It’s always easy to demand that “something must be done” on one issue or another – indeed, the principal reason why people do so without actually specifying what and how is to chuck whatever hot potato they’re handling over to someone else. It’s rather harder to actually come up with and do whatever that “something” might be.
Fair play, therefore, to Sajid Javid for acting both decisively and swiftly on the question of rip-off leaseholds. This was a growing scandal – leaseholding, a model of ownership intended to facilitate the construction and management of properties like flats which share common areas and infrastructure, had been twisted to become a way of turning standalone homes into lasting cash-cows for builders.
Some people were, frankly, being exploited under this tactic. They would buy their homes on apparently reasonable terms, with relatively low ongoing charges, only to find that the owner of the freehold intended to increase the ground rent exponentially for ever more – or that the freehold on their property had been packaged up and sold off as an investment to others who intended to squeeze it for every penny they could. Those who had thought they were buying property, and thereby independence, too often found themselves trapped, facing escalating bills and unable to sell their house for that very reason.
Javid’s response is three-fold. First, he is banning the use of leasehold arrangements on almost all newly-built houses. Second, where new properties are still built on a leasehold basis, which will mainly be flats, he is requiring ground rents to be set to zero for long leases. And third, he is looking at ways to make it easier, quicker and cheaper for leaseholders to buy the freehold to their property.
That will save more people from falling into this trap, and should help those currently caught in it to escape somewhat more easily. There are inevitably critics who say he isn’t going far enough – one company which makes its money advising leaseholders, for example, instantly denounced his proposals as “weak”. Their critique appears to be that Javid isn’t simply abolishing all existing leaseholds.
However, it’s easier to pose as tough when it isn’t you making the decisions. Ministers cannot simply start dissolving existing private contracts and transferring people’s property around as a form of retrospective justice, as such critics seem to want. A country operating with the rule of law, a great deal of whose prosperity rests on contracts being binding and not at risk of being overturned by political intervention, cannot simply go in for random bouts of contractual meddling.
Similarly, the outcry from firms trading in these dubious uses of leasehold – some of whom have taken a hit on the stock market as a result of this decision – is overblown. Dire warnings that this will undermine rates of construction don’t make any sense, and are a cheap way to scaremonger. Look at house prices. Is anyone seriously claiming that it isn’t possible to make a profit in this market by simply building and selling houses, rather than by selling leaseholds on them and then squeezing your customers until the pips squeak for years down the line? My sympathy for those complaining they won’t be allowed to pursue such unpleasant practices in future is decidedly limited – even the tiniest violin in my collection will be staying firmly in its microscopic little case.
There are plenty of aspects of housing policy which are extremely difficult to solve – and many which will take a long time to even put a dent in. But this one was both pressing and possible to act on quickly. People’s lives will improve as a result. So well done, minister.