Leasehold Reform (Ground Rent) Bill [Lords]

Andy Carter Excerpts

2nd reading
Monday 29th November 2021 Commons Chamber

[Eddie Hughes]

I do not want to jump forward several pages in my speech, but the right hon. Gentleman is predicting—or at least pointing to—the fact that we have identified this problem and have ensured that when we reduce ground rents to a peppercorn, people will not be able to cheat by introducing associated management fees and other charges. If he is looking for further changes, the second part of our seminal legislation, when it comes in due course, will no doubt satisfy his needs.

The starting point for this legislation has to be our shared recognition that for many people, to be a leaseholder is also to be a homeowner, and we are clear that homes that have been bought should be theirs to live in and enjoy, not be treated as cash cows for third-party investors. This Government are on the side of homeowners, which is why in our manifesto we committed to introduce this important legislation.

Hon. Members will be well aware of the problems that many leaseholders have faced in recent years, including, as pointed out by Opposition Members, spiralling ground rents and onerous conditions that have turned the dream of home ownership into a nightmare for some leaseholders. This Bill is the first of our seminal two-part legislation to reform and improve the leasehold system. Further legislation will follow later in this Parliament to continue to address the historic imbalances in the leasehold system.

[Andy Carter (Warrington South) (Con)]

I pay tribute to the Minister for the work that he has done so far. He may know that constituents on Steinbeck Grange in Warrington South have been calling for changes for almost 10 years. Will he give an update on the current Competition and Markets Authority investigation, which is vital to people living in Warrington?

[Eddie Hughes]

The work of the CMA has been pivotal so far in already changing the behaviour of a number of significant developers. I have spoken to it recently; further work is ongoing and I hope that it will have further successes in the future. My hon. Friend is completely right to raise that point.

Both this Bill and the wider leasehold reform programme have been informed by consultation. I thank those present here today, including the Opposition Front Benchers, who have taken the time to discuss the issue. I look forward to further discussions over the coming weeks and months.

The Bill has a specific focus: the ground rent in future long residential leases. Some existing leaseholders face substantial difficulties, including costly enfranchisement, a lack of transparency and burdensome lease terms. Escalating ground rents in particular can reach unaffordable levels and make some properties difficult to sell. That is not right, which is why we have asked the Competition and Markets Authority to conduct a thorough investigation into potential mis-selling and unfair terms in the leasehold sector.

Leasehold Reform (Ground Rent) Bill [Lords]

Andy Carter Excerpts

Report stage & 3rd reading
Monday 24th January 2022 Commons Chamber

[Justin Madders]

Indeed: ground rents are payments for which nothing is received in return, which is why they should be abolished. For the record, I am a co-chair of the all-party parliamentary group on leasehold and commonhold reform and have campaigned for the abolition of ground rents for a number of years, having seen the impact on individuals of their use and abuse.

I thank my hon. Friend the Member for Weaver Vale for tabling the new clause and for being a consistently strong advocate for leaseholders during his time as an Opposition spokesperson. He apologised at the start of his speech; I would ask him to resign based on that apology had he not already been moved to another position. [Laughter.] He has done a sterling job in this brief, and the new clause is typical of the way he has used every opportunity available to him to push forward the cause for leaseholders.

As we know, new clause 1 would not abolish ground rents altogether but, if it is agreed to, will set a timescale by which concrete proposals on their abolition must be put forward. That is important because for too long my constituents and thousands of others have suffered because of the leasehold scandal.

I know that the overturning of a system that has been in place for 1,000 years is not necessarily straightforward, and arguments will always be made as to why things cannot happen, but, as has been said so many times—I have already said it once in this debate myself, but it is worth saying it again and again because it is such a powerful point that can never be made enough—ground rent is a payment made for which absolutely nothing is received in return. Why, then, can we not get on and reduce that payment to effectively nothing so that the legal position reflects the reality of the situation? That would send out an important signal—not just a departmental press release but a signal that will make a tangible difference to people’s lives: that the days of leasehold are numbered and that this place does not accept that ground rent is a legitimate payment.

We see ground rent for what it is: a feudal device used to suck money away from people who get no benefit and no advantage from the payment but risk losing their home if they do not make it. Such arrangements have no place in the 21st century or, indeed, any century.

