Michael Gove’s Bill to abolish the “feudal” leasehold system does not abolish leaseholds, the housing department has admitted.
Officials did not have time to include the measure because Downing Street only agreed to it at the last minute, The Times reported.
As a result, ministers will now have to introduce the reform as an amendment to the 132-page Bill, or replace it in favour of a new Bill altogether.
Mr Gove, the housing minister, has previously described leasehold as “an outdated feudal system that needs to go”.
He favours replacing it with the commonhold system used in the US and Australia, where buyers own their home indefinitely rather than for a set period and have a greater say over its management.
It was claimed that his Leasehold and Freehold Reform Bill would ban developers from selling new leasehold homes except in exceptional circumstances, as the first step to scrapping leasehold altogether.
However, officials reportedly said it was drafted in a “huge hurry” after Downing Street delayed a decision on whether to include it in the King’s Speech last month.
‘Doesn’t even do what it says on the tin’
A source downplayed the omission and said the department would now seek to amend the existing Bill – adding that this was common practice.
Matthew Pennycook, the shadow housing minister who found the omission, said: “Not only does this long overdue piece of legislation not ensure that new flats will be sold as freehold, contrary to what ministers have claimed it doesn’t even do what it says on the tin and ban the sale of new leasehold houses.”
He added that a Labour government would make commonhold “the default tenure” for new properties, and “comprehensively reform the leasehold system”.
A spokesman for the Department for Levelling Up, Housing and Communities said: “Liberating leaseholders forms a vital part of the Government’s long-term plan for housing.
“That’s why we are bringing forward the biggest changes to the system for a generation by giving leaseholders significant new rights, powers and protections through the Leasehold and Freehold Reform Bill.
“As we laid out on Monday, we will bring forward amendments as the Bill progresses through Parliament and that includes the ban on leasehold houses.”