Leasehold and Commonhold Reform

Debate between John Healey and Lord Sharma

Thursday 21st December 2017 Westminster Hall

[Alok Sharma]

I will come on to talk about the work that the Government will be doing with the Law Commission.

We have also heard of consumers with very onerous ground rent terms who are effectively trapped in their own homes, unable to find a buyer. Some of those people have not been able to get redress and do not know where to turn for support. It is clear that the leasehold system as it stands is not working in many consumers’ best interests. Even most developers accept that use of leasehold for new build houses, unless in exceptional circumstances, is entirely unjustified. This has got to stop. That is what we all want.

The Secretary of State’s statement noted that, alongside publishing a response to the consultation, the Government have set out a package of measures to crack down on unfair practices, which includes introducing legislation to prohibit the development of new build leasehold houses, other than in exceptional circumstances. The Government intend to ensure that future legislation to ban the sale of leasehold houses applies to land that is not subject to an existing lease from today’s date. We will continue to work with the sector and other partners to consider the case for exemptions to the policy and its retrospective application, in particular to mitigate any undue unfairness.

We are restricting ground rents in new leases of houses and flats to a peppercorn, and we are addressing loopholes in the law—for example, to ensure that freeholders have a right to challenge unfair service charges. We are also working with the Law Commission to support existing leaseholders, including by making the purchase of a freehold or extension of a lease easier, faster, fairer and cheaper and, of course, by reinvigorating commonhold.

The right hon. Member for Wentworth and Dearne and the hon. Member for Brentford and Isleworth (Ruth Cadbury) raised the issue of the Law Commission. I can confirm that the Government will be funding the work. We will be funding five lawyers and five research assistants, a proportion of the managers’ and the commissioners’ time and some peer review and external consultancy. That work will start in January.

[John Healey]

I am grateful to the Minister for giving us that answer. I think everyone will be encouraged and will welcome that. He indicates that work will begin in January 2018. Can he indicate when that work is scheduled to be completed?

[Alok Sharma]

If the right hon. Gentleman bears with me, I will come on to that.

As I said, we will be working with the Law Commission. A number of Members raised the issue of freeholds being sold on to investment companies. Our view is very clear: where houses are sold on unfair terms, we have asked developers to be proactive and arrange for the leasehold contract to be put on a fair footing. The right hon. Member for Knowsley (Mr Howarth), who is not in his place, asked whether there should be a requirement for developers not to sell on the freehold at this point. I am sure that developers will be listening intently to the tone of this debate and understanding precisely how Parliament feels about this matter.

We will, of course, want to ensure that there is appropriate support for existing leaseholders with onerous ground rents, and we will work with the ombudsman and trading standards to provide comprehensive information on the various routes to redress. However, that is not enough. We also want to see developers and investors going further with their compensation schemes. I want to see that support extended to all those with onerous ground rents, including second-hand buyers.

A number of Members, including the hon. Member for North Tyneside (Mary Glindon), mentioned Help to Buy. Given the Government’s position on leasehold, we do not think it is appropriate for the Help to Buy equity loan scheme to support the sale of leasehold houses. We cannot impose a new requirement on developers under existing contracts, but we expect them to work with us to take forward that change ahead of legislation. The Secretary of State has today written to all developers to ask them to stop using Help to Buy equity loans for the purchase of leasehold houses, to encourage them to take early steps to limit ground rents and to ask those that have customers with onerous ground rents to provide the necessary redress as soon as possible. Both the Secretary of State and I will be keeping a very close eye on progress in that area.

I am very grateful to the hon. Member for Ellesmere Port and Neston for proposing a Bill on leasehold reform, and for the considerable efforts that he and other colleagues have made to put it on the agenda. This is a highly complex area, covering multiple Acts of Parliament, which is why we will be working closely with the Law Commission as part of its 13th programme of law reform, announced last week. We want to ensure that we prioritise making the process of buying a freehold easier, and to support existing leasehold house owners, and we will seek to bring forward solutions by the summer recess of 2018.

Regulation of Property Agents

Debate between John Healey and Lord Sharma

1st reading: House of Commons
Wednesday 18th October 2017 Commons Chamber

[John Healey (Wentworth and Dearne) (Lab)]

My goodness, the Government really are now scraping the bottom of the barrel: an oral statement on a call for evidence about property managing agents—not a statement on the Grenfell Tower fire and why four months on only 14 of 200 surviving families yet have a new permanent home, on bold Government action in the face of home ownership hitting a 30-year low, on rough sleeping doubling, or on the lowest level of new affordable house building for 24 years.

More than 80 Members on both sides of the House want to speak next in Labour’s debate on universal credit, yet the House is being held up by the Minister telling us he wants to

“create a fairer property management system that works for everyone.”

If Mr Speaker were a football referee, he would book the Minister for time wasting. Where is the hon. Member for Moray (Douglas Ross) when he is needed?

In the face of the country’s housing crisis, this is a truly feeble statement. It is not even a commitment to act; it is a commitment to ask some questions. The Government are launching today, the Minister tells us, “a call for evidence”. He tells us that he is seeking views on

“whether regulatory overhaul of the sector is needed”.

