Leasehold Reform

Debate between Lord Beamish and Andy Carter

Tuesday 23rd May 2023 Commons Chamber

[Mr Jones]

I will cover that in more detail later, but it was a point that was raised by my right hon. Friend the Member for Alyn and Deeside (Mark Tami). The right hon. Gentleman is right: the one thing that needs outlawing is a developer or an estate agent being able to refer a person to a solicitor who is supposed to be “acting in their best interests”. That should not happen. The legal advice should be completely independent. There is an unhealthy relationship between those people. It is okay saying that we should blame the individual buying the property, but they are often first-time buyers who do not understand the process.

The issue of flats has already been raised. I accept that we deal with flats in a particular way, but there is a perfectly simple system that is not leasehold. What we have seen over the past few years is houses being sold under leasehold arrangements. That is because certain developers have seen it as a way of maximising their profits. They do it in two ways. The first is by passing the charges on to the owners, when traditionally they should have been paid by the developer—I will come on to examples of that in my own constituency in a minute. The second, which was referred to earlier, is the monetarisation of the actual leases, which are not only being sold to individual companies, but, in some case, being put into baskets of leases. It can be bewildering for a person to find out who owns their lease from year to year.

The other scandal, which was raised by my hon. Friend the Member for Wigan (Lisa Nandy), is around minor alterations. We are not talking about the wholesale redevelopment of a property, but, perhaps, a porch being moved or even a Sky dish being added, which have to be charged. It is no wonder that investors have got on to this. They know that the way that these leases have been constructed can mean a profitable business for them. They are not buying out of altruism; they are buying because they know that they can make money, and the people who are suffering are those who bought the leases.

I have already mentioned the issue of legal advice. Clearly, it is an issue that needs to be looked at. In many cases, if a person goes to some major housing developers, they will be told, “These are our recommended solicitors.” I am sorry, but that should be outlawed. The solicitor should be there to represent the buyer’s best interests. As the right hon. Member for East Yorkshire (Sir Greg Knight) has just said, the solicitor should be there saying, “No, don’t sign that, because it is not in your best interests.”

I know that Members will cite many examples in this debate, but I wish to raise just three in my own constituency. Members will not be surprised to hear that they involve a notorious company, Persimmon Homes, which is terrible at dealing with customers. It has made more than £1 billion of profit every year for the past five years, mainly funded by the Government’s Help to Buy scheme. The Government have done nothing to stop Persimmon’s sharp practices. Between 2012 and 2020, Persimmon built Roseberry Park in my constituency. Traditionally, when an estate is finished, the verges and common areas are passed over to the council, once they have been brought up to adoptable standards. But, lo and behold, on this site, they have not. Those areas are part of the lease, which means that the leaseholders have to take responsibility for the maintenance charges, which then go up and up. If buyers are asked whether they knew about this, they say, no, they did not, which gets back to the point about legal advice made by the right hon. Member for East Yorkshire—should they have signed this when they are taking on open-ended commitments. The site was finished in 2020, but the roads have still not been brought up to adoptable standards. It is anything to save money for Persimmon.

The other case involves Urpeth Grange. It is a small development site of 47 houses on a larger estate. Developers refused to pay the 15 years’ maintenance on an area of land and a play area and have passed it on to a management company, which is then owned by the leaseholders. Part of the planning permission was to have a play area. Well, if it is a play area, it should have been brought up to standard and passed on to the local authority, but, no, that did not happen. Even though everyone can use this play area, it is still the responsibility of the leaseholders. These sharp practices by Persimmon have been used to make more profit, and they are funded by the Government’s Help to Buy scheme.

[Andy Carter (Warrington South) (Con)]

The right hon. Gentleman will be aware that the Competition and Markets Authority investigated the practices of Persimmon Homes and reached a settlement with the company. However, it seems to me, and I think he is saying the same, that there are still so many issues that are outstanding with house builders such as Persimmon Homes that either the CMA should go back in there and address those issues, or we should have some form of housing court where we can get those issues resolved, so that individual homeowners are not footing the bill in areas where they should not be.

[Mr Jones]

I totally agree with the hon. Gentleman, and I agreed with the Select Committee’s recommendations on those homes.

Murray Park is another development, built in 2011 by Bowey Homes, which went into administration. In 2015, the freeholds were sold to a company called Adriatic Land 3 Ltd, which started charging ground rent. It came to light later that, due to a conveyancing error, Adriatic Land 3 had not bought 11 of the leases on the properties, and with Bowey Homes having gone bust, they were passed to the Duchy of Lancaster.

I would like the Minister’s help here, because the way the Duchy is dealing with the situation is frankly scandalous. Despite the error coming to light in 2011 and people wanting to buy the leases, they are being told that they have to pay £11,000 individually for valuations. Moreover, because there are only 80 years left on the leases, the marriage value applies. They are left unable to sell their property and, for some of them, their mortgage providers are questioning the situation.

The Duchy is being legalistic and obstructive in the way it wants to solve the problem. Those individuals found themselves in this position through no fault of their own, and when they got the valuation to try to get the cost of the leases, the comparisons used were in Leeds and York. I must say there is a big difference between York and Leeds, and Stanley in my constituency. If the Government could give any help in making representations to the Duchy, I would appreciate it.

As has been said, reform was promised. I do not know why the delays are ongoing, because this situation is blighting many people’s lives. They are hard-working, decent people who in many cases have saved and worked very hard to own their own house, who are proud of what they have achieved, but who have basically been left, in some cases, with assets they cannot sell or the fear that somehow the asset will never be there to be passed on to their loved ones.

I urge the Government to act quickly on leasehold reform. They cannot make the excuse that there is no Government time, because we have had very little business over the last few months. If it is not in the next King’s Speech, it will be one of the top priorities for a Labour Government to deliver in their first term.