The London mayor says he supports government moves to end unfair leasehold tenures on newbuilds but has not committed to it for homes already under construction, reports Kumail Jaffer, Local Democracy Reporter

Mayor of London Sir Sadiq Khan has been urged to “stand up for leaseholders” after refusing to commit to converting all City Hall-backed developments to commonhold.

Khan has been a vocal campaigner on leasehold reform in the past, often calling on his Labour colleagues in government to move faster and further as well as banning ground rents and making 990-year leases a condition for Greater London Authority (GLA) funding.

Over a third of London’s homes are leasehold – more than double the proportion than in the rest of England, primarily due to the higher concentration of flats in the capital.

The government’s draft Commonhold and Leasehold Reform Bill, published in January, will in theory mean that commonhold – where flat owners are given a share of the freehold on their building – becomes the default for any new properties built.

Khan was last week challenged by Conservative London Assembly member Andrew Boff to commit to “suspending all proposed developments backed by mayoral money that are using leasehold as the tenure”.

“You are actively involved in new developments that have leasehold as the main tenure,” Boff said during Mayor’s Question Time last Thursday (26th March).

“You could do it now – you could convert all those developments to a share of freehold, giving those residents control over their destiny, but you are still backing leasehold with mayoral money.”

However the mayor, who has previously said he was reluctant to “break” any agreement around government funding for building homes in London, refused to rebel against any deals struck with the Ministry for Housing, Communities and Local Government (MHCLG).

He said: “We’ve taken several steps to support leaseholders including requiring 990-year leases for shared ownership homes, developing my leasehold guide for Londoners and introducing my service charges charter.

“It’s not mayoral money – it’s government money that comes with conditions attached. What we’re doing is abiding by the conditions from the government working with councils, housing associations and developers to get the housing built in London that we desperately need.”

Theoretically, the mayor must follow guidelines set out by the MHCLG under the latest Affordable Homes Programme (AHP) deal, which sees central government funding go to City Hall to build social homes. Part of the 2021-2026 AHP involved the construction of shared ownership homes, which are leasehold by default.

Depending on leasehold reform, however, further AHP deals between the mayor and the government could mean it becomes easier for Khan to avoid building leasehold homes entirely.

In December, the mayor told assembly members: “We could not change the rules in relation to the previous funding from MHCLG but, going forward, we are trying to secure particularly the change in the law in terms of legislation to make sure that in the future they are all commonhold.”

However, Khan’s critics on the London Assembly feel the issue is more a case of political will rather than legal contracts.

Boff responded: “Under your mayoralty, we will continue with leasehold – that’s basically what you’ve just said.”

Green Party leader and assembly member Zack Polanski added: “Sadiq Khan has refused to commit to no more new build leasehold buildings in London.

“Literally moments after banging on about how bad leasehold is and that it’s a feudal system. The Labour hypocrisy knows no ends. What do they stand for other than to protect wealth and power?”

Harry Scoffin, housing campaigner and founder of Free Leaseholders, told the Local Democracy Reporting Service (LDRS): “Growing numbers of Londoners are being abused in the rigged leasehold system, surrendering more and more of their hard-earned money to fat-cat freeholders while many slide into negative equity. Leaseholders are often unable to sell because of these spiralling service charges imposed by property grifters.

“For those who do, they face wipe-out losses compared to those with freehold houses. Flats accounted for around 60% of London home sales last year, according to Hamptons, but made up around 90% of all losses.

“Instead of being a caring and strong mayor challenging an unpopular government that has fallen to vested interests, Sadiq Khan is backing tokenistic reforms that will keep the ground rent gravy train running until 2068 and abandon existing leaseholders to a two-tier regime, with commonhold only mandated for future builds.

“Where is the leadership London was promised? Instead of standing up for leaseholders and stabilising the housing market, Sadiq Khan is leaving us as financial captives of property cartels.

“There is scant evidence he is fighting for government to end leasehold for good, as Labour promised in its election manifesto.

“The May elections will be the perfect opportunity for leaseholders to register their dissatisfaction with Khan and Labour. It is no surprise that Greens Leader Zack Polanski is weaponising this issue to cannibalise the Labour vote in London.”

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