Rising service charges have overtaken ground rents as the biggest financial concern for leaseholders according to new research published as the Government delays its response to a parliamentary report on leasehold reform.
The survey, commissioned by campaign group Justice for Property Rights, found that 38.5% of leaseholders identified service charges as the housing cost that had increased most unexpectedly, making it the highest-ranked concern among those surveyed.
By comparison, ground rents ranked fifth, with 88.1% of respondents describing their current ground rent as affordable or saying they were neutral about the cost. Just 13.8% said reducing or abolishing ground rents would make the biggest difference to them.
The findings were released after Housing Minister Matthew Pennycook confirmed the Government would not meet the 27 July deadline for responding to the Housing, Communities and Local Government Committee’s report into leasehold reform.
SERVICE CHARGE TRANSPARENCY
Justice for Property Rights argues the results show ministers should place greater emphasis on tackling service charge transparency and strengthening the Right to Manage, allowing leaseholders to take greater control over the management of their buildings.
Richard Merrin, spokesperson for Justice for Property Rights, saya: “The Housing Secretary says these reforms are designed to address ‘a specific issue’ and represent ‘a proportionate approach’.
“And yet our research demonstrates that ministers are focusing on the wrong issue altogether. If almost four in ten leaseholders say service charges are their biggest financial concern, while only 13.8% believe abolishing ground rents would make the greatest difference, then Government has a duty to explain why its flagship reforms are aimed elsewhere.”
He adds: “Leaseholders have told us clearly what they want fixed, and it isn’t ground rent. It’s service charges they can’t predict, can’t challenge and often can’t afford. Government has an opportunity to fix the biggest concern amongst leaseholders by implementing transparency requirements and empowering leaseholders to manage the cost of their own homes.
WIDER CONSEQUENCES
And he adds: “This research offers government a clear choice: legislate on the evidence or continue legislating on assumption. Leaseholders have told us plainly that service charges, not ground rent, are what’s damaging their finances month-on-month.
“Strengthening the Right to Manage would fix that immediately, without waiting years for commonhold to become the norm.”
The campaign group also warned that retrospective changes to ground rent legislation could have wider consequences for investors and the property market, although those claims remain disputed as the Government continues to develop its leasehold reform proposals.
