Dave Smith 🇺🇦

COMMONS HOUSING SELECT COMMITTEE: STATEMENT FROM FREE LEASEHOLDERS 3/3/26 Today, we told Parliament the truth. About the cynical games Conservative and Labour governments have been playing with your homes, money and lives. It was awkward. We had to motor through to cover as many points as humanely possible in a short time. Sorry if we didn’t cover yours. We are the insurgents against a very closed and broken political system. We will go away when they finally free the people from the property servitude of leasehold. Until then, we will keep challenging the official line and holding power to account, however uncomfortable that may be. Parliament has been talking about abolishing leasehold, a legacy of serfdom, since the 1880s, before working men and women had the right to vote. In 2026, we keep hearing it’s “complicated” and our politicians need more time because they might get sued by the wealthy landowners. What happened to the will of the people? Isn’t Parliament sovereign? Wasn’t that what all the Brexit lark was about? And doesn’t this Labour government have the second biggest parliamentary majority in its 126-year history as the so-called working people’s party? @Keir_Starmer can do a TikTok stunt on ground rents. But he can’t run away from the truth. His government are peddling a draft Commonhold and Leasehold Reform Bill that has been purged of policies that you voted for in the @UKLabour manifesto. Policies promised again in the July 2024 King’s Speech: the remaining @Law_Commission enfranchisement and Right to Manage recommendations. So you can finally “take back control”. The Starmer administration appears to be captured by the deep-pocketed freeholder lobby and property cartels. And the Prime Minister is in thrall to the hand-wringing lawyers who bleat on about the risk of judicial review and ECHR lawfare, as if the rights of extortionists, many offshore, and lofty international law matter more than the British people being looted in their homes and what election manifestos have promised time and time again. This government claims that they are ending the feudal leasehold system. Instead, they keep it on life support by protecting money-for-nothing ground rents until 2068. We’ll have flying cars before feudalism is banished from our homes! And buried away in the small print, the Labour government concedes our point: “leasehold as a tenure will not disappear overnight and it will be a feature of the housing market for many years to come.” The government is also siding with the leasehold grifters by failing to restrict development value in the draft legislation, which means many flat leaseholders will never be able to afford to buy their freehold, something that must happen before conversion to commonhold. Remember, the freeholders’ main lobby group, the Residential Freehold Association, admits that the typical freeholder owns just 2.5% capital value in a block of flats. These wealth-destroying corporates own a sliver of our homes and have the cheek to talk about their human rights. We are not Mugabeists. We will, of course, pay a fair rate to compensate the freeholder to leave our homes for good. But demanding more of our money so they can thwart our right to buy them out, on the basis that they could theoretically build a skyscraper in the garden, is taking the mick and must end, as the government first promised in 2021. Don’t take our word on the scam of freeholders invoking development value to block leaseholders’ bid for self-rule. Barrister Nicola Muir, of Tanfield Chambers, has written that “it is amazing what developments landlords believe are possible and the profits they claim they will generate”, citing a telling example from practice: “The landlord initially claimed £34 million for the alleged potential to build a skyscraper in the front garden of the block. Such claims can obviously be a deterrent to leaseholders, who probably have no intention of developing.” And we were the ONLY campaign group that urged the @CommonsHCLG to ensure that this government sets enfranchisement rates high in the Leasehold and Freehold Reform Act 2024, to the benefit of leaseholders. There is a major risk that, due to the influence peddling of ground rent grifters and their lobbyists in Westminster and Whitehall, the government will fail to implement these long-awaited reforms already on the statute books. @mtpennycook promised in November 2024 to put enfranchisement rates out to public consultation last summer, but it never happened. And if the government is forced to begin the enfranchisement changes in the 2024 Act, it will likely set the deferment and capitalisation rates artificially low, stuffing freeholders’ mouths with gold when desperate leaseholders try to extend their leases or buy out the freehold. These deferment and capitalisation rates are already derived from freeholder-friendly case law, specifically the 2006 Upper Tribunal decision known as Sportelli, with the deferment rate set at 4.75% for houses and 5.0% for flats, and a capitalisation rate of 6.0%. While the 2024 Act is vague on what these rates should be, we know that investors routinely buy freeholds at auction or directly from developers at higher rates than those implied by Sportelli, meaning they pay significantly less than leaseholders are already required to pay under statutory schemes with the low Sportelli rates. For example, an analysis of Allsop Ground Rent Auctions found that investors have been paying an average 9% capitalisation rate