Conservatives’ 2019 election manifesto.
Gove, who last year criticized the leasehold as an obsolete system in need of abolition, has faced resistance from the Treasury on this matter.
Many pension and insurance funds have made major investments in ground-rent portfolios. A Treasury report warns that the proposed reforms could lead to a loss of up to £37 billion in investments, potentially triggering compensation claims against the government.
However, some Conservative MPs are dissatisfied and are invoking the party’s 2019 manifesto commitment.
They stated: “It’s time to carry on Margaret Thatcher’s legacy by implementing nominal ground rents and other important leasehold reforms.”
The MPs argue that these changes are vital for continuing the Conservative vision of a “property owning democracy.”
A report from the Department for Levelling Up, Housing and Communities last May revealed that nearly 5 million homes in England fall under leased control – which is 20% of all homes in England – so abolishing leaseholds could be an attractive proposal for many voters.
Ex-Housing Minister Robert Jenrick is among those who support eliminating the leasehold system altogether.
“This goes against everything the Conservative ideal of homeownership stands for; it’s neither fair nor just,” he remarked.
Harry Scoffin, head of the Free Leaseholders campaign group, said: “Every Conservative MP in 2019 promised to reduce ground rents to nothing. The Conservative Party must decide: will they side with young homeowners and first-time buyers, or the opportunists and middlemen? Rishi Sunak must take a strong stance and advocate for the average person.”
A representative from the government commented, “It’s wrong that countless leaseholders have to pay unregulated ground rents for uncertain services, which is why gearing towards minimal ground rents as specified in our 2019 campaign pledge is crucial.”
“We’ve weighed up various approaches on how to limit ground rents for current leases, and we’re currently evaluating the feedback to these consultations before making further announcements soon.”
