Housing and Planning Bill

Debate between Barry Gardiner and Peter Bottomley

Tuesday 12th January 2016 Commons Chamber

[Sir Peter Bottomley]

(Worthing West): May I pick up the words of my hon. Friend the Member for Bromley and Chislehurst (Robert Neill) on the need for fair outcomes, and may I tie that to the excellent speech by the hon. Member for Poplar and Limehouse (Jim Fitzpatrick), with whom I co-operate on leasehold issues? His new clause 3 talks about commonhold. The Act on that of about 13 years ago did not work. I ask the Government to make sure that by the time this Bill gets considered in the House of Lords, they will put in the simple changes that will make commonhold accessible, before we even get to the point made in the hon. Gentleman’s amendment, which is to transfer all long leaseholds to commonhold.

[Barry Gardiner]

Does the hon. Gentleman agree that had commonhold been part of the conditions for developers, with all new build having to be sold as commonhold in 2002, that would have effected the step-change many of us wanted to see at the time?

[Sir Peter Bottomley]

Yes. I thank the hon. Gentleman for raising that.

Each Member of this House has on average 9,000 leasehold residential properties in their constituency; that is 15,000 constituents. In London, over half the homes owned are leasehold. Over half the homes in the Government drive for more property will be leasehold. They should be commonhold.

The scandals attached to this situation are set out in my contribution to the Queen’s Speech debate in June 2014, when I listed the kind of things that the Tchenguiz interest got involved in, when the old Peverel and Cirrus call button scandal was going on. I make this warning to those who are accumulating bunches of freeholds because they think they are going to get an extraordinary return from charges other than simple ground rent: do not expect that to be left alone by Parliament or the courts. I hope that by the time this Bill gets into the House of Lords, the Law Commission proposals on event fees can be put into legislation, rather than having to wait two or three years for another Bill to come by, and I make this point: any kind of unfair clause should be declared ineffective by the property chambers, the High Court, the Court of Appeal and the Supreme Court because for too long bad freeholders, sometimes with incompetent managing agents, have exploited leaseholders, whether previously from council homes or in the private sector.

I say to McCarthy and Stone, who have come back and may go for a flotation this year, “You try to explain why it is that so many retirement properties that come on to the second-hand market do so at a far lower value than when they were first sold.” Solicitors should warn their clients about the problem. We can solve the problem so that McCarthy and Stone, and our constituents, can have a better future.

[Jake Berry]

I want to speak briefly to new clause 3 proposed by the hon. Member for Poplar and Limehouse (Jim Fitzpatrick). I have some concerns about it and I guess that it was tabled to probe this issue, which is extremely important and on which I think the Government should look to act.

Long leases in the residential sector have been one of the most established forms of tenure in our country for literally hundreds of years. I can remember when I was training as a property lawyer and looked at the leases of the Grosvenor Estate, for which 999 years was the average lease term. I remember thinking, “I’ll be long dead before anyone has to consider this returning to the freeholder.” I draw Members’ attention to my entry in the Register of Members’ Financial Interests: I own some properties on long leaseholds.

It is important to note that although there are problems with long leaseholds and that form of tenure, a lot of them tend to be London-related. In my constituency, leasehold is often a way of protecting areas by stopping inappropriate development, such as the clauses in leases that prevent the development of gardens without the landlord’s or freeholder’s consent. They are an important form of tenure and one that the new clause would abolish by 2020, which probably illustrates its probing nature.

Long leaseholds have advantages, particularly in the area of estate management, where I have personal experience of them. In my professional life, I have set up many estates to be run for the benefit of tenants. They have involved important cost-sharing measures relating to matters such as estate roads and the maintenance of the outside of buildings. It is important that we preserve such measures in any changes that we make to this historic and important form of tenure. That said, the spirit of the proposal seems to relate to estates with service charges and rent charges, and to ask what more the Government can do to ensure that the interests of tenants are protected. This is an important area and I hope that the Government will explore it in more detail in the months and years to come.

A particular issue with leasehold properties occurs when the management company no longer exists. This is a big issue on housing estates. I can think of one in Irwell Vale in my constituency—unfortunately, it was severely flooded on Boxing day—in which the road attached to the estate has been passed to a freehold company. Despite the tenants and other residents of the estate being more than prepared to contribute to the maintenance of the road, it can no longer be maintained. The Government should certainly look into the circumstances in which tenants want to take on the management of an estate. There should be specific provisions for when some freeholders have exercised their rights under leasehold enfranchisement legislation and taken away the landlord’s interest but some leaseholders are still involved. This is a complicated area of the law, but these are not issues that can be resolved by the proposals in new clause 3. I will not support the new clause, but it would be worth while for the Government to introduce some proposals in this important area.

I was working in a law firm when the then Labour Government introduced their proposals on commonhold, and I remember there being lots of seminars on the subject to teach us how they were going to affect property law. It never really happened, however. No one really embraced commonhold. In my view, that was not because we did not tie it to a compunction for a development to offer commonhold, but because it sought to solve problems that often did not exist. A much better route for dealing with problems relating to long leaseholds would be to give the tenants real rights and powers against the freeholder, rather than creating an entire new form of tenure.