Leasehold Reform

Chi Onwurah Excerpts

Thursday 11th July 2019 Commons Chamber

[Chi Onwurah (Newcastle upon Tyne Central) (Lab)]

I congratulate the Select Committee on its report. The fact that in 2019 so many British people owe their homes to a feudal property relationship is absolutely astonishing. I am proud that the Labour party has announced that it will end this ancient and anachronistic practice and ensure justice for leaseholders.

I want to use the brief time that I have to highlight the ongoing misery of constituents whose case I raised in my Adjournment debate of 1 November 2017; one is watching here today. As you know, Mr Speaker, the St Thomas area of Newcastle is one of the most beautiful parts of what is a very beautiful city. It has a large number of fine houses that anyone would be proud to call home, but for some they have become a prison—the families with children uncertain whether they can afford to pay mortgages that they cannot change; a refugee whose family have outgrown their home but who cannot sell it; a pensioner who wants to move to be near her grandchildren but cannot do so; and a couple in their 70s faced with six flights of stairs and rising maintenance costs. The charity that owns the freehold, the St Mary Magdalene and Holy Jesus Trust, refuses to extend their leases or sell the freehold. The trust was formed to support the Freemen of Newcastle, who also date from feudal times and the ancient guilds of our city. Today they are not generally considered to be among the poorer members of our society.

Section 172 of the Housing Act 1985 restricts the 1967 legislation to exempt charities from selling or extending the lease of houses on their land. The National Trust is in a similar position and, in response to the Committee’s consultation, offered to buy back properties whose freehold it did not want to sell. In the past, the Mary Magdalene Trust has offered to sell the freehold, but more recently it has changed its position, apparently to maximise its land assets. In so doing, it is causing misery.

The Minister is familiar with the situation and in the past has reassured me that a solution was in the works. My constituents had their hopes raised when it was reported that the trust was willing to sell the freehold, but in fact it was willing to charge residents thousands of pounds just to consider the option of perhaps allowing them to extend their leases for tens of thousands of pounds more. I hope the Minister will condemn that behaviour by the trust.

I also hope that the Minister will condemn the Charity Commission, which, in some disgraceful correspondence with me, said that it would be wrong for the trust to forgo the income that it could receive—presumably when the leases expire and my constituents are dead or on the streets. This is an organisation whose chair, Baroness Stowell, recently said:

“Charitable aims cannot justify uncharitable means”,

and:

“All charities, not just the big ones, have to recognise that they have to demonstrate charitable behaviour and charitable attitude.”

Does the Minister view what I have described as charitable behaviour? Will she ensure that the trust follows the example of the National Trust and offers to buy back leases at market value? Will she press the charity to allow the option of enfranchisement, as committed to the Minister previously? Or will she leave the residents with no option but to await a Labour Government and justice for leaseholders?

--- Later in debate ---

[Sarah Jones (Croydon Central) (Lab)]

I congratulate my hon. Friend the Member for Sheffield South East (Mr Betts) and all the other members of the Housing, Communities and Local Government Committee on such a powerful report, and I thank the 700 or 800 people who got in touch with the Committee to give their views. We have heard this afternoon how powerful the feelings are across the country. I thank the APPG, of course, the Leasehold Knowledge Partnership, of course, and the National Leasehold Campaign, of course, all of which have done extraordinary work in this area. I also pay tribute to all the Members who have spoken today, but I give particular thanks to the Conservative Members on the opposite side of the House. It is not necessarily comfortable for an MP to stand up and call for action from their own Government, but they have done that well and with dignity and great conviction.

We have all heard some of the stories many times, and the time has come to act. One in four homes in this country are leasehold homes, which means that up to 6 million people have basically bought homes that they think they own when they do not. We have heard horrific cases of people trapped in homes they cannot sell, people being ripped off with extortionate service charges, and people being threatened with eviction for absolutely no good reason.