Some say that we should not ban ground rents on existing leases because that would introduce an element of retrospective impact on long-standing investments, including pension funds, but that is not an argument I have any sympathy with. The toxicity of leasehold has now been known for at least five years, which is plenty long enough for any investor to have taken a closer look at what they were involved in, looked for alternative sources of income and realised that nobody with an ounce of humanity should be using people’s homes as an investment vehicle—and especially not ones that included leases that were so onerous they made the homes unsellable.

Yes, there is a concern that we should not readily change the law so that it works retrospectively and changes the legal nature of a contract after it has already been entered into, but let us not forget that this place voted to introduce the loan charge, which retrospectively changed the law, arguably to the considerable detriment of many who say they were misled about what they signed up to at the time. There are parallels, because let us not forget that the victims of leasehold did not sign up to leases in the full knowledge of what they entailed. The developers, lenders and lawyers all have some degree of culpability, but the innocent victims—the leaseholders—do not.

The Competition and Markets Authority has been clear on several occasions that leaseholders have been wronged, and I welcome its decisions, but of course those decisions do not cover everyone, which is why we in this place need to step in. We often talk in the House about the plight of the Women Against State Pension Inequality—did the WASPI women not sign up for something very different from what they ended up with?

I know there are legal opinions about freeholders’ human rights, but what about my constituents’ human rights? In fact, I would love the owner of a set of freeholds to get on the witness stand and try to convince a judge that they are the wronged party in all this. I would love to ask them whether they think people should have the right to live in their own homes without them being used as an income stream for someone else.

The irony of what we are debating is that many of those who have done the most to bring the leasehold scandal to the public’s attention—I think in particular of the National Leasehold Campaign—stand to benefit the least from this Bill because there is nothing in it to help existing leaseholders. That is why new clause 1 is so important. Four years ago, when he was Communities Secretary, the right hon. Member for Bromsgrove (Sajid Javid) promised an outright ban on leasehold houses, and we all hoped that by now a law would be in place for everyone so that these wrongs could be righted. Those people deserve an end to this. They deserve hope that something will finally be done to make their lives a little better. If the Government cannot support the new clause, then, at the very least, I would like to hear from the Dispatch Box a commitment in the form of a final date by which the scourge of leasehold will finally be consigned to the history books. The wronged leaseholders deserve that, and it is about time it happened.

[Andy Carter (Warrington South) (Con)]

It is a pleasure to follow the hon. Member for Ellesmere Port and Neston (Justin Madders). I share his concerns and those of the hon. Member for Weaver Vale (Mike Amesbury), because a significant number of new homes built in the north-west of England, particularly in my constituency and in theirs too, have been on leasehold contracts. Although I recognise the aim of the new clause, I am not completely sure that it will resolve all the issues for my constituents, and I want to talk through some of the issues that they have told me about over the past couple of months.

I welcome many of the proposals set out in the Bill and recognise the important role that they will have in protecting leaseholders moving forward. I am, though, concerned that, as the hon. Member for Ellesmere Port and Neston said, they will offer little comfort for the thousands of homeowners who have become trapped in historical leases, which I am afraid many were even unaware they were purchasing when they signed for their new home. That includes an number of constituents in Warrington South who have spent the past 12 years trying to resolve a situation that they were inadvertently drawn into when they were mis-sold their properties on the Steinbeck Grange estate in Chapelford village by David Wilson Homes.

My constituents believed they were purchasing their properties freehold, and many were not disabused of this position until several months after they moved in, when they received an invoice. One might rightly ask why their lawyers did not make them aware when they were signing the contract. It has become clear that most of them used a legal firm recommended by the developer—by the house builder’s sales team—and those lawyers failed to point out the tenure under which the properties were being sold, and failed to make Steinbeck residents aware of the important clause in their contract documents. By using their first names in dealings with clients, they made sure they could not be traced by dissatisfied customers once they became aware of the situation. The law firm went into administration within days of the estate being completed.

I note with interest that the Law Society’s response to the Bill states that it is not the solicitor’s place to dissuade a client from entering into a particular transaction; their role is to ensure that the transaction is legally sound and efficiently completed. I agree with that, but I believe that every lawyer has a responsibility to their clients, and in this case the client was not the developer but the homeowner, or prospective homeowner. They should have made clear all the elements of the contract and their clients should have been advised accordingly. I am aware of one Warrington solicitor who, when looking at the contract that was brought to him, advised the purchaser not to proceed because of the leasehold situation, and has come forward to give me all those details.

