Leasehold and Commonhold Reform

Hilary Benn Excerpts

Thursday 21st December 2017 Westminster Hall

[Sir Peter Bottomley]

I think people will accept that. I ought to say that we are not trying to solve all the problems with all forms of housing in one short debate. I will try to limit my remarks and leave space for others to bring up issues, although we do not expect the Minister to answer every point today. The Government’s announcement was welcomed by most people in the field as a step forward that is less than is needed but is dramatically more than anyone had expected.

[Hilary Benn (Leeds Central) (Lab)]

I join my hon. Friend the Member for Alyn and Deeside (Mark Tami) in congratulating the hon. Gentleman on the work he has done on this and on securing the debate. While the legislation the Government have announced to ban the practice in the future is, of course, very welcome, many people have already been caught by the scam, including constituents of mine who purchased leasehold homes from Miller Homes in my constituency, in Hunslet. They have found that the company that the freehold has been sold on to is now asking for unreasonable charges in order to buy out the freehold, which they cannot afford. Does he agree that, as well as the original housebuilders being asked to set up compensation schemes, as the Government propose, they should be required to do so? Otherwise, people can find themselves in a home that they cannot actually sell.

[Sir Peter Bottomley]

That matches the problems of some park home owners. If I had the time, I would get into the activities of Barry Weir, the Smart family and various others who have ruined people’s lives.

On solving the doubling of ground rents for residential properties, whether houses or flats, it is quite clear that there are three approaches that will work. The first is trying to deal with the problem with the first buyers. I congratulate Taylor Wimpey and Countryside on trying that, and pay tribute to them and their shareholders for making that decision. The Minister will write to the other companies to ask what they will be doing. I am grateful for that. However, that does not solve the problems for the second-hand buyers.

The second is changing the unfair terms, which are in either leasehold or some freehold contracts, where people cannot make changes without getting permission, which can be expensive. That is added to by the problem that, when a leaseholder or interested resident tries to challenge something, the property tribunals have not always worked properly.

The cost of a leasehold valuation tribunal was supposed to be limited to £500. However, as Mr Dennis Jackson discovered, he was about to lose £600,000 of equity after he and another elderly leaseholder challenged some costs. They were awarded three quarters of their claim, but then the costs went out of control. His home was going to have to be forfeited, and the surplus after the costs were paid would not go to him or his mortgage company—it would have gone into the hands of the freeholder. That cannot be right, and it has to change. The law on forfeiture is another thing I hope the Minister will be able to tell us about, either today or next year.

--- Later in debate ---

[Mr Howarth]

My hon. Friend makes a very good point. Was someone else trying to intervene?

[Hilary Benn]

If my right hon. Friend is offering, I will.

[Mr Howarth]

I did not have my right hon. Friend in mind, but I can never resist giving way to him.

[Hilary Benn]

My right hon. Friend is most kind. Listening to the powerful testimony on all sides of this Chamber, peeling the layers of an onion to see the full nature of this scandal, does he agree that it is impossible to reach any other conclusion than that the developers are responsible for this? They must have known what they were doing and what they hoped to gain by selling the freehold on to others who then engaged in the sharp practice that we have heard about. They bear the responsibility. The law will stop them from doing it anymore, but they also need to compensate people. Bearing in mind what has happened to developers’ profits —Miller Homes, which I mentioned earlier, announced earlier this year a 44% increase in their pre-tax profits—they can afford it, and they have a moral responsibility to compensate people they have put in an untenable position.

[Mr Howarth]

I am glad that I gave way to my right hon Friend; the point he makes is right. People should be compensated for what has happened to them. It is disgraceful and it should never have happened.

I conclude by asking the Minister—I realise that it is quite a delicate thing to do—to consider whether the Government can discourage developers from disposing of freeholds to management companies until it is clearer exactly how this problem will be tackled? That would be very helpful. I realise that it is a tricky area legally speaking, as we heard from the hon. Member for Witney. Nevertheless, I would certainly welcome whatever could be done to discourage or freeze any further transactions for the time being, and I know that all my constituents who have been affected would welcome that, too.