MPs have warned over freeholders charging “exorbitant” ground rents of £8,000. Jack Spearman, head of leasehold at the Residential Freehold Association, which represents freeholders for 1m leasehold apartments, pushed back against proposals from the housing secretary, Michael Gove, to cap ground rents on existing leases.
“The general living sector and building houses in this country needs capital, it needs to come from somewhere,” he told MPs. “Where’s that going to come from? It’s going to come from pension funds. So it is unfortunately sending the wrong signal.”
Mr Spearman said that “where ground rents are onerous and where they are egregious, it’s hard to say there isn’t an argument for legislating to deal with those onerous ground rents”, but for ground rents that are not doubling frequently down the years “that’s slightly harder”.
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Labour MP Barry Gardiner called the idea that the housing market would collapse without the ability of pension funds to extract revenue from ground rents “a nonsense”. “Freeholders have over the past 15 years created a rentier structure where they can extract revenues from the ground rent that are exorbitant, in some cases £8,000 a year for no service,” he said.
Harry Scoffin, the founder of Free Leaseholders, a campaign group launched last week to campaign for stronger measures in the bill, said: “It is absolutely surreal that the leasehold new-build houses ban, the one leasehold policy that has survived six years and four prime ministers, doesn’t feature in the actual wording of this government’s supposedly landmark leasehold and freehold reform bill.
“More seriously, the bigger crime is not to commit to a ban on future leasehold flats, where the real money is being made and abuse of homeowners [is] routine. While government has dodged commonhold, they could at least give new-build apartment buyers a share of the freehold for resident control from day one.”
Robert Johnson is a UK-based business writer specializing in finance and entrepreneurship. With an eye for market trends and a keen interest in the corporate world, he offers readers valuable insights into business developments.
