Housing: Unfair Leasehold Agreements

Lord Kennedy of Southwark Excerpts

Tuesday 3rd March 2020 Lords Chamber

Asked by

[Lord Kennedy of Southwark]

To ask Her Majesty's Government, further to the report by the Competition and Markets Authority Leasehold housing: update report, published on 28 February, what plans they have to help homeowners who find themselves in unfair leasehold agreements.

[Baroness Bloomfield of Hinton Waldrist (Con)]

My Lords, we welcome the CMA’s report on its investigation into unfair terms and mis-selling in the leasehold market, and I commend on his work my noble friend Lord Tyrie, who led this report. The report underlines the problems caused by onerous ground rents. We have been clear that leaseholders should not pay a charge for which they have received no tangible benefit in return. That is why we have committed to legislating to reduce ground rents to zero for future leases and to banning the sale of new leasehold houses. We are pleased that the CMA is seeking to take forward enforcement cases, following the findings of its investigation.

[Lord Kennedy of Southwark (Lab Co-op)]

Does the Minister agree that the actions of some freeholders, property developers and service companies are scandalous? Leaseholders are ripped off with ever-escalating ground rents, service charges, commission fees and, frankly, dodgy sales practices, which effectively make home owners tenants in their own homes. Can she go further and commit that the Government will take immediate, firm action on these practices and stand up for leaseholders? Urgent action is needed now.

[Baroness Bloomfield of Hinton Waldrist]

The noble Lord is correct. These unfair practices in the leasehold market have absolutely no place in a modern housing market, and neither do excessive ground rents that exploit consumers who get nothing in return. That is why we are reforming the system so that it is fairer for leaseholders. In December 2019, we announced that we would move forward with legislation on leaseholder reform, reaffirming our commitment to making the system fairer for leaseholders. This will include measures to ban the sale of new leasehold houses, restrict ground rents to peppercorn for future leases, give freehold home owners equivalent rights to challenge unfair charges, and close loopholes to prevent unfair evictions. Regarding his question on what action we can take, the CMA has already announced enforcement action and said that this report is an interim report and that its research is ongoing.