London’s slowdown in housing development is likely to continue until the government finishes planned reforms to leasehold, according to the housing minister.
London’s slowdown in housing development is likely to continue until the government finishes planned reforms to leasehold, according to the housing minister.
Speaking at a fringe event at the Labour Party conference in Liverpool yesterday, Matthew Pennycook drew attention to the capital’s reliance on flatted development, which he said accounted for 96% of its new homes.
“That’s where the changes we’re making across the piece are so important”, he said.
He added: “Until we have really reformed the leasehold system, that tenure is going to remain a problem to people who are contemplating what their first home is and thinking ‘do I really want to buy a flat in London when I’ve got the service charge and other charges and fees coming through?’”
A piece of draft legislation published at the start of this year would replace leasehold as the default tenure for new flats with a new commonhold tenure. Under commonhold residents own their property outright and share obligations for managing, funding and maintaining properties through a commonhold association.
Labour’s planned reforms to the leasehold tenure come after major changes to rules for private renters, which came into effect through the Renters Rights Act earlier this year.
“I’ve done the private rented sector, I’m onto leasehold,” Pennycook said.
The minister acknowledged that it had been “a long time since it’s been this tough” for developers”, but that many of the reasons were “completely outside the government’s control”.
“At the start of the year, I was looking at, I think, two interest rate cuts and first-time buyer numbers really going up,” he said.
However, base interest rates have been kept stable since the start of this year, in part due to the impacts of the US conflict with Iran.
Pennycook acknowledged there was an issue with the “cumulative impact” of regulation, but said the government had “inherited […] a lot of the regulation that we’ve seen put in place”.
Addressing the recent Social and Affordable Homes Programme (SAHP) first wave allocations, Pennycook said that “People with really good bids lost out”.
The minister was sitting beside Mark Washer, chief executive of SNG, which missed out on being named a strategic partner of Homes England in the alllocations.
“Mark’s heard this before, but [it was] so massively oversubscribed in terms of the amount that’s available and on the profile that’s made, which is a great thing,” Pennycook said.
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