(1 day, 8 hours ago)
Commons ChamberRead Hansard Text Read Debate Ministerial Extracts
Mr Speaker
Before we come to the statement on commonhold and leasehold reform, I once again note, for the second day in a row, my disappointment about briefings to the media before important announcements are brought to the House. As the Public Administration and Constitutional Affairs Committee recently stated,
“making the most important statements in the first instance to Parliament means doing so before they are made to the media and not at the first available opportunity thereafter”.
Those are the Government’s rules in their own ministerial code, and they must do better. I am defending Back Benchers on both sides of the House. They have been elected here to hear it. Hearing it on Sky News and the BBC is not the way we do business. If there are issues of market sensitivity, or indeed any other sensitivities, Ministers are welcome to seek advice through my office or the Clerks on how the best balance of these sensitivities might legitimate the need to update me before the media. We have to work together on this. The message is clear. I am not in charge of the code; the Prime Minister is. He needs to take the code more seriously.
The Minister for Housing and Planning (Matthew Pennycook)
My Department always strives to ensure that the House is updated at the earliest possible opportunity. I note and appreciate fully the points you have made, Mr Speaker, and will ensure that they are passed on to my ministerial colleagues.
With your permission, Mr Speaker, I would like to make a statement on the Government’s draft Commonhold and Leasehold Reform Bill. We made a clear and unambiguous commitment in our manifesto to act where previous Governments had failed and finally bring the feudal leasehold system to an end. We did so on the basis of a firm conviction that it is only by extinguishing fully the historical iniquities on which the present leasehold system rests that we can ensure that the dream of home ownership is made real for millions of households across the country.
Today, the Government have published and laid the Commonhold and Leasehold Reform Bill in draft for pre-legislative scrutiny by the Housing, Communities and Local Government Select Committee. This ambitious piece of legislation will modernise property law, deliver a fair and efficient modern housing market and, most importantly, transform the experience of home ownership for millions of leaseholders across the country.
The draft Bill includes the following key provisions: a new legal framework for commonhold to reform and reinvigorate this radical improvement on leasehold ownership; a statutory restriction on new leasehold flats to ensure that, in future, commonhold is the default tenure; a new process for converting to commonhold from leasehold to make conversion easier, so that more homeowners can enjoy this improved form of ownership; the abolition of leasehold forfeiture and its replacement with a fairer system of lease enforcement; the repeal of draconian powers relating to rent charges on freehold estates; and the capping of ground rent for older leases at £250 a year, changing to a peppercorn after 40 years.
Let me expand briefly on each of these core measures, beginning with commonhold. Commonhold is a modern home ownership structure that is widely used around the world. It is not merely an alternative to leasehold ownership, but a radical improvement on it. At the heart of the commonhold model is a simple principle: the people who should own buildings and who should exercise control over their management, shared facilities and related costs are not third-party landlords, but the people who live in the flats within them and who have a direct stake in their upkeep. Commonhold ensure that the interests of homeowners are preserved in perpetuity. It transfers decision making to them so that homeowners have a greater say over how their home is managed and the bills they pay, as well as the flexibility to respond to the changing needs of their building and its residents.
For a variety of reasons, commonhold failed to establish itself following its introduction in 2004. As a result, there are fewer than 20 commonhold developments in existence today and the 2002 legal framework is hopelessly outdated. The provisions in the draft Bill build on the publication of our commonhold White Paper in March last year, which confirmed the detail of our commonhold reform programme, and responded to the Law Commission’s thorough and expert review of commonhold law. The result is legislation that will reinvigorate commonhold through the introduction of a comprehensive new legal framework that will enable commonhold to be used in the widest possible range of settings.
To ensure that commonhold becomes the default tenure, as our manifesto promised, the draft Bill also includes provisions to ban the use of leasehold for new flats. Once enacted, this will ensure that, other than in exceptional circumstances, all flats are provided as commonhold. The provisions will work in tandem with the ban on the use of leasehold for new houses contained in the Leasehold and Freehold Reform Act 2024.
Alongside the publication of the draft Bill today, we are publishing a “Moving to commonhold” consultation, seeking input from industry and consumers on precisely how we implement the new ban. The feedback we receive will ensure that we can proceed with a smooth transition to commonhold for new developments, while at the same time protecting the supply of new homes and determining whether there is a case for any justified exemptions.
The draft Bill also includes measures to make it easier for existing leaseholders to convert their buildings to commonhold. The existing law already sets out a process for conversion, but it is one that requires consent from everyone with an interest in the block. This sets an unacceptably high bar and means that commonhold is not achievable if even a single unit owner, lender or the existing freeholder objects. The draft Bill will introduce a new process for conversion, one that brings conversion into line with wider enfranchisement processes and will make conversion possible if at least 50% of qualifying leaseholders agree.
The previous Government’s Leasehold and Freehold Reform Act does provide leaseholders with important rights and protections, but on the Labour Benches we have always maintained that it was a distinctly unambitious piece of legislation that left untouched serious problems, including the disproportionate and draconian threat of forfeiture as a means of ensuring compliance with a lease agreement. For too long, outdated forfeiture laws have allowed landlords to threaten people with losing their home and hard-earned equity over small debts of as little as £350, or any amount if left unpaid for three years. The draft Bill contains provisions to abolish forfeiture and replace it with a modern, proportionate lease enforcement system that addresses breaches fairly, with appropriate safeguards and judicial oversight.
Mr Speaker, you will know that before Christmas we launched two comprehensive consultations, seeking views on how best to implement new consumer protections for homeowners on freehold estates and the ways in which we might reduce the prevalence of privately managed estates over the coming years. To further enhance protections for homeowners on freehold estates, the draft Bill will also repeal enforcement powers that apply to estate rent charges on them. These powers, often difficult to find in deeds and poorly understood by buyers, can lead to rent charge owners taking possession of, or granting a lease over, a freehold home as a result of small sums outstanding. That is not just unfair; it creates real barriers to home ownership and property sales. We will remove these wholly disproportionate and outdated remedies for enforcing rent charges by repealing sections 121 and 122 of the Law of Property Act 1925, including estate rent charges.
The Government are acutely aware that the cost of living remains a pressing concern for leaseholders across England and Wales, and that those who remain subject to unfair and unreasonable practices need urgent relief. That is why last summer we consulted jointly with the Welsh Government on strengthening leaseholder protections over charges and services. That consultation included proposals to reform the section 20 major works procedure, increase transparency over service charges, and enhance access to redress through the relevant provisions in the Act. We thank all those who responded to the consultation and will set out details of how we intend to implement the measures in question as soon as possible. However, the Government are determined to go further to alleviate the cost of living pressures facing leaseholders. In our manifesto, we promised to tackle unregulated and unaffordable ground rent charges. The draft Bill honours that commitment.
As the House will know, historically, ground rents, which often entail no service being provided whatsoever, were of low or nominal value. However, over the past two decades a practice has developed of freeholders including high and escalating ground rent clauses in leases. Such clauses are causing leaseholders considerable financial strain and some are unable to sell or remortgage their properties as a result. The draft Bill will cap ground rents at £250 a year initially, changing to a peppercorn after 40 years. This will provide immediate financial relief for leaseholders with high and harmful ground rents, while the longer-term change to a peppercorn cap will eliminate the two-tier market between new and older leases, delivering a fair and efficient modern housing market.
The reforms will necessarily have effects on existing contractual arrangements and investments—something that the Government do not undertake lightly. However, the Government have a clear mandate to tackle unregulated and unaffordable ground rent charges, and our approach has been designed to strike a fair balance between the interests of leaseholders, freeholders and investors, maintaining the reputation of the UK as a safe place to invest.
