Housing crisis: is the leasehold scam a distraction?

Recorded at the Battle of Ideas festival 2023 on Sunday 29 October at Church House, London.

ORIGINAL INTRODUCTION

In the middle of a housing crisis, where some believe that the emphasis in Westminster and Whitehall should be that we need to ‘build, build, build’, some campaigners – and indeed with Labour and Tory frontbench support – focus less on building more, than on a scandal about a type of homeownership: leasehold.

For many people, buying their first home or affordable flat means they buy a leasehold property, not realising they don’t own a single brick of the properties they thought they were buying. In recent years, there have been multiple scandals surrounding leaseholds. In particular, the messy fallout from the Grenfell Tower tragedy has shone a light on the lack of consumer protection against new-build defects. Freeholder landlords claim to be ‘noble custodians’, bearing the burdens of building ownership and, in return, collecting the income. But with leaseholders facing spiralling and crippling service charges, tens of thousands have discovered that when it comes to paying to fix faulty buildings, they have all the costs and no control, a form of glorified tenancy. No wonder many are now campaigning to abolish leasehold.

However, some claim that those campaigning against ‘toxic tenure’ are a new breed of NIMBYs, with the drive to abolish leasehold likely to be used as yet another excuse to block development and shore up existing homeowners’ property prices. At least leaseholders have a home, it’s argued; focusing on tenure is a luxury compared to those who can’t afford to buy or rent because of the lack of housing stock.

Critics of leasehold reply by noting that existing leasehold flats are just not selling, and argue that the flats market cannot be revived in England and Wales – and the housing crisis cannot be resolved – without tenure reform, including a ban on the creation of future leasehold tenancies. The price gap between freehold houses and leasehold apartments is the widest it has been in 20 years, according to property website Zoopla.

The abolitionists argue for a mass shift to a resident-controlled commonhold system that is the default arrangement for flat living almost everywhere else in the world. Is that too extreme and disruptive? Is the great leasehold debate – which is preoccupying mainstream political parties and a focus for leaseholder activists – an unnecessary, even dangerous, distraction for building more in the middle of our housing crisis? Or is solving tenure essential to ensuring we don’t scam those desperate for their own home into a nightmarish and expensive form of bondage to rich freeholders?

SPEAKERS
Colin Horton
managing director, Hortons Group; founder, Flat; co-owner, Project & Co; podcaster

Harry Scoffin
co-founder, Commonhold Now, housing campaigner; freelance journalist

Melissa York
assistant property editor, The Times & Sunday Times

CHAIR
Austin Williams
director, Future Cities Project; honorary research fellow, XJTLU, Suzhou, China; author, China’s Urban Revolution; convenor, Critical Subjects Architecture School