Leasehold and Freehold Reform Bill

Angela Rayner Excerpts

2nd reading
Monday 11th December 2023 Commons Chamber

[Angela Rayner (Ashton-under-Lyne) (Lab)]

It is a pleasure to open this debate on behalf of the Opposition. Let me say at the outset that we do not intend to oppose the Bill today. Simply, it is better late than never. May I associate myself with the Secretary of State’s comments at the start of the debate, because many people have contributed and campaigned on this issue over the years that it has been spoken about? Many have long needed this overdue Bill, and they need it to be improved. Leaseholders across the country have been waiting for years—six years, to be exact—to see the Government’s flagship Bill to end leasehold and to break free the millions of people trapped in what the Secretary of State himself describes as a feudal and absurd system of home ownership.

If this is the Secretary of State going in a hurry, I would hate to see his normal pace. It was back in 2017 that his fifth predecessor as Housing Secretary pledged action. He talked a good talk today, and he is theatrical. I love the passion—it is really there—and I love the “squeeze”. We want to see the squeeze, but frankly I have lost count of the number of times Ministers have promised to finally put Britain in line with other developed countries across the world that have all ended this medieval system. To be fair to the Secretary of State, none of them has said it is an assault on leasehold and a squeeze on income, so he is going a little bit further, but after all that time and all those promises and after that theatrical squeeze, we still have a Bill that does not actually abolish leasehold. I suppose that that is no surprise, as it comes alongside a Bill that pledges to ban section 21 no-fault evictions that does not ban no-fault evictions and a Bill to stop the small boats that does not stop the small boats.

It is all well and good for the Secretary of State to say that the Government plan to amend the Bill in the usual way, but is it too much to ask for the Government to include a clause that bans leasehold in a Bill whose stated purpose was to ban leasehold? Why make those promises, only to produce a Bill that does no such thing? In a word, it sounds like chaos. Even the day before it was published, the Department’s press release said that the Bill would ban developers from selling new houses under leasehold. Given the tiny proportion of leaseholds that are houses, rather than flats, it is hardly an ambitious pledge, but the Bill does not even introduce that ban.

[Mr Kevan Jones]

Does my right hon. Friend agree with what I said to the Secretary of State? The Government could have stopped this, if they had not done the Help to Buy scheme, which fuelled this practice among large developers. They could have stopped it in its tracks, if they had stopped the finance to those companies. Does she also agree that expectations have been raised among a lot of the leaseholders who were put into the trap of their houses being leasehold? They thought they were going to get out of that trap, when actually they are not.

[Angela Rayner]

I absolutely agree with my right hon. Friend. The Government have been in government for 13 years. We have had six years of these promises, and he is absolutely right that there is more than one way that the Government could have ensured that leaseholders were not treated in this way. The botched drafting of the Bill means we are still waiting to see a single clause that prohibits a single new leasehold property, whether it is a flat or a house.

It was on 30 January this year that the Secretary of State promised my predecessor, my hon. Friend the Member for Wigan (Lisa Nandy),

“we will maintain our commitment to abolish the feudal system of leasehold. We absolutely will. We will bring forward legislation shortly.”—[Official Report, 30 January 2023; Vol. 727, c. 49.]

In February, he said he aimed in the forthcoming King’s Speech

“to introduce legislation to fundamentally reform the system…to end this feudal form of tenure”.—[Official Report, 20 February 2023; Vol. 728, c. 3.]

In May, the then Housing Minister told this House that

“my Department are working flat out”—[Official Report, 23 May 2023; Vol. 733, c. 214.]

on the legislation. If it has taken them this long with not a word to show for it, can they guarantee that they will put their amendments to the House by 30 January next year—a full 12 months after the Secretary of State’s promise at the Dispatch Box?

We have heard the Secretary of State say that it is perfectly normal to bring forward vast swathes of amendments in Committee—believe me, the Committee will be doing some considerable heavy lifting. Having shadowed him through the final stages of the Levelling-up and Regeneration Bill, I would say that perhaps he does think that making endless last-minute amendments to his own Bills is a normal way of legislating, but the anonymous sources close to the Secretary of State may have let the cat out of the bag about the real reason the Bill is so empty when they briefed the press last month. We know from them what he cannot admit today: the Prime Minister was blocking this Bill from the King’s Speech in the face of lobbying from vested interests opposing the reform. In the chaos of this Government, it was added only at the very last minute. We may have heard many warm words, and the Secretary of State was very theatrical about his ambition for reform, but he is stuck in the daily Tory doom loop in which vested interests always come before the national interest.

