Leaseholders will be given right to buy their homes - Mortgages - Money - The Independent

Leaseholders will be given right to buy their homes

Britain's two million leaseholders are to be given new rights to buy their homes outright under wide-ranging reforms unveiled by the Government yesterday.

Britain's two million leaseholders are to be given new rights to buy their homes outright under wide-ranging reforms unveiled by the Government yesterday.

The draft Commonhold and Leasehold Reform Bill will extend the right to buy a freehold and create a new form of tenure - commonhold. Described by ministers as the biggest overhaul of English and Welsh property law for more than a century, the Bill aims to ensure that leaseholders are protected from the worst abuses by landlords and freeholders.

The leasehold system is seen as unfair to leaseholders who pay freehold prices for their flats and yet have much less control over their homes than other homeowners. Landlords often have a monopoly over repairs, service charges and maintenance, with some threatening to forfeit leases to extract unreasonable charges.

Commonhold, which is available in most countries throughout the world, is an alternative that allows those who live in a block to manage their own affairs even if they do not want to buy their freehold. Under the system, residents in a block can set up and manage a commonhold development as long as all leaseholders agree to the proposal.

Each person would have an optional freehold interest in their property or "unit" and "unit holders" would be able to form a private limited company, or Commonhold Association.

The commonhold proposal heads a list of reforms which also include the right to take over management without having to prove abuse or mismanagement. Leaseholders who extend their lease will no longer be excluded from the right to buy the freehold and will be given simpler criteria for challenging service charges. Residence requirements, which mean that those who have owned a leasehold for less than a year cannot buy their freehold, will also be scrapped.

In a bid to win key swing voters in working-class areas, the Government has also decided to give more help to leaseholders of former council flats, many of whom have suffered from high service charges. The Bill will give the 200,000 such homeowners similar rights to other leaseholders for the first time, such as the right to be properly consulted about repairs.

Nick Raynsford, the Housing minister, said it would provide much more effective remedies against abuse by landlords. He said: "We will make it easier for leaseholders to buy their freehold. We also propose to broaden the range of options for leaseholders who do not wish to buy their freehold but who think they could do a better job of managing their homes."

David Lock, a minister in the Lord Chancellor's Department, said commonhold had "been a long time coming", but he was determined to provide a viable alternative to leasehold. He said: "In a commonhold there will be no landlord: no one will have rights in the property which are superior to the unit-holder's, and neither will the owner's interest run out over time, as it does in leasehold."

But Archie Norman, the shadow Environment Secretary, accused the Government of dragging its feet over the reforms and pointed out that the legislation was only a draft Bill. He said: "Labour's dithering on leasehold reform is yet another example of the failure of John Prescott to deliver.

"Despite the fact that Conservatives tabled a draft Bill in 1996, all Labour can muster after three years is yet another draft Bill which will not make any headway during this parliament. This is just another 'eye-catching initiative' released in the quiet summer months to give an illusory impression of activity."

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