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Recent headlines suggest that Labour has abandoned its pledge to abolish leasehold within 100 days of gaining power but says it is still committed to getting rid of the system during the next Parliament should it win the General Election. The party had previously vowed to act quickly to end the ‘feudal’ leasehold system but has now said it will take more time to bring about the necessary reforms.

With a General Election looming, there is the real possibility of a change to the party of Government before the year is out. Many leaseholders, who have long-awaited the outcome of the Government’s protracted programme of leasehold reform, will be wondering whether an incoming Labour government would follow through with the policies of their Conservative predecessors, or indeed go further to bring forward root and branch reform.

The short answer is almost certainly yes; Labour has supported the Conservatives’ intentions to reform the leasehold system and there is no sign it would abandon the leasehold cause now. In fact, the party has repeatedly committed itself to a more radical approach, although it appears to have now recognised the magnitude of the task ahead. Labour has said it will enact all the recommendations from the Law Commission’s report, but it remains to be seen whether the suggestions could become manifesto commitments.

Meanwhile, the Conservatives have moved quickly since the King’s Speech on 7th November, bringing forward the draft Leasehold and Freehold Reform Bill which they hope will be law before the year is out. Currently sitting with the House of Lords, a great number of amendments are currently under consideration, not to mention the tricky questions around valuation reform that are still to be ironed out during this process, with the prospect of some other amendments to come during the debate taking place in the Lords next week. The Government is increasingly keen to show progress on its legislative agenda ahead of the election. There has been criticism from some quarters of the Bill not going far enough. Recent press comment has centered on the prospect of a total ban on ground rents under existing leases seeming perhaps unlikely. This follows reported pressure from the pensions industry and Treasury about the risk of the need to pay compensation under the Human Rights legislation if such a move were made.

The outcome of the ground rent consultation will be interesting, given the Government’s previous manifesto commitment to end ground rents versus the now highly likely reality that it won’t be possible to do so. As with all things in the leasehold world, a simple and well-intentioned idea without proper insight can have far reaching and profound implications, and the pledge to abolish ground rents now seems perhaps unlikely. Although as was reported in the FT yesterday it does appear that perhaps a cap on ground rents might be on the horizon.

The party that wins the next election is highly likely to determine how far and how fast the current programme of leasehold reform goes, with both Conservatives and Labour committed to seeing through the current tabled legislation. The question being in any new government whether there will be an appetite to go back to the work of the Law Commission and seek to implement much more wholesale changes. The question is perhaps, who will be in power to take the credit… or to take the tough decisions and deal with any potential fall out?

 

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The above is accurate as at 19 April 2024. The information above may be subject to change.

The content of this note should not be considered legal advice and each matter should be considered on a case-by-case basis.

If you have a query concerning leasehold property, then please contact our expert Landlord & Tenant team by emailing leasehold@bishopandsewell.co.uk or call on +44(0)20 7631 4141

Mark Chick Senior Partner   +44 (0)20 7079 2415


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