The truth is that the time wasting and backtracking all go back to the Prime Minister’s desperate attempt to extend the lease on No. 10 Downing Street. The fact is that even if the Government belatedly fix their leasehold house loophole, flat owners will be left out of the picture, yet 70% of all leasehold properties are flats and there are over 600,000 more owner-occupied leasehold flats than houses in England. Having listened to the Secretary of State, those owners will still be wondering just when the Government will fulfil their pledge to them. As I am sure everyone in the House will agree, property law is, by nature, extremely complex, but we cannot and must not lose sight of the daily impact that these laws have on the lives of millions across our country, including over 5 million owners of leasehold properties in England and Wales. I am sure that most of us in the House know what that means in human terms for our constituents.

For most freehold homeowners, ownership means security and control, yet for far too many leaseholders, the reality of home ownership falls woefully short of the dream they were promised. Too many leaseholders face constant struggles with punitive and ever rising ground rents—rent for a home that they actually own, in exchange for which the freeholder needs to do nothing at all. Leaseholders are locked into expensive agreements and face unjustified administration fees and extortionate charges. Conditions are imposed with little or no consultation. For leaseholders also affected by the building safety crisis, the situation is even worse.

[Michael Gove]

The right hon. Lady has made it clear from the Dispatch Box that she opposes excessive ground rents. Can she explain why the Labour leader made it clear at the Labour party conference that he would get new houses built by creating “attractive investment products” that had residential ground rents at their heart? How can it possibly be the case that she intends to deal with excessive ground rents, when the leader of the Labour party wanted to fund new development by pursuing precisely that policy? Which is it: against them or for them?

[Angela Rayner]

I thank the Secretary of State, but he has just used the word “excessive”. If he wants to let me deal with this problem, I am happy to take over and show that I am not just about theatrical performances at the Dispatch Box; I will actually deal with it. He has been given 13 years on the Government Benches and has failed to do that. This Bill still fails to do that, so I would like to see where he will deal with this issue.

Regulation of freeholders has fallen behind that of landlords, leaving leaseholders stripped of the rights enjoyed even by tenants in the private rented sector. Perhaps the Secretary of State can tell us what measures exist that prevent the worst actors in the market from repeatedly ripping off leaseholders in one place after another.

[Stephen Doughty]

My right hon. Friend is making a strong speech, and she accurately describes the mental and financial anguish that has been felt by many leaseholders in my constituency. She is absolutely right. In my constituency, this issue predominantly affects those in flats, not in leasehold houses, and what they have gone through with service charges and fire and building safety remediation has taken a toll on many of them. They have found themselves in despair. Does she agree that much more needs to be done to deal with managing agents on the transparency of service fees? It was good to hear the Secretary of State mention FirstPort, and I hope to meet it soon, but does she agree that this is a much wider problem that needs to be addressed?

[Angela Rayner]

I absolutely agree. As I said before, and as I think the Secretary of State acknowledged, there is a lot of work to be done in Committee on these issues. Hopefully, we will be able to help the Secretary of State improve his own Bill, which needs significant improvements.

[Alistair Strathern (Mid Bedfordshire) (Lab)]

I suspect that my right hon. Friend will welcome the strengthening of the regulation of management companies in the Bill, but we need to go further. Just last Friday, I had some heartbreaking conversations with residents on the Froghall Fields estate in Flitwick—a lovely part of the world with which I am sure many Members will be familiar from the by-election—who have been left brutally exposed to successive failed management companies by ongoing adoption conversations with the council that are dragging on and on. Does my right hon. Friend agree that there is more we can do to strengthen the proposed regulations in this area, to ensure that my long-suffering residents finally get the redress and resolution they deserve?

[Angela Rayner]

I absolutely agree with my hon. Friend. I am so pleased about the work he has been doing since he was elected to this place and the way in which he has been a real champion of his constituents, which they did not feel they had previously. He makes a really important point, and he is right to point out the huge problem of estate agent charges and fees. The steps the Government are taking to address the issue are welcome, of course, but we absolutely believe there is room to improve the measures in the Bill. The shadow Housing Minister, my hon. Friend the Member for Greenwich and Woolwich (Matthew Pennycook), will look to do so in Committee.

