Leasehold and Freehold Reform Bill

Debate between Clive Betts and Stella Creasy

2nd reading
Monday 11th December 2023 Commons Chamber

[Mr Betts]

The Father of the House makes a very reasonable point. My point is simply that forfeiture is currently a blanket possibility that can apply to any breach of a lease, however minor, and non-payment of a very small amount could cost the leaseholder the total of the value of their property. That is what we have to stop.

Why do freeholders not have to join a redress scheme? The Committee called for them to be included in the redress schemes. The Secretary of State is bringing in a number of redress schemes and ombudsmen extensions, so why can freeholders not be included?

One of the big issues raised with us, where again there is a lack of transparency, is that many leaseholders have to pay into a reserve fund—a sinking fund—for their property. Can we not have some protection for those funds formally written into law? Currently, many leaseholders have no idea what the money is being spent on. There is no obligation on the freeholder to explain it and certainly no protection that funds have to be used for the purpose for which they are paid.

On mis-selling, one of the big complaints we heard when we met leaseholders—this related to houses in particular; Persimmon Homes has been mentioned, but there were other developers too—was the fact that they were being sold a leasehold as though it was the same as a freehold. The solicitors were compliant in that, because they had been recommended by the developer. Often, a bonus was thrown in: “We’ll give you new carpets in the living room if you use that solicitor.” The Competition and Markets Authority investigated at our request and said there was mis-selling, but so far nothing has been done about it. The Government have done absolutely nothing to rectify that injustice. Can we not see something on that again? I do not think that there is any great conflict across the House, or between anyone who has been involved in this matter. It is wrong—absolutely wrong. Solicitors should not be induced in this way to provide conveyancing to a purchaser, when the developer is recommending that solicitor. It simply is not right and it needs addressing.

My final point is one that we raised on the private rented reforms that the Government will hopefully pursue —and hopefully this year coming, rather than waiting any longer with regard to section 21. We have called repeatedly for a housing court. I know the Secretary of State will explain again why he does not want to do that, but I think we ought to keep asking. There are so many issues in the housing field that need a specialism, and need quick decisions and quick resolution. A housing court would be one way of doing that and of trying to improve the process.

[Stella Creasy]

One thing I think so many leaseholders find frustrating with our current court system and the first-tier tribunals is that they do not set a precedent, so even if we identify something with a freeholder who may have multiple thousands of properties, every single individual has to go through the process if they were not a party to the original case. Does my hon. Friend agree that a specialist housing court could at least have precedent built in?

[Mr Betts]

That is an extremely good point. I do not think the Select Committee actually made that point, but it adds to its recommendations in a very thoughtful and helpful way.

There are a lot of issues, and I am sure we will not resolve all of them in today’s debate, but they need to be addressed in Committee. There are reforms to the proposed legislation that could be made, most of them quite easily. The bigger issue of leasehold flats is for another day, but it ought to be kept on the agenda. I welcome what is in the Bill, which could be the basis for a much-improved piece of legislation. Perhaps we will see an improved Bill come back to us on report.