Leaseholders and Managing Agents

Debate between Barry Gardiner and Jim Shannon

Tuesday 28th February 2023 Westminster Hall

[Barry Gardiner]

I am grateful to the hon. Gentleman for that intervention. He highlights something that is really important to us all: the mental health problems that this issue causes. It is not just a financial issue; it has both physical and mental health implications.

There was one more person to whom I was going to pay tribute. If I left her out, I would be in deep trouble, because it is my own head of office, Jackie George, who keeps a database of more than 7,000 leaseholders in my constituency and who keeps in touch with them regularly.

In 2017, the then Secretary of State, the right hon. Member for Bromsgrove (Sajid Javid), committed the Government to act on leasehold abuses. Specifically, he committed them to legislate to prohibit the creation of new residential long leases on newly built or existing freehold houses, other than in exceptional circumstances; to restrict ground rents in newly established leases of houses and flats to a peppercorn; to address loopholes in order to improve transparency and fairness for leaseholders and freeholders; and to work with the Law Commission to support existing leaseholders. The Government said that would include making buying a freehold or extending a lease

“easier, faster, fairer and cheaper”.

In April 2018, the Government announced that managing agents in the sector would be subject to regulation by an independent body and that a code of practice would set out minimum standards for key areas of activity, including service charges. In October 2019, the then Minister for Housing, the right hon. Member for Tatton (Esther McVey), confirmed in a written statement the Government’s intention to take forward those measures. In 2020, the Law Commission published its report and recommendations.

It is not good enough to say that the Government have been busy with other priorities. Since 2017, we have had seven Secretaries of State and nine Housing Ministers, yet leaseholders are still being ripped off.

[Jim Shannon (Strangford) (DUP)]

I hope to give the hon. Gentleman a chance to clear the frog in his throat, and I congratulate him on securing the debate. Does he agree that the current arrangements, whereby there is no limit on the amount paid in service charges, insurance, ground rent and forfeiture charges, have left leaseholders at the mercy of the unscrupulous? Although we must allow the free market to prevail, that does not preclude the House and the Minister introducing and implementing fit-for-purpose regulation to protect the average leaseholder, who wants a fair bill for a fair service. That is not too much to ask for.

[Barry Gardiner]

The hon. Gentleman is absolutely right. Leaseholders are not asking for special favours; they simply want equity and justice.

The Government’s survey reported that more than 70% of leaseholders regretted buying a leasehold property. In London, and in my constituency of Brent North, the leasehold model accounts for more than 90% of properties sold. I do not believe that my constituents should have to wait a moment longer for basic rights over their own homes, the right to manage, and the right not to be subjected to unreasonable and sometimes fabricated service charges and then bullied into submission by managing agents who threaten legal proceedings and, ultimately, forfeiture.

For my constituents and millions like them throughout the country, the delay is imposing financial penury and severe impacts on their mental and physical health, as the right hon. Member for Stevenage (Stephen McPartland) said. The impacts include those on the residents of Williams Way in my constituency of Brent North, from where one resident wrote to me saying:

“My wife cried last night when I shared a few things about all of this. Management fees have increased: £5,600 in 2020 to £8,400 in 2022—I cannot afford to pay this significant increase. That is a 50% increase. Water storage has increased from £564 in 2020 to £1068—an 89% increase. The insurance premium charged at £5,820.76 in 2021 increased to £20,726.23 in 2022—a staggering 256% increase. A detailed explanation has not been provided.”

Hallmark Premier Estates is the managing agent there, but it is not providing a premier service—just as it is failing to do in Parkside Place in Barham village, where the insurance premium, which was £22,738 in 2021, has risen 108% to £47,415. No wonder I was told yesterday that the landlord would be replacing Hallmark as the managing agents for “unspecified reasons”.

