Labour must turn leasehold promises into progress

Timing matters most. Leaseholders and freeholders need to know the likely timetable for the final version of the Commonhold and Leasehold Reform Bill, and when and how the fixes to the Leasehold and Freehold Reform Act 2024 will be implemented.

At the moment we don't know whether the new CLRB will include more of the Law Commission's original recommendations, as the Select Committee's output suggested, or whether other changes will be tabled as well.

The longer this uncertainty goes on, the more it will affect the decisions of buyers, sellers and lenders, and it risks creating a two-tier housing market.

Flats as an asset class

The evidence from the sales market should worry ministers. Zoopla's analysis found that average house prices have risen by 43% since 2016, while flat prices have risen by only 10%. A house now costs 1.7 times as much as a flat on average, the widest gap recorded in 30 years.

Leasehold isn't the only reason. The pandemic increased demand for space and gardens, and building safety concerns, higher mortgage costs and some buy-to-let investors leaving the market have all hit flats too.

Even so, lease lengths, service charges, ground rents and uncertainty about future legislation are clearly affecting buyers. Negative press coverage of leasehold in general risks talking it down. Reform, and the possible replacement of leasehold flats with commonhold, has been hailed as a long-promised solution, but any move to commonhold is likely to be several years away, and the timing of the LAFRA reforms is still uncertain because of the Human Rights Act challenges to the legislation. Those responsible for housing policy need to encourage realistic engagement with the market and make sure consumers get the advice and help they need to make informed decisions.

The effects on the market will be easy to see. A first-time buyer who avoids flats may have to wait longer to own a home. If existing flat owners struggle to sell, their onward moves are held up too, and chains are delayed or collapse.

Flats are an essential part of the housing market, especially in London and other cities where houses are out of reach for many buyers. Policy needs to make sure they are fit for purpose, and changes meant to improve home ownership shouldn't be allowed to weaken confidence in one of its most important entry points.

If the newly announced Your First Home scheme is likely to help people buy flats, then restoring confidence in the property sector, and in flats in particular, is essential to a housing policy that works.

Urgency must not mean haste

Calling for progress is not the same as calling for legislation to be rushed. Commonhold has real potential, but changing tenure doesn't remove the cost and complexity of maintaining an apartment building. Questions remain about development finance, phased schemes, mixed-use buildings, reserve funds, lender confidence and the rights of owners who don't consent to conversion.

As the Housing Committee has recognised, the final legislation must be more ambitious and also technically workable. That needs structured consultation with the lawyers, valuers, lenders, developers and managing agents who will have to run the new system.

ALEP's members support meaningful reform. We also know from daily experience how small-looking drafting decisions can affect valuations, mortgageability and transactions.

So our hope for the Labour Party Conference is modest but urgent: publish the final Bill, set out a joined-up implementation timetable and use professional expertise to get the detail right. Every further period of uncertainty means more flat owners may find the home they bought is getting harder to sell. Labour now needs to show that leasehold reform is moving from political promise to practical delivery.

Mark Chick, ALEP director and Senior Partner at Bishop & Sewell LLP