Finally, as I have made clear to the House on previous occasions, the last Government’s Leasehold and Freehold Reform Act contains a number of specific but serious flaws that prevent certain provisions from operating as intended and that need to be rectified via primary legislation. While not included in the draft Bill, our intention is to rectify those flaws in primary legislation. Among other things, that will allow us to commence the 2024 Act’s enfranchisement provisions, making it cheaper and easier for leaseholders to extend their lease or buy their freehold.
To conclude, the publication of the draft Bill today is an historic moment. It marks the beginning of the end for the feudal leasehold system that has tainted the dream of home ownership for so many. I look forward to working closely with the Select Committee as it performs its invaluable role of scrutinising carefully this draft legislation, and I encourage hon. Members across the House to engage with it and the accompanying consultation on banning new leasehold flats. I commend the statement to the House.
Gareth Bacon (Orpington) (Con)
I thank the Minister for his remarks and for advance sight of his statement. Progress on leasehold reform is to be welcomed. Labour promised that when it stood for election 18 months ago, so it is about time it got on with it, as the previous Conservative Government had started to do.
The previous Conservative Government began the process of fundamental reforms to the existing system of leaseholds by making it easier to extend a lease or to buy a freehold, increasing the standard lease extension time to 990 years, and giving leaseholders greater transparency over their service charges. His Majesty’s Opposition remain committed to giving leaseholders a fair deal, want householders to have security for the future and will continue to hold the Government to account on that.
The Government made big promises to leaseholders at the last election. Do they believe that the Bill is the summit of their ambitions? What about the Leasehold and Freehold Reform Act 2024? What are their plans to implement secondary legislation? There are opportunities to improve leaseholder situations that are available to the Government now. Why have they not implemented those changes? Surely, if they were serious about reform for leaseholders, they would have picked up the 2024 Act and run with it, rather than doing nothing until now. The Minister just said:
“I have made clear to the House on previous occasions, the last Government’s Leasehold and Freehold Reform Act contains a number of specific but serious flaws that prevent certain provisions from operating as intended and that need to be rectified via primary legislation.”
He went on to say:
“While not included in the draft Bill, our intention is to rectify those flaws in primary legislation.”
Perhaps he could tell us what those flaws are. If the Government have already identified them, why are the corrections not included in the forthcoming Bill? Surely now would be the time to rectify them. So if not now, when?
I would be remiss not to comment on one of the central principles of housing reform: there actually needs to be some housing in order to reform it. The Labour Mayor of London is delivering the lowest house building in London since 2009, while Labour’s national housing delivery is nowhere near where it needs to be to meet its 1.5 million homes target. What is Labour doing to ensure that there are strong incentives to build more? Where is the second planning Bill that the Government briefed out to the media that they will need to introduce because of their failure to get the planning reform right first time? The Conservative party is pro-development, which is why we have announced both a plan to review the London plan to improve on Labour’s failings in London and to ensure that national development is done on a brownfield-first approach.
Now, it is true that ground rent is an additional cost to leaseholders, but it is reported that the Chancellor is against capping ground rents because she believes it will deter pension fund investors. What does the Minister have to say to that?
The Government are claiming that these measures will reduce people’s bills, which would of course be welcome, but if leaseholder ground rent bills are simply replaced by soaring council tax bills, with some local councils now facing more than 30% rises in council tax due the Government’s grossly unfair funding review, how will people be better off? In inner London, which has a high proportion of leasehold flats, residents in councils such as Wandsworth, Westminster and Kensington and Chelsea are facing the double whammy of staggering rises in council tax and a council tax surcharge on top. Are the Government in fact claiming to cut a cost on one hand, while knowingly replacing it with even more costs on the other?
I would be grateful if the Minister answered those points in his reply. We will scrutinise the Government’s forthcoming commonhold and leasehold reform Bill, and we will hold the Government to account on their promises on leasehold reform and housing. We look forward to studying the details, and to the debates that will follow.
Matthew Pennycook
I note the initial positive tone from the shadow Minister in welcoming the draft Bill. I am slightly reluctant, on what is usually a matter of cross-party consensus, to be too critical of him, but it is a bit rich to criticise this Government, given that the previous Government cherry-picked reform in a way that was at odds with the Law Commission’s recommendation to treat all three of its reports as a holistic package, and left us with an Act that we will have to make a series of changes through primary legislation to fix so that we can implement the remaining provisions. I will, therefore, not take any strictures on ambition from the shadow Minister when it comes to leasehold reform.
I say plainly to the shadow Minister that we have switched on a number of the 2024 Act’s provisions already. On coming into office, we immediately enacted a series of provisions on rent charge arrears, building safety legal costs, and the work of professional insolvency practitioners. On 31 October we enacted further building safety measures; on 31 January we switched on the two-year qualifying exemptions for leaseholders; in March we switched on the right-to-manage provisions; and we are working at pace to take forward the rest of the significant package of secondary legislation that was required. However, some parts of those provisions require us to make fixes to the Bill—sadly, something that the previous Government left us with.
The shadow Minister mentioned housing supply, but again, I am loath to take lessons from a party that torpedoed housing supply in the last Parliament by making a series of anti-supply changes to the national planning policy framework, including the abolition of mandatory housing targets. The shadow Minister’s criticism could be taken a little more seriously if his colleagues did not come to me week in, week out, objecting to housing applications, telling me how our reforms will make it more permissive in their local constituencies.
We are getting on and taking forward the reforms to the leasehold system that are already on the statute book. Through this Bill, we are bringing forward the wider reforms necessary to bring that system to an end, which will be to the lasting benefit of millions of leaseholders across the country.
Mr Speaker
I call the Chair of the Housing, Communities and Local Government Committee.
Florence Eshalomi (Vauxhall and Camberwell Green) (Lab/Co-op)
I pay tribute to the Minister for his hard work in getting us to this stage. There were a few occasions when he saw me and went the other way, because he knew what I was going to ask him, but we would not be here without his tireless work. I also highlight what the Minister said about this being a cross-party issue, and pay tribute to the former Member for Worthing West, Sir Peter Bottomley, for his work chairing the all-party parliamentary group on leasehold and commonhold reform.
For far too long, many leaseholders up and down the country have been caught up in this medieval system, leaving them with soaring rents and unreasonable fees—people who bought their homes in good faith and have seen a nightmare transpire. It is right that the Government are finally bringing in a change that will help millions of people up and down the country. The Minister has agreed to support the Committee’s inquiry with the necessary evidence. Can he also confirm that he will support us by providing the Government’s response to the 2023 ground rent consultation in the coming days, so that we can get a better understanding on how that underpins the Government’s decision to cap ground rents at £250?
There were some things that we were expecting to see in the draft Bill—yes, I have read it—that are not there, including the Law Commission’s unimplemented recommendations on enfranchisement and the right to manage, and Lord Best’s recommendations on managing agents. Lord Best has called for a regulator with teeth for proper enforcement; can the Minister clarify what work the Government are doing to ensure that this will be in the final version of the Bill, or if it will be addressed elsewhere? The Minister also outlined a rough timeline for implementation. Can we get more clarity on when we expect to see that, so that those leaseholders around the country who have been waiting for a long time will finally get the help that they desperately need?
Matthew Pennycook
I thank my hon. Friend, the Chair of the Housing, Communities and Local Government Committee, for those fair and pertinent questions. I will answer each of them in turn. We published a whole series of documents at 7 am, including a copy of the draft Bill. That also included a policy document setting out our rationale for the £250 per year ground rent cap, but we will make available to the Committee other information, evidence and documentation as needed and at the earliest possible opportunity.