One leaseholder in Lawns Court said:

“I have lived in my flat for 39 years, but I find I can no longer struggle to keep it - the service charges for my one-bedroom flat have risen from £1600 per annum to over £5000 per annum. That is a 212% increase.”

The managing agents there are Aldermartin, Baines & Cuthbert.

At the Living City development in Colindale in my constituency, leaseholders were advised in March last year that after the constant failure of the communal hot water supply to the building over three successive winters, they would receive a rebate on their service charge, only for that offer to be countermanded in October last year. Residents noted that their insurance cover appeared to be paying for associated commercial units, and found that the premium had been increased by 100%. Lift maintenance is also charged, conveniently, on a day rate rather than a job rate: the lift fails, and a day rate is charged to fix it. Strangely, it fails again the following day, and another day rate is charged to fix it again—and so on, day after day, until astronomical charges have been incurred, with the managing agents able to take a management fee every time, of course.

I have written to all these managing agents, challenging them to justify their service charges and other fees, and to none have I been writing longer than Freshwater and its associated companies—at the last count more than 150 linked under the same beneficial ownership. It is because of Freshwater that in 1999 I launched my original campaign for what became the 2002 Act. One of its leaseholders wrote to me from Barons Court in my constituency, saying:

“Dear Barry, every double bed apartment now costs £6000 up from £2600 per year a 130% increase in service charge and we had to pay for the Waking Watch. The management company will not tell us how much commission they receive from the insurance premiums. We arranged our own fire tests and paid for critical remediation work.”

The name of the company FirstPort is well known to many Members. Since 2013, my constituents in Chamberlayne Walk have been challenging unreasonable service charges by FirstPort management services. I say unreasonable but, in fact, the word “fraudulent” is closer to the truth: it even charged for the management of surrounding land that it did not own and was not its to manage. One resident wrote to me about a typical example of its practice, saying:

“I was charged £1725.88 for internal and external decorations (painting of the windows). My windows are UPVC - no redecoration was required.”

Another wrote to tell me:

“The back fill of the stack pipe which causes water to come up into my kitchen sink and has flooded my kitchen on many occasions is still an issue after 15 years of reporting it.”

Yet another person explained:

“My flat is a one-bedroom flat, one of the smallest on the estate and I was charged £2861 for redecorations - almost double the costs levied on the larger 2-bedroom flats this matter remains unresolved.”

FirstPort’s response to those and the more than 500 more complaints like them that I have received is to make no response and ignore things for as long as possible—for months and years, not days and weeks. There is a lack of accountability and transparency over what the residents are charged for and whether the costs are reasonably incurred and reasonable in amount. There is a total failure to provide leaseholders with a breakdown of service charges. Many of my constituents can wait more than 20 months for accounts to be finalised.

Even when FirstPort admits that refunds are owed to the leaseholder because of double counting, overcharging or charging for services not provided, the requests for the return of the overpayments are often ignored, or the returns can take many months to be made. FirstPort also charged multiple administration penalty charges of £60 each when someone queried the costs. One resident ended up being billed for more than £400 of admin charges and was then browbeaten into paying because of the threat of legal action.

In 2019, Nigel Howell, the then chief executive, conceded to me that it was unlawful for his company to impose late penalty fees on leaseholders who had disputed their charges—but not all leaseholders have been refunded. Nigel Howell also confirmed to me that his company had charged costs for areas not under FirstPort’s management and promised that a 20% refund would be given in the following year’s accounts. Strangely, Nigel Howell was removed from his post as chief executive.

After years of suffering, one brave, resilient resident finally took FirstPort to the tribunal. FirstPort sought to rely in its defence on two factors: it tried to rely on the payments made by leaseholders—in other words, by paying up they had intimated consent; and, especially ironic given the FirstPort practice of delay, it tried to rely on the length of time the leaseholder had taken in bringing the challenge to the tribunal.

