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‘The Tories in England are enthusiastic only about ground rent’

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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.

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