Leasehold Reform

Alex Norris Excerpts

Tuesday 3rd June 2025 Westminster Hall

[The Parliamentary Under-Secretary of State for Housing, Communities and Local Government (Alex Norris)]

It is a pleasure to serve with you in the Chair, Dr Allin-Khan. I congratulate my hon. Friend the Member for Brentford and Isleworth (Ruth Cadbury) on securing this debate, on the case that she made and on the passion with which she spoke. This degree of turnout is uncommon for a half-hour debate, which shows the strength of feeling on this matter across the UK. Anybody writing legal letters to my hon. Friend with the idea that it might stop her using her platform to advocate for her constituents is likely to be deeply disappointed. Nevertheless, the debate has reinforced the case for major reform of the leasehold system. My hon. Friend highlighted the broad range of issues faced by leaseholders every day. We are committed as a Government to honouring the commitments made in our manifesto and to doing what is necessary to bring the feudal leasehold system to an end.

I will cover the legislation as it is, how we are going to commence those provisions, legislation that we committed to in the King’s Speech and, hopefully, some other elements at the end. We heard from my hon. Friend and other colleagues that there are unfair and unreasonable practices that require urgent relief. As my hon. Friend said, the Leasehold and Freehold Reform Act 2024, with the cross-party support that it garnered, provides scope for some of that relief. In November, the Minister for Housing and Planning, my hon. Friend the Member for Greenwich and Woolwich (Matthew Pennycook), made a statement on the next steps for leasehold and commonhold reform that set out our intended sequencing for bringing those provisions of the Act into force, including an extensive programme of secondary legislation and consultation.

The parts of the Act that can be implemented quickly have been implemented. A number of provisions relating to rent charge arrears, building safety legal costs and the work of professional insolvency practitioners came into force in July 2024. In October, we commenced further building safety measures. In January, we commenced provisions to remove the two-year qualifying rule in relation to enfranchisement and leasehold extensions. In March, we switched on the right-to-manage provisions, which allow for expanding access, reforming costs and voting rights. Some things in the Act require secondary legislation, and we have been able to turn them on.

[Alistair Strathern (Hitchin) (Lab)]

I welcome the early pace that the Government have shown on this, but given the urgency of the issues that the leasehold scandal is causing for my constituents and those of many hon. Members, does the Minister agree that we need to bring forward further, more substantive solutions at pace, including answers for existing leaseholders, to ensure that we are doing justice to the urgency of this moment?

[Alex Norris]

I do. I appreciate that there is frustration about consultation, but some of the challenges within the Act show why it is important that we get this right, and that we have a process that delivers the relief that people are so desperately waiting for. One such consultation that has now concluded is around insurance commissions, which relates to service charges. We are consulting on how to replace that with a fairer and more transparent permitted insurance fee.

This year, we will also start the consultation on relevant measures related to service charges and litigation costs more generally. On new consumer protection provisions, as my hon. Friend the Member for Swindon North (Will Stone) mentioned, for the up to 1.75 million homes on private and mixed-tenure housing estates that are subject to estate charges, we will bring the measures into force as soon as possible once we have the correct model.

[Chris McDonald (Stockton North) (Lab)]

I thank the Minister for the interest that he has shown in the issues we have in Stockton North at Queensgate, Willow Sage Court and Wynyard. I am pleased to provide the update to the Minister that, following my intervention, in Queensgate we now have 98% of the roads completed. Does he agree that the issue here is a lack of consumer choice? There is a market failure; in local areas such as Stockton, people who want to buy a house have very limited opportunity to do so without entering into one of these agreements.

[Alex Norris]

I commend my hon. Friend for his work there; it will be of great succour to a number of his constituents. However, he is right, because this is a confluence a failure to build enough houses and a system that has been left to govern itself and act in the ways that my hon. Friend the Member for Brentford and Isleworth set out, leaving people with no choice but to enter into arrangements that lead to them having to live with these long-term consequences. That is why we must build more houses and address those behaviours.

[Noah Law (St Austell and Newquay) (Lab)]

Does the Minister agree that part of ensuring that we can take more control and offer more choice to residents is allowing residents to take greater control for themselves and, in the process, ensure better value for the services that they need on their estates?

[Alex Norris]

I absolutely agree, and I will turn to that in a second.

We will also be consulting on the valuation rates used to calculate the cost of enfranchisement premiums, and would welcome hon. and right hon. Members’ views on that. However, there are some deficiencies in the Act that need to be rectified in primary legislation, so we do need to legislate. That gives us the opportunity to bring forward, in line with what hon. Members have said, a new era of commonhold being the default tenure for new flats.

