Leasehold and Commonhold Reform

Debate between Chris Green and Justin Madders

Tuesday 20th December 2016 Commons Chamber

[Justin Madders (Ellesmere Port and Neston) (Lab)]

What we are discussing today is nothing short of a national scandal. It is the payment protection insurance of the house building industry. Every now and again a sharp practice comes to light which is totally unconscionable and of which every reasonable person would say, “We cannot allow this to continue. Parliament must act.” This is one such occasion.

I congratulate my hon. Friend the Member for Poplar and Limehouse (Jim Fitzpatrick) and the hon. Member for Worthing West (Sir Peter Bottomley) on securing this important debate and on their excellent contributions today. They should also be commended for their work on the all-party parliamentary group and for shining a light on a situation that is a national disgrace. As we have heard, there is a huge range of issues underneath the misleadingly simple title “leasehold”, and I hope that today’s debate will bring about progress in resolving some of the huge injustices that I, too, propose to speak about. I echo the tribute paid to the Leasehold Knowledge Partnership for the excellent professional assistance that it has provided to us and to the many homeowners affected by the issues discussed today.

Thousands of people around the country who bought new homes in good faith are the victims of what can only be described as a racket by some of the country’s best-known developers, who between them have received millions of pounds from taxpayers to provide affordable homes and have also been the recipients of generous subsidies as a result of policies such as the Help to Buy scheme. As we know, the practice that has developed is to sell new homes on a long-term lease, with a misleadingly low ground rent and buy-out price. This practice has become common in my constituency over the past few years and, contrary to what is asserted by some developers, it is not a tradition in my constituency. It now seems to be part of the business model of a great many developers. It is a clever way of selling more units, by dropping the asking price a little to reflect the fact the property is leasehold, but failing to make it clear that in the long run the homeowner will pay far, far more than they would have done if the property had been freehold.

[Chris Green (Bolton West) (Con)]

Does the hon. Gentleman agree that when ground rent or other charges double, it would be usual to expect double the service? As this is not the case, it goes against natural justice.

[Justin Madders]

I thank the hon. Gentleman for his intervention. I know that his constituency is affected by the issue. I have yet to see any evidence that higher ground rents result in any kind of service, particularly for the properties that I am talking about. Obviously, leasehold flats are a slightly different matter. I remember when it was common, if there was a leasehold, for the rent to be described as a peppercorn rent. The implication was that that was nothing other than a symbolic exchange.