Leasehold Reform

Debate between Greg Knight and Kevan Jones

Tuesday 23rd May 2023 Commons Chamber

[Mr Kevan Jones (North Durham) (Lab)]

For most people, buying a house is the single largest investment that they make in their lives. Not only does it provide a home for them and their family, but it is also probably the biggest financial commitment that they have to meet each month. Anyone who has bought a new home knows how stressful and bewildering the process can be, particularly for first-time buyers. The mixture of stress and excitement of owning a new home means that many rely on advice from an array of advisors, including estate agents, lawyers, high-pressure salesmen and developers.

Often, when people are buying a house, they do not look at the issue of freehold and leasehold. They think that leasehold is cheaper, so they think that they will put that all off until the day they can afford to buy the lease. Many are not aware of the feudal nature of the property system in this country. Not only is the system outdated and unfair, but it has been made worse in recent years by the pure greed—it is greed, frankly—of certain house builders and property developers. The number of houses sold as leasehold has more than doubled between 1995 and 2015. The Minister mentioned that the figure has recently gone down. I wonder whether that is because of the scandal to which the Father of the House has just referred.

[Sir Greg Knight (East Yorkshire) (Con)]

I am most grateful to the right hon. Gentleman for giving way. He is making a number of very good points. In the light of what he has just said, does he agree that it is essential that anyone taking on an estate in land, whether it be a leasehold or freehold, receives the best possible legal advice before they sign on the dotted line, so that they know precisely what commitments they are taking on? Are not some of these problems related to the fact that that advice is not particularly good?

[Mr Jones]

I will cover that in more detail later, but it was a point that was raised by my right hon. Friend the Member for Alyn and Deeside (Mark Tami). The right hon. Gentleman is right: the one thing that needs outlawing is a developer or an estate agent being able to refer a person to a solicitor who is supposed to be “acting in their best interests”. That should not happen. The legal advice should be completely independent. There is an unhealthy relationship between those people. It is okay saying that we should blame the individual buying the property, but they are often first-time buyers who do not understand the process.

The issue of flats has already been raised. I accept that we deal with flats in a particular way, but there is a perfectly simple system that is not leasehold. What we have seen over the past few years is houses being sold under leasehold arrangements. That is because certain developers have seen it as a way of maximising their profits. They do it in two ways. The first is by passing the charges on to the owners, when traditionally they should have been paid by the developer—I will come on to examples of that in my own constituency in a minute. The second, which was referred to earlier, is the monetarisation of the actual leases, which are not only being sold to individual companies, but, in some case, being put into baskets of leases. It can be bewildering for a person to find out who owns their lease from year to year.

The other scandal, which was raised by my hon. Friend the Member for Wigan (Lisa Nandy), is around minor alterations. We are not talking about the wholesale redevelopment of a property, but, perhaps, a porch being moved or even a Sky dish being added, which have to be charged. It is no wonder that investors have got on to this. They know that the way that these leases have been constructed can mean a profitable business for them. They are not buying out of altruism; they are buying because they know that they can make money, and the people who are suffering are those who bought the leases.

I have already mentioned the issue of legal advice. Clearly, it is an issue that needs to be looked at. In many cases, if a person goes to some major housing developers, they will be told, “These are our recommended solicitors.” I am sorry, but that should be outlawed. The solicitor should be there to represent the buyer’s best interests. As the right hon. Member for East Yorkshire (Sir Greg Knight) has just said, the solicitor should be there saying, “No, don’t sign that, because it is not in your best interests.”

I know that Members will cite many examples in this debate, but I wish to raise just three in my own constituency. Members will not be surprised to hear that they involve a notorious company, Persimmon Homes, which is terrible at dealing with customers. It has made more than £1 billion of profit every year for the past five years, mainly funded by the Government’s Help to Buy scheme. The Government have done nothing to stop Persimmon’s sharp practices. Between 2012 and 2020, Persimmon built Roseberry Park in my constituency. Traditionally, when an estate is finished, the verges and common areas are passed over to the council, once they have been brought up to adoptable standards. But, lo and behold, on this site, they have not. Those areas are part of the lease, which means that the leaseholders have to take responsibility for the maintenance charges, which then go up and up. If buyers are asked whether they knew about this, they say, no, they did not, which gets back to the point about legal advice made by the right hon. Member for East Yorkshire—should they have signed this when they are taking on open-ended commitments. The site was finished in 2020, but the roads have still not been brought up to adoptable standards. It is anything to save money for Persimmon.

The other case involves Urpeth Grange. It is a small development site of 47 houses on a larger estate. Developers refused to pay the 15 years’ maintenance on an area of land and a play area and have passed it on to a management company, which is then owned by the leaseholders. Part of the planning permission was to have a play area. Well, if it is a play area, it should have been brought up to standard and passed on to the local authority, but, no, that did not happen. Even though everyone can use this play area, it is still the responsibility of the leaseholders. These sharp practices by Persimmon have been used to make more profit, and they are funded by the Government’s Help to Buy scheme.