As for the other recommendations made in the three reports from the Law Commission, the Leasehold and Freehold Reform Act 2024 implemented a significant number of the Law Commission’s enfranchisement recommendations, a small number of its right-to-manage recommendations, and none of its recommendations on commonhold. We cannot do everything in this Bill; hon. Members who have had a chance to look will have seen that is has a large number of clauses already. But we are committed to enacting those remaining recommendations relating to leasehold enfranchisement and other things over the course of the Parliament.
On implementation, different provisions will come into effect at different times. For example, we aim to switch on the rent charge provisions I described soon after Royal Assent. Other measures will require secondary legislation. We expect the ground rent cap to be in place in 2028. We will work with the Committee to ensure that it can do the fullest and most robust job possible when it comes to giving the Bill the enhanced scrutiny it deserves.
Gideon Amos (Taunton and Wellington) (LD)
The Liberal Democrats welcome the introduction of a commonhold framework, the abolition of leasehold for newbuild flats, and the end of forfeiture—all these are positive steps in the right direction. Our manifesto has been calling for an end to unfair residential leaseholds since Lloyd George called it “blackmail” in his 1909 People’s Budget. But while I welcome those measures, we should be going much further.
The Housing Secretary this morning called ground rents “money for nothing” and a “scam”, so why should leaseholders continue to pay £250 for nothing? The Government’s proposals need to go further. For freeholders trapped in the fleece-hold of unscrupulous property management companies, the blackmail of the great property rip-off is set to continue. There is nothing that will cap those charges in these proposals. Since residential leaseholds will still be with us for some time, millions of leaseholders need better protection from landlord costs being passed on to them. They need the capping of excessive service charges, like £400 to change a lightbulb and £4,000 to mow the grass. Help is also needed for those trapped in unsafe and defective buildings, hundreds of thousands of which are excluded from the building safety regime.
Will the Minister take forward Liberal Democrat proposals and immediately abolish residential leasehold charges, set ground rents at a peppercorn now, and regulate property and estate-management companies as recommended in the Best report, capping unreasonable service and estate management charges?
Matthew Pennycook
I thank the Liberal Democrat spokesman for those questions. He often mentions Lloyd George, and I share his passion for Lloyd George’s radicalism on property law and other measures. I will address the specific points that he raised. During the passage of the Leasehold and Freehold Reform Act 2024, I was clear that my instinctive preference when it comes to ground rents was for a peppercorn cap, fully eliminating ground rents. The changes that we are making ensure that, after 40 years, that change occurs.
Having considered all the analysis and advice available to me as a Minister, including the evidence gathered in response to the previous Administration’s 2023 consultation, I believe that we have set out the right policy. It is clear that an immediate peppercorn cap would carry significant risks, including some that might impact on leaseholders. The Government also recognise that there is a significant difference between regulating the creation of new leases, and intervening to affect existing contracts and investments.
On the functioning of the cap itself, I want to make clear that it is a maximum cash cap. If someone’s lease is below £250 and does not include escalating clauses, their ground rent will not rise to £250. If someone’s ground rent is over £250, at the point that the measures are brought into force they will see an immediate reduction. That will benefit millions of leaseholders across the country. It is a huge cost-of-living intervention, and I hope the House can get behind it as the most just and proportionate way of addressing unregulated and unaffordable ground rent terms.
The hon. Member for Taunton and Wellington (Gideon Amos) will know that we ran a consultation last year on how we can standardise service charges and increase their transparency to ensure that leaseholders can better challenge the reasonableness of service charges at tribunal. However, we do not intend to bring forward a cap, not least because doing so could harm leaseholders, particularly those in enfranchised buildings, who may need to raise sums beyond the cap to carry out essential maintenance works on their buildings.
Angela Rayner (Ashton-under-Lyne) (Lab)
I thank my hon. Friend for this extremely welcome statement. I know how much work he has put into this. We know, however, that vested interests have repeatedly resorted to lawfare to block such measures, and may do so again; we have already seen the scaremongering begin, with outrageous claims that these changes will impact on lifesaving building safety work. Can my hon. Friend reassure me that the Government will not waver in the face of such threats, but stand firm and ensure that the will of this Parliament prevails? I take exception to objections from those on the Opposition Benches, who did nothing on rent caps in their time in Parliament.
Matthew Pennycook
I thank my right hon. Friend for her kind words. She was an incredible champion of the reform agenda for this legislation when she served as Secretary of State. She raises the matter of vested interests. I hope that the House—and you, Mr Speaker—will take from the Government’s robust defence to the legal challenge brought against the 2024 Act by a group of claimants who are owners of freehold and other arising interests of dwellings that we will robustly defend the legislation. The High Court, incidentally, comprehensively dismissed that challenge, allowing us in due course to take forward the relevant provisions. I simply say to my right hon. Friend—who embodies this herself, so she is well aware—that taking on vested interests that are opposed to change that will bring about improvements in the lives of working people is what Labour Governments do.
Lewis Cocking (Broxbourne) (Con)
As a leaseholder, I understand the issues that leaseholders face, and I look forward to carrying out pre-legislative scrutiny on the HCLG Committee. The conveyancing process also needs to be looked at, as I am not sure that solicitors and managing agents point out considerations such as historical service charges, whether the property has a sinking fund and how much service charges have gone up. Will the Minister assure me and my constituents that that part of the process of buying a leasehold property will also be looked at within this legislation?
Matthew Pennycook
I have a lot of respect for the hon. Gentleman and his service on the Select Committee. He has a lot of expertise in this area. I would say two things in response. First, we published two consultations on the home buying and selling process to try to modernise that process, and we are looking at some of those issues as part of that. Secondly, on service charges, one reason we had to hold quite a complicated and technical consultation on the implementation of the 2024 Act’s service charge provisions is precisely the complexity and the number of factors to deal with. We received incredibly useful feedback in response to that consultation, and that will shape how we take those measures forward. I want to be clear, though, that we are talking about how and not whether we take those measures forward; I want to see them brought forward at the earliest possible opportunity, because we absolutely know the impact that high and rising service charges are having on leaseholders across the country.
Navendu Mishra (Stockport) (Lab)
People in Stockport and Greater Manchester have suffered for many years with poor service and unfair treatment by managing agents. Does the commitment by the Government to protect leaseholders mark a break from years of weak regulation by the coalition and then Conservative Governments?
Matthew Pennycook
We did see a considerable amount of deregulation under the coalition Government and their successors. I will give the previous Government credit, as I have done before, for bringing forward the 2024 Act; it does include some limited relief for leaseholders and some new rights and protections. However, we need to take it forward and finish the job, as I made clear in opposition that Labour would. As I said, we are consulting on changes to increase protections over service charges—incidentally, that same consultation included a number of proposals recommended by Lord Best in his 2019 report, “Regulation of Property Agents”, including the introduction of mandatory qualifications for managing agents. We are clear, though, that that consultation and the measures within it are not the final step in the regulation of managing agents, and we will continue to reflect on the various other recommendations made in Lord Best’s report.
Mr Gagan Mohindra (South West Hertfordshire) (Con)
Unlike the Chair of our Select Committee, the hon. Member for Vauxhall and Camberwell Green (Florence Eshalomi), I have not read the full draft legislation published at 7 o’clock this morning. I can confirm that she did indeed feel a bit unloved whenever she saw the Minister running away from her. On the statement, I think the Minister referred, in a previous answer, to ground rents and the transition from £250 to a peppercorn being effective in 2028. At the point that it becomes effective, will he look to backdate it or will tenants have to continue to pay their bills up until the legislation becomes effective?