for the ground rent in freehold titles – well above Sportelli’s 6%. This situation is clearly unfair, and there is significant industry lobbying to keep the deferment and capitalisation rates low, i.e. below the going market rates, so that freeholders are excessively compensated by leaseholders. Once the rates are set in the 2024 Act, they remain fixed for ten years, creating jeopardy that they will be set to the disadvantage of leaseholders, who are less organised and resourced than industry interests to influence policy. If the rates are set substantially below Sportelli rates, the savings from other provisions of the 2024 Act – such as the removal of marriage value, the 0.1% restriction on ground rents, and the end of the requirement to pay the freeholder’s reasonable legal and valuation costs – would be more than cancelled out, leaving leaseholders paying more than they do today under the current rules. Minister Pennycook highlighted this risk while in opposition during the passage of the 2024 Act, stating that Labour “remain[s] convinced that this government, or a future one, could be lobbied by vested interests to set a deferment rate that will be punitive to leaseholders.” He proposed an amendment on the deferment rate to guide the Secretary of State, requiring that “in setting the deferment rate, the Secretary of State must have regard to the desirability of encouraging leaseholders to extend their lease at the lowest possible cost”, although the amendment was not passed. This policy ought to be in the draft Bill, yet it remains absent. We are urging that the 2024 Act be amended to require that the enfranchisement rates must not fall below an absolute floor of the existing Sportelli rates (with the deferment rate of 4.75% for houses and 5.0% for flats, and a capitalisation rate of 6.0%). But leaseholders should really benefit from market rates, i.e. those which developers and investors already enjoy being significantly above Sportelli, to ensure that they do not pay excessive compensation to freeholders, as occurs under the current system, to buy their freehold or extend a lease. And this isn’t just about what goes into the algorithm for the online enfranchisement calculator under the 2024 Act, or about ending the development value scam, a reform dropped from the legislation after behind-the-scenes lobbying. We will not accept a failure to bring forward a Universal Right to Manage, as part of a glidepath to commonhold. Watch what our founder said about a well-connected landlord and tenant barrister who bragged to the property tribunal last year that he had worked on the Law Commission’s Right to Manage reforms, all while representing an offshore billionaire freeholder trying to block leaseholders’ quest for Right to Manage. It should be easy. But the leaseholders at this development had to spend £150,000 just to defend their no-fault right against this legal onslaught at the First-tier Tribunal. They won, but the freeholder is now appealing… Beyond Right to Manage reform, we need a Right to Participate in collective enfranchisement so that all flat leaseholders can buy a share of the freehold even if they miss out the first time when one group of neighbours has enough support to enfranchise the block. It is unfair for leaseholders to be locked out of decisions over the charges they pay and the services affecting their home when they are ready to buy their share of the freehold. Sorting this inequity was the will of Parliament with Right to Enfranchise provisions in the 2002 Act. It’s also what the Law Commission originally recommended before seemingly being pressured by vested interests to drop the policy from their final recommendations in 2020. Also, why on earth should leaseholders have to contort themselves to get 50% support of all unit-owners in a block? Satisfying the onerous 50% participation threshold is near impossible in bigger buildings and those with high levels of buy-to-let, yet scummy investors face no qualifying criteria when hoovering up the freeholds of our homes from developers or auctioneers behind our backs. Don’t patronise us with Lord Best’s scheme for managing agents. We want liberation, not regulation. There’s a reason both the freeholder and managing agent lobbies are gagging for the cosy Lord Best policy, which wasn’t promised in either the Labour manifesto or the King’s Speech. It will jack up leaseholders’ already sky-high service charges, repeat the cruel joke of the Building Safety Regulator, and keep freeholders and their managing agent cronies firmly in the ecosystem. At the same time, a statutory regulator of managing agents will no doubt restrict competition by keeping out small ethical new entrants. It will also allow the government to claim job done while failing to end leasehold. Even without leasehold abolition, leaseholders will still be denied rightful control of their service charges and the power to easily sack their managing agent - the real regulation needed to rein in rip-off service providers and put them out of business, not some powerless or captured regulator in Whitehall. Labour should be for the grafters. If the government wants to win back public support after the Gordon and Denton by-election drubbing, salvaging this draft legislation and swiftly commencing the 2024 Act must be its priority. Show that politics can be a force for good. Stand up to the ground rent grifters and offshore property mafia. Free leaseholders. 5.3 million households in England and Wales are watching.