Leasehold Reform (Ground Rent) Bill [Lords]

Debate between Catherine West and Lucy Powell

2nd reading
Monday 29th November 2021 Commons Chamber

[Lucy Powell]

My good and hon. Friend makes an extremely well-made point. The practice of new homes being built as leasehold, and sold as leasehold—buyers often do not even know that at first—has got out of all kilter lately, especially in north Wales and north-west England, where it has been a particularly egregious practice. I welcome this Bill, albeit that it is a bit too little, too late, but it does nothing to protect those trapped in the injustice of leasehold. It does not do anything for those facing excessive ground rent increases today or yesterday, nor does it put an end to some of the most egregious practices, such as selling new houses as leasehold.

The ground rent scandal typifies everything that has gone wrong with our housing market. Housing has become a commodity to be traded, packed up in financial products and thrown into an unregulated market. Large-scale developers and investors have been given free rein to create ever more complex financial products, in order to squeeze money out of homeowners. Many people do not even realise when they buy their house that they will not own the land underneath it, as my right hon. Friend has just made clear. Even worse, the leases often contain clauses that double the ground rent—in some cases, every 10 years, which means that a homeowner in a property worth a modest £200,000 might pay £10,000 a year in ground rents after they have owned the property for 50 years or so.

[Catherine West]

Does my hon. Friend share my concern that this has got so out of hand? The amounts being charged are rising in excess of the retail prices index, which we would expect to be a basic marker. People feel trapped, in that they cannot sell on.

[Lucy Powell]

Absolutely. My hon. Friend makes a really good point. People are trapped in this situation, because we all know that when we look to buy a home, we look at the overheads, and the ongoing service charges, ground rents and other costs. In recent years, those things have rightly been added to the affordability criteria, so people often cannot get a mortgage for these homes. That leaves the people living in them trapped in that situation with an unsellable home.