British House Building Industry
Debate between Mike Amesbury and George Howarth(5 years, 3 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Sir George Howarth (Knowsley) (Lab)
It is a pleasure to follow the hon. Member for South Norfolk (Mr Bacon), who made a typically thoughtful and interesting contribution to the debate on housing.
I congratulate my hon. Friend the Member for Mitcham and Morden (Siobhain McDonagh) on her survey of the state of the market and some of the negative aspects of it that we need to address. Anybody who reads her speech in Hansard tomorrow or at some later point will consider some of the companies that she named to be a roll call of disrepute.
On that theme, I wrote to the chief executive of Redrow, the developer, about a leasehold scandal following conversations with concerned residents of Summerhill Park in my constituency. Summerhill Park has over 455 houses and 70 flats. There is a two-tier system of ground rents in operation. Residents who purchased their properties early on in the development pay ground rents of £150 a year, while those who purchased homes in the later phases pay £250 a year. My constituents want to be enfranchised. They want to purchase their freeholds and are willing to pay a fair price. They believe—and I agree with them—that a fair price would be 10 times the annual ground rent, which they think is fair and reasonable and are willing to pay. Redrow, however, is asking for 26 times the annual ground rent, which I think, frankly, is unfair and unreasonable.
In the light of the Government’s reform proposals and the Law Commission’s ongoing work on leasehold reform, I approached Redrow to arrange a meeting to discuss the residents’ ideas further. Redrow contended in its response that the lease agreements are fair and transparent, which my constituents strongly disagree with, as do I. Its business model is considered by many—including, as I am sure the Minister will confirm, the Government—both unreasonable and unjustifiable. The offer of giving residents the opportunity to purchase the freehold at a fixed price of 26 times the annual ground rent is not, in my view—and, I hope, in the Government’s view—reasonable or fair.
In response to my letter, Redrow said:
“it would be inappropriate to move away from the practice that has been adopted over the last two years, with all Redrow households, including those [who] have already acquired their freehold at Summerhill Park.”
I wrote back to say that I did not agree and I would still like a meeting. Surprise, surprise, Redrow said, “There is little point in a meeting.” All Members of this House have a reasonable expectation that if they request a meeting with an organisation or company in the private or public sector to discuss an issue that is of concern in their constituency, they will get that meeting. Redrow arrogantly—not to me, but to the people I represent—declined to hold such a meeting. I deplore that, as I hope others do.
It is unjustified and unfair, and I fail to see how pressing on with that policy is either reasonable or acceptable. Redrow is doing this simply because it can and because it can continue to make money out of the residents I represent in this House. The leasehold scandal has caused a great deal of distress for homebuyers across England, particularly in the north-west, with many homebuyers trapped in their current properties, some unable to afford to purchase their freehold and others even unable to sell their property. Redrow is not unique in this. Other developers are just as involved in this scandal.
Mike Amesbury (Weaver Vale) (Lab)
I have a situation in the Winnington part of my constituency of Weaver Vale, where resident Emily Martin and many others are caught in this leasehold trap. In terms of the next phase, people have benefited from the reforms that we in this place have campaigned for, and the properties then become unsellable.
Sir George Howarth
That adds to the unfairness of it. Redrow is not unique in this, and all these companies need to look at themselves, the business model they are adopting and the ethics involved.
I will conclude by asking the Minister three questions. First, may I invite her to join me in condemning Redrow and the other companies that are still involved in this practice? Does she agree that the freehold purchase cost of 10 times the ground rent is fair and reasonable, whereas 26 times is sheer daylight robbery? Finally, does she agree that it is desperately important that we have legislation to curtail the naked greed of those developers engaged in this disreputable practice?
Leasehold and Commonhold Reform
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Mr Howarth
My right hon. Friend is absolutely right; that is another complicating factor. I will quote what some of my constituents have said about this—I will not name them because I have not asked their permission. The first said:
“Why were we not given the full facts of exactly what it was we were buying into? We haven’t bought a home, we’ve bought a license to live in the house until the lease expires. Please tell me, where is the security in that?”
Another constituent said that:
“we bought a Bellway home in Huyton unaware that Bellway were going to sell on the freehold to a private company without giving us the chance to buy. The increase is immoral and totally unfair”.
The third constituent said:
“I was never told I could purchase the leasehold although I now know some people on the estate purchased the leasehold at the time they were buying. I thought Bellway would manage the property for many years to come, not be sold off to the highest bidder who would raise their fees whenever they want to. I feel ripped off by Bellway”.
That is what some of my constituents say.
Most of the properties in Knowsley that I am talking about are houses—starter homes, as my right hon. Friend the Member for Delyn called them. On some estates, some flats are mixed in. One constituent asked my office to contact the developer of his flat, Redrow, to find out what would be involved in purchasing the freehold. Eventually, somebody called Steve at Redrow replied—“kind regards, Steve.” We got a reply; the company conceded that the residents in the flats could purchase the freehold, which, of course, is their statutory right. The end of the reply, from December, states:
“As you will appreciate the 2 month notice period is only a first step, and should give residents time to decide whether it would be something they would wish to pursue.”
A group of residents makes the effort to look at a freehold arrangement, but they only have until the end of January to find out where they would get the money from, and to find out whether a majority of them want to go down that route. I would think that that is almost impossible. Anyone who has ever been involved in a house purchase knows that these things take a lot longer than that. There is a lot going on.
I welcome the announcement by the Secretary of State. The hon. Member for Hazel Grove said, “So far, so good”. We hope that the work that the Law Commission will be asked to do will provide a way forward for my constituents who have bought new homes, although there is no guarantee. It worries me that a lot of those developers will see some kind of control or legislation that will curtail their activities looming ahead of them and will hurry to sell those homes so that they are not left with a liability. I realise that with potential legislation pending, that might not be the most attractive sale ever, but nevertheless it is a worry.
Mike Amesbury
In my constituency of Weaver Vale, Morris homes is selling houses in a development in expectation of the new arrangements, and literally on the other side of the street, people are caught in the scandal we are talking about. Their homes are simply unsellable.
Mr Howarth
My hon. Friend makes a very good point. Was someone else trying to intervene?