Freehold and Leasehold Reform

Derek Thomas Excerpts

Wednesday 5th July 2023 Westminster Hall

[Derek Thomas (St Ives) (Con)]

I certainly find little to disagree with in the speech made by the hon. Member for Ellesmere Port and Neston (Justin Madders) and I commend my hon. Friend the Member for Dartford (Gareth Johnson) for bringing this issue to the House. The problem is prevalent. Many of my constituents are stuck in this time warp of managing their leasehold property, which they never expected to have to do.

As we have heard, there is cross-party consensus on the need for leasehold reform. I cannot put it better than the Government did themselves:

“The existing residential leasehold system is fundamentally flawed. It has its roots in the feudal system and gives great powers and privileges to landowners. Despite a series of reforms over the last thirty or so years, abuses continue to flourish causing misery and distress to leaseholders.”

Since then, the Government asked the Law Commission to advise on reform and made a manifesto commitment to advance it. They fulfilled the first part of the Law Commission’s recommendations by passing legislation to reform ground rents, but delayed on the second part, on reforming existing leases. Constituents write to me every month to ask when the second part will be introduced. They think the Government are wasting time. Their leases are a wasting asset; losing time means they lose part of their property.

We know that a property-owning democracy gives people security and the power to make choices, control their own lives, build their communities and plan for the future. Leasehold ownership puts limits on that power, and the Government’s delay to reforms is preventing homeowners from making plans for the future. Take the confusion about whether marriage value will be abolished so that leaseholders no longer have to pay a premium to extend a lease that has less than 80 years to run. One of my constituents, Stephen, holds a lease on a property with the National Trust. There are 81 years remaining, and he has to decide whether to pay for a new lease now or wait to see whether the Government will carry out their promise to abolish marriage value.

Another constituent, Amy, owns a leasehold property in London, which she has been trying to sell. She has very sensibly moved to my constituency to start a new life with her partner, but she cannot sell her property because of safety defects that have not been remedied. I will come back to Amy in a minute.

My constituency includes the beautiful Isles of Scilly, which have been exempted from leasehold reform in the past. The off islands and parts of St Mary’s are owned by the Duchy of Cornwall. The Duchy’s leasehold properties were shielded from enfranchisement because of their long historic or particular association with the Crown. Regardless of whether or not those properties should still be exempt from the Government’s reforms, the Duchy is waiting to see what the Government’s plans are before it even extends leases.

One of my constituents has been trying to extend the lease on his property for nearly two years. He runs a business from the property and needs to plan for the future. On each occasion, he has been advised by the Duchy to await leasehold reform. I have met the Duchy to challenge and address the situation. It is also faced by many constituents who are waiting to hear the guidance from Government, as it will have an impact on them.

I have worked with the Duchy and know its intention is to keep islands as a living community. The Duchy is not one of the ground-rent grazers we have heard about. It leases all untenanted land on the islands to the Wildlife Trust at a peppercorn rent of one daffodil a year. Some remnants of feudalism are charming; leasehold is not. Government should push forward with their plans for reform. This afternoon has shown that there is cross-party support.

I want to return to the specifics of Amy’s case. Amy moved from her flat in London three years ago to set up home with her partner, now her husband, in my constituency. She owns 50% of a one-bedroom shared-ownership flat. The housing association is Metropolitan Thames Valley, and the developer Mount Anvil. She put her flat on the market in August 2020, but it quickly became clear that it would not be sold, as it is unmortgageable under the current Royal Institution of Chartered Surveyors guidance. Since then, she and I have been battling to get more information from Metropolitan Thames Valley housing association. It has undertaken inspections that show that cladding is not an issue, but there are missing firebreaks, and concerns about wooden walkways and balconies. Those relate to building regulations from when the housing was first built and are nothing to do with Grenfell Tower. Without those issues being fixed, under current guidance, Amy cannot get an EWS1 and, as such, cannot sell. Her building is under 18 metres, so she does not get the protections that others do.

The Building Safety Act 2022, which we all promoted and voted for, covers a lot of cladding, but is still very murky on other fire-safety defects. Under the new waterfall system, the first person to fix and pay for those issues should be the developer. In this case, that is Mount Anvil. We are told by Metropolitan Thames Valley that Mount Anvil had engaged in conversations but has been less receptive recently. I know from my own work, personally through my office and through Government Departments, that Mount Anvil is not meeting the expected requirements. As a result, potentially 50 properties in that block of flats are not in a state in which they should be and cannot be sold. There is no indication or hint that remediation work will start any time soon.

Amy has been allowed to sub-let her property, simply because it was unaffordable for her not to. She does not want to be a landlord. She pays a lot of tax on it as a result, and 50% of the property is owned by the housing association. The housing association has also added £50 a year to her charges, on a property she does not want to own. She wants to sell and is not being allowed, simply because of delays in leasehold reform. While she has shared ownership, she cannot get another mortgage. She and her husband live in a section 106 affordable home in Porthleven. They would move out of it tomorrow, releasing two affordable homes to other families, if they were in a position to sell the shared-ownership property. She cannot remortgage because of the issues around her property so she has had to extend her mortgage with Nationwide, which has allowed her to do that for significant extra monthly costs. She is paying another £200 a month for her mortgage, another £50 a month for her service charge, and there is no information whatsoever from the housing association or the developers about when they will do the work and there has been zero progress with Mount Anvil. The building is missing firebreaks, which have always been required under building regs.

In August, it will be three years since she tried to sell the property and started this journey. To this point we have not been able to resolve it and in that time she has had to pay a further £5,000 to deal with the lease extension, so she now has a 999-year lease, but, to add insult to injury, the Land Registry has said she will not receive the documents she needs for a further two years, which will make it even more difficult for her to sell her property.

The simple solution is for the Government to deal with Mount Anvil and the housing association and get them to do the work they should be doing, not just for Amy but for the owners of all such properties, as well as to further progress leasehold reform, which we have all been asking for and have been promised.