British House Building Industry

George Howarth Excerpts

Thursday 5th September 2019 Commons Chamber

[Sir George Howarth (Knowsley) (Lab)]

It is a pleasure to follow the hon. Member for South Norfolk (Mr Bacon), who made a typically thoughtful and interesting contribution to the debate on housing.

I congratulate my hon. Friend the Member for Mitcham and Morden (Siobhain McDonagh) on her survey of the state of the market and some of the negative aspects of it that we need to address. Anybody who reads her speech in Hansard tomorrow or at some later point will consider some of the companies that she named to be a roll call of disrepute.

On that theme, I wrote to the chief executive of Redrow, the developer, about a leasehold scandal following conversations with concerned residents of Summerhill Park in my constituency. Summerhill Park has over 455 houses and 70 flats. There is a two-tier system of ground rents in operation. Residents who purchased their properties early on in the development pay ground rents of £150 a year, while those who purchased homes in the later phases pay £250 a year. My constituents want to be enfranchised. They want to purchase their freeholds and are willing to pay a fair price. They believe—and I agree with them—that a fair price would be 10 times the annual ground rent, which they think is fair and reasonable and are willing to pay. Redrow, however, is asking for 26 times the annual ground rent, which I think, frankly, is unfair and unreasonable.

In the light of the Government’s reform proposals and the Law Commission’s ongoing work on leasehold reform, I approached Redrow to arrange a meeting to discuss the residents’ ideas further. Redrow contended in its response that the lease agreements are fair and transparent, which my constituents strongly disagree with, as do I. Its business model is considered by many—including, as I am sure the Minister will confirm, the Government—both unreasonable and unjustifiable. The offer of giving residents the opportunity to purchase the freehold at a fixed price of 26 times the annual ground rent is not, in my view—and, I hope, in the Government’s view—reasonable or fair.

In response to my letter, Redrow said:

“it would be inappropriate to move away from the practice that has been adopted over the last two years, with all Redrow households, including those [who] have already acquired their freehold at Summerhill Park.”

I wrote back to say that I did not agree and I would still like a meeting. Surprise, surprise, Redrow said, “There is little point in a meeting.” All Members of this House have a reasonable expectation that if they request a meeting with an organisation or company in the private or public sector to discuss an issue that is of concern in their constituency, they will get that meeting. Redrow arrogantly—not to me, but to the people I represent—declined to hold such a meeting. I deplore that, as I hope others do.

It is unjustified and unfair, and I fail to see how pressing on with that policy is either reasonable or acceptable. Redrow is doing this simply because it can and because it can continue to make money out of the residents I represent in this House. The leasehold scandal has caused a great deal of distress for homebuyers across England, particularly in the north-west, with many homebuyers trapped in their current properties, some unable to afford to purchase their freehold and others even unable to sell their property. Redrow is not unique in this. Other developers are just as involved in this scandal.

[Mike Amesbury (Weaver Vale) (Lab)]

I have a situation in the Winnington part of my constituency of Weaver Vale, where resident Emily Martin and many others are caught in this leasehold trap. In terms of the next phase, people have benefited from the reforms that we in this place have campaigned for, and the properties then become unsellable.

[Sir George Howarth]

That adds to the unfairness of it. Redrow is not unique in this, and all these companies need to look at themselves, the business model they are adopting and the ethics involved.

I will conclude by asking the Minister three questions. First, may I invite her to join me in condemning Redrow and the other companies that are still involved in this practice? Does she agree that the freehold purchase cost of 10 times the ground rent is fair and reasonable, whereas 26 times is sheer daylight robbery? Finally, does she agree that it is desperately important that we have legislation to curtail the naked greed of those developers engaged in this disreputable practice?

--- Later in debate ---

[The Minister for Housing (Ms Esther McVey)]

I thank the hon. Member for Mitcham and Morden (Siobhain McDonagh) for bringing the debate to the Floor of the House and I thank everyone who has contributed to it.

There has been much agreement across the Floor on what we would like to happen, and, more importantly, what we do not like the look of and is not the way forward. None of us can agree with the exorbitant pay packets that some people have received. We are also all agreed that—in the hon. Lady’s words—the market is not working. That is right: it is not. We might have different ways of resolving that problem, but we would say that, if there are not enough houses in the market, it is not working. Various implementation schemes should operate for a short period, until we have ensured that there are more houses in the market, and that is what we are doing.

It has been a scandal how fewer houses have been built decade after decade, but we are turning that around. Let us look at some of the figures. We have delivered more than 1.3 million new homes since 2010, including more than 430,000 affordable homes. In the most recent year, we have delivered more than 220,000 additional homes, the highest level in all but one of the last 31 years. The latest indicators show that we are on track to meet our 2015 manifesto commitment to add 1 million more homes by 2020.

Those who have talked about homelessness will be heartened to learn that, for the first time since 2010, the annual rough sleeping statistics have shown a decrease in the number of those sleeping rough. That reflects the Government’s substantial investment and support over the last few years. But what we want to see is the right houses being built; choice in who is building them; and an SME market, not just a market of the top four or five in the building sector. We as a Conservative Government want to bring back the SMEs; 30% were lost during the financial crash and never came back. We want those businesses back and, more importantly, as my hon. Friend the Member for South Norfolk (Mr Bacon) said, we want there to be the right to build: we want to be able to make sure there are not just a few companies, building thousands of homes, because there could be thousands of individuals making their own homes. That is what we are about: choice and opportunity as we go forward.

We have said we would deliver 300,000 homes by the mid-2020s. That is my ambition and the ambition of the Conservative party. How will we go about it? I have said that we have been delivering more each year, but we want to bring together a centre of excellence for construction and engineering in the north of the country. We want to have a global leader for construction and engineering, bringing forth those technological solutions we have been talking about such as modern methods of construction and environmental innovations in the housing market.

However, let me pick up on some of the things we do not want that many Members talked about. I want to work with the right hon. Member for Knowsley (Sir George Howarth), the hon. Members for Ellesmere Port and Neston (Justin Madders) and for Brentford and Isleworth (Ruth Cadbury) and my hon. Friend the Member for Northampton South (Andrew Lewer). We do not want to see the misuse of leaseholds and the exorbitant costs people are paying. We have brought a consultation forward. We are going to stop the misuse and the bad practices in that field, and we can work on that together from both sides of the House, because we should not have that and we do not want it, and we have already started on that course to make sure it does not happen.

[Sir George Howarth]

I am grateful for that response. Will the right hon. Lady therefore join me in condemning companies such as Redrow for being unwilling to even discuss what residents want?

[Ms McVey]

Companies and businesses should work towards what their purchasers and customers want. Therefore, they should be listening if they want to be the best company they can possibly be. Equally, we are listening as Members of Parliament. We have all shone a light on that bad practice and we will be taking that issue forward.

We are also looking at what housing associations are doing. My right hon. Friend the Member for Rayleigh and Wickford (Mr Francois) has brought forward what is happening with Sanctuary Housing. We have a Green Paper setting out the principles that will underpin a new fairer deal for social housing residents: safe and decent homes, swift and effective resolution of disputes, empowering residents and ensuring their voices are heard.

Although we talk about the industry, we really want to support the people who are living in those houses; we are talking about homes, safety and security. We do not want people in temporary accommodation. We do not want people to be homeless; we want them in permanent accommodation, and that can only be brought about by fixing the market and making sure we build more homes, which is what we are doing.