[Mr Betts]

Following on from that point, when the Select Committee looked at this issue—it is a real problem—we said that whenever a property is sold, the purchaser or leaseholder, and in some cases the freeholder, should have a right at the beginning to see precisely what the agreement was between the local authority and the developer about where responsibility for ongoing maintenance of the estate and so forth rests. Many purchasers simply do not know who to go to and who is responsible. It would be helpful if that was set out very clearly at the beginning of the purchase.

[Angela Rayner]

I absolutely agree, and I congratulate my hon. Friend on his fabulous work in this area. Transparency is incredibly important because it is the first step towards getting accountability.

We spoke before about pets—we all love our pets—and the Secretary of State has rightly protected the reasonable right of tenants to keep pets, yet it is not clear whether he intends to extend that right to leaseholders. I have seen leases that contain an outright ban, so I hope he ensures that the Bill reflects that. It is just one example of the restrictions that terms in leases increasingly impose, but I could cite many more—for example, basic modifications or decorations to flats, or the right to conduct business from home. I know that some Government Members may not be keen on working from home, but it is quite another thing to say that someone could lose their home over it. They might be more sympathetic if I point out the impact on the self-employed, who are often banned from running their own business from their own home.

There are basic principles at stake for the Opposition, and I hope the whole House can agree that people’s rights to bring up a family, to care for a loved family pet, to own and run their own business, and to pay a fair price and receive what they have paid for are basic British rights and values. The incredible thing is that they are being denied to people in their very own homes—homes that they own. That is surely at the heart of today’s debate, because for leaseholders, their flat or house is not an investment; it is their home—a place to live, to grow up, to grow old, to raise a family, to get on in life and to be part of a community. A home is more than bricks and mortar; it is about security and having power over your own life.

As a leaseholder, someone may have ownership but not control. The dream of home ownership has already slipped away from far too many, but it is less of a dream and more of a nightmare for too many who now achieve it. From what the Secretary of State has said, there is some agreement between us on the problems those people face, but the contents of the Bill do not quite match up to his sentiments or the energy that he brings to the Dispatch Box. So I hope that in winding up, the Minister will not just tell us exactly how far the Bill addresses the problems raised today but accept that we can work together in later stages to go further.

[Rachael Maskell]

This is a point that I wanted to make to the Secretary of State as well. There is a long-standing injustice for leaseholders who experience flooding as they currently do not have access to the Flood Re scheme. Will my right hon. Friend seek—I hope she will—to ensure a level playing field for leaseholders and freeholders in accessing the Flood Re scheme?

[Angela Rayner]

I thank my hon. Friend for that. Just as the Secretary of State earlier brought enthusiasm to the Dispatch Box on cladding and some issues we faced there, I hope that, in Committee, we can explore that and the effect on people who have been affected more and more by flooding.

The Secretary of State may not have the support of his Prime Minister, or his Back Benchers—[Interruption.] Many of them are not here at the moment—watch this space!

On the Labour Benches, we are united behind the decisive action that leaseholders need. If the Government cannot deliver it, we are ready to do so. A Labour Government will make commonhold the default tenure for all new properties as part of our commitment to fundamentally and comprehensively reform the leasehold system. We will also enact the Law Commission’s recommendations on enfranchisement, commonhold and the right to manage in full.

The fact is, unless and until leaseholders of houses and flats get a renewed commitment from Ministers on all the Law Commission’s recommendations, leaseholders will reasonably conclude that the Government have scaled down their ambition with the scaled-back Bill before us. Leaseholders deserve to know the real reason why they are being fobbed off with such limited steps. Unfortunately, the answer, as ever, lies in the chaos of this Government. The Secretary of State has talked a good game, but he might be the only functional cog in a dysfunctional Government—there is a compliment in there; I am trying. [Laughter.] I hope that he will face down his Prime Minister and his own Back Benchers and accept Labour’s proposals to make the Bill meet the challenges of the moment. But if he does not, a Labour Government will.

[Madam Deputy Speaker (Dame Rosie Winterton)]

I call the Father of the House.