Matthew Pennycook
The House can, of course, help us to speed up the progress of the Bill; 2028 is only a rough estimate based on the time it will take for the Bill, once it has passed its draft phase and scrutiny from the Select Committee, to be introduced in its final form and to get through both Houses. We will then also have to switch on the necessary secondary legislation. Up until that point, people will continue to pay their existing ground rents, but, as I say, the cap will apply once we bring those measures into force. For lots and lots of leaseholders around the country—I am sure the hon. Gentleman has many in his constituency—who are paying onerous, high ground rent terms way above £250, that will be an immediate financial relief that will be hugely beneficial to them.
Catherine McKinnell (Newcastle upon Tyne North) (Lab)
Since I was first elected in 2010, I have seen the misery caused for constituents in Great Park, Moorfields and Grove Park, who suffer high ground rents, hikes in service charges, threats of forfeiture and a total lack of accountability of the maintenance companies. I therefore strongly welcome today’s announcements and truly thank the Minister for listening to calls for change. However, many will still find themselves living in existing leasehold houses and will remain trapped in this old, unfair and very frustrating system. They are asking me what the Government will do next to support them. Could the Minister explain that?
Matthew Pennycook
I am more than happy to have a separate conversation with my hon. Friend about the specific conditions pertaining to leasehold houses. She will know, of course, that the Leasehold Reform (Ground Rent) Act 2022 made a number of changes in that area. In general, we want to arrive at a situation, once our reform agenda is enacted, where existing leaseholders can choose to remain in leasehold ownership but can take advantage of the new rights and protections made available to them, including a cheaper and easier enfranchisement process if they want to extend their lease or buy their freehold, or convert to commonhold. That is why it is so important that the Bill contains an easier mechanism to convert to commonhold, which, as I said in the statement, we are clear is not only an alternative to leasehold ownership but a radical improvement on it.
Mr Lee Dillon (Newbury) (LD)
I welcome the introduction of this draft Bill and, as a member of the Housing, Communities and Local Government Committee, I look forward to scrutinising it. I wonder whether the Minister will make available to the Committee evidence around the peppercorn rent and the 40-year requirement. I suspect is to do with investor confidence, but could that time period be brought forward? My overarching feeling, which I know will be reflected in my inbox when I get back to my office, is that people across the country would have expected to see within the draft Bill action on service charges; we are consistently contacted about managing agents not performing their duties and charging too much for it. The Bill was meant to be presented at the back end of last year and I know that the Government concluded a consultation in September. We want service charges to be addressed as soon as possible. Will we be able to get an additional clause on this issue into this legislation?
Several hon. Members rose—
Mr Speaker
Order. Can I gently say that I want to get everybody in, but I cannot do so if people are going to make longer contributions? I know there is a 40-year clause in the legislation hon. Members are discussing—I don’t want us to hit that today!
Matthew Pennycook
It is clear that this draft Bill cannot do absolutely everything, and it is the Government’s considered opinion that we do not need provisions on service charges in this Bill—not least because, for the reasons I have set out, we do not intend to implement a service charge cap—and that the provisions in the 2024 Act will do the job. Help is on the way, though, and I want to ensure that those provisions are switched on at the earliest possible opportunity.
Mr Clive Betts (Sheffield South East) (Lab)
First, I congratulate my hon. Friend the Minister on the magnificent job he has done with this legislation, as well as the Chair of the Housing, Communities and Local Government Committee, my hon. Friend the Member for Vauxhall and Camberwell Green (Florence Eshalomi), who has pushed him and bothered him all the way down the corridors for months on end!
It is now eight years since the previous Committee looked at this matter and recommended radical reform of leasehold. One of the challenges in my constituency—still—concerns individual householders who try to buy their freehold and find that the freeholders will not even respond to their requests, and then push them through complicated and expensive procedures before they can get their entitlements. Can the Minister give us an assurance that that procedure will now be simplified and cheapened?
Matthew Pennycook
I thank my hon. Friend for his kind words on my role in developing the draft Bill. I can say to him very plainly: yes. If he looks at the consultation on service charge protections that we released last summer, he will see proposals that specifically address non-litigation costs and other measures. However, as I said, it is our intention to ensure that in the enfranchisement process, it is not only cheaper but easier for leaseholders to make use of their new rights and protections if they intend to buy their freehold or extend their lease.
Mr Will Forster (Woking) (LD)
I am pleased that the Government have finally published their plans to reform the leasehold system, and I look forward to scrutinising those plans on the Housing, Communities and Local Government Committee. In my constituency, we have a range of issues with property management companies, whether it be the mismanagement of the Clock Tower in Maybury or the proposed 30% increase in the service charge at Brookwood Farm, and all are unacceptable. Please will the Minister explain why he is not using the draft Bill to end the wild west of unregulated property companies?
Matthew Pennycook
We launched two comprehensive consultations before Christmas, in respect of how we switch on the consumer protections set out in the 2024 Act for those living on freehold estates and, more widely, on how we end the prevalence of private management arrangements of the kind that I think the hon. Member is referring to. The draft Bill does not have to do everything, but relief is on the way through the new consumer protections for those living on freehold estates who suffer from management companies levying unfair charges.
Barry Gardiner (Brent West) (Lab)
I congratulate my hon. Friend on resisting the calls from those who have exploited leaseholders for far too long and on capping ground rent. I welcome the assurance that we are moving from the outdated feudal system of leasehold to a proper commonhold future to give the full rights of ownership to leaseholders, but my hon. Friend will know that those who have taken money for no service or for poor service will resist this with all their might. A loophole may still exist for enfranchisement when developers put up a new building with a proportion of commercial property in its base, so can my hon. Friend address that, specifically in order to stop them using such a loophole?
Matthew Pennycook
My hon. Friend and I both served on the Public Bill Committee when the Bill that is now the 2024 Act was going through the House, and we discussed many of these issues then; I can assure him that we have given consideration to all of them. He is right that we are now on a path to a commonhold future. As I have said, this is a radical improvement on leasehold home ownership. In general, while we will obviously ensure that leaseholders who wish to remain under leasehold ownership benefit from new rights and protections, it is the Government’s intention to try to persuade as many leaseholders as possible to convert to commonhold and to enjoy the benefits that it provides.
Rebecca Paul (Reigate) (Con)
I thank the Minister for his statement, and for all his support with the issues we have had at Park25 in Redhill; I very much appreciate that he has taken residents’ concerns seriously. Which of the changes will be most beneficial for my Park25 residents, and has the Minister given any more thought to my suggestion of mandatory adoption of communal land by local authorities?
Matthew Pennycook
I must say, without getting into the detail of the circumstances of the hon. Lady’s constituents, it is hard to know which of the measures will benefit them most. If they are subject to high ground rent charges, the cap on introduction will benefit them hugely on its introduction. If they have suffered from the threat of forfeiture, which is a draconian and disproportionate means of enforcing lease terms, they will benefit in myriad ways from the legislation.
Darren Paffey (Southampton Itchen) (Lab)
I congratulate my hon. Friend on his statement and thank him for it. Like thousands of long-suffering leaseholders across Southampton Itchen, I warmly welcome this announcement. Residents of the Sapphire Court development have already been paying ground rent that is higher than the cap, and there is a plan to double it, but thanks to the action of this Labour Government that will not happen. How soon will Southampton’s leaseholders will get the rights, protections and securities that they have been waiting a long time for and that they deserve?
Matthew Pennycook
As I have said, it is the Government’s intention to ensure that the draft Bill, and the final product that eventually comes forward after scrutiny by the Select Committee, is made law as soon as possible so that leaseholders can benefit from the new provisions. In general terms, no one will pay more than the ground rent cap that we are introducing, but millions of people will pay less. Approximately 770,000 to 900,000 leaseholders with ground rents over £250 will see savings in this Parliament, and others will see savings in greater amounts in Parliaments to come.
