Why populist posturing against freeholders will backfire on the Conservatives – ConservativeHome

In August 2022, Mick Platt, Director of the RFA, wrote for ConservativeHome about how anti-freeholder sentiment would spell trouble for residents and would cause the Conservative Party reputational issues in the future. The original piece can be read here.

In a recent article for ConservativeHome, Harry Scoffin from the Leasehold Knowledge Partnership argued that abolishing leaseholds on apartment buildings is central to reviving the Tory dream of a “property-owning democracy”.

As the Director of the Residential Freehold Association, I can tell you it won’t be a dream, and it certainly isn’t democratic.

In the past few years, this Government has embarked on an irresponsible war with freeholders, seemingly for superficial political appeal. They have willingly and recklessly fed a false narrative that all building owners simply take money for nothing, charge excessive fees, and deliver little to the wider economy.

This narrative completely ignores the role professional freeholders in fact play in maintaining apartment buildings, and disregards the burden that would be imposed on residents if professional freeholders were removed.

Far from being a dream, the Government’s plan to abolish leaseholds on apartment buildings will be a nightmare for the majority of residents and is unlikely to make the Conservative Party popular in the long-term. There are three key reasons why this is the case.

Firstly, there is strong evidence to suggest it won’t produce the desired outcome – and you only have to look to Scotland to see this borne out.

One of the main alternatives that has been proposed to replace leasehold is a commonhold system – where, in effect, residents manage their buildings. The property tenure in Scotland is very close to this – and it has been a resounding, and frankly dangerous, failure.

In Harry’s article, he has made the erroneous claim that Scotland is a country in which “commonholds flourish”. While commonhold may be appropriate for smaller apartment buildings where residents can more easily assume management of a building, it is irresponsible to advocate for such a system in larger, more complex buildings.

In Scotland, if the roof of a large apartment building needs repairing due to leaking, the top floor’s residents who are affected by it would need to raise money from others in the building to carry out repairs. Some leaseholders in the building may not reside there, meaning there is difficulty in tracing them. Some residents may disagree with what parts of the buildings have a ‘communal responsibility’ and need communal funding.

The resulting delays and difficulties resolving what would otherwise be straightforward issues for an independent freeholder often means the necessary repairs are not done. Recent studies, including a recent BBC2 documentary, suggest that 50 per cent of all properties in Scotland are in “critical disrepair” because there is no legally enforced maintenance system for buildings.

This is the fate that awaits apartment blocks in England in 10-20 years’ time.

Secondly, it would amount to a huge added burden for leaseholders in apartment buildings, because of the responsibilities they would need to take on. Professional freeholders of large apartment buildings fulfil a vital stewardship role, overseeing the maintenance, safety and sustainability of building structures and communal areas, and taking on significant responsibility for the building as a whole, such as insurance and complying with legislative requirements.

If the Government were to scrap the freehold model in England, these responsibilities would be transferred to leaseholders. Many do not know this is coming – and the majority of those that do are not happy about it, as research by Savanta last year demonstrates.

The UK’s building safety crisis will not be resolved through a transition to commonhold. In reality, it will worsen the plight of those living in dangerous buildings who do not have the time, qualifications or expertise to assume the management responsibilities of those that the Government is determined to drive out.

Finally, another consequence of abolishing leasehold is the negative impact it will have on investor confidence – something you would hope would be a priority for a Conservative government at a time of stagnant economic growth.

Both candidates currently vying to be our next prime minister have promised to use tax levers to spur business investment, seemingly forgetting the misguided mission that the Department for Levelling Up, Housing and Communities is on which will do the exact opposite. Previous governments have made similar mistakes, with both the Tories and Labour doubling down on rent controls throughout the 1970s. The result of this was a serious hit to investor confidence which took decades to recover from.

Currently, investor confidence in this space is being undermined by the Government’s bizarre anti-business rhetoric and the housing department’s muddled policy agenda.

In short, the current Government’s war on leasehold is unnecessary, impractical and will certainly be unpopular once the public realise what it means in practice. The Conservative Party should be alarmed at the likely impact this will have on its relationship with the business community and with voters. I would urge whoever becomes prime minister on September 6 to ditch this policy – and stop the dream of home ownership becoming a nightmare for many.