Of course it is: managing and letting agents can set up with no expertise, no qualifications, no registration and no professional body membership. This is a market with no legal regulation, just partial self-regulation. It is a market in which the reputation of the best is dragged down by the worst, and a market in which consumers too often face unfair upfront fees, restrictions on what they can do to their own homes, and a system in which it proves impossible to get problems sorted out.

Better regulation of letting and managing agents has long been a commitment on this side of the House, so the Government’s concern now is welcome, but action needs legislation. Therefore, can the Minister confirm when the proposed legislation will be introduced, and when it will come into force? Can he confirm that this “call for evidence” today will not delay still further the announcement the Government made a year ago to ban letting agents’ fees? When will that legislation be introduced, and when will it come into force? As a result of today’s announcement, can the Minister tell us how much on average each leaseholder and private renter will save, and when—oh, when—will he act on the other protections leaseholders and renters need from this Government?

Finally, may I give the Minister his first response to this “call for evidence”? Rather than asking whether or not renters and leaseholders need better protections, will the Government instead act on Labour’s proposals to end the building of new leasehold homes and to cap rises in ground rents, and will they back our plan for new consumer protections for private renters, with longer tenancies and a control on rent rises, a ban on letting agents’ fees, and new legal minimum standards that all landlords must meet before they rent their homes?

We have a big housing crisis and small thinking from Conservative Ministers. After seven years of failure on all fronts on housing, when will Ministers come to the House and announce a proper plan to fix this country’s housing crisis?

[Alok Sharma]

I have not said this before, but I have enormous respect for the right hon. Gentleman. However, I am extremely sorry that he started his response to the statement with such rancour. There are 4.5 million households renting in the private sector. For them, this absolutely matters—it really does—so I hope he will reflect on how he started his contribution and on the fact that perhaps what we ought to be doing is working together on making this happen. He says we should do it. Of course, and that is precisely what we are doing, but I say respectfully that he was the Housing Minister—why did he not do it?

Let me talk about fixing the broken housing market. The right hon. Gentleman said that we are tinkering. We are not tinkering. He will have seen the work that has been done since the White Paper was published and he knows the announcements that have been made. I recommend to him that, instead of talking to his colleagues in the Labour party, he talks to the social housing sector to ask what it makes of the announcements made at the Conservative party conference—the £2 billion extra and CPI plus 1%. It will tell him that those announcements were a sea change.

I also say to the right hon. Gentleman that, in the work that we are doing, there is finally some joined-up thinking in Government. We have already announced—I am pleased he welcomes this—the ban on tenant fees from letting agents. We will publish the draft Bill very shortly, together with the consultation. He knows that, when it comes to rogue landlords, it has been possible since April to levy civil penalties of up to £30,000, and we are also looking at banning orders. A range of work is ongoing.

The right hon. Gentleman will also know that my right hon. Friend the Secretary of State made an announcement a few weeks ago on measures to help the private rented sector with landlords being required to be part of a redress scheme and housing courts being consulted on incentives to landlords for longer tenancies. We are doing a huge amount of work.

The right hon. Gentleman raised a couple of other points. He asked by how much leaseholders will benefit. He has seen the figures I talked about: £3.5 billion is charged, and some experts say £1.4 billion is overcharging, so if he does the maths he might be able to work it out for himself.

The right hon. Gentleman knows that we have just concluded a consultation on leasehold. I pay tribute to the all-party parliamentary group on leasehold and commonhold reform for all the fantastic work it has done. We have had 6,000 responses—a record—to this consultation, and we agree with him that this is an area that needs fixing, but I hope he will reflect and welcome what we are doing with this call for evidence.

Grenfell Rehousing

Debate between John Healey and Lord Sharma

Wednesday 5th July 2017 Commons Chamber

[John Healey (Wentworth and Dearne) (Lab)]

I welcome the Minister to the Dispatch Box for his first oral statement in this job and thank him for making a copy of his statement available. May I also add the thanks of Labour Members to John Barradell and the emergency response team, as well as to the community organisations that are still supporting the survivors?

The Minister has had a testing first few weeks. I hope he knows now that, whatever he says, it is the Government’s actions that count in getting Grenfell Tower residents the help and new housing they need, and in giving them and the wider local community in North Kensington the confidence that what is promised will be done. I have to say to him that the Government have been slow to act. They have been off the pace at each stage following this terrible tragedy, and it is clear from this statement that in some ways they still are.

After the fire, the Prime Minister said:

“I have fixed a deadline of three weeks for everybody affected to be found a home nearby.”

The three weeks are up, yet whole families, who have lost everything, are still in hotels and hostels. We have learned today that three—just three—of the 158 families from Grenfell Tower have moved into a fresh home, and these are only temporary, which was not what the Prime Minister first said. Plus, only 11 others have so far been found somewhere they feel they can say yes to.

