Michael Gove, Britain’s leveling up minister, is to push through two significant housing reforms to protect renters and leaseholders before the next election, as the UK accommodation crisis rises up the political agenda.
Gove has been given the green light to bring forward a leasehold reform bill in the final session of this parliament, while next week he will publish a bill to end “no fault” evictions of renters.
However, prime minister Rishi Sunak and Gove are facing criticism from Labor and some Tory MPs for not doing more to address the chronic housing shortage and bowing to anti-development “Nimbys”.
Gove will next week publish a renters reform bill, first promised in the 2019 Tory manifesto, which will abolish so-called “section 21 orders” that enable landlords to throw out tenants in England with eight weeks’ notice without any explanation.
Scrapping “no fault” evictions has been a target for housing charities, who claim the current law leaves renters in a precarious position.
Polly Neate, chief executive of the charity Shelter, said the government had “dragged its heels on the legislation for four years, leaving renters trapped in “a broken, insecure and unfair system”.
Meanwhile, government insiders said Gove had been given a green light to bring forward a fresh leasehold reform bill in the autumn, with a view to changing the system in England and Wales — but not scrapping it — before the election.
Under leasehold contracts, homeowners do not have full ownership of their property but hold long-term leases under which many must pay a yearly ground rent to whoever owns the “freehold”.
The changes are expected to include a cap on ground rents at 0.1 per cent of the freehold value. Gove has hinted that the entire leasehold system could one day be scrapped, calling it an “outdated feudal system that needs to go”.
Although Sunak believes his decision last year to scrap compulsory housebuilding targets for local areas is popular with some voters, a generation of young people is struggling to find affordable homes.
“We know we have to do something, but we haven’t figured out exactly what,” admitted one government insider.
Neither Gove nor the Treasury are keen on the idea, floated this week, of a new government-backed “Help to Buy” scheme, which some argue would simply push house prices higher.
The Treasury last autumn also rejected plans to further increase taxation on overseas buyers of British property, arguing it could freeze the market and would raise little money.
Gove will set out some of his ideas in a key housing speech, expected later this month, in which he will argue for the “densification” of cities, taking high-density urban areas such as Paris as an example.
But Sunak made it clear in the House of Commons this week that he stood by his decision not to instruct councils to allow more housebuilding on greenfield sites.
He accused Sir Keir Starmer, Labor leader, of wanting “to impose top-down housing targets, concrete over the greenbelt and ride roughshod over local communities”.
While Conservative party strategists believe Sunak’s policy has played well in Thursday’s local elections in England, some Tory MPs argue that a “not in my backyard” tendency is harming people trying to find a home.
Former cabinet minister Simon Clarke, who represents a Middlesbrough seat, said in a WhatsApp message seen by the Times newspaper: “We cannot become the party of nimbyism”.
The supply of new homes stood at 232,820 in the year to March 2022, according to government figures, well short of the official target of 300,000.
Housebuilders’ output is set to fall around 25 per cent this year, according to Investec analysts, in part because of higher mortgage costs after last year’s “mini” Budget.
Gove’s department insists that putting local communities in charge of development plans is the best way of meeting the 300,000 target.
But the housebuilding industry is critical of ministers’ approach, including the cumbersome planning system, the decision not to extend or replace help for first-time buyers, and the watering-down of national housebuilding targets.
Peter Truscott, chief executive of housebuilder Crest Nicholson, said that “the government has got it horribly wrong with its housing policy”.
The Department of Leveling Up said: “We are building a housing market that works for everyone and that is why next week we will bring forward the renters reform bill and leasehold reforms later in this parliament.
“These changes will give renters and leaseholders more protections and empower them to challenge unreasonable costs.”