While the leasehold system is in need of reform, the Conservatives' proposed blanket ban could have dangerous unintended consequences for genuinely affordable housing.
When the government announced its consultation for banning leaseholds, they unexpectedly caused community-led housing providers a big headache.
Why? Because, believe it or not, there are housing developers who build houses because people need them, not because there’s money to be made – and they’re the fastest growing in the sector.
These developers are ordinary people – a group of people of south-east London inspired by self-build pioneer Walter Segal, a Liverpool community fighting demolition plans, Cornish villagers fed up with the ghost town vibes caused by a huge number of holiday homes…
By law a Community Land Trust (CLT) must exist for the community’s benefit, be not-for-profit and be democratic. Land can be gifted or bought by a community, but either way – the CLT become stewards of the land and the houses built on it, ensuring that it remains genuinely affordable for locals for generations to come.
It gets better – rents and house prices are based on what people are earning in the area, normally working out that occupiers don’t pay more than a third of their income each month. This is guaranteed not just for now, but for every future occupier.
There are 225 CLTs in England and Wales, with 800 homes – many which were built in the past three years. 4,000 homes are estimated to be delivered by 2021.
One third of CLT housing to date has been sold under leasehold and most of the new-build houses planned are set to use the leasehold system.
Any blanket ban that restricts a CLT’s capacity to deliver new affordable housing will harm – not benefit – people in housing need.
CLTs only use ground rents and other charges to deliver services that truly benefit residents and the local community. They’re not going to create a dodgy financial package to flog to a mystery investor, as some private developers have done.
So, while irresponsible businesses have created an environment where home owners feel confused, duped and stuck, Community-Led Housing is the opposite – giving people stability, independence and freedom.
Developers do need to stop abusing our housing market. People shouldn’t be duped into buying worthless houses, or face ever-spiralling costs.
But that doesn’t mean that those who have been using leasehold responsibly, should now suffer, or worse, cease altogether.
We are working together with UK Cohousing, calling on government to exempt community-led housing models, including CLTs, from the ban on new-build leasehold sales and for community-led housing groups to retain their freedom in charging reasonable ground rents.
We are also proposing a Code of Conduct for Public Interest Leases, where best practice of leasehold is promoted and demonstrates that when in the right hands, leases are the best way of maintaining long-term, responsible stewardship of land and homes.
Responsible leasehold already exists: long-term stewardship of housing where people, not profits are at the top of the agenda.
The problem isn’t leaseholds. It’s greed.
More information on the consultation can be found here. The last date for responses is Tuesday 19 September.
Catherine Harrington is Director of the National Community Land Trust Network
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