Plans to abolish the “feudal” system of leaseholds across England and Wales have been dropped after a battle between Downing Street and Michael Gove.
Gove, the housing secretary, will next month announce a range of measures to protect the 10 million Britons who own their homes in a leasehold, as part of a major speech following months of bruising party rows over housing.
The measures are expected to include a cap on ground rents, more powers for tenants to choose their own property management companies and a ban on building owners forcing leaseholders to pay any legal costs incurred as part of a dispute.
But Gove will stop short of abolishing leaseholds altogether, despite a pledge made in January to end it this year.
A spokesperson for the Department for Levelling Up, Housing and Communities, said: “We are determined to better protect and empower leaseholders to challenge unreasonable costs.
“We have already made significant improvements to the market – ending ground rents for most new residential leases and announcing plans to make it easier and cheaper for leaseholders to extend their lease or buy their freehold.
“In line with our manifesto commitment, we will bring forward further leasehold reforms later in this parliament.”
Millions of Britons own their homes through a lease, which leaves them having to pay extra costs to the building owner, including ground rents and service charges.
Flat owners are often left having to pay tens of thousands of pounds to repair common areas to their buildings, even if they disagree with the work being done.
Gove has promised for a long time to scrap the system, telling the Sunday Times earlier in the year he wanted to do so this year.
“I don’t believe leasehold is fair in any way,” he said. “It is an outdated feudal system that needs to go. And we need to move to a better system and to liberate people from it.”
Gove told government colleagues that ending leaseholds would be a vote-winner and could help the party recover its reputation among younger urban voters, who are more likely to own flats.
The most recent poll by YouGov shows that fewer than 15% of under-50s would vote Conservative if the election were held tomorrow. A separate YouGov poll showed just under half of voters backed the idea of ending leaseholds, while just 10% oppose it.
Gove wanted to replace leaseholds for flats with a “commonhold” system, which is used in other countries and would allow owners to make joint decisions about what should happen in shared areas of the building.
Several government sources have told the Guardian that Downing Street pushed back on Gove’s plan, however, with the prime minister’s officials arguing there would not be enough time before next year’s election to enact such major reforms.
One said: “Gove wanted to be a maximalist on leaseholder reform, but we simply haven’t got time to be maximalist right now.”
This is not the first time Gove has been reined in by other departments. In February, the levelling up department was banned from spending money on new capital projects amid concerns about how well public money was being managed.
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Nor is it the first time he has had to water down his housing plans because of opposition from within his own party.
Last year he scrapped a mandatory target for local councils to build 300,000 new homes a year after pushback from Tory backbenchers, making it voluntary instead.
That move prompted dozens of local councils to halt or reduce their local housebuilding plans, leading to a collapse in the number of houses being built over the next few years.
The Home Builders Federation warned earlier this year that new housing supply in England would soon fall to its lowest level since the second world war.
Gove’s latest climbdown will disappoint campaigners who have argued for years for an end to leaseholding altogether.
Harry Scoffin, cofounder of Commonhold Now, an anti-leasehold campaign group, said: “Michael Gove has been clear that leasehold – which has its roots in serfdom and manorialism – has no place in a civilised society and must be abolished.
“There are up to 10 million votes in this agenda. The Conservative party would be well advised to be bold here and phase out the toxic landlord-controlled leasehold regime.”
Gove will argue that the reforms he is enacting will help encourage more people to buy flats, and therefore more developers to build them.
If cities become denser, he will argue, the government will be able to alleviate the country’s housing crisis without having to build so much on greenfield land.
