Leasehold Reform

Debate between Stephen Doughty and Matt Western

Tuesday 23rd May 2023 Commons Chamber

[Matt Western]

The Father of the House is absolutely right. In one of the properties in which I was a leaseholder, we set up as directors and took control of the property. We appointed our own management company, at significantly lower cost, to address some of the massive overcharges we faced.

In 2014, the Competition and Markets Authority estimated that the average service charge amounted to just over £1,100 a year, suggesting that service charges could total between £2.4 billion and £3.5 billion a year. My hon. Friend the Member for Sheffield South East (Mr Betts) highlighted the 2019 Select Committee report—I was privileged to sit on that Select Committee—which identified that, too often, leaseholders, particularly in new-build properties, have been treated by developers, freeholders and management agents not as homeowners or customers but as a source of steady profit. We concluded by urging the Government to ensure that commonhold became the primary ownership model for flats in England and Wales, as it is in many other countries. Of course, that has not been adopted.

[Stephen Doughty]

Does my hon. Friend share the frustration that many of my constituents face? When they try to set up “right to manage” companies, and to move towards taking over their freehold, the process and the disputes about which buildings and outhouses constitute part of their property make it extraordinarily complex, and often expensive, to take control of management accounts.

[Matt Western]

My hon. Friend is absolutely right. It is incredibly complex and extremely expensive to go through that process.

The last Labour Government’s Commonhold and Leasehold Reform Act 2002 introduced commonhold as a new tenure, which this Government should have pursued over the past 13 years. Progress was not made for two reasons: the conversion from leasehold to commonhold requires consent from everyone with an interest in the property, as my hon. Friend just said; and developers do not want to build new commonhold developments because there is no incentive and no financial upside, as my hon. Friend the Member for Ellesmere Port and Neston (Justin Madders) highlighted. This Government have ignored these exploitative practices, and the ever-louder calls from the public to end them, for 13 years. They launched the Commonhold Council two years ago, so will the Minister update us on what has happened with that? It appears to be nothing.

The public are aware of the Conservative Government’s broken promises. Their 2019 manifesto promised to address this issue by implementing a

“ban on the sale of new leasehold homes”.

That has not happened. Even the Housing Secretary admitted that they should end this “absurd, feudal” system, but we are 13 years on from the last Labour Government and nothing has happened. This Government have let down the public. I appreciate that there is a high incidence of these cases in the north-west England, but there are also some in my constituency. Groups of residents across my local towns are keen to take control of the development of their blocks, but it is too expensive and complicated to do so, as many Members have been saying. In one block of 70 flats, the residents have managed to take that on, but the previous managing agent took £76,000 from the residents’ account and they have not been able to recover the money. The residents are keen to ensure that managing agents are better regulated in any proposed legislation.

As my right hon. Friend the Member for North Durham (Mr Jones) said, there is so much sharp practice out there. That is why Labour would implement the three Law Commission 2020 reports in full. They included measures designed to make it easier for leaseholders to convert to commonhold; to allow shared ownership leases to be included within commonhold; to give owners a greater say over how the costs of running their commonhold are met; and to ensure that they have sufficient funds for future repairs and emergency works.