Freehold and Leasehold Reform

Jim Shannon Excerpts

Wednesday 5th July 2023 Westminster Hall

[Jim Shannon (Strangford) (DUP)]

I thank the hon. Member for Dartford (Gareth Johnson) for leading this important debate on leasehold reform, or fleecehold as it might be for some people—I think everyone who has spoken has said that. As often happens in this House, whatever our political aspirations or affiliations, we have been bought together by this joint issue. It is always a pleasure to follow the hon. Member for Congleton (Fiona Bruce). We have been together twice in one day in Westminster Hall—we were here at 9.30 am and came back for more at 2.30 pm—and we have also had many meetings today on various issues. It has been a busy day for us all.

I have spoken on this issue many times in Westminster Hall and in the Chamber. I have raised the importance of protection for tenants regarding their leases and concerns about rising costs for ground rent. Security of tenure is imperative for our constituents, and we have to do all we can to assist them in these matters. All Members present put forward a clear case on behalf of their constituents, and I want to do the same. I look forward to the response from the shadow Minister, the hon. Member for Greenwich and Woolwich (Matthew Pennycook), whose requests will be as illustrative as ours. I look forward to the Minister’s comments as well. As others have said, she has indicated a willingness to respond in a positive fashion to try to address these issues. Time is of the essence. That is the main point that has been put forward, and I wish to make that point as well.

In the past, colleagues of mine have raised the issue of leasehold reform in Northern Ireland. I will echo their comments and reinforce their importance. More than 4,000 Northern Ireland homeowners bought property under right-to-buy legislation, but they may struggle to resell their homes due to the fact that it is extremely difficult to obtain a mortgage on properties with less than 85 to 90 years left on the leasehold. Many constituents are only now becoming aware that many years of their leasehold have expired, making it extremely less likely that they will be able to sell their home. In addition, banks and building societies will not lend money to cash-buy those types of properties, so the hope that another cash buyer would even consider purchasing these types of homes in the future is slim or, indeed, non-existent. In theory, this will seriously disadvantage those working people and families who aspire to own their own homes but do not have the capital to purchase a home outright.

One of Margaret Thatcher’s policies—she had many policies; I did not agree with them all, by the way—was that people should own their own homes. I always thought that was as it should be; people aspire to own their own home and if we can help them to do so, we should. However, the Northern Ireland Housing Executive has stated that there is currently no statutory provision to help deal with the problem that we are discussing today. From 1 April 1997 to 31 March 1998, 4,111 flats were sold with leases of 125 years or less. That leads me back to my earlier point that people are less likely to purchase such homes because the leasehold and ground rent can be quite debilitating. The Northern Ireland Housing Executive does not hold information for housing associations—they are different organisations, but still control some properties—so the number of people affected will be much higher.

I am aware that this debate is centred on England, but I always like to give a Northern Ireland perspective. Everybody knows that; I think Members expect it to be the case. It is how we illustrate the issues. In this great House, of course, we represent four regions—four nations within one—and it is what brings us together that cements and strengthens our position. This issue is a UK-wide issue and it must be addressed UK-wide. When the Minister responds to the debate, I would be very keen to know her thoughts on where the discussions will go with the responsible organisations in Northern Ireland.

Given that there is no limit on service charges, insurance, ground rent and forfeiture charges, leaseholders have been left open to exploitation by their landlords. Given that there is no such cap, we actively allow leaseholders to be taken advantage of and there is no regulation or protection for them.

I have spoken in the past about the necessity of a fair fee for a fair service. Other Members have also referred to that idea. A Government survey has found that 70% of leaseholders regretted buying a leasehold property. That is a staggering figure—almost three quarters of them regret it. Although in Northern Ireland there is the option to buy out a ground rent, that often comes at a fee that people simply cannot afford to pay.

Furthermore, land and property service fees and solicitor fees are paid separately, placing an additional burden on leaseholders. There must be more onus on the responsibility that ground rent must be paid. In Northern Ireland, if an individual tries to buy out their ground rent but there is a record of a missed payment, the additional payment can be up to six times the missed amount, which again would be detrimental to the finances of some families. There is something wrong with a system that seems to penalise leaseholders, with all the advantage lying with those who have control of their ground rent, or indeed landlords or owners of land.

I strongly urge the Minister to engage with the Department for Communities back home to see what steps can be taken to address these issues, as they have proven to be prevalent in all of our constituencies, whether in Northern Ireland, England, Scotland or Wales. That means that these crucial issues need to be tackled UK-wide.