One-third of homeowners in Croydon are leaseholders, but the Government has flunked its promises to reform the service charge system. Citing Gramsci and Marx, Michael Gove and Sarah Jones, our columnist ANDREW FISHER, pictured right, explains why getting rid of this ‘feudal’ system is long overdue
More than 1-in-5 homes in England and Wales are leasehold – homes that people have bought, but that they don’t quite own.
In Croydon, the number of leasehold homes is higher than the national average, with nearly 1-in-3 properties in the borough being leasehold.
Typically, these will be flats or maisonettes, where the homeowners have bought the property just like any other home, probably with a mortgage from a bank or building society, but which gets them the lease on their bit of the building.
But the freehold, the land on which the property has been built, remains in the control of a landowner, who will receive a ground rent annually, and often holds control over major decisions affecting the property.
This oversimplifies matters. If the lease expires, then the land (and the leaseholders’ home) reverts to being the property of the freeholder.
Most leaseholders also pay service charges to the freeholder. In the case of the owners of flats within a block, this is more complex and service charges can be for the maintenance of common areas – corridors, stairs, lifts, and the exterior walls and roof.
But the regulation of such charges has been incredibly weak, and there are wide variations in levels of ground rents or service charges that leaseholders have to pay. Some leaseholders have found their charges increased well above inflation, and with little transparency.
One Croydon homeowner told me that the company servicing their building had changed since they bought their home and that service charges had rocketed.
“They impose expensive solutions on all of us, including the affordable homes,” they said. “We get a breakdown of the service charge but it’s all retrospective of course – they say we can go into their offices to check the receipts. But ultimately we have no choice but to pay.”
This particular building also has unsafe, Grenfell-style cladding and insulation, which the freeholder has not removed. It has made the leaseholders’ properties practically unsellable.
Groups of leaseholders have organised to campaign for leasehold reform, and put the major political parties under pressure to act.
Reform: the Labour Party policy in 2019 appears still to be its policy in 2023
At the 2019 General Election, Labour’s then housing spokesperson, and Croydon Central MP, Sarah Jones was calling for a “New Deal for Leaseholders” that would end the sale of new leasehold properties, cap ground rents for existing leaseholds and give leaseholders improved rights to buy their freehold.
Until recently, it had been expected that the Conservatives would reform leasehold. They had certainly suggested that they would do so. Michael Gove, as housing secretary, had described the system as “feudal”.
In June last year he pledged to introduce legislation to “fundamentally reform” the system and “end this feudal form of tenure”.
In January this year, Gove went further, suggesting leasehold should be abolished – in line with Labour’s 2019 policy. But in a row with Downing Street, Gove has come off second best.
His department issued a homeopathic version of his previous commitments, promising only “we will bring forward further leasehold reforms later in this Parliament”.
The property developers who fund the Conservative Party apparently weren’t too happy about Gove’s radicalism – he described leaseholders as being “held to ransom by freeholders”.
A deluge of propaganda has been deployed in the Tory press, with industry bodies and individual companies ridiculing not only Gove’s proposals but the idea that “unskilled leaseholders” could manage properties in commonhold.
Gramsci beat: Michael Gove
Michael Gove is a fan of quoting Italian Marxist Antonio Gramsci.
Perhaps he is not familiar with Karl Marx’s own observation: “The Tories in England long imagined that they were enthusiastic about monarchy, the church, and the beauties of the old English Constitution, until the day of danger wrung from them the confession that they are enthusiastic only about ground rent.”
And so, property companies’ love of ground rent has killed off Gove’s mooted reforms.
This week, Labour sought to exploit that U-turn with a vote on a non-binding opposition day motion, which put forward the party’s policy – largely as per 2019.
Lisa Nandy, the shadow housing secretary, said: “It is nothing short of a scandal that despite near-universal agreement that leasehold is a feudal form of tenure that should be a thing of the past, there is still no timetable for ending leasehold on new builds and introducing a workable system of commonhold to replace existing leasehold homes.”
In the end, 174 MPs voted in favour of Labour’s motion.
Every Conservative MP abstained.
