Tory MPs threaten to rebel against government over leasehold reform

Tory MPs are threatening to rebel over the government's new housing proposals.

In a letter to Chancellor Jeremy Hunt, more than 30 Tory MPs have stated their dissatisfaction with the current leasehold system and implored the government to scrap ground rent on leasehold properties.

Currently, there is no cap on the amount freeholders can charge existing leaseholders for "ground rent". That's the money to literally have property on the ground that their freeholders own.

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Housing Secretary Michael Gove previously called that "a charge for nothing" and has stated a personal preference to move towards a "peppercorn" system, where ground rent is as close to zero as possible.

Multiple Tory MPs who have signed the letter are also in favour of this proposal - citing that promise made in the Tory 2019 manifesto.

They wrote: "It's time to finish what Margaret Thatcher started and implement peppercorn ground rents and other much needed reforms to leasehold."

They also state that many of their constituents are stretched with the cost of living and that MPs have seen the "human misery and financial stress" the "feudal" system of leaseholding supports.

The letter says the reforms to leaseholds they want to see are crucial to upholding Tory aspirations of creating a "property owning democracy".

The housing secretary has previously described leasehold as a "feudal system" and there have been repeated promises by former government ministers to scrap the system altogether.

Exclusive polling seen by Sky News shows that scrapping leaseholds is a popular policy.

Among UK voters, the majority want to see them gone altogether, and for Tory voters the number is higher at 65%. Despite pension funds reportedly facing losing the most from reforming the policy, the strongest support for scrapping leaseholds was with voters over 65 years of age.

This is a knotty issue, but homeowners say they are trapped in a system that gives them little say.

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When Claire bought her flat in Greenwich ten years ago, she thought she was doing the right thing.

She saved up early so she could get onto the property ladder as soon as she could and plunged all of her savings in a starter property. At the time, an affordable option in London was a leasehold option.

But now, unable to sell the property, she says she feels trapped in a property nightmare.

Since buying, her service charge has gone up threefold.

It is now just over £6,000 a year for a two-bed flat. There is then ground rent, insurance and other charges like security - and on top of all that if she makes a claim for repairs there is a £500 excess.

David lives in the same block of flats as Claire and is struggling to cope. He's given up on holidays and says he's had to severely cut back.

"I can't tell you how many times you lie awake at 2am in the morning worrying about something that you literally have no control over so you lose sleep.

"You know I should be in the stage of my life where I should be able to afford really nice things. But you can't because you have to keep paying the charges over and over again."

The government says their new legislation would restrict the sale of new leasehold homes but not the sale of new flats (which are the majority of properties affected, around 70%) as these would still be permitted and largely unaffected.

It also leaves little in the way of reform for current leaseholders - of which there are an estimated five million in the UK.

The department for Levelling Up, Housing and Communities has recently consulted on options for ground rent charges and say they are considering responses.

The current bill already aims to extend the default length of a lease and makes it cheaper for people to convert properties into freeholds.

Senior Conservative MP and former housing minister Robert Jenrick said none of these options will be robust enough and he wanted to see the leasehold system scrapped altogether.

"It's an affront to the Conservative dream of homeownership, it's not fair and it's not right."

Harry Scoffin, founder of campaign group Free Leaseholders said: "Every single Conservative MP elected in 2019 stood on a manifesto committing their party to restricting ground rents to a peppercorn, or zero financial value. The Conservative Party has a clear choice: it is on the side of young homeowners and aspiring first-time buyers, or rent-seekers, extortionists and middlemen? Rishi Sunak must hold his nerve and stand up for the little guy."

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A government spokesperson said: "It is not fair that many leaseholders face unregulated ground rents for no guaranteed service in return, and we remain committed to reducing ground rents to a peppercorn as set out in our 2019 manifesto.

"We recently consulted on a range of options to cap ground rents for existing residential leases, and we are carefully considering the responses before we make an announcement in due course."