Original article "Leasehold reform needs care"
By Charles Campion, Partner-in-charge of Community Planning at JTP
Published in Issue 103 of Planning in London
Leasehold reform is welcomed, but mustn’t stifle the growth of Community Land Trusts, says Charles Campion
In July this year, new proposals to cut out abuses of leasehold were announced by the government in an attempt to deliver a fairer, more transparent system for homebuyers. Communities Secretary Sajid Javid set out plans to ban new build houses being sold as leasehold, as well as restricting ground rents to as low as zero.
Leasehold generally applies to flats with shared spaces, but developers have been increasingly selling houses on these terms. There are 1.2 million leasehold homes currently recorded in England and the number of leasehold sales is growing rapidly. This can often expose homebuyers to unreasonable and long-term financial abuse.
It’s clear that far too many new houses are being built and sold as leaseholds, exploiting home buyers with unfair agreements and spiralling ground rents. Enough is enough. These practices are unjust, unnecessary and need to stop.
Sajid Javid, Communities Secretary
Whilst taking action against these particular practices has been broadly welcomed, it would be a mistake to simply ban leasehold outright. Leaseholds are essential to the innovative form of affordable housing provided through Community Land Trusts (CLTs). These are non-profit, community- led organisations that provide housing in perpetuity to local people at rates they can afford.
In England and Wales there are now over 225 CLTs and it is estimated that by 2020 these community owned organisations will be responsible for over 4,000 permanently affordable homes.
To create affordability a CLT needs to receive initial subsidy in one form or another; be it free land, or financial grants from government, charities or benefactors. CLTs then use leasehold to separate the value of the land from that of the building upon it, meaning they are able to deliver genuinely affordable housing.
CLTs are attractive because they can be established — like any non-profit organisation — by a group of engaged citizens with a common aim. Once land is owned by a CLT, it is protected from commercial development and any profits garnered from the land are re-invested in maintenance and/or capital expenditures for the benefit of local residents and the community.
JTP has played a role in delivering homes for the East London Community Land Trust, London's first CLT.
In 2012, Boris Johnson as Mayor of London agreed to establish a CLT at the former St Clement’s Hospital in Bow. Galliford Try and Linden Homes, with JTP as architect and masterplanner, were selected as the Greater London Authority’s Development Partner to deliver the new neighbourhood. When complete, the regenerated hospital site will comprise a total of 252 homes, including 58 for ‘social rent’ and 23 sold to local people as CLT homes at prices linked to local wages.
JTP was commissioned to engage local people to create a vision for the former workhouse. We held a series of Community Planning events at Bow Methodist Church where 350 local people created a new vision for the site through walkabouts, dialogue workshops, hands-on planning groups and report backs.
The subsequent planning submission was approved unanimously at committee, and this summer the first CLT residents moved into their new homes.
The East London CLT is a truly innovative way of providing genuinely affordable housing in an area of London where house prices are beyond the reach of most people. This new model will provide the blueprint for future developments elsewhere.
Indeed, JTP is now working with Palace Green Homes and the local community to design a new garden village in Kennett, East Cambridgeshire. This village will include new homes, education provision, neighbourhood-scale commercial spaces such as a village shop, opportunities for the development of new and existing businesses, and generous public open spaces throughout the new neighbourhood.
A proportion of the new homes will be genuinely affordable for people living and/or working in the parish, to be owned by the newly formed Kennett CLT. Our design team is now working in close partnership with Kennett CLT, Kennett Parish Council and the wider community to develop the proposals which are due to be submitted as an outline planning application.
CLTs are an increasingly important component of the delivery of new homes to meet local need, and any government reform should not undermine the ability of the local community to come together and drive the creation of new, affordable homes where they are most needed.
It’s a positive approach that puts housing provision within the hands of a community, and like many innovations in housing, CLTs need to be supported not stifled by one size fits all legislative proposals – and must be protected in any leasehold reform.