A campaign group representing freeholders and property investors has warned the Government could face multi-billion-pound compensation claims over planned leasehold reforms, escalating the increasingly bitter battle surrounding proposals to phase out leasehold and expand commonhold ownership.
Justice For Property Rights accused ministers of pursuing what it described as “state-backed asset confiscation” following the Housing, Communities and Local Government Committee’s latest report urging the Government to move “further and faster” on commonhold reform.
The group says it is now working with a major law firm on potential legal challenges linked to what it claims is the “unlawful destruction of long-established property rights.”
The dispute centres on the Government’s wider leasehold reform agenda, which aims to curb ground rents, strengthen leaseholder rights and eventually make commonhold the default tenure for flats in England and Wales.
FEUDAL SYSTEM
Ministers argue the reforms are needed after years of mounting consumer anger over escalating service charges, onerous lease terms and difficulties selling leasehold homes. Previous research from Propertymark found 94% of leaseholders regretted buying leasehold properties, while the Government has repeatedly described the system as “feudal”.
However, Justice For Property Rights claims the reforms risk undermining investor confidence and damaging Britain’s wider reputation for legal certainty and property rights.
The organisation also criticised the Select Committee inquiry itself, claiming evidence from smaller investors and family-owned freehold businesses was largely ignored in favour of institutional and campaign voices.
FUNDAMENTALLY SKEWED
Richard Merrin, spokesperson for Justice For Property Rights, says: “This inquiry was fundamentally skewed from the outset. The voices of ordinary investors and small business owners were ignored in favour of a politically convenient narrative.
“The result is a report that is economically illiterate, legally dangerous and completely disconnected from the real-world consequences these proposals will have.”
The group warns retrospective removal of contractual ground rent income could amount to unlawful expropriation.
“Correcting genuinely excessive ground rents on low-value flats is one thing. But retrospectively deleting contractual income streams entirely is something very different.
“That is not reform. That is state-backed expropriation.”
The increasingly heated debate comes as the Government continues consulting on the Draft Commonhold and Leasehold Reform Bill, with industry bodies including ALEP and Propertymark supporting reform in principle but warning the transition will require careful implementation, clearer guidance and realistic timescales.
Justice For Property Rights says any attempt to remove or severely dilute existing property rights without compensation could ultimately leave taxpayers exposed to “billions of pounds” in legal liabilities.