John Glen (Salisbury) (Con)
I welcome the news of the capping of ground rents for existing contracts, and I thank the Minister for the time he gave me last year, but he will recognise that many city centre developments require ongoing investment from pension funds, so could he say a little more about how his announcement will not spook the City and how he will ensure that there continues to be a flow of investment into our high streets?
Matthew Pennycook
I thank the right hon. Member for his fair and reasonable question. The Government consider the intervention on ground rents that we are making through this draft Bill to be a justified and proportionate approach to the specific problems that leaseholders face as a result of high and harmful ground rents. We are introducing the reforms to deliver on specific commitments in our manifesto and in the context of a significant number of wider reforms to the leasehold market. We have carefully weighed the different options to meet our manifesto commitment on ground rents and we have taken investors’ concerns into account when developing the policy, which we believe strikes a fair balance between leaseholders, freeholders and those invested in ground rents. We recognise that the reforms will have a significant impact on freeholders and investors, but we consider this a justified and proportionate response.
Dame Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)
I should first declare that I am a leaseholder. I welcome very warmly the Minister’s statement, particularly the measure on commonhold, which is something that we Co-op MPs have been campaigning on for a long time. We also welcome that the cap on ground rents is in sight. There are issues in my constituency relating to the fact that a lot of my leaseholders are shared owners. Could the Minister tell us now—or write to me with the details—how shared ownership might be impacted by the changes? Could he also reassure us, given the complexities, that there will be some Government support, such as an advice hub or something to point people in the right direction, when it comes to how people will move from where they are to commonhold?
Matthew Pennycook
I am more than happy to write to my hon. Friend about the issue of shared ownership specifically. She will know that through our £39 billion social and affordable homes programme, we are making improvements to shared ownership as a tenure model. More widely, I can assure her that the provisions in the draft Bill will benefit leaseholders in her constituency in the way that she makes clear. I am happy to have a further conversation with her about how the reforms will benefit her constituents and what advice leaseholders can draw on, including the Government-backed Leasehold Advisory Service.
Mike Martin (Tunbridge Wells) (LD)
I thank the Minister for announcing this Bill to Parliament, and I broadly welcome the provisions within it, particularly the proposal on conversion from leasehold to commonhold—I think that is excellent. By my count, there are about 4.8 million leaseholders in England. Do the Government envisage driving this process so that people are empowered and encouraged to make that conversion, and when does the Minister think that we will get rid of the last leasehold in England?
Matthew Pennycook
I think that leaseholds will exist for some time to come. Indeed, people in various buildings may not, for whatever reason, wish to convert to commonhold, but it is absolutely our intention to make it easier to do so and to encourage as many leasehold homeowners as possible to make the change, because it is a radical improvement on leasehold ownership, not just an alternative to it.
Ben Coleman (Chelsea and Fulham) (Lab)
Residents in Chelsea and Fulham have experienced years of poor service and unfair treatment from managing agents, so I know how pleased they will be by this Government’s determination to do the right thing by leaseholders after years of, sadly, weak regulation under the Conservatives. May I take this opportunity to tell my hon. Friend how much residents in Chelsea and Fulham are looking forward to the further steps on service charges and managing agents that he has outlined? More, please.
Matthew Pennycook
We are absolutely committed to strengthening regulation of managing agents. Some proposals on charges were set out in the consultation on protections for leaseholders, which we released last summer, but there is more to come.
Charlie Dewhirst (Bridlington and The Wolds) (Con)
Hundreds of thousands of freeholders up and down the country who are locked in financial arrangements with unaccountable estate management firms will be very frustrated by this statement, because it focuses solely on leasehold. Will the Minister very clearly set out the next steps to tackle this enormous travesty, which involves fleecehold and estate management companies?
Matthew Pennycook
I must correct the hon. Gentleman: it does not solely deal with leasehold, as I made clear in the statement. The draft Bill will repeal sections 121 and 122 of the Law of Property Act 1925, ending the disproportionate remedies that give rent charge owners access to a draconian enforcement regime on freehold estates. As I have said, we are doing more, through the two consultations launched before Christmas in particular, to give new consumer protections to those living on freehold estates. I hope the hon. Gentleman will take part in and respond to that consultation.
Dame Nia Griffith (Llanelli) (Lab)
The capping of ground rent at £250 will give certainty and relief to leaseholders in Llanelli, who face unpredictable and unjustifiable hikes in ground rent and for whom the reform simply cannot come soon enough. Will the Minister give us a bit more detail on the timetable for the Bill and assure us that he will do everything he possibly can to ensure that the cap is brought in as soon as possible?
Matthew Pennycook
I agree with my hon. Friend. She, like me, will have constituents who are subject to high, unfair ground rent charges and, in some cases, to escalating ground rent charges, particularly those that are inflation-linked. People across the country see those ground rent charges stack up to significant amounts and they will benefit from the cap once it is implemented. We estimate that the cap on ground rents will take approximately 12 months to introduce after Royal Assent, but that is all subject to parliamentary timings. If, as in the past, there is cross-party support on this issue, we can all work together to ensure that the Bill makes speedy progress.
Carla Denyer (Bristol Central) (Green)
Leaseholders in Bristol Central are being ripped off. I am disappointed that the Minister and the Government will not enforce peppercorn ground rents immediately, although a £250 cap is an improvement and the movement towards commonhold is really welcome. However, there are big problems for leaseholders that are still unaddressed. Will the Minister please commit to tackling the soaring insurance premiums that have left homes unmortgageable and leaseholders trapped, unable to sell and move in the wake of the cladding scandal?
Matthew Pennycook
I detected an unusual amount of support in that question from the hon. Lady, which I welcome. On the specific issue of insurance charges, again, there was a consultation on switching on some of the provisions in the 2024 Act that relate to insurance commissions. I am more than happy to write to her to set out further detail, but we need to bring those into force and it remains our commitment to do so at the earliest opportunity.
Dr Lauren Sullivan (Gravesham) (Lab)
I thank the Minister for the statement. Although, as he has pointed out, this cannot all be fixed in one go and there are other levers that he will put in place for leaseholders, will he give some reassurance to leaseholders in Gravesham who have experienced poor service that this is about rebalancing power so that they are protected going forward?
Matthew Pennycook
All manner of provisions in the draft Bill that we are discussing are absolutely about rebalancing leasehold and freehold interests. To take the example of forfeiture, freeholders have often been in an unassailable position of strength vis-à-vis leaseholders. That is what we are trying to address by introducing the Bill. I thank my hon. Friend for her support.
Dr Kieran Mullan (Bexhill and Battle) (Con)
I hesitate to add to the Minister’s in-tray, but he will know that we have existing protections of some sort for leaseholders and freeholders, as right as he is to want to go further. Residents in the Cooden area of my constituency have been sent letters by a company called Asset Invest Ltd demanding thousands of pounds, which it says is to regularise covenant breaches. That, to me, seems unjustified and has some of the hallmarks of the unregulated charges that leaseholders have faced in the past. This is probably an issue that affects MPs across the House. Will the Minister be so kind as to meet me to explore how we might address this issue as well?
Matthew Pennycook
I will happily meet the hon. Gentleman. As I have said, it is our intention as a Government to end the unjust and discriminatory practices from which leaseholders suffer. As I hope I have made clear, over the course of the Parliament we intend to end—finally, once and for all—this iniquitous system. That will take some time; it cannot happen overnight, but that is our intent. Leaseholders across the country, including those in his constituency and mine, will benefit from that.
Dame Chi Onwurah (Newcastle upon Tyne Central and West) (Lab)
I congratulate my hon. Friend on freeing so many of my constituents from the historical and, indeed, feudal injustice of the leasehold system. I urge him to ignore the clarion complaints of those freeholders who predicated their business model on the continued exploitation of working people through extortionate ground rents. The Minister is familiar with the predicament of my constituents who are unable to extend their leasehold or buy their freehold because of the actions of the St Mary Magdalene and Holy Jesus Trust. What hope can he offer them?
