Government reforms to allow property owners to build an additional two storeys onto blocks of flats without planning permission could wipe £200m from the value of leaseholders’ homes, while effectively giving freeholders up to £42bn, campaigners have claimed.
The new laws to allow fast-track approval for property owners building upwards were laid before Parliament yesterday and are due to come into force in September, but Labour leader Keir Starmer has tabled an early day motion to annul the controversial amendment to permitted development rules.
Campaigners have warned that the changes would be disastrous for leaseholders, many of whom are already fighting battles on several fronts against onerous ground rent clauses, unfair service charges and bills for replacing dangerous cladding.
Detailing the measures yesterday, housing secretary Robert Jenrick said: “We are reforming the planning system and cutting out unnecessary bureaucracy to give small business owners the freedom they need to adapt and evolve, and to renew our town centres with new enterprises and more housing.
“These changes will help transform boarded up, unused buildings safely into high quality homes at the heart of their communities.
“It will mean that families can add up to two storeys to their home, providing much needed additional space for children or elderly relatives as their household grows.”
The government’s impact assessment estimates the changes to planning rules would create up to 800 new homes a year.
But analysis by the Leasehold Knowledge Partnership calculates that this will come at a cost of £200m to leaseholders, resulting from the loss in value of their own homes and inconvenience caused.
Furthermore, it warns that the owners of more than 1.2m existing leasehold homes will face increased costs of collective enfranchisement should they wish to purchase a share of the freehold.
LKP estimates that it could cost leaseholders between £21bn and £41.9bn more to purchase their freehold because of these new permitted development rights – money that is effectively being gifted to freeholders, according to the campaign group.
Those additional costs equating to between £11,970 and £28,742 per flat would be likely to apply even if the freeholder did not take up their right to build upwards because of the increase to the potential development value.
The National Leasehold Campaign is calling on MPs to support Keir Starmer’s plea to quash the new rules.
In a statement on Twitter the NLC says: “Allowing two storeys to be built on top of blocks of flats gifts freeholders £41bn, crushing the rights of leaseholders who want to get their freehold, devaluing flats by £200m, stuffing any attempts to reform leasehold.”
Co-chair of the All-Party Parliamentary Group on Leasehold and Commonhold Reform and long-standing leaseholder rights campaigner Peter Bottomley told MPs earlier this month that the changes would “wreck the lives of leaseholders who want to get their freeholds” and “put the price up so that people like Vincent Tchenguiz can stuff his pockets again at the expense of leaseholders”.
