The story is all too familiar. A young family scrimps and saves to buy their dream flat, or an older couple downsizes to pay for care and move into a smaller flat. Hidden in the small print, however, is something that will hit them time and time again — ground rents and service charges.
These costs are often downplayed during the sale, but a few years after purchase, they start doubling or even trebling as happened to one of my constituents. For many, these costs become larger than the mortgage payments.
What can they do? They can’t sell because who would want to buy a property they don’t truly own? Yet, they are indentured to pay these fees — often to faceless investment companies and landlords.
When they receive the annual service charge statements, they find costs that bear no relation to the services they receive — street lighting for a block of flats, access to facilities they are not allowed to use, or simple paint jobs costing tens of thousands of pounds with no say over who carries out the work or how it is done.
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This is the trap of the feudal leasehold system, where people pay upfront to live somewhere as if they own it, but they never really do. For too long, this has harmed communities, leading to the poor condition of homes in my constituency and across the country. It is time for leasehold to go.
Scotland has already abolished leaseholds, and the Conservatives promised to do the same. However, their proposed legislation was riddled with loopholes so large that an elephant could walk through them. That is why I am delighted that the Labour government is committed to abolishing new leaseholds forever and shifting the standard to commonhold.
Commonhold is a little-used but cooperative system where everyone in a block owns a part of the common areas together. They, and only they, decide how to manage their flats. It was introduced at the end of the last Labour government, but landlords and property developers resisted giving up control. Now, Labour will force their hand and return power to tenants and end this unfair system.
Along with making it easier for people to manage their own flats, stopping the rip-off of inflated ground rents, and enacting reforms for renters, this is the final cornerstone of fixing the housing sector.
Many people talk about the need for more housebuilding, and we certainly need that. However, history shows that housebuilding alone does not solve the housing crisis. The market is not one single pool in which everyone is competing. Many people are stuck in specific types of homes, tied to certain areas due to work and family commitments. Developers building homes on greenfield sites may be good for their bottom line, but if those homes are not commonhold or freehold, if they are not council or social housing, and if they are not high-quality, well-insulated, and low-energy, then what is the point?
We don’t need more houses for the rich; we need them for ordinary people—the older couple downsizing to free up larger homes for families, the young family buying their first flat. That vision is impossible if debt collectors are knocking at the door for hidden fees and charges.
This is what Labour will change, preventing future leasehold abuses and ending this unfair system cannot come soon enough for the leaseholders in Jarrow and Gateshead East and the estimated five million leasehold properties in England.