Matthew Pennycook
My hon. Friend is right: there will always be vested interests that resist reform of the nature that we are trying to take forward, just as there will always be naysayers out there for whom nothing we do is ever good enough. This package as a whole, as I have said, will end the leasehold system in its entirety and in a single Parliament. That will be a huge achievement for this Government and we will succeed on that basis where other Governments have failed.
I am aware of the specific issue my hon. Friend raises and we have had many discussions about it. The provisions to address it are not in the draft Bill, but my officials and I are giving serious consideration to how and where we will resolve the matter that my hon. Friend has campaigned on for so many years.
Layla Moran (Oxford West and Abingdon) (LD)
I welcome the Bill, but I take this opportunity to urge the Minister to go further and faster on rip-off service charges. That is the thing that is clogging up my inbox—so much so, in fact, that I will hold a service charges forum in Oxford in a few weeks’ time. One group in particular—social housing tenants—is under-protected. The Minister will know that under the 2024 Act, there is more transparency in their service charges, but they do not have anywhere near as strong a hand as others in seeking redress. Will he meet me following the forum so that I can relay to him the issues that my constituents, particularly the social housing tenants, are having?
Matthew Pennycook
I can feel the glare of my private office as I agree to meetings across the House, but I am happy to do so. The matters that the hon. Lady addresses are in the consultation we brought forward last year. It is an incredibly technical consultation on standardising and making more transparent service charges across the country, which are not uniform in any way as things stand. However, as I have said, we want to introduce those protections as soon as possible.
Josh Dean (Hertford and Stortford) (Lab)
Today, I think of one of the very first constituents I saw at one of my surgeries, who was trying to sell one of her leasehold properties just to help fund the care of her mother. Will the Minister take this opportunity to reassure my constituent that this Labour Government are on her side and are doing all they can to free her and others from what has become a nightmare?
Matthew Pennycook
I say to my hon. Friend that we are on his constituent’s side. It is because so many leaseholders across the country are suffering from unjust and discriminatory practices that we have to overhaul and ultimately end this feudal system.
Josh Babarinde (Eastbourne) (LD)
Eastbourne’s leaseholders are being ripped off. The current leaseholder landscape has bred an industry of property management companies, such as FirstPort and Eagerstates, that prey on powerless leaseholders by charging eye-watering service charges, making opaque calculations of those charges and bullying residents into submission. In failing to cap service charges, and without the 2024 transparency rules in place, today’s reforms still leave thousands of local leaseholders unprotected. When will the Minister finally crack down on exploitative property management companies?
Matthew Pennycook
I have made it clear to the House that we have already set out proposals to strengthen the regulation of managing agents. Those proposals are not the summit of our ambitions; there is more to come. I say to the hon. Gentleman and generally to the House that managing agents will play an even more important role as we progress towards a commonhold future. We must therefore end the abuse and poor service from unscrupulous managing agents that so many leaseholders face.
Ms Stella Creasy (Walthamstow) (Lab/Co-op)
I thank the Minister for his diligent work on this issue. I know that we all appreciate his expertise, as will my constituents in Walthamstow who are leaseholders with Clarion and who, in the last year, have seen their ground rents go up from £200 to £650 and now this year to £857, including an admin fee. What can the Minister say to reassure my constituents that there will not be loopholes in the cap and that we will ensure that all charges are included in the £250 limit?
Matthew Pennycook
It is certainly not our intention to allow any loopholes into the legislation. That is precisely why we have brought forward a draft Bill rather than a final product. Such is the complexity and technical nature of the reform we are enacting that the additional and enhanced scrutiny to be provided by the Housing, Communities and Local Government Committee will be invaluable.
Tessa Munt (Wells and Mendip Hills) (LD)
I welcome the Minister’s announcement and I know that it will bring some joy, particularly with the further announcements he is going to make later in the Parliament, to many of the residents in my part of the west country. May I draw his attention to the housing with care sector? I am talking not about those gated communities that have a caretaker or somebody who cuts the grass, but about charities such as the St Monica Trust that provide some affordable rents and shared ownership but mostly provide leasehold purchase with a guaranteed buy-back and resale. This gives them a way of updating their contracts for residents and maintaining affordability. These organisations are really concerned that there will be an unnuanced ban on new leasehold care-led retirement living apartments. What consideration has the Minister given to the housing with care sector having some protection, and his attention?
Matthew Pennycook
The draft Bill, as published, includes exemptions that mirror the ground rent exemptions for new leases entered into since 30 July 2022, based on that previous Act of Parliament, but we will consider through the pre-legislative scrutiny process whether other exemptions would be appropriate for a small number of leases granted for specialist purposes. I can assure the hon. Member that I have given consideration, and will give further consideration, to the matter she raises.
Luke Murphy (Basingstoke) (Lab)
Since I was elected, so many constituents have raised with me the absolute nightmare of being trapped in leasehold and fleecehold, so I wholeheartedly congratulate the Minister on the action he is announcing today, particularly on capping ground rent, ending leasehold flats and the transition to commonhold. On the transition to commonhold, previous Governments have attempted to make this easier. Will he say a bit more about what the Bill will do to ensure that this Government make the transition happen, rather than failing as previous Governments have done?
Matthew Pennycook
My hon. Friend is absolutely right. For various reasons, commonhold failed to take off after its introduction in 2004 and the legal framework is now hopelessly out of date. That is why we have to reform and reinvigorate commonhold as a tenure. We want to put in place an easier conversion mechanism. We have given a great amount of thought to the Law Commission’s recommendations in this area, and we have tried to strike the right balance to ensure that our approach meets those objectives, but my hon. Friend is more than welcome to contribute to the scrutiny process for the draft Bill outside the Select Committee, and I hope that the does so.
Monica Harding (Esher and Walton) (LD)
In my constituency, managing agents are still imposing excessive service charges with very little transparency. Flats in retirement developments often will not sell, even at well below the market value, and families are left paying deceased relatives’ service charges. Restrictive lease terms ban rentals, trapping those families with empty, unsaleable homes. I note the Minister’s commitment to the consultation on service charges, but will he hurry up with the action?
Matthew Pennycook
I can assure the hon. Lady that we are going as fast as we possibly can, but I hope she would not want us to follow the example of the previous Government, who rushed forward legislation that contained serious specific flaws that a future Government—this Government—would have to fix in due course.
Rachael Maskell (York Central) (Lab/Co-op)
Today’s announcement is life-changing for many of my constituents, and this is why we elect Labour Governments. I want to ask the Minister about residents in leasehold complexes, where decisions are often delayed because of absent landlords and Airbnb owners. Will he ensure that when decisions are being made about the transfer to commonhold, those who do not respond do not hold up the decision to make the transfer?
Matthew Pennycook
I very much agree with my hon. Friend that the draft Bill will be life-changing for leaseholders across the country, freeing them from the unjust and discriminatory practices that so many of them face, and from the financial cost of high ground rent terms. I am more than happy to write to her on the specific issue she raises. It is these nuanced points that we want to work through, and that is why we have brought forward a draft Bill for enhanced scrutiny.
Munira Wilson (Twickenham) (LD)
I welcome many of the Government’s announcements today. Across Twickenham, I hear regularly from leaseholders who suffer when service charges are jacked up without any notice or transparency, often for spurious maintenance issues. I note that the Minister has said that he does not want to cap service charges and that help will be on the way at some point, but he has refused to put a timeline on that. Why does he not use this Bill as a golden opportunity to bring forward Lord Best’s recommendations on having a property regulator that can look at this area in a nuanced and sensible way?