- Croydon residents affected by leasehold can get in touch with the campaigning group Commonhold Now or the National Leasehold Campaign
- More advice for leaseholders is available from the Money Saving Expert website
- From 2015 to 2019, Andrew Fisher worked as the Labour Party’s Director of Policy under Jeremy Corbyn. He is a former chair of the Croydon Central Constituency Labour Party. Fisher is also the author of The Failed Experiment – and how to build an economy that works, and now writes regular columns for InsideCroydon in a personal capacity
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Feudal? Someone’s history is a bit crap. The system of long leases and ground rents only dates back to the 1920s. Anyway, staunch Labourites don’t believe we should be able to own our own homes. As Karl Marx famously said, “the theory of communism can be summed up in a single sentence; the abolition of private property”
Take it up with Michael Gove
The point is that, when buying a leasehold flat, you don’t really own the property. You’re effectively leasing it for 99 years or whatever. Unless you’re lucky to get a share of the freehold.
It’s an absurd situation and not one understood by people who have bought houses and never bought a flat (and don’t give me the whole “move somewhere where you can afford a house).
well said. There is no reason at all ,why England cannot adopt another fairer system. As leaseholder( I have been one twice ,one in Crystal Palace /Croydon never ever again ) the lessee is never ever in control. Leasehold knowledge Partnership are strongly campaigning for reform as are a few others..
Sadly with how houses have been allowed to be developed by this planning department that observation would no longer be valid. All too many house owners have suffered from this councils decisions and what it terms perfectly legal developments. They know all too well about leashold landlords with no freeholder and how that goes and the damages they cause. From dilapidated structures causing harm to neighbours and the general public along with rampant damage and laws that are so bad they are unfit for purpose. Insurance Polices that fail as there is no one to sue and a feckless coucil to boot that has a building control that beggers belief.
I would happily vote for whatever Politician that makes those people responsible and forces Councils to do their job and stop lying to Courts covering up mistakes and generally acting like supercilious unethical patronistic sanctimonious excuses for humanity.
If that sparks recognition of oneself and makes some at Croydon Council look in the mirror that can only be an improvement, but their arrogance and conceited knows no bounds so I doubt it.
The system of leasehold property ownershipland or building in use today is a relic of English property law dating back to the 11th Century. It is just the current style that was introduced in the 1920s and even that has been amended.
The principle of leaseholds dates even further to the records of and the code of Hammurabi from Babylon (part of wikipedia that is factual).
But there are even older styles of leasehold tenure or lifetime tenure and even long generational tenures that could be renewed at each generation. Some of that can be seen in the 999 year leases still in the UK. Even back to the Summarian empire and the creation of civilisation a form of leasehold tenure paid for in kind (later also coin in peacetime) has existed.
You could take a very narrow view of what Leaseholding actually is but even then you may find it a struggle to exclude earlier styles that 1920.
Even historians struggle to agree and has been a long standing debate.
Safe to say all things evolve even laws. Unsafe to be definitive especially in England which is precedental in its laws without a historic constitution. I am sure that many of my peers will kindly debate and put forward arguments and cite differential texts and records
and the freeholder can submit plans to build extra flats on top of your once quiet and peaceful top floor flat. 2nd application and we’re objecting – but who knows…. Service charges, poor quality repairs, lack of oversight by management company, and now they may build on top. Trashed my mental health.
At least you know you are not alone in Croydon, both physical and mental health permanently and in the end fatally altered by this Councils decisions and a developer.
I very much agree with the proposals, but would mention a couple of factual points:-
1) In some blocks of flats the leaseholders already own a share of the freehold. This is usually done by the setting up of a company in which each leaseholder owns a share. Leaseholders have certain statutory rights to require this, though the rules are complex and it can sometimes be prohibitively expensive to “buy out” the former landlord’s interest.
2) I like the proposal that the cost for leaseholders buying their freehold be limited to 1% of the value of their home. However in many cases this will be far less than the market value of the landlord’s interest, especially if the lease does not have many years left to run. We should be ready for landlords to squeal about this.
The right of ownership and leasing for up to 99 years with and extension have merits as does the return of full rights to the freeholder after that term. It releases property for long term residency and reduces pressure on the housing availabilty.
I tis the regulations surrounding the allowance of that where the process falls down. There is little legal protection at any level and very little enforceable rights at any level without serious financial outlay that far exceeds the value of any real loss.
In english couts settlements rarely cover costs and losses and in many situations you win but lose financially to the extent that it is actually more disbenefit financially in going to court.
There needs to be reasonable protestion for the three parties affected, owner, leaseholder and neighbours that suffer detriment though the laws failures and ”bad” landlords/freeholders/leaseholders.
This is a situation that all political parties Ministers and local administrations need to get a grip of and stop playing political semantic’s with peoples lives.