'Government's Bill is just an eye-catching initiative'

A draft Bill unveiled this week offers leaseholders more rights, but does it go far enough to make a difference?
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The Independent Online

This week the Government unveiled its draft Commonhold and Leasehold Reform Bill, giving leaseholders more rights. The long-awaited Bill means two million flat owners will now be able to buy their homes outright or take over the management of their properties.

This week the Government unveiled its draft Commonhold and Leasehold Reform Bill, giving leaseholders more rights. The long-awaited Bill means two million flat owners will now be able to buy their homes outright or take over the management of their properties.

Housing Minister Nick Raynsford interrupted his holiday in France to fly back to the UK and announce details of the Bill, which proposes reforms to improve leaseholders' rights and heralds a new form of property ownership that may eventually replace the old leasehold system.

Currently flat owners may be freehold, which comes close to absolute ownership, or leasehold, which gives them ownership for a certain period of time. Legally, flat owners may only apply to buy a freehold if they have backing from two-thirds of the leaseholders. Mortgage lenders are also reluctant to lend on properties that have less than 60 years of a lease to run.

The draft Bill, which is expected to be pushed through as a legislative priority, has three strands. Firstly, it proposes a new system of ownership - "commonhold" - which gives groups the right jointly to own their property's freehold and create a management company to run the common parts. The second drive aims to simplify the law so leaseholders can jointly buy a freehold and, thirdly, it gives greater say over the running of their home to leaseholders who do not want to buy, but who do want to manage.

Property partner at Withers solicitors Paul Brecknell says: "There are no real surprises. The revolutionary aspect is the introduction of commonhold." Commonhold is widespread throughout the rest of the world, and the British system will follow similar schemes in Australia, the US and Europe.

Many leaseholders currently find themselves exploited by rogue landlords who demand hefty service charges but provide little in return. The Government hopes these reforms will help leaseholders tackle "incompetent, exploitative or abusive landlords", but Nick Raynsford reassured good landlords they have nothing to fear if they are providing a cost-effective service.

The Bill also gives 200,000 leaseholders of local authorities and social landlords more say over improvements to their property, and they will now be able to object to the amounts charged by landlords for proposed work - a move which some cynics have claimed is a bid to win key swing-voters in working-class areas. Currently many leaseholders of council-owned blocks face what they believe are inordinate service charges.

There has long been a campaign by flat owners and MPs for reforming the system, but critics of the Bill are questioning whether it goes far enough. The Campaign for the Abolition of Residential Leasehold does not believe these reforms will give leaseholders greater protection. Spokesman Ken Murray said: "This latest measure, like its 80 predecessors in the last century, merely tinkers and fails to give leaseholders the means to win their own homes."

Shadow environment secretary Archie Norman accused the Government of dragging its feet over reforms: "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 to give an illusory impression of activity."

But Peter Haler of LEASE, Leasehold Advisory Service, says the Bill is "pretty radical stuff": "We welcome it. Our view is that they have listened to us and to tenants and have produced the goods. Criticism is born of unrealistic expectations. We're not apologists for landlords, but where a landlord owns a building you can't simply wave a magic wand as a way of transferring ownership. "The Government isn't into confiscation, but what they have done is to create an alternative system - and the market will dictate whether it wants it."

Comments on commonhold proposals can be sent to: Fovazia Khan, Commonhold Bill Team, Lord Chancellor's Department, Room 3N, 5 Southside, 105 Victoria Street, London SW1E 6QT. Telephone: 020 7210 1987.

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