Michael Gove warns ‘deep-pocketed’ opponents will challenge leasehold reforms

Deep-pocketed opponents of leasehold reform are likely to try and derail the Government’s plans, according to Michael Gove.

The Housing Secretary said he expected a “lobbying exercise” to take place, but insisted he wanted to be on the “right side of justice”.

Mr Gove also gave assurances that the Government would also bring forward amendments to “ban new leasehold homes in the future” and that the legislation would amount to the “effective destruction of the leasehold system”.

The long-awaited Leasehold and Freehold Reform Bill aims to introduce changes in England and Wales to make it cheaper and easier for more leaseholders to extend their lease, buy their freehold and take over management of their building.

The standard lease extension term will be increased from 90 years to 990 years for both houses and flats, with ground rent reduced to £0.

Speaking during the Bill’s second reading, Mr Gove told the Commons: “(It) is likely to face a lobbying exercise from deep-pocketed interests outside attempting to derail it.”

But he told MPs: “Whose side am I on? Homeowners, those who have worked hard, who have saved up and secured a mortgage? Or shadowy foreign entities that are essentially attempting to rip off British citizens? I’m on the side of homeowners.”

Addressing future consultations, he said: “I’m sure that some of London’s finest legal firms and some of London’s most eloquent solicitors will be putting in some very thoughtful contributions, but the question will be: who is paying for them?”

He added: “To my mind you can buy silver-tongued eloquence, but what is far more important is actually being on the right side of justice.”

He also told MPs: “We have a consultation on ground rents. I can’t pre-empt that consultation, but it is the case that at the conclusion of that consultation we will then legislate on the basis of that set of consultation responses in order to ensure that ground rents are reduced and that ground rents can only be levied in a justifiable way.”

He said the Bill is not “perfect” but asking if it would “move the dial” and “effectively mean that leasehold will become a thing of the past”, he told MPs: “I believe absolutely it will.”

Campaigners have previously expressed concerns that the sale and purchase of leasehold flats will still not be banned.

Mr Gove said: “The Bill will ensure that there is a ban on new leasehold homes. But as well as dealing with the situation in the future, to avert that problem, we’re also attempting to deal with the difficult situation that we’ve all inherited.

“How are we going to do so? We’re going to do so by making sure that we squeeze every possible income stream that freeholders currently use so that in effect their capacity to put the squeeze on leaseholders ends.

“That will be the effective destruction of the leasehold system.”

He added later in these remarks that he was willing to look at the issue of “right-to-manage” and “the abuse of forfeiture, which can sometimes be used by freeholders to intimidate leaseholders as well” during the Bill’s committee stage.

He added: “I am very open in committee to improving the Bill. We ourselves will be improving our own Bill in committee by bringing forward the legislation that will ban new leasehold homes in the future.”

Labour deputy leader Angela Rayner said: “”I have lost count of the number of times that ministers have promised to finally put Britain in line with other developed countries across the world who have all… (ended) this medieval system.”

She added: “After all those promises, and after that theatrical squeeze, we still have a Bill that doesn’t actually abolish leasehold.”

Ms Rayner referenced remarks from “anonymous sources” quoted in the press, saying: “We know from them what he cannot admit today, that the Prime Minister was blocking this Bill from the King’s Speech in the face of lobbying from vested interests opposing the reform.”

Tory MPs urged ministers to ensure all new leasehold homes are banned in the future.

Bob Blackman (Harrow East) said: “The promise was clear in the manifesto and the promise should be honoured in my view, and that is to do away with leasehold or ‘fleecehold’ completely, particularly on the sale of new build flats.”

Tory former housing minister Rachel Maclean described ground rent as “sheer exploitation” and said it should be capped.

Closing the debating, housing minister Lee Rowley said on exceptions to the reforms: “We intend this to be a very narrow element, an example … which I can give is the issue of National Trust land, where freeholds are not to be sold and therefore a small number of leasehold homes may be required in that instance.”

The Bill received an unopposed second reading and will undergo further scrutiny at a later date.