The months since the election have been a precious reminder of what happens when elected leaders forget who put them into power. Labour were elected as an insurgent government of delivery that would mobilise against vested interests within and without the British state. But if you are elected on such a platform, you have to deliver. As a report by Labour Together from last month warned: “This Labour government has been cautiously hired, on a trial basis, liable to prompt dismissal if it deviates even slightly from its focus on voters’ priorities.” As they approach a decisive Budget, Labour are searching for ways to rally the country. And one issue that should not be forgotten amid the back-and-forth over tax rises is housing tenure reform.
That same Labour Together report found that voters with precarious housing situations were among the most likely to have switched from Conservative to Labour in July. Inspired by this research, the campaign group I founded, Free Leaseholders, used party conference season to begin a listening tour of the country, sounding out exactly these voters. The people we spoke to were clear: their housing experience is a cost of living crisis in itself. And this is especially because of the exploitative and antiquated housing arrangements British governments have allowed to fester – either leaseholders under predatory landlords or households with “fleecehold” arrangements, which lock occupiers into private maintenance contracts with overcharging and unaccountable management companies. These undemocratic systems leave their victims as second-class homeowners.
Labour’s clear manifesto commitment to end what they called the “feudal” leasehold regime was the deciding factor behind thousands of voters who fell behind Starmer’s campaign. Stephen, a lifelong Conservative voter in Blackpool South, said: “I would like him [Starmer] to do it as quickly as possible, and not leave it two weeks before the next general election, because if he does, I certainly won’t be voting for him again.” Jon in Swindon North, who also voted Labour for the first time in his life in July, said: “I know the government’s short of money… They are going to come knocking for taxes. The one thing I want the government to do in return is stop people taking needless amounts of money from me for doing things they’re not really doing much for, to end the leasehold and fleecehold trap.”
To respond to the concerns of voters like these – who are to be found across the country – Labour must accelerate the commencement of the Leasehold and Freehold Reform Act 2024 so it can be used ahead of the 2025-26 Tory timetable, publishing new timescales now. After all, Labour had promised to “act quickly” on the issue in its first King’s Speech in July. They should also unveil the promised draft commonhold legislation to end these rackets for good before the Christmas recess, for scrutiny in this session of Parliament. And in the Budget, the Chancellor should publish the results of the ground rent consultation undertaken by the previous government, followed by her timelines for delivery of Labour’s manifesto commitment to regulate ground rents.
Voters won’t accept yet more excuses and technocratic legalism. After all, if government cannot get rid of something so blatantly unfair and rejected by the public at election after election, what is it good for? But this is not just about politics. These policies would be transformative, and would rectify a symbolic and material injustice, rebalancing the economy away from asset owners and towards workers.
As Joseph Stiglitz and Mariana Mazzucato have argued, the extractive nature of the modern rentier economy is a major source of the inequality and political upheaval we see across modern capitalist societies. But leasehold and fleecehold housing in England and Wales are extreme forms of rent-extraction, feeding off people’s aspiration for homeownership and the dignity, autonomy and control that traditionally came along with it. These systems are leading to the wealth erosion of ordinary families, warping the economy and creating widespread unhappiness.
Labour claims 1.5 million new homes will be built over the next Parliament. On the current trajectory, however, they won’t be freehold houses and commonhold flats. And under leasehold and fleecehold housing, occupiers lose essential control of maintenance costs to outside investors and management companies who, aided by their monopolistic position, tend to extract ever greater sums of money from these households in return for vaguely defined, sometimes never received “services”. These costs can become so extreme that the properties are rendered unsellable, certainly unliveable. This extractive and exploitative system has become so bad that last year Hamptons glumly admitted England’s flat leaseholders were collectively paying a crippling £7.6 billion in service charges.
Fixing the housing crisis productivity puzzle requires densification and high-rise housebuilding in our cities. But England has the second-lowest proportion of flats of any country in Europe, after Ireland, which also inherited leasehold from us. Without a mass shift to commonhold (forms of which exist in most of the world including North America, Australia, the continent and even within the UK itself in Scotland), the agglomeration effects of a greater clustering of economic activity in productive places will never be unleashed. Instead, the continuation of leasehold simply means more money being offshored by rentier freeholders while new businesses aren’t created, households avoid forming families and people can’t save for retirement.
Labour’s support at present is wide but shallow. Its central challenge at the next election will be consolidating its 2024 coalition while breaking new ground by delivering retail policies that have cut through with new cohorts of voters. As Rachel Reeves searches for a way of pursuing Labour’s mission of national recovery despite the financial challenges ahead, the inexpensive but socially invaluable cause of leasehold abolition cannot be forgotten.
[See also: Paul Johnson: “Labour might get lucky on growth”]
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