On Friday 13 January, the last working day before the hearing, I received the following email in my office from my constituent at 5 pm:

“They are settling all of the claim. Their lawyers harassed me all week and made the offer on Friday afternoon, just hours before the hearing this Monday. They did not want this case heard as they have been lying to Barry. They owe money to 202 families.”

Of course FirstPort did not want the case heard in public: section 27A(5) of the Landlord and Tenant Act 1985 states that

“the tenant is not to be taken to have agreed or admitted any matter by reason only of having made any payment.”

Tenants often pay expressly disputed service charges to avoid the risk of forfeiture and preserve their home and the value of their lease.

Of course FirstPort did not want that in the public domain, but it now is, and 200 other families have now been given heart that it is possible to take FirstPort on and beat it. Already, 42 other leaseholders on the estate have signed up to a class action. But the point is that this should not be happening. A code of conduct for managing agents will not do any good. The 1985 Act already provides that service charges must be reasonable and services and works must be carried out to a reasonable standard. The problem is the whole imbalance of power between the leaseholder and the freeholder.

Leasehold tribunals were intended to be a cheap, efficient way of resolving normal disputes between reasonable people without enormous legal costs, but landlords have intimidated leaseholders by engaging vast arrays of lawyers and threatening them with forfeiture and bankruptcy. There is a way to end this misery, but it is not with a new code of practice. Companies do not obey the existing primary legislation; they will not abide by a new code of practice. The way to end this misery is not with the safety regulator. Company law allows companies to avoid their obligations, go into administration while the directors set up new companies and repeat their scams all over again. This misery will end only when we have an end to leasehold. Our country has put up with a feudal system of land tenure for almost 2,000 years. It is time it stopped.

Crisis in Iran

Debate between Barry Gardiner and Jim Shannon

Tuesday 25th October 2022 Commons Chamber

[Barry Gardiner (Brent North) (Lab)]

Why is it still possible to purchase a cheap tourist flight from London to Iran for £158?

[Jim Shannon (Strangford) (DUP)]

Because nobody wants to go there!

[Barry Gardiner]

If the Government’s sanctions are strong enough, surely we should be stopping travel to and from that country.

India: Persecution of Minority Groups

Debate between Barry Gardiner and Jim Shannon

Tuesday 12th January 2021 Westminster Hall

[Barry Gardiner]

I shall refer to the right hon. Gentleman’s remarks later, but at this point I will continue to make some progress. I represent the constituency of Brent North, which only Newham, which includes the constituency of my right hon. Friend the Member for East Ham (Stephen Timms), might be able to rival for diversity of ethnicity and religious faith. Perhaps 40% of the families in my constituency are originally from the Indian subcontinent. Many are Hindu and many are Muslim and I am equally at home visiting the mosque or the mandir.

As a Christian, I remember the appalling murder of the Christian missionary Graham Staines in Odisha. He was burned to death with his two little boys, aged 10 and six, when Dara Singh led a group of Hindu militants who set light to the van that they were sleeping in. I think I was the first person in this Parliament to raise the matter with the then high commissioner, my good friend Lalit Mansingh. As a human being, I also remember that Dara Singh murdered the Muslim trader Sheikh Rehman, chopping off his hands before setting him alight too. Psychopaths and murderers exist in all countries, but when talking of persecution it is important to examine how the authorities in those countries respond to such atrocities. The Indian constitution is, importantly, a secular constitution and it provides for protections of minority communities including Sikhs, Muslims, Jains, Buddhists and Christians. Though different political parties have formed the Government since its independence, all have respected the constitution and worked within its boundaries, so it is important to say that 21 years later, Dara Singh is still serving a life sentence for his crimes. It is also important that he was convicted in the year 2000 when Atal Bihari Vajpayee was the Prime Minister, at the head of a Hindu nationalist BJP Government.