Matthew Pennycook
We have given serious consideration to how we will take forward Lord Best’s recommendations from his 2019 report and, as I have made clear, we are taking some of them forward already. This Bill introduces reform in a number of specific areas and, as I have said in response to previous questions, it does not need to do everything. There are other pieces of legislation, not least the 2024 Act, that do lots of the work that hon. Members are calling for, but we want to ensure that the whole agenda is a comprehensive one that benefits leaseholders in the way that the hon. Lady and I both want.
Abtisam Mohamed (Sheffield Central) (Lab)
I pay tribute to the Minister’s work, which I know will bring real relief to many of my constituents. However, leaseholders in the Riverside Exchange development are being blocked from securing their right to manage because of absentee leaseholders. This has left them trapped with eye-watering service charges, which have increased from £1,900 to £5,500. Can the Minister set out how the upcoming legislation will reform and reduce the minimum qualifying threshold for the right to manage, which is currently set at 50%?
Matthew Pennycook
My hon. Friend will be aware that there were very few provisions relating to the right to manage in the 2024 Act. We are committed to enacting the remaining Law Commission recommendations relating not only to the right to manage but to leasehold enfranchisement. I am more than happy to write to her to try to get at the specific issues she raises in relation to the building in her constituency.
Mr Adnan Hussain (Blackburn) (Ind)
I too welcome the Minister’s statement today on leasehold reform, but I must press him and ask him what the Government’s plans are in respect of service and maintenance charges, so that I can provide at least some reassurance to my constituents.
Matthew Pennycook
Hopefully the hon. Gentleman heard my answer to a previous question. We intend to switch on the 2024 Act provisions that standardise service charges and increase transparency around them, so that people can more easily challenge unreasonable charges at tribunal. I will not put a time on that, because I do not have an exact date in mind, but I can assure him and other Members across the House that we are working as fast as possible to bring forward the necessary protections to ensure that leaseholders are protected from high and rising service charges.
Luke Myer (Middlesbrough South and East Cleveland) (Lab)
I have heard from so many residents across Marton, Guisborough, Skelton, Hemlington Hall and elsewhere about issues with leasehold and fleecehold, so what message does the Minister have for my constituents that he will tackle both of those issues and protect my residents from unfair service charges?
Matthew Pennycook
As I have made clear, there are measures in this draft Bill that will provide enhanced protections for residential freeholders on freehold estates, but we are taking other action, and I refer him—as I have other hon. Members—to the two comprehensive consultations we launched before Christmas, one of which deals exclusively with switching on the consumer protections for those people living on freehold estates.
Claire Young (Thornbury and Yate) (LD)
My constituents trapped in fleecehold schemes—freeholders on privately managed estates—will still be exposed to escalating, unregulated service charges and have no way of ensuring that the work they are paying for is actually done. The Minister has talked about the consultation and promised that help is on the way, but can he promise protection from this exploitation for my constituents in this Parliament?
Preet Kaur Gill (Birmingham Edgbaston) (Lab/Co-op)
I welcome this statement and congratulate the Minister. Does he agree that strengthening and simplifying the route to commonhold will shift power away from distant freeholders and back to residents, and that for leaseholders in Birmingham Edgbaston, this will mean control over service charges, repairs and management for the first time?
Matthew Pennycook
Absolutely. Commonhold is a purpose-built tenure designed specifically for people to own and manage a shared building without a third-party landlord and without a ground rent. We want to see its uptake grow significantly over this Parliament, and that is what the measures in this draft Bill are designed to provide for.
Jim Shannon (Strangford) (DUP)
I thank the Minister very much for his statement. It is indeed a joy to have some good news in the Chamber for everyone out there, and we welcome that. Thank you for that, Minister, and for the Government’s proposals. The Government have an interest in Northern Ireland, and while homeowners in Northern Ireland have the ability to buy out leaseholds under the Ground Rents Act (Northern Ireland) 2001, that Act does not provide for a cap on ground rent in its calculations. Will the Minister undertake to discuss these proposals with the devolved regions to enable a blanket costing to apply UK-wide at this time of austerity?
Matthew Pennycook
I always thank the hon. Member for his constructive contributions. As he knows, England and Wales can learn lots from Northern Ireland, but, as ever—particularly in relation to our reforms to housing and planning, as well as to leasehold—there are many things that Northern Ireland can learn from our reforms. I can give him the undertaking that the devolved Administrations will be kept up to date with what we are doing.
Steve Race (Exeter) (Lab)
I am delighted that we are moving forward on capping ground rents and abolishing the feudal leasehold system. I have been supporting hundreds of residents across Exeter in fighting terrible practices by management companies, and I know that these measures will put money back into people’s pockets. Does the Minister agree that the age of the exploitative leasehold system—and the ripping off of residents—is finally over, and that it is thanks to a Labour Government?
Matthew Pennycook
My hon. Friend is absolutely right. We are calling time on the abusive practices of unscrupulous property agents and on the leasehold system as a whole. That is down to a Labour Government finishing the job that the previous Government were unable to complete.
Several hon. Members rose—
Madam Deputy Speaker (Caroline Nokes)
Order. It would be helpful if Members asked very short questions so that I can get them all in.
Olivia Blake (Sheffield Hallam) (Lab)
I thank the Minister for his statement; the measures will radically improve the system. He will be aware that over 170,000 houses in my constituency have had their freeholds purchased by Andrew Milne, who is now demanding that residents pay sums sometimes exceeding £25,000 to buy out the freeholds, and is threatening forfeiture and High Court action if they do not pay up. I welcome the Minister’s commitment to ending forfeiture, but will he set out what additional steps that Government are taking to regulate rogue freeholders?
Matthew Pennycook
I will be careful in what I say in respect of that particular case, but a meeting with my hon. Friend and other Sheffield MPs was postponed because this legislation was being brought forward. I will ensure that that meeting goes back in the diary as soon as possible.
Danny Beales (Uxbridge and South Ruislip) (Lab)
Today’s news is welcome for leaseholders in my constituency, whose ground rents—often of £400 or £500—escalate throughout their leases. The measures will save them thousands of pounds throughout their leases. In my time as an MP, I have been shocked by the behaviour of managing agents. There is strong support in this place and the other place for Lord Best’s recommendation for a proper regulator of managing agents. Will the Minister outline what steps will be taken, and what the timeline is, for action on managing agents?
Matthew Pennycook
We are clear that we need to strengthen the regulation of managing agents. I appreciate the strength of feeling, across the House, on the matter. As I have made clear, we will continue to reflect on the various recommendations made in Lord Best’s 2019 report, and I am more than happy to engage with my hon. Friend on his private Member’s Bill, which I know deals with some of these matters.
Sarah Russell (Congleton) (Lab)
I thank the Minister for his statement, which demonstrates how Labour stands up for people against vested interests—my constituents will thank him for it. On the ongoing problems with unadopted estates, which I have been raising with him since before my election, I would be extremely grateful if he agreed to visit my constituency to see the difficulties that homeowners face.
Matthew Pennycook
I think that I have already committed to ensuring that a visit to her constituency is on the very long list of requests that I have received, but I will bear her request in mind.
Sam Carling (North West Cambridgeshire) (Lab)
I commend the Minister for bringing forward these brilliant measures to protect leaseholders. Constituents across Hampton own the freehold to their homes but pay several levels of service charge—first, to managing agents such as FirstPort, which is supposed to be responsible for unadopted roads, and secondly, to Hampton Estates, which covers lots of the public open space, parks and drainage. As part of our reforms, how will the Government ensure that multi-level service charges like those are addressed, particularly in areas for which they were never supposed to be adopted?
