SHUTTERSTOCK / CHRISDORNEY
Show Hide image

Surveyor loses “David and Goliath” case to make two million houses more affordable

Court of Appeal squashes legal challenge to leasehold costs 

The Court of Appeal ruled today against a challenge to the cost of extending the leasehold or buying the freehold of a property, in a landmark legal case that could have made an estimated 2.1m homes in the UK dramatically more affordable for their owners in the long term.

The case of Mundy v The Trustees of Sloane Stanley Estate challenged the system used to calculate the cost of extending the leasehold on a property. Had the challenge succeeded, the cost of extending a lease or buying a freehold could have fallen by as much as 50 per cent. 

Leasehold properties are those in which the land remains the property of the landowner – the freeholder – who grants a lease to the tenant. When the lease has expired, the freeholder is entitled to take possession of the property once more. The cost of extending a lease rises dramatically as the lease gets shorter.

The case centred around a small leasehold flat in Chelsea, upon which the freeholder had requested a charge of £420,000 to extend its current 23-year lease. The “relativity graphs” used to calculate this valuation were the focus of the challenge; this 20-year-old system of valuation was drawn up for the Duke of Westminster, one of the country’s biggest landowners.

The challenge was brought by surveyor James Wyatt, who told the Guardian recently that a “gravy train” of solicitors and surveyors maintains the current system in favour of landowners. The wealthiest of these landowners, including the current Duke of Westminster, would have stood to lose millions had Wyatt’s case succeeded.

Following what Sajid Javid described as the “feudal practices” of management companies and freeholders, the government is considering banning the use of leasehold on any new-build property. But for millions of owners of older houses and flats – there are thought to be almost half a million homes in London with leases of fewer than 80 years – extending their lease or buying the land on which their home stands will remain a very expensive process. 

Will Dunn is the New Statesman's Special Projects Editor. 

Wei Huang/Shutterstock
Show Hide image

John Healey: “Labour has a radical, deliverable housing plan. The government has no plan”

The shadow housing minister talks to Augusta Riddy about Britain’s “broken” housing market, and his plan to fix it. 

It is now summer recess, and without its MPs Portcullis House is quiet. John Healey, however, has yet to return to his constituency; one of his team jokes that only her boss would be charting their “priorities” for the summer. A member of parliament since 1997, the Yorkshire native was a treasury minister for five years under Tony Blair and Gordon Brown, before becoming minister of state for housing and planning in 2009. Apart from a couple of months spent away from the front bench in 2016, he has served as shadow housing minister under Jeremy Corbyn since September 2015. Does that make him a housing expert? Laughing, he concedes that in comparison to the six housing ministers that have been appointed since 2010, “it’s relatively long.”

That most of the Conservative manifesto has been scrapped is widely acknowledged, but Labour’s manifesto continues to guide the party, and has retained its electoral relevance. Housing was not one of the top issues for voters, and the launch of their housing manifesto, “Labour’s new deal on housing”, was overshadowed by the Manchester terror attack. “In the election campaign, it [housing] was in some ways the dog that didn’t bark.” Both Healey and the Prime Minister agree, however, that moving forward the “broken housing market – direct quote from her” will be a major issue.

He now has a steely eye on the future. “We’re in a very strong position post-election because we have a comprehensive plan for housing. The government has no plan.” In the absence of a Conservative majority, Healey believes that Theresa May is unable to deliver necessary housing policy. “Her deal with the DUP covers the Queen’s speech, Brexit-related legislation and budgets. There is no agreement, no majority, and therefore no plan for domestic policy including on housing.”

“Since 2010, we’ve seen the number of under-45s owning their own home drop by 900,000 and now home ownership generally is at a 30-year low. Everyone knows someone who’s affected, someone who can’t get the home they need or aspire to.” Labour would launch the biggest council house building programme for over 30 years, he says, as part of a programme to build a million new homes over a parliament. To address rising homelessness, Labour would make 4,000 new homes available to people with a history of rough sleeping. Housing is such a policy priority that it would be given its own government department.

Avoiding the Labour flytrap of affordability Healey wants to be clear on the investment required for this “new deal between government and citizens”, but has Labour been successful in getting that message across? “No. We have to work harder at that. You’ll see in the housing manifesto a commitment that this requires no more borrowing from day-to-day spending, and simply returns the level of capital investment to what it was in the last year of the last Labour government. This is a radical plan but it’s a deliverable plan, and it’s costed.”

Healey has the gift of political hindsight. “The fact that I did the job in government in 2009 and I’m now shadowing the government has the advantage [that] I knew what we did then and I can see what they’re doing now I can draw some of the comparisons.” Does he find the comparisons depressing? “No. If the public aren’t angry about housing, I am. If the public don’t believe there is an answer to the housing crisis, I do.”

