Housing: Unfair Leasehold Agreements

Baroness Grender Excerpts

Tuesday 3rd March 2020 Lords Chamber

[Baroness Bloomfield of Hinton Waldrist]

The noble Lord is correct. These unfair practices in the leasehold market have absolutely no place in a modern housing market, and neither do excessive ground rents that exploit consumers who get nothing in return. That is why we are reforming the system so that it is fairer for leaseholders. In December 2019, we announced that we would move forward with legislation on leaseholder reform, reaffirming our commitment to making the system fairer for leaseholders. This will include measures to ban the sale of new leasehold houses, restrict ground rents to peppercorn for future leases, give freehold home owners equivalent rights to challenge unfair charges, and close loopholes to prevent unfair evictions. Regarding his question on what action we can take, the CMA has already announced enforcement action and said that this report is an interim report and that its research is ongoing.

[Baroness Grender (LD)]

My Lords, does the Minister regret that the MHCLG ignored warnings about this crisis from the Leasehold Knowledge Partnership back in 2015? Does she accept that those victims of what the CMA now describes as “significant harm” cannot wait any longer for change? Can she explain to them what happened to Sajid Javid’s promise to change the law before summer 2018? Does she accept that leaseholders’ rights continue to be sold to speculators, with little government protection from everything from doubling of ground rents to extortionate fees for correcting issues such as dangerous cladding?

[Baroness Bloomfield of Hinton Waldrist]

I agree that the legislation has taken a long time in its gestation, but we have done a number of things since Javid’s report in the other place. For example, we have asked the Law Commission to undertake a series of reports, which it will start producing this spring, about standardising the enfranchisement process, so that buying and extending a lease is easier, cheaper and quicker. It is also going to make it easier for leaseholders jointly to obtain the right to manage and review how commonhold works, so that it may become a viable alternative for existing and new homes. Together with the leaseholders’ pledge that we put in place over a year ago in consultation with housebuilders, that has gone some way—but not nearly far enough—towards mitigating the effects of the actions of those housebuilders.