Leasehold Reform (Ground Rent) Bill [Lords]

Jim Shannon Excerpts

Report stage & 3rd reading
Monday 24th January 2022 Commons Chamber

[Matt Rodda (Reading East) (Lab)]

It is a pleasure to speak in this important debate. I express my support for new clause 1; I am grateful to the right hon. Member for Hemel Hempstead (Sir Mike Penning), and to others across the House, for their words tonight and for pointing out the enormous imbalance between powerful developers on the one hand and people buying a property for themselves, who possibly do not have all the information before them that ideally they should, on the other.

I refer to an issue in my own constituency, an attractive modern development on the edge of the town of Woodley, which is part of my Reading East constituency. The Loddon Park development is relatively recent, but there is a clear need for action to be taken. This development is in the south-east of England, a different part of the country from many of the developments mentioned tonight, and while there are some similarities there are also some differences.

Loddon Park is an attractive new estate, built in the past few years in parkland on the edge of Woodley. There are several hundred properties, a mixture of owner-occupied and some social housing. There are many attractive ponds and features, including meadowland, in the development. Unfortunately, when the whole development was given planning permission, the local authority—mistakenly, I believe—allowed the site developer to charge upkeep for those common areas in perpetuity. There is no limit, as I understand it, to the charge that can be made. It is deeply unfair for normal householders—many of them have young families, are commuters who work locally and are facing, like many people across the country, significant rises in the cost of living—to face in addition ongoing costs for maintaining the landscape around their homes. Frankly, that is wrong.

I hope the Minister will consider new clause 1. We have heard arguments from many MPs across the House and from different places around the country, whether in the south or the north of England; we have heard from the Chair of the Select Committee, my hon. Friend the Member for Sheffield South East (Mr Betts), who set out some powerful legal arguments for why this action should be considered. I hope the Minister will look at it again, even at this stage, and will consider further action by the Government and our new clause.

[Jim Shannon (Strangford) (DUP)]

It is always a pleasure to make a contribution in such debates, and it is nice to be here. When we look at amendment 1 and the reasons why the right hon. Member for New Forest West (Sir Desmond Swayne) tabled it, as he expressed in his contribution, it is hard to say that we should not support it.

We must make sure that there is financial fairness for leaseholders, especially long leaseholders who plan to hold a lease for more than 21 years. The issue of ground rent payment has been brought to my attention by my constituents, and the hon. Member for Warrington South (Andy Carter) rightly gave an example of his constituents. An elderly couple in my constituency, who paid their mortgage off more than 15 years ago, are still paying ground rent of more than £50 a year. Although that is not much, I am pleased that the need to abolish this has been recognised. We already changed the legislation in Northern Ireland, so I understand why this Minister and Government are looking forward to making these changes tonight. Many Members have stated that many people have long leases with higher ground rents at the start of their lease, with shorter ground rent review periods. As a result, leaseholders face unsustainable ground rents, so there is a real need to change this, as hon. Members have said.

Leaseholders with high or escalating ground rents will often struggle to remortgage or sell their houses, leaving them in greater financial distress. The Bill aims to restrict ground rents on newly created long residential leases, with some exceptions, to a token of one peppercorn a year. That effectively restricts ground rents to zero financial value. The intention is to make leasehold ownership fair and more affordable for leaseholders. We should support that purpose.

In Northern Ireland, individuals can apply to the Land Registry to buy out their ground rent. In some cases, the individuals cannot afford to pay the substantial sum outright, so I am pleased that the Bill has assurances for long leaseholders and that Government have protected householders. If ground rent is demanded in contravention of the Bill and any payment received is not returned in 28 days, the landlord will face a fine ranging from £500 to £30,000 per qualifying lease. The fines are clear and hopefully prohibitive.

However, there is one substantial problem with the Bill, as others have said: it will apply only to new leases and will not assist existing leaseholders faced with high and escalating ground rents. I feel that they should not be left behind and I would be grateful if the Minister clarified this matter, looked at it again and considered the impact that the situation has not only on finance, but the possibility of remortgaging or selling property.

The Bill’s commencement date has also raised concerns across the House, so I would be grateful if more clarity was given about that. A Bill on broader leasehold reform is expected in the third Session of this Parliament and I would encourage discussion and a closer look at how the situation can be improved to make circumstances easier for leaseholders. Others have said that we just need a wee bit more movement, and perhaps that can be done in the next Session.

[The Parliamentary Under-Secretary of State for Levelling Up, Housing and Communities (Eddie Hughes)]

This is a bit like the Rolling Stones tour in that I said goodbye to the hon. Member for Weaver Vale (Mike Amesbury) and he has come back for an encore, for another concert. However, like the Rolling Stones, it is good to see him back again. I thank all right hon. and hon. Members for their contribution to this debate and for the constructive way in which they have engaged with the Bill throughout its passage. I particularly thank the Opposition Front Bench team for their helpful contributions.

I will address each amendment, starting with amendment 1 in the name of the hon. Gentleman. The difficulties faced by existing leaseholders have rightly been raised by Members across the House, both in Committee and in correspondence. I understand Members’ points about the fact that the Bill relates only to new leases. I point out, however, as I did in Committee, that the Bill is just the first of two-part legislation to reform the leasehold system and that further legislation will follow in this Parliament, so I encourage others, including my right hon. Friend the Member for Hemel Hempstead (Sir Mike Penning), to engage with me in discussions on the second part of the legislation as it begins to form.

The Government understand the urgency of the need for changes for leaseholders paying out unacceptable charges day to day. However, I do not think that the arbitrary deadline in new clause 1 is useful in this context, and similar is true of the alternative deadlines suggested by the hon. Member for Sheffield South East (Mr Betts). Although I appreciate that this is not completely relevant, Madam Deputy Speaker, on what he said about new burdens, the point of legislation such as this is to encourage people to behave appropriately so that they treat leaseholders fairly and there are no cases. However, as the Bill is implemented and we see how it develops, I look forward to discussing with him and the Levelling Up, Housing and Communities Committee the impact that that will have on councils.