Healey possesses a strong ideological conviction in the role of government that runs through his proposals. He laments the public loss of faith in the power of the state, “a lack of belief that government, national and local, has a role to play. I don’t accept any of that but what I do accept is that that defines the fundamental challenge for us as politicians. We have to set out a plan that makes people think ‘I could see Labour in government doing that, if it was given the chance and it would make a difference to me and the people I know.’”

“I would love to get back to a situation which we had post-war for decades, where there was a broad cross-party consensus on the housing needs of the country. A recognition that public housing as well as private housebuilding had a role to play.”

He is highly critical of Conservative small-state thinking, which he calls “inflexible, dogmatic, non-interventionist”. “The deeper problem for Conservatives is that they tie their own hands with their free market ideology.” In light of the Grenfell tragedy, Healey refers to remarks made by former fire service minister of state Brandon Lewis, “when challenged over some of the actions necessary on fire safety, the minister said: ‘That is not a responsibility for government,’ citing the principle of two regulations out one regulation in.” Healey calls this position “shameful”.

Shadow chancellor John McDonnell said the Grenfell victims were “murdered by political decisions”. Was Grenfell a mass murder? “No. I would not use those words. But none of us can escape the really brutal, cruel truth that that disaster was man-made.” For Healey this is not so much a case of individual blame, but once again relates to the roots of political thinking and a resistance to regulatory intervention. We are seeing “the consequences of seven years of deep cuts to local government capacity in areas that are essential, but not visible.”

Any perceived failure to act on housing fire safety has not dented former housing minister Gavin Barwell’s career, who was recently made Theresa May’s chief of staff. Barwell was accused of sitting on a coroner’s report from a fire in Lakanal House in 2009, in which six people were killed, but to be “fair to Gavin Barwell, successive housing ministers before [him] failed to act .” And what of the latest Conservative housing minister offering, Alok Sharma? Healey seems similarly uninspired. “Nice man, with a tough brief.” Healey has urged the government not to wait any longer before undertaking a fire safety review. “Any conclusions from the [Grenfell] investigations can be incorporated, but don’t kick it further down the road. This was not just any old report, this was a rule 43 letter that coroners prepared for government, when in their view government can prevent the future loss of life.”

Reflecting on the aftermath, he speaks plainly on how he and Labour will move forward. “That’s our responsibility – to pledge to those Grenfell Tower residents and survivors that we won’t rest until everyone who needs help and re-housing has it, everyone who is culpable in this has been held fully to account, and that every measure necessary to make sure this can’t happen is in place. That’s both a political pledge from Labour and a personal pledge from me.”

Grenfell has imprinted itself on the public consciousness as a shocking reminder of housing inequality, but there is a broader dissatisfaction with housing which Healey describes as “a simmering resentment and frustration which is increasingly widespread”. An inability to meet rent, to stay in one’s community, or to move out and buy a home are all personal ramifications of a market weighted in favour of the wealthy. Is the housing market stable? Healey seems peeved by the question. “The question for me is not if it’s stable. Is it fair, is it functioning properly?” With Brexit on the horizon, he admits that the market could become strained, “if you take the view that Brexit is likely to lead to an economic slowing, an increase in costs, and therefore inflation domestically, it would seem a sensible move for government to act now in order to head off any potential problems rather than too late, and in panic.” The housing manifesto pledges to reinstate a mortgage safety net, recently scrapped by chancellor Philip Hammond, which was in place under David Cameron and used by Labour “very effectively after the global financial crash and recession in 2008 to help homeowners who lose their jobs and can’t keep up with their mortgage.”

Can the metro mayors be big players in housing outside the capital? “The jury’s out for the metro mayors. A lot will depend on the force of personality, and on housing and planning their ability to bring people together to strike the agreements and partnerships.” Healey does not dispute the crucial role of devolution, but “everything to date has been relatively piecemeal. It’s been a political branding exercise by and large led by George Osborne to try and show people that the Conservatives care about the north.” With the re-routing of HS2, Healey is dealing with the fallout of the former chancellor’s policies in his own constituency. “We face the worst of all worlds at the moment which is the HS2 route running right through south Yorkshire without stopping.”

Electorally, Healey remains focused on recapturing traditional Labour ground. “We have some deeper weaknesses to deal with. In the midlands and the north, a generally white working class vote that has moved away from Labour, and lost confidence in us.” He is a familiar face on the doorstep across the nation, and lends his time to Labour colleagues. “I see that as part of my shadow cabinet job, week in week out ... in the last couple of weeks I’ve been to Ipswich, Northampton, Peterborough, Sheffield Hallam, Kensington. I think politicians should perennially be on the doorstep. I never see any seat as secure”.

What Healey finds “indefensible” is the acknowledgement that the housing market is broken, unaccompanied by a legislative agenda to improve the situation. “You’ve got a government rightly pointing to the problems but not willing to offer any action.” He believes the solutions are out there; all you need is a plan.

Augusta Riddy is a Special Projects Writer at the New Statesman.