That is why we committed in the King’s Speech to a leasehold and commonhold reform Bill. It is part of our commitment to bring the feudal leasehold system to an end. We have committed to publishing draft legislation on this in the second half of the year. It will make commonhold the default, and it began with the publication of the White Paper in March. Alongside that, in response to the question from my hon. Friend the Member for Brentford and Isleworth about the 5 million leaseholders, we want to make the conversion process easier. Once commonhold comes back into public prominence as a model, I think it will be more popular, but we want it to be easier as well.

We want to reform the existing system by legislating to tackle unregulated and unaffordable ground rents, as was mentioned, to remove the disproportionate and draconian threat of forfeiture, to act to protect leasehold from poor service from managing agents, as many have said, and to enact the remaining Law Commission recommendations on enfranchisement and the right to manage. We will address private estate management in that.

[Darren Paffey (Southampton Itchen) (Lab)]

I thank the Minister for his work for my constituents. I am sure that he will sympathise with the latest victim to have been in touch with me. He said that with an unsellable and unmortgageable flat, due to the charges that the Minister has mentioned, he is now on the verge of bankruptcy. Does the Minister agree that real change for leaseholders is now beyond urgent, and can he assure us that this year, residents will see not only legislation but real change?

[Alex Norris]

I absolutely can. My hon. Friend is a doughty campaigner for buildings in Southampton. We are meeting later to discuss one of them. I assure him, and those residents, that we know that they need change and relief now. That is why we have made the changes that we have been able to make so far. We want to get the changes right so that when the relief comes, it sticks, does not get mired and has the right impact. However, we appreciate the urgency with which my hon. Friend speaks.

Several hon. Members have mentioned service charges and managing agents. Service charges have become a particular pinch point, highlighted by the cost of living pressures in recent years. The LAFRA gives us measures to increase transparency and to remove barriers that prevent leaseholders from challenging them, including more standardised information. However, this year, we will consult on the Act’s provisions on service charges and litigation costs so that we can bring them into force as quickly as possible.

We will also consult on reforms to the section 20 major works procedure, which landlords must follow when leaseholders receive big bills for large works, as has been mentioned in the debate. There is much more to do in that area.

On the subject of managing agents, I reassure my hon. Friend the Member for Brentford and Isleworth that we have heard her call about minimum standards.

[Tom Hayes (Bournemouth East) (Lab)]

My constituents have been defrauded by Initiative Property Management, are suffering at the hands of Scanlans Limited, and have had to deal with the Residential Management Group, representatives of which I am meeting later today. I welcome this Labour Government’s action to hold companies such as those accountable, to challenge unfair charges and hidden fees, and to end leasehold. What is the Government’s message to rogue management companies? I ask so that when I meet the Residential Management Group, I can convey the will of the Government.

[Alex Norris]

I am keen to say clearly from the Front Bench that we will legislate in this area to close the dark corners that unscrupulous managing agents use to maximise profits. However, they do not have to wait for that in order to do the right thing. They have a duty to residents. There are many great examples of managing agents and landlords doing the right things by their residents. That is good for them, their building and the individuals who live there. They can do that today. I know that my hon. Friend will continue his work until they do so.

That brings me to an important point that was raised both by my hon. Friend the Member for Bournemouth East and by my hon. Friend the Member for Brentford and Isleworth when she opened the debate, about the regulation of managing agents. They play an important role, particularly in multi-occupancy buildings, and that role is likely to increase in importance as commonhold becomes the default tenure. Many provide a good service, but there are too many examples like those mentioned by my hon. Friend the Member for Bournemouth East. I know that all hon. Members here could tell me about similar examples. In 2018, the previous Government committed to regulating the sector. The report came back from Lord Best and they did not respond to it. We are looking at it closely and we will set out our position in due course. However, we have said that as a minimum, we will include mandatory professional qualifications for managing agents, to ensure that they have the skills that they need to carry out their role to a high standard.

Finally, my hon. Friend the Member for Brentford and Isleworth mentioned building safety and fire, which are part of my brief. As a Government, we understand that as part of our remediation acceleration plan, we need to give clarity about what a remediated standard is. I have talked to insurers about it, including about what they are asking for. The cladding safety scandal is being addressed through remediation. That cannot lead to a half a dozen other issues for leaseholders. We are pushing industry in that area, but we have been asked for certainty and we will deliver it.

There has been a lot to consider in this debate, and it could easily go on for another hour, which I think would be important. However, I know that colleagues will not let the matter lie. The subject is frequently on Parliament’s agenda, and rightly so. There are people living under intolerable strain. We are committed, as a Government, to giving them relief as quickly as possible, and in a way that sticks. I will be working on it with my hon. Friend the Member for Brentford and Isleworth and colleagues over the coming weeks and months.

Question put and agreed to.