In June 2017, in response to the growing violence of Hindu mobs known as cow vigilantes, it was the current Hindu nationalist Prime Minister, Narendra Modi, who spoke out against that violence and proclaimed that killing people in the name of protecting cows was criminal, illogical and unacceptable. When the Muslim trader Alimuddin Ansari was later lynched by a Hindu mob for allegedly transporting beef, 11 people were sentenced to life imprisonment, including one local BJP worker. That justice was meted out by a fast-track court and was the first case ever successfully prosecuted against such religious extremists in India. The state acted. It did not sanction the atrocities. Are there atrocities in India? Yes, there are. Are they often perpetrated against religious minorities? Yes, they are. Do they represent persecution by the state? No, they do not. Islam is the second largest religion in India. There are 40 million Muslims in Uttar Pradesh alone. As the right hon. Member for Gainsborough (Sir Edward Leigh) said, there are 1.4 billion people in India and the second largest population is Muslim. He spoke of 1,000 attacks on minorities.

[Jim Shannon]

I understand the point that the hon. Gentleman is trying to make, but what has unfortunately not come across yet—I ask him to reflect on this—is the fact that, in the legal system in India, four more Indian states are to introduce anti-conversion laws. That means that 1.3 billion people will be under specific state law and state changes that disadvantage them, and 1.9 million Rohingyas do not have the right of citizenship. I understand the points that the hon. Gentleman is making, but I have to say this: we are here to speak on behalf of those who have no voice. We should be their voice in this Chamber.

[Barry Gardiner]

I am grateful to the hon. Gentleman for making his points so clearly. Let me try to address them. He spoke of Muslims being stripped of their citizenship rights—no. Actually, they are not stripped of rights that they ever had. They were not citizens; they were classed as illegal migrants into the country.

It is very important when talking about India and religious persecution to consider the Citizenship (Amendment) Act 2019. India is one of the world’s top destinations for illegal migrants. Most are Muslims who come from the neighbouring countries of Bangladesh and Pakistan. The Pew Research Center estimates that they number 3.2 million and 1.1 million from Bangladesh and Pakistan respectively. The Act provided a pathway for illegal migrants to become citizens of India where they had been victims of religious persecution in Pakistan, Bangladesh or Afghanistan. It established the important legal principle of non-refoulement by offering shelter to refugees who fled those countries due to discrimination based on religion. It gave that right to Christians, Parsis, Jains and Buddhists.

The Act was passed in both the Lok Sabha, where the BJP Government hold a majority, and the upper Rajya Sabha, where they do not. It sparked riots and outrage because the pathway was not open to Muslims. The argument applied by the Indian Government is that those are Muslim countries, and therefore Muslims coming to India as migrants could not be persecuted religious minorities.

The right hon. Member for Gainsborough spoke about Ahmadiyya Muslims, and I entirely agree with him. The Indian Government say that the legislation discriminates not against Muslims per se, but only against illegal immigrants who do not have a well-founded fear of persecution in their country of origin. There is a basic logic to that argument, and I disagree with it. It is clear to me that if someone is an Ahmadiyya Muslim or a gay Muslim, it is perfectly possible—indeed, highly probable—that they have suffered religious persecution in one of those countries. It is also possible that Christians or Parsis have come without actually having a well-founded fear of being persecuted. They may simply be an illegal migrant, rather than a genuine refugee. Better, in my view, that the law should seek not to treat illegal immigrants on the basis of broad religious categories at all, but to consider each individual case on its merit. However, India is a sovereign country with an established democracy, and I respect its right to enact legislation whether or not I think it clumsy or ill-framed.

As people criticise India for legislation that is giving citizenship to tens of thousands of illegal immigrants, perhaps we should recall that just in December, a British Home Office Minister complained to the Home Affairs Committee that we had been unable to get the French to agree to a policy of turning back migrant boats in the channel. As India enacts the principle of non-refoulement, we are busy trying to do the opposite. Sometimes, as a Christian, I think we would do better to cast out the beam from our own eye, and then we might see clearly to case out the mote from our neighbour’s.