Gove resurrects bid to phase out leasehold system for houses

All new houses in England and Wales will have to be sold as freehold properties under government plans to phase out the leasehold system.

Over the weekend The Times, in what appears to be an informed leak from government, says that next week’s King’s Speech will include proposals to 'restore true home ownership' to buyers. This will be in a new Leasehold Bill to be introduced by Michael Gove’s Department of Levelling Up, Housing and Communities.

Although new flats can be leasehold in future, the proposals will mean all new houses must be freehold: some developers have until now sold some new-build houses  as leasehold, with controversial ground rents levied by the builders on the individual home owners.

The Times says Gove also plans to cap all ground rents on existing leasehold properties at a 'peppercorn' rate, and change the standard contract lease extension from 90 to 990 years.

Ministers also want to remove the requirement for someone to have lived in a property for two years before they can negotiate an extension.

Similar proposals were revealed in the early days of January this year when Gove criticised what he called the “outdated and feudal” leasehold system but the proposals did not make it to the Levelling Up Bill, which became law last week.

DLUHC says there are over 4.5m leasehold homes in England, of which 30 per cent are modern houses. The proportion of new-build houses sold as leasehold rose from seven per cent in 1995 to a peak of 15 per cent in 2016, since which time their proportion has dipped.

Yesterday housing minister Rachel Maclean tweeted confirmation of The Times story, saying: “Plans to phase out leasehold and restore true home ownership confirmed today as part of the King's Speech. We will restore true home ownership to millions of people and end the reign of rip off freeholders + incompetent profiteering management companies.”