Why have so few families been successfully matched with fresh accommodation? Is it the case, as I have been told, that some have been offered accommodation with too few bedrooms, or in another tower block, or indeed with bizarre conditions attached, including “no overnight stay” for family or friends? A hotel room is no home, and temporary housing is no place to rebuild shattered lives. When will all those now homeless from the fire be offered a new permanent home?

The Minister mentioned the 68 homes in the Kensington Row development. They were already allocated for social housing. How many extra social homes have the Government or the council made available in the borough? Will the Government guarantee that the number of new social homes planned before the fire will be increased by at least the number needed now as a result of the fire? What assessment have the Government made, with the Mayor of London and the other London boroughs, of the knock-on consequences for temporary accommodation, social housing and council waiting lists across the city?

The Minister mentioned the recovery taskforce for Kensington and Chelsea. This is the taskforce that has now been sent in to take over from the taskforce sent in three weeks ago. Kensington and Chelsea is a failing council—it has even failed to admit that it is failing. The fundamental concern about this council is not just its capability, but the total lack of trust that residents or anyone else have in it. The Government concede that by sending in the taskforce, yet they leave the council in charge. Labour Members want the taskforce to work, but we doubt that it will. It can advise but it cannot act. It lacks the powers of decision or action that commissioners would bring. Public confidence in the council will not be restored by replacing one set of leaders with politicians from the same ruling group. What will be the tests for this taskforce, and what will be the tests of further council failings, before Ministers take the fuller intervention steps needed, as they have in other areas?

The fears following the fire go well beyond Grenfell Tower, as do the consequences. Hundreds of thousands of people who live in high-rise blocks around the country want to know that their homes are safe. That means that the full building has been tested for fire safety, not just one component of the cladding on the outside; that all replacement cladding and fire prevention works necessary to guarantee safety are done; and that no remedial action is delayed or not done because the council or housing association has not got the funding.

How much funding have the Government set aside for these costs? Has the Treasury agreed access to the Contingencies Fund? Will the Minister reassure tower block residents today by making a clear commitment to full up-front funding for whatever work is needed to make these high-rise homes safe? When Ministers have rightly said, “You can’t put a price on people’s lives,” that is what it means.

[Alok Sharma]

I thank the right hon. Gentleman for his comments. I will take each of his points in turn.

In terms of actions, we have made it very clear that the initial response was not good enough—the Prime Minister has said that at the Dispatch Box. As the right hon. Gentleman knows, ministerial colleagues and I have been engaged in meetings with the community, both on an individual basis and as part of community meetings, and that work will continue.

The right hon. Gentleman referred to the three-week offer. The purpose of that was to make sure that we offered temporary accommodation to the people who wanted it.

The right hon. Gentleman talks about the numbers. As I have said, we are working with all the families involved. I expect that number to rise, but I know that he and all in the House will acknowledge that it is not up to Government, or indeed any Member of this House, to determine the pace at which families should move—that has to be up to them. We have to treat them with sensitivity and that is what we are doing.

The right hon. Gentleman talked about whether people are being housed in tower blocks. That is not the case. I know there was initially some reporting about tower blocks, but I believe that was in relation to emergency accommodation in hotels that are tower blocks, and we responded to that.

The right hon. Gentleman talked about affordable housing. I can confirm that Kensington Row was originally designated as affordable housing, not social housing, so this represents a net increase. We are looking to provide a net increase in the number of homes in the social sector.

The right hon. Gentleman referred to the independent recovery taskforce that has now been appointed. It will report directly to my right hon. Friend the Secretary of State. Its members, including the chair, are being identified, and we should be in a position to announce further details over the coming weeks. I want to be clear that the special focus of the recovery taskforce will be on housing, regeneration and community engagement.

The right hon. Gentleman talked about high-rise blocks, and I do understand that those living in similar blocks across the country will have concerns. That was why we acted immediately and made sure that we informed local authorities and housing associations of the checks that they needed to do. We put in place a regime for them to send us the cladding materials on any building that they felt was suspect, and that testing has been going on at a pace. We have been very clear that local authorities and housing associations should do whatever is necessary to keep people safe, and that if there are issues to do with funding, we will work with the individual local authorities and housing associations. It is vital that we ensure that everyone who lives in such a block is kept safe.

The right hon. Gentleman also talked about wider tests. When we wrote to local authorities and housing associations on 22 June, we also asked them to look at issues related to insulation and to make checks. On 27 June, my right hon. Friend the Secretary of State appointed an expert panel to advise on these matters. It met on Thursday 29 June and agreed a range of matters that it will look at. In particular, it agreed to consider whether any immediate additional action should be taken to ensure the safety of existing high-rise buildings.

I know that this is a subject that we wish we did not have to debate, but I have found, through the discussions that I have had with colleagues on both sides of the House, that this is a time for us to work together. There is a public inquiry, and a criminal investigation is under way. They will apportion blame, leaving no stone unturned, but this is the time for us to work together. I say again to colleagues, including the right hon. Gentleman, that if they feel that any individuals are not getting the right level of support, please come to me. I stand ready to help.