Tory MPs are preparing to force the government to toughen up its planned leasehold reforms in England and Wales, with Downing Street expected to launch a bill that falls short of campaigners’ demands.
Conservative backbenchers say they are ready to bring amendments to the long-awaited leasehold reform bill, which will be one of the centrepieces of next week’s king’s speech but will not end leasehold on the majority of properties.
The package has long been promised by Michael Gove, the housing secretary, who has promised to stop what he calls the “feudal” system of freeholders maintaining control over properties.
However, while the bill is expected to include a ban on developers selling new houses under leasehold, government sources have told the Guardian it will not extend that ban to flats, which make up about 70% of all leasehold properties.
Several senior Tories said they wanted the government to end leasehold for new houses and flats, and were willing to bring their own amendments to the bill if it failed to do so. With Labour backing these MPs, they could even force a government U-turn or defeat.
Peter Bottomley, the longest-serving MP in the House of Commons, said: “If the government has not included in the bill things that are clearly necessary, both the Lords and the Commons will improve it. If anything is left out of the bill, it can be and will be improved.”
An unnamed Tory MP, who is helping organise the resistance to the government’s plans, said: “If this bill does not include flats, I absolutely will seek to amend it. If you’re buying a flat in a 50-apartment block, then there must be a way of doing it so that people can still own their own property and not be at the beck and call of a freeholder.”
Matthew Pennycook, the shadow housing minister, said Labour would back attempts to ban leasehold for new flats.
“It is deeply disappointing that the government appears set on legislating only for new houses to be sold as freehold, leaving those who buy flats trapped in an archaic system of home ownership,” he said.
“Labour believes commonhold should be the default tenure for all new properties, with the system completely overhauled so that existing leaseholders can collectively purchase more easily and move to commonhold if they wish.”
Gove has promised for a long time to end the leasehold system altogether, telling the Sunday Times this year: “It is an outdated feudal system that needs to go.”
Leaseholders have complained for years about a range of practices by some freeholders and managing agents. Many say they have been charged extortionate fees to carry out repairs or extend a lease, or that property management companies keep putting up service charges without reason.
The issue came to the fore in the wake of the Grenfell fire, after which thousands of leaseholders found themselves confronted with bills of tens of thousands of pounds to replace combustible cladding on their buildings. The government has since insisted that developers foot the bills for larger tower blocks, but much of the replacement work has still not been done.
On Tuesday the government will use the king’s speech to outline what is likely to be its last package of legislation before a general election next year, including the leasehold reform bill.
Sources say the bill will include a ban on developers selling new houses under leasehold – a measure that ministers have been promising for six years. It will also cap ground rents for new and existing properties and set the default length of leases at 990 years, rather than 99.
Behind the scenes, Gove has been fighting for a more wide-ranging set of proposals that would also include measures to end leasehold on newly built flats. Sources have told the Guardian, however, that he has been unsuccessful in that battle, with Downing Street concerned it could run into opposition from developers and Tory freeholders.
Other Tory MPs, many of whose constituencies have large numbers of flats, have backed more substantial reforms.
Nickie Aiken, the MP for the Cities of London and Westminster and a deputy chair of the Conservative party, said: “I want to see what the draft bill says, but other countries have ended leasehold for flats and we need to learn how it’s worked in practice. I wouldn’t be surprised if amendments are brought on this.”
Bob Blackman, who represents Harrow East, said: “Selling properties under commonhold [a replacement for leasehold where homeowners collectively own their buildings] going forward is very sensible.”
Harry Scoffin, a co-founder of the campaign group Commonhold Now, said: “A failure to ban leasehold on new-build flats would be a betrayal of everything the government has promised since 2017. Doing so would cost the Treasury nothing and, crucially, stop yet more unsuspecting flat buyers from being sucked into the leasehold debt trap.”
A spokesperson for the Department for Levelling Up, Housing and Communities said: “We have already made significant improvements to leasehold – ending ground rents for most new residential leases, and will make it easier and cheaper for leaseholders to extend their lease or buy their freehold.
“The secretary of state has been clear that we will bring forward legislation to protect leaseholders as soon as is possible.”
