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UK's arcane land-ownership rules targeted in Labour Party plan
[LONDON] The opposition Labour Party took aim at one of the UK's most controversial land-ownership rules, proposing to end a system that can leave some homeowners paying rent each year on the ground beneath their buildings.
So-called leaseholders, who own a house or flat but not the plot underneath, would have the right to buy that land for no more than 1 per cent of the property's value under Labour's plan. The "ground rent" they pay each year to owners of the land beneath their buildings would also be capped, and the sale of new private leasehold homes would be stopped.
The changes would rein in excesses such as clauses in contracts that allowed ground rents to double every decade, making properties unsellable. It would also have an impact on the business model of companies such as Vincent Tchenguiz's Consensus Business Group Ltd and Ground Rents Income Fund Plc, which collect the income generated by ground rents.
"England is one of the only places in the world which has failed to move away from this feudal system," said Sarah Jones, Labour's shadow housing minister. "Leaseholders have everything stacked against them. Too often they suffer extortionate fees, appalling service and restrictive contract terms, and no way to easily challenge them."
Labour's plan goes further than the one announced last month by Prime Minister Theresa May's government. James Brokenshire, the secretary of state for housing, proposed that all new houses would be sold on a "freehold" basis, which brings ownership of the home and the plot on which it stands. In addition, "pernicious" ground rents on new leases would be reduced to zero.
Some of the UK's biggest homebuilders such as Taylor Wimpey Plc and Persimmon Plc have sold thousands of leasehold homes, then placing all that income into a single portfolio that can be sold to investors.