Two former housing secretaries from opposing parties have urged the government to stand firm against legal threats from freeholders and press ahead with leasehold reforms to limit land rents.
In their speech to the Housing Committee, former Labor Housing Minister Angela Rayner and former Conservative Housing Secretary Michael Gove called on ministers to face up to the owners’ lobby and make progress. with reforms undeterred by fear, they will seek judicial review to protect their rights.
Gove said: “For years [freeholders] have benefited from a system where they get money for nothing.
“That leasehold system is essentially extortion. It must end.
“The government will put an end to it. I would much prefer it to end on an accelerated schedule, but I recognize that there is only so much an individual Secretary of State can do when financial institutions exert such a mesmerizing hold over Treasury decision-makers.”
Rayner said:[You would need] “The world’s smallest violin to these organizations that think ground rent, which is a free gift, is acceptable when people are in these circumstances, and we need to put an end to it.”
While both Gove and Rayner said they hoped leasehold reforms could go further, they both acknowledged the difficulties ministers face.
Rayner said: “I think we have found the right balance, and I don’t think we should give in or lecture on this.
‘I think we have the mandate.
“I think the previous administration went as far as they could in washing up the 2024 bill. I think we need to engage that, and I think we need to move at a pace.”
Gove refuted arguments from an earlier speaker, who is the legal representative of a property owners group, that reforms to quickly reduce land rents to a peppercorn would jeopardize investor confidence in Britain.
He also hit back at claims that pension funds would face significant consequences.
Gove said: “These arguments, however well put, are bogus.
“The first thing we have to say is the impact on pension funds.
“Overall, pension funds have less than 1% of their investments in residential property. In Britain that is residential property in general, let alone land rents.
“So we are talking about a small part of people’s retirement savings that is invested in this asset class.
He added: “The second thing that goes along with that is the concern about deterring or deterring future investment.
“Again, I think that’s nonsensical. Investors judge the attractiveness of Britain in general based on a variety of factors, and I think the people in the markets are big boys and girls.
“They will know that a government has absolutely every right to say the party is over when it comes to risk-free returns, and those investors will be fully aware that there are plenty of other areas that will deliver more productive and higher returns over time.”
Both Rayner and Gove have urged ministers not to be deterred by concerns that home owners want a judicial review or challenge the reforms at the European Court of Human Rights, as the government has the backing of Parliament to bring about change.
Rayner dismissed arguments that ground rents were needed to pay for essential fire safety remediations as “absolutely nonsense”.