Labour minister caught in a lie over leasehold betrayal

Leasehold properties are a national scandal, and these properties are causing misery for millions of people. Labour promised to end this issue, but in government they’ve instead opted to kick the can down the road. The problem is they want voters to believe they’re solving the problem even as they refuse to do so.

As an example of this in action, please see the following from Labour’s minister of state for housing and planning:

Leasing the truth

The problem with leasehold properties is they combine the cost of purchasing a house with the downsides of not actually owning one, as HG wrote for the Canary in January this year:

Most flats in the UK are leasehold, along with some shared ownership houses.

Freehold means a resident owning their property and the land it is built on. On the other hand, leasehold means owning the property for a fixed period, while still paying ground rent to the landlord, who either owns the building (such as a block of flats) or the land.

When the lease ends, ownership returns to the landlord.

In comparison, commonhold provides freehold ownership for flats or other interdependent buildings.

Pennycook said he’d ‘end’ leasehold in parliament:

He also made it clear it would happen “over the course of this Parliament” — i.e. that it would happen before the next elections in 2029:

Do ‘abolish’ and ‘end’ mean the same thing in every context?

No.

But they both clearly give the impression that leasehold would no longer exist under Labour — i.e. that it would ‘end’.

Demonstrating that this position is unpopular with the party’s own members, Labour Party activist Matt Lismore said the following:

I don’t think people realise that creating a 2 tier flats market with leasehold (existing) and commonhold (new) could crush leasehold property values further.

That would place leading UK banks in the position of holding huge volumes of mortgages where the borrower is in negative equity.

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This wouldn’t be an issue if defaults stay low, but should a significant number of leaseholders start defaulting, banks could be in considerable bother, causing significant harm to the UK economy.

Further, if leasehold flat values fall after commonhold comes in, even more properties will fall into the service charge > 1% of value bracket, making them largely unmortgageable.

Matt Pennycook, it is vital that we don’t create a 2 tier market in flats – it has the capacity to have significant knock on consequences.

Labour — collapse in real-time

Lismore isn’t voicing a niche opinion or unwarranted concern. If you want to see what’s happening to leasehold properties in the UK, simply look at the property market:

To be fair, houses should be cheaper. At the same time, these houses aren’t cheaper because we’ve fixed the housing problem; they’re cheaper because no one wants to live in them them.

Labour aren’t fixing a problem in a sensible and incremental way; they’re allowing an entirely new problem to fester to keep property developers happy. And it’s going to result in misery for anyone who owns one of the nearly 5 million leasehold properties in the UK.

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