Leasehold Reform

Emma Hardy Excerpts

Tuesday 23rd May 2023 Commons Chamber

[Lisa Nandy]

The reality is that for so many of us—including myself as a constituency MP—there are few options available to people who find themselves in this situation. My own constituency had the 17th highest number of transactions for leasehold houses in the country last year. We are not just failing to solve the problem for people trapped in the situation; we are compounding it and making it worse, because more people are being sucked into this exploitative system.

[Emma Hardy (Kingston upon Hull West and Hessle) (Lab)]

As well as concerns for leaseholders, many people who own their homes have problems with management companies, which claim they are charging money for the upkeep of communal areas but increase the charges time after time. No one is regulating those companies; they are accountable to no one. Even as Members of Parliament it is difficult to hold them to account for their bad practice. Does my hon. Friend agree that the use of those appalling companies could be the next big housing scandal?

[Lisa Nandy]

It is already a scandal happening in plain sight. For that reason, I hope that we will hear from the Minister when he responds that the Government will commit to implementing the Lord Best working group recommendations as quickly as possible.

This is a huge problem, but it is almost uniquely ours. Virtually every country in the world apart from England and Wales has either reformed or ended this archaic feudal model. We stand as an outlier. The good news is that we know the answer. It has been clear since we received the Law Commission proposals in 2020 that we need new legislation to end the sale of new private leasehold houses, effective immediately after Royal Assent is given. We need new legislation to replace private leasehold flats with commonhold. Lots of promises have been made to that effect, but there has been little in the way of action.

--- Later in debate ---

[Emma Hardy]

The Minister will have heard my intervention earlier. I accept he is talking about leasehold reform, but will he elaborate on management companies, where people own their properties but are charged a management fee for communal areas? Such fees can be increased every year, there are no rules about the extent they can reach, and there is no oversight or regulation of them. Are there any plans for the Government to look at the regulation of such management companies, as some of them—not all—are exploiting people?

[Lee Rowley]

The hon. Lady makes a strong point and I will come to that in a moment. We have shared concerns about specifics, which we have all experienced as constituency MPs—Coppen Estates in North East Derbyshire, I am looking at you—and about the general principle and the broader point, which I will come to in a moment.

We have already taken action. The hon. Member for Sheffield South East has highlighted that we have ended ground rents for most new residential leases. The Leasehold Reform (Ground Rent) Act 2022 came into force last June and prevents landlords under new residential long leases from requiring a leaseholder to pay a financial ground rent. That will ensure that people buying most new leases will not face problems associated with ground rents. However, we remain concerned about the cost of ground rents and, in 2019, we asked the Competition and Markets Authority to investigate abuses in the leasehold sector. Since then, the CMA has secured commitments benefiting over 20,000 leaseholders, including commitments to remove a doubling of ground rent terms and to revert charges to original rates.

We know that there is more to do to tackle unfair practices, however. We know that many leaseholders find the process for extending their lease or buying their freehold prohibitively expensive or complex or lacking transparency. Equally, we understand that many right-to-manage applications fail on technicalities that may be attributed to an over-detailed procedure, and we are committed to improving this by making the process simpler, quicker, more flexible and more effective. That is why, as the hon. Member for Wigan said, we asked the Law Commission to look at the issue, and we are carefully considering the reports that it has since produced on enfranchisement, valuation and the right to manage.