The Guardian view on leasehold reform: well overdue | Editorial

The leasehold exploitation that the Guardian has been campaigning against for several years is to be stopped within weeks. This is welcome news indeed for the future, though not for the hundreds of people who bought new flats and houses, mainly in the north-west of England, without knowing the risk of exploitation from buying only a leasehold rather than a more expensive freehold. Some householders have been left with a home that is all but worthless because the freehold has been sold on to a finance company that is levying huge charges from leaseholders for alterations and improvements, while quoting an absurd price to buy the freehold outright.

Not before time, the communities secretary, Sajid Javid, has announced proposals to make leasehold fairer. Selling houses leasehold will be banned altogether, and the ground rent for new flats sold leasehold will be set at a peppercorn level. These are practical proposals, first put forward by Labour last year. But they do nothing for more than a million people, many of them first-time buyers, who are already trapped in the leasehold nightmare.

Buying a property leasehold has always been an uncertain proposition, which is why more than a decade ago the then Labour government introduced a third form of ownership it called a commonhold. Like a leasehold, it enables owners to share the cost of maintenance of the external and internal shared parts of the building, the windows and halls and stairways. But commonhold, where flat owners all belong to an association, is more transparent. It would avoid the worst aspects of leasehold, where homeowners have long been vulnerable to exploitative managing agents that charge over the odds for maintenance, or fail to do it at all.

The leasehold scam unleashed on unsuspecting housebuyers over the past few years is in a different league from being overcharged for new stair carpets. It has left buyers with properties so encumbered by obligations – like ground rents doubling every few years – that they are unmortgageable and unsaleable. Their homes, sometimes only a few years old, are worthless. That was the fate of Lindsay Lloyd, who bought a flat in Ellesmere Port in 2009 for £155,000, only to find that the freehold had been sold on and its new owners wanted £32,000 for it. Another victim told the Guardian how she had bought a house for £122,000 and then found buying the freehold would cost £40,000.

They are at the wrong end of a planning system that has left developers almost entirely in control of what ought to be a delicate balance between meeting the UK’s housing needs and making a profit. Ever since the legitimisation of planning gain in the 1990s – where a local authority demands some benefit in money or facilities in return for planning permission – the odds have been stacked in their favour. When Kensington and Chelsea negotiated a fee of £50m in lieu of building social housing last year, months before the Grenfell disaster, it was only doing what many London boroughs, like Southwark, have also done.

And it is not just in overheated London that the relationship between planners and developers has become noxiously intimate at the expense of local people. Prince Charles’s model ecotown in South Devon is the latest at risk of scuppering by greedy developers claiming that it is too costly to fulfil the undertakings they gave to earn permission to build. This is an out-of-control sector that greedily exploits the desperate need for homes, and it needs to be brought under control, fast.