Matthew Pennycook
Again, I refer my hon. Friend to the two comprehensive consultations that we launched before Christmas. We need to establish the new regulatory framework to provide consumer protections for residential freeholders on freehold estates. We are also consulting on how to reduce the prevalence of such private management arrangements, which are at the core of so many of the unjust practices that residential freeholders face.
Jessica Toale (Bournemouth West) (Lab)
I have heard too many horror stories from leaseholders in Bournemouth West. One constituent, Jeremy Green, described feeling like a second-class citizen subject to the total autocratic control of his freeholder landlord and its managing agent. Will the Minister assure me that this Labour Government are getting on with reform and giving leaseholders the protections and dignity that they deserve?
Matthew Pennycook
Given their experience of the leasehold system, it is completely understandable that Jeremy and other leaseholders across the country feel that the dream of home ownership has fallen so short. That is why we have to end the system in its entirety. This draft Bill goes a long way towards ensuring that we do just that.
Peter Lamb (Crawley) (Lab)
This package of measures will transform the lives of thousands of my constituents. On fleecehold, residents in Forge Wood are paying thousands of pounds for services that other constituents receive for free. Can the Minister confirm that he will act as quickly as possible following the end of the consultation?
Matthew Pennycook
We want to act as quickly as possible, particularly to bring in the new consumer protections provided for by the 2024 Act.
Sarah Hall (Warrington South) (Lab/Co-op)
I welcome the statement and the progress that it represents, and I put on record my thanks to the National Leasehold Campaign, which has spent many years campaigning tirelessly on behalf of existing leaseholders, who have been trapped in an unfair and archaic system. For the benefit of Warrington South leaseholders who are trying to understand the 40-year peppercorn cap, will the Minister explain how the 40-year cap was arrived at and whether there is any scope for the transition to be brought forward so that relief is felt sooner?
Matthew Pennycook
I echo my hon. Friend’s remarks about the NLC. I also thank others, such as the Leasehold Knowledge Partnership, Sir Peter Bottomley, who has now left this place, and other champions, including my hon. Friend the Member for Ellesmere Port and Bromborough (Justin Madders), who has stood up for leaseholders so vocally over many years. The rationale for the ground rent approach that we have chosen is set out in a policy paper that we published this morning. The Select Committee will be able to scrutinise the draft Bill and provide suggestions—that is the whole point of the pre-legislative scrutiny process.
Jim Dickson (Dartford) (Lab)
I welcome the statement and the Minister’s great work. Leaseholders and freeholders across my constituency, in places like Greenhithe, Ebbsfleet and Stone, will hugely welcome the cap on ground rents and the rest of the detail on the draft Bill. May I impress on the Minister the need for us to go further on supporting those who live on unadopted or freehold estates, and to address poor practices by managing agents?
Matthew Pennycook
I am acutely aware of the strength of feeling on freehold estates. It cannot be an either/or when it comes to ensuring that residential freeholders and leaseholders get the rights and protections that they need. I can assure my hon. Friend that we are taking concerted action on both fronts.
Alistair Strathern (Hitchin) (Lab)
This is an historic day for leaseholders, many of whom were let down by a lack of action from the previous Government, which left them on the hook for exploitative levels of ground rent. One 90-year-old constituent of mine was hit with a 9,000% increase in his ground rent—that cannot be right. I am really glad that the Minister has shown such leadership to ensure that we put that right today. I know he agree that we need to go further on unadopted estates, too, so will he meet me to ensure that we bring those protections forward as swiftly and effectively as possible?
Matthew Pennycook
My hon. Friend has been an incredible champion for residential freeholders and leaseholders in his constituency. It is precisely because of ground rent increases of that scale that we are imposing, via this draft Bill, a maximum cash cap. I am more than happy to meet him to discuss the draft Bill and related matters.
James Asser (West Ham and Beckton) (Lab)
I declare that I am a leaseholder. Correspondence from leaseholders in my constituency, which makes up a lot of my inbox, mentions poor service, rising charges and homes that they can no longer remortgage or sell, causing financial difficulty. They will very much welcome today’s announcement, but will the Minister reassure them that the Government will rise to all the challenges that they face, swing the balance of power back towards homeowners, and tackle the real problem of service charges, through which leaseholders are being fleeced for poor-quality services that are often not even delivered?
Matthew Pennycook
I absolutely agree with my hon. Friend. His constituency is just over the river from mine, and is, in many ways, very similar. Day in, day out he will receive, as I do, complaints about service charge increases and onerous ground rent terms. That is precisely why we are taking action, in this Bill and elsewhere, to provide the kind of relief that he seeks for leaseholders. As I said, over the course of this Parliament we will end the system for good.
Mr Connor Rand (Altrincham and Sale West) (Lab)
Since my election I have worked to support leaseholders across my constituency, meeting residents at Maple Court, Budenberg and St James Court. When I surveyed local leaseholders on what they needed from the Government, the most common response was a reduction of the unfair charges that they face. Does today’s announcement not show that we finally have a Government who are listening to leaseholders and putting money back in their pockets?
Matthew Pennycook
That is absolutely right. In this area and so many others, the cost of living and addressing the affordability crisis faced by so many families across the country is the Government’s driving mission. For leaseholders, the reforms in the draft Bill will be transformative, particularly on ground rents, and will also introduce other protections.
Jack Abbott (Ipswich) (Lab/Co-op)
I thank the Minister for his genuinely groundbreaking statement. It feels like a little while ago that he visited Ipswich to talk to local people about the building safety crisis and leasehold. He was a shadow Minister and I was a parliamentary candidate at the time. Now we are capping ground rents, making it easier to move to commonhold, and scrapping leasehold for all new builds. Is this a case of a Labour Government keeping their promises and making a real change for many people up and down the country?
Matthew Pennycook
That is absolutely right, and I can assure my hon. Friend that we have given consideration to building safety remediation in the design of this legislation. I should make it clear that freeholders’ obligations to ensure that their buildings are safe are not related, for example, to the right to collect ground rents. Many buildings already operate a peppercorn ground rent, and they are subject to the same legal obligations as other buildings. We do not want to see the impact that some in the country may be concerned about.
Mr Jonathan Brash (Hartlepool) (Lab)
My constituents in Hartlepool are facing outrageous estate management charges, including a 49% increase in the administration fee by management company Sela just this year on the Marine Point and Longbranch Homes estates, as well as ongoing charges by Praxis on the Wynyard Mews estate. We have heard that time and again from Members today. When will we switch on the protections of the 2024 Act, and give the powers necessary for homeowners to challenge unfair charges, hold estate management companies to account and prevent families from being unfairly burdened?
Matthew Pennycook
I simply say to my hon. Friend: as soon as possible. Through these new consumer protections, we are bringing into force a regulatory framework that takes some time to get right, but I want those protections in place as soon as possible, so that we can provide protection to his constituents and others across the country who are suffering from the set-up that he describes.
Josh Newbury (Cannock Chase) (Lab)
Yet again, we have the wonders of hindsight from the Conservative party. In the immortal words of Beverley Knight, “‘Shoulda woulda coulda’ means I’m out of time”, and the Tories certainly were. I thank my constituents, including Rob from Heath Hayes and Daniel and Rebecca from Brereton, who have written to me to stress the need for these reforms. Like them, I very much welcome the draft Bill. Given that these proposals will not only reform a feudal system but cap ground rents at £250, does the Minister agree that this is another way in which this Government are putting money back into the pockets of families struggling with the cost of living?
Matthew Pennycook
I do not want to be too critical of the Conservative Government, because they did bring forward the 2024 Act, and they did move the dial when it comes to the public conversation about things like ground rents. But ultimately, they did not finish the job, and it will fall to a Labour Government to do so.