As hon. Members have mentioned, the Competition and Markets Authority is currently investigating several issues surrounding the potential mis-selling of leasehold properties. I thank the CMA for its endeavours in addressing this poor practice. It has been to Warrington and engaged with my constituents, and I am incredibly grateful for the work that it is doing there. These investigations have looked at four developers—Persimmon, Countrywide, Taylor Wimpey and Barratt Homes, which is the parent company of David Wilson Homes. To date, the CMA has reached agreements with the first three. I therefore encourage the management of Barratts to recognise the harm that has been caused by its past sales polices and agree a way forward with the CMA as soon as possible to put things right.

Many hon. and right hon. Members have raised these issues in this House, but progress is also down to the tenacity of the men and women trapped in unfair leasehold contracts across the country who have continued to fight for their rights. I particularly praise my constituent Mr Mike Carroll, who has refused to take no for an answer and is continuing to work tirelessly with me and his neighbours to achieve the right and just outcome for them.

Ministers also need to look again at how consumer bodies around the country, particularly trading standards, should be working in the interests of homeowners, to help them resolve some of these issues. In the case of homeowners in Warrington, trading standards appear not to have been interested and have done little to involve themselves in any investigations. That is not the case in other parts of the country, where resolutions have been reached. I note in particular that Cardiff trading standards got involved and looked very closely at some of these practices.

[Sir Mike Penning (Hemel Hempstead) (Con)]

I congratulate my hon. Friend on his tenacity in looking after his constituents. All of us across the House try to do that, and he has done a brilliant job. On other areas that need to be addressed, the solicitors that have gone into administration were insured. The big companies have liability insurance sitting in pots, so leaseholders could simply say to the insurers, “You’ve had the premium, and now we want to see some help from you.”

[Andy Carter]

My right hon. Friend is absolutely right. The greatest challenge that my constituents face is that they cannot find the people who did the work—the lawyers no longer exist as a company body. My constituents are working to try to find some recompense, and I hope that the situation will be resolved by the CMA.

Will the Minister consider what actions his Department can take to tackle the problem faced by residents on Steinbeck Grange in Warrington and elsewhere who are locked into leaseholds and did not expect to be in this situation? I hope he will look very carefully at what the CMA says. I know that he has been working with the CMA to try to find solutions, and I hope that he will continue to do that, so that a satisfactory outcome can be found. Having met residents and constituents on Friday evening, I know that the impact that this has had on their lives cannot be overestimated. They have been living through a genuine nightmare, having bought what they thought was their dream home. I urge the Minister to think about the impact that this has had on those individuals.

It is time not only for us to protect those who will be looking to buy a new home in the future, but to secure justice for those who have been mis-sold properties in the past and are still paying a heavy price through unreasonable management fees and escalating ground rents. I am pleased to support the Government’s efforts, but I urge them to go further.

[Mr Betts]

It is a pleasure to speak in this debate. I welcome the steps that the Government have already taken but encourage them to go that little bit further.

Thinking back to the Select Committee inquiry in, I think, 2018, I remember that we invited not just formal witnesses—I have mentioned certain very distinguished lawyers who advised us—but many leaseholders from up and down the country. Up to 100 people came to events. There were a number of roundtables at which they met individual members of the Committee and told us about their experiences.

All the issues that the hon. Member for Warrington South (Andy Carter) has just raised were in our report, including mis-selling and how lawyers told people, “It’s just the same as freehold, really. It isn’t any different: you own your own house and, by the way, there’s an incentive to go with us on this leasehold arrangement. Here are the presents we’ll give you, the garden we’ll do up for you and the new carpets we’ll provide.” What solicitors were doing was scandalous, and we identified that in our report.

The simple message we had from everyone present was, “Everyone’s talking about changing the system for the future, but we’ve got problems here and now.” I understand why the Bill goes only so far on future ground rents and future arrangements, because it is more challenging and complicated to unwind existing legal arrangements than it is to describe what should happen in new arrangements, but I say to the Minister that the people in these leasehold homes who are experiencing all the problems that have already been explained, including in our report, think that that is unfair. They think that people in the future will be protected but that they will not and that Ministers, having raised the issue, should take it one step further and bring in the same rules for them. It is almost as simple as that. They cannot understand why, as they see it, they are being left behind and, so far, ignored on not just ground rents but a range of issues including the mis-selling of the service charge and all the other scandals that the Select Committee unearthed in its inquiry.