No other major economy has this feudal-style system. Every other major economy has moved away from leasehold and towards fairer, more transparent systems of ownership. Scotland has abolished leasehold, transferring all properties held on long leases to outright ownership, and action has been taken in Northern Ireland. Other countries have demonstrated that alternative models of ownership can work. There are co-op models, and the Australian system has spread to other countries—Canada, New Zealand and Singapore. This is being done everywhere else, but not in the UK.

This week, the Labour party announced a policy that will bring leasehold into line with every other major economy, and I brought a copy of the document with me today. We do not have many printed copies, but I have one here for the Minister, because she will hopefully appreciate reading it. We talked to the Law Commission. We spent a lot of time listening to the debates, reading the Select Committee’s report, and listening to the APPG and the campaigners, and we talked to property lawyers. Our policies are comprehensive and sensible, and worth being looked at by the Government. There are two parts, and the first is what we do with new leasehold properties going forward.

Of course, there is no argument at all for new leasehold houses. We should be looking to abolish new leasehold flats, too. The second part of the package, of course, is to help the up to 6 million people living in leasehold homes by giving them new rights and saving them thousands of pounds.

The Government have paid lip service to this. They know the system is broken and they have acknowledged the problem, but they have failed to act. As my hon. Friend the Member for Leigh (Jo Platt) said, they have made over 60 announcements on leasehold since 2010, but none of their proposals is aimed at helping the 6 million people trapped in leasehold homes right now and none of their proposals has led to any legislation.

Going beyond that, as has already been mentioned, the Government are actually propping up the system. The number of leasehold homes is increasing and £1 billion of Help to Buy money has gone directly to new leasehold homes, which is nothing less than a scandal.

As my hon. Friend the Member for Heywood and Middleton (Liz McInnes) said, Labour proposes to end the sale of new leasehold houses, with direct effect, and to legislate to end the sale of new leasehold flats. We want existing leaseholders to be able to buy the full freehold ownership of their home for no more than 1% of the property’s value. Where does the 1% figure come from? It was suggested by the Law Commission; it is well evidenced; and we think it could work.

Labour would end ground rents for new leasehold homes, and as has been said, we would cap them for existing leaseholders at 0.1% of the property’s value, up to a maximum of £250 a year. Again, where does that come from? It comes from the Select Committee, and the hon. Member for Walsall North (Eddie Hughes) has tabled the Ground Rents (Leasehold Properties) Bill, too. Again, the proposal is well evidenced and sensible.

Labour would give new rights to empower leaseholders to hire and fire their managing agent, or to take over the management of their home themselves. Importantly, we would crack down on unfair fees and contract terms by publishing a reference list of reasonable charges, not dissimilar to that which the Government introduced in the Tenant Fees Act 2019. We could have a similar system. We want to see transparency, which we would introduce on service charges, and we want to give leaseholders a right to challenge rip-off fees. As we have heard, such fees are complex, difficult and expensive.

We think the formulation of acting “whenever parliamentary time allows,” after nearly 10 years of Conservative government, is unacceptable. As the hon. Member for The Cotswolds (Sir Geoffrey Clifton-Brown) said at the start of the debate, this feudal system has been in place for around a thousand years. After a problem has existed for a thousand years, parliamentary time should allow for us to act. As my hon. Friend the Member for Ellesmere Port and Neston (Justin Madders) said, Labour Members and Conservative Back Benchers would support such legislation if it were introduced by the Government.

I end with a series of questions, which I would be grateful if the Minister answered. Does she recognise that we are the only developed country in the world that has failed to move away from the feudal leasehold model? Does she accept that the number of leasehold homes has gone up, and is still going up? Does she accept that 100,000 people are trapped in unsellable homes because of the leasehold scandal?

[Chi Onwurah]

Some of them are my constituents.

[Sarah Jones]

Exactly. If the Minister does not accept that 100,000 figure, what work is her Department doing to understand what the number is? What possible reason can she give, after the 60 announcements and the body of evidence we have heard of today, for legislation not having been introduced? When will the legislation be introduced? Can she confirm that none of the Government’s proposals will help the up to 6 million people who are currently leaseholders, and what will she do about it? England is the only place in the world that has failed to move away from this system, and it is time we caught up.