Leasehold Reform

George Howarth Excerpts

Thursday 11th July 2019 Commons Chamber

[Sir George Howarth (Knowsley) (Lab)]

Given that it is Wimbledon week, it is nice to see you in the umpire’s chair, Mr Speaker. It is a great pleasure to follow the hon. Member for Harrow East (Bob Blackman), who made a good case that I fully support. I should also compliment my hon. Friend the Member for Sheffield South East (Mr Betts), the Chair of the Select Committee, who, as ever, displayed a detailed and thorough knowledge of the subject.

According to the House of Commons Library, 27% of all new house sales in the north-west in 2018 were on a leasehold basis. In my constituency, about 1,320 have been sold on that basis in the recent past—261 in the past year alone. As we have heard, the current arrangements allow landowners to retain a level of ongoing management and the ability to secure income. For leaseholders, there is a range of problems, most of which we have already heard about, including with transparency on what they are charged for, disproportionate service charges and freeholds being sold on to a third-party.

Let me give a couple of examples from my constituency to show how the current situation has affected real people. Helen Spree is the owner of a Redrow property in my constituency for which she pays a ground rent. She is limited by a restrictive contract that dictates what she can and cannot do with her home. She is concerned that the freehold will be moved to a third party which, as we have already heard, happens frequently, without any notice or consultation. To purchase the freehold, it will cost her 26 times the current annual leasehold payment. That amounts to around £7,000. In addition, she would be required to pay Redrow’s legal fees, as well as her own, if she wanted to purchase it. By any standard, that is outrageous.

Another constituent of mine, from Earle Avenue, does not want to be named. He bought his property as the second owner—he was not the first person to buy it—in 2014, and planned, not unreasonably, to install a conservatory. He was told by a neighbour that Bellway would charge £350 for the privilege. When he approached the freeholder’s representative, he was informed that that £350 had gone up to £2,600. All he wants to do is build a conservatory, and he has to pay the freeholder £2,600 to do so. In addition to that, he would have to pay administration charges. Four months after he moved in, Bellway sold the freehold on his house to an investor; he found out only when he received a letter telling him so. He is restricted in respect of retaining his mortgage with his existing mortgage company, because under the terms of his lease he is required to inform the freeholder if he wants to change providers, and pay an additional £108 charge to the freeholder for doing so.

I have one further example that I will not go into at any length. A constituent of mine called Mr Eric Barry lives in a flat in Briton Court in my constituency. He is currently being charged £1,692 a year in service charges. There is a long list of things that the company, Moreland Estate Management, is supposed to do for that money, but Mr Barry contests whether it bothers to do it, or does it with the required frequency. It is an outrage. The worst thing about it is that he took the matter up with me a year ago, and I wrote to the estate management company, Moreland Estate Management, but I have still to receive a reply from them to a letter that I wrote on behalf of a constituent.

We have heard in great detail what a scandal all this is; it is about time it was sorted out.

--- Later in debate ---

[Mrs Wheeler]

I will not give way, as I have a lot to get through and I believe I have some answers for people.

On the leasehold house ban, I am pleased with the profound impact our original announcement and the work of campaigners have had on the market. When we made the announcement in 2017, 11% of new build houses in England were sold as leasehold, whereas today the figure stands at 2%—I repeat that it has reduced to that level. Despite that progress, we will still legislate to ensure that in the future—save for in the most exceptional circumstances—all new houses will be sold on a freehold basis. Developers will no longer be able to use leases on houses for their own financial gain, a practice that had become the norm in some regions of the country and, as we appreciate, particularly in the north-west. These reforms will remove the incentives for developers and freeholders to use leasehold to make unjustified profits at the expense of leaseholders, and we will be pressing ahead as soon as parliamentary time allows.

On the matter of where ground rents are so high that it—

[Sir George Howarth]

On a point of order, Mr Speaker. The Minister has just said that she would want to press ahead as soon as parliamentary time allows. I wonder whether you could confirm that the one thing this Parliament is not short of is time.

[Mr Speaker]

If it were for the Chair to decide, I would happily allocate time to all sorts of worthy purposes, but, sadly, the powers of the Speaker do not extend that far. If the right hon. Gentleman is bidding to increase my power, far be it for me to say no.