Leasehold and Commonhold Reform

Gareth Thomas Excerpts

Tuesday 20th December 2016 Commons Chamber

[Ruth Cadbury (Brentford and Isleworth) (Lab)]

Before I start, Madam Deputy Speaker, I would like, on behalf of the Opposition Front Bench, to wish you, your staff and all the staff of the House all the very best for Christmas and a very happy new year.

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 thank them for their work with the all-party parliamentary group on leasehold reform. I thank the Leasehold Knowledge Partnership and the House of Commons Library for the work they have done in supporting me and other Members in preparing for this debate.

The majority of people in this country aspire to own their own home, and for those lucky enough already to own a home or to be able to buy, a leasehold property often suits their needs better than a freehold house. Long leaseholders are in a landlord-tenant relationship with the freeholder. The rights and obligations of the two parties are governed by the terms of the lease agreement, which is supplemented by statutory provision. When it works, leasehold is fine—the hon. Members for Plymouth, Sutton and Devonport (Oliver Colvile) and for Worthing West spoke of their personal experiences—because there are transparent charges, well-itemised and properly justified service charges, appropriate resale values, and so on.

Homeowners want and deserve security and safety, but this debate shows that for far too many, their dreams of home ownership have turned into a nightmare. When one has worked hard to save up to buy a home, and budgeted to pay for servicing any loan and other costs that one reasonably expects, one should expect security and then to be able to plan for one’s future.

Probably all MPs represent leaseholders of one category or another. As we have heard, many MPs have examples from their casework of issues that have been brought to this debate. Too often,

“leasehold property sells buyers short at every step.”

Those are not my words; they were in an excellent article in a paper I do not usually read—the Daily Mail—in September 2015. Leaseholders are finding problems they had not expected when they bought their home. I think that “duped” was the word used by my hon. Friend the Member for Ellesmere Port and Neston (Justin Madders). These are some of the examples that we have heard about: managing agents imposing arbitrary and multiple charges; lack of transparency of service charges that are way overpriced; estate owners such as those mentioned by my hon. Friend the Member for Poplar and Limehouse having no right to a tribunal on charges; unexplained and unforeseen increases year on year—sadly, in my experience in Brentford, housing associations are sometimes among the worst culprits; and the cost of extending leases when they drop below the 70-year, or even 60-year, period. I was pleased to learn a bit more about hedonic regression from the hon. Member for Worthing West; I thank him for that.

We have heard about exorbitant charges for capital works on common parts, with little advice on how to pay. Too often, sadly, local authority landlords are some of the worst culprits in this regard.

[Mr Gareth Thomas (Harrow West) (Lab/Co-op)]

I apologise to the House for being unable to be here for the start of the debate. May I offer my hon. Friend another example that demonstrates why the leasehold system needs reform? The residents of Platinum House, owned by Luke and Brian Comer, in my constituency have sought to secure the right to manage, yet the owners have used a whole series of tricks to delay the exercise of that right. Does she think that is a further example of the need for reform?

[Ruth Cadbury]

I thank my hon. Friend for that excellent additional example where the right to manage has been proved not to be as simple and straightforward as it should be. Too many people who want to manage their property collectively with their neighbours are finding it too difficult and costly with too many hurdles.

We have seen many complicated hurdles put in the way of leaseholders exercising their right to manage or the right to enfranchise. Dispute resolution procedures are complicated and costly. Lessees are having to pay the landlord’s legal costs. Resale charges are up to 20%, which then suppresses resale values. I ought to declare an interest in that this happens particularly in the retirement sector, and my mother has just bought a flat in a retirement community. There are the questionable tie-ups between freeholders and managing agents, and the solicitors they recommend, as mentioned by my hon. Friend the Member for Ellesmere Port and Neston. There is the scandal of lease forfeiture, again brought to the debate by the hon. Member for Worthing West. New homes on their own plots are being sold by volume housebuilders on 999-year leases when they could be freeholdings. Despite advice given to many first-time buyers in these instances, I must say that no, 999-year leases and freeholds are not one and the same thing.