Leasehold Reform

Julian Lewis Excerpts

Tuesday 23rd May 2023 Commons Chamber

[Lee Rowley]

The right hon. Gentleman makes a strong point about the importance of reform. This is one of the reasons that we have committed to reform and I hope that we will be able to provide that in the months ahead in the remainder of this Parliament.

We are committed to tackling problems such as these at the root, so we will abolish issues such as marriage value and we will cap ground rents in enfranchisement calculations so that leaseholders who currently pay onerous ground rents do not also have to pay an onerous premium. To make this process simpler and more transparent, we will introduce an online calculator to help leaseholders to understand what they will pay to extend their lease or to buy it out. These changes should, and will, generate substantial savings for some leaseholders, particularly those with fewer than 80 years left on their lease, and also ensure that landlords are sufficiently compensated in line with their interest. These changes are therefore fair for all concerned.

[Sir Julian Lewis (New Forest East) (Con)]

I am grateful to my hon. Friend the Minister, for whom I have a great deal of time and respect, but it seems to me that he is talking about tinkering at the edges and improving a fundamentally unfair system. I would gently remind him of an exchange I had with the Secretary of State on 20 February this year, when I asked if there was going to be fundamental reform and he replied:

“We hope, in the forthcoming King’s Speech, to introduce legislation to fundamentally reform the system. Leaseholders, not just in this case but in so many other cases, are held to ransom by freeholders. We need to end this feudal form of tenure and ensure individuals have the right to enjoy their own property fully.”—[Official Report, 20 February 2023; Vol. 728, c. 3.]

Do I detect a basic shift away from this position? I earnestly hope not.

[Lee Rowley]

My right hon. Friend highlights the importance of reform in this area and the cross-party nature of the support for it. I would not read anything into my comments other than that we are committing to reform, we have said we will bring it forward and we will bring it forward. It will happen in the remainder of this Parliament.

Part of that reform will involve reforming unreasonable and excessive service charges. Many landlords and managing agents already demonstrate good practice and provide significant and relevant information to leaseholders, but too many are failing to meet that standard and failing to provide sufficient information or sufficient clarity. We recognise that existing statutory requirements do not go far enough to enable leaseholders to identify and challenge unfair costs. We will therefore act to improve this through better communication around these charges, and a clearer route to challenge or seek redress if things go wrong. That will ensure that leaseholders better understand what they are paying for and can more effectively challenge their landlord if fees are unreasonable, and make it harder for landlords to hide unreasonable or unfair charges.

--- Later in debate ---

[Sir Peter Bottomley (Worthing West) (Con)]

I thank the hon. Member for Sheffield South East (Mr Betts) for his contribution. I also thank the Minister.

I am glad that the official Opposition have raised this issue, but if they force this to a non-binding vote, it will show the party politics. That is no criticism of a political party.

The key issue is how soon life can be made better for those who deserve a better life in their own home, and how soon those who are screwing them can be unscrewed.

S. J. McCarthy and others secured an extension for ground rents on retirement homes. I have written to him at Ringwood in Hampshire, asking how many properties the company has sold since 1 April 2022, and how many properties it will sell with leases backdated to before the ban on ground rents. That is the kind of—expletive deleted—behaviour that leaseholders had to put up with for 20 or 30 years.

The days when leasehold charges were low and landlords were decent people went years ago. Governments of all parties should have noticed and acted earlier when house builders in the north-west were building a third of their properties as leasehold.

Those who know the chronology will know that, 12 years ago, a Housing Minister asked people to provide evidence of malpractice and unfairness in the leasehold sector, which apparently was not known to people in Government. It is now 21 years since Parliament and Government thought they had made commonhold viable. The Government did not notice it was not viable because commonhold came under what became the Ministry of Justice, which had no resources. When we told the Government, “Put commonhold and leasehold together under the Department with responsibility for housing”—now the Department for Levelling Up, Housing and Communities—the Department said, “Only if you transfer the resources so we can look after it.” There were no resources, so for three or four years the Government did not do it. That is the sort of thing we would expect “Yes Minister” to come back and have a look at.

So where are we now? If we look at the sales of properties in many London constituencies, we find that 80% to 90% are of leasehold properties. Some constituencies have their figure down at less than 10%, whereas mine is at about 30%.

It is well known, although I will say it again, that I own a leasehold flat in my constituency, where I have never had a problem. We had a decent managing agent and a decent landlord. When the landlord wanted to retire, he offered the freehold to the leaseholders and we bought it. I have also since bought a leasehold property in London, where probably half the flats are owned by people overseas. How on earth, under existing regulations, will there ever be a majority for, let alone unanimity on, making a change to the management or ownership arrangements in that situation? I put it to the Minister that the Government ought to say that anybody not resident in this country does not have a vote on enfranchisement, on taking over control or on an extension. They should be assumed to agree with those who are resident and have an interest while living there or being a small landlord.

The Opposition spokesman, the hon. Member for Wigan (Lisa Nandy), referred to Commonhold Now as the first group in her list, perhaps because it is the most recent. One of the people mentioned as being in Commonhold Now claims the credit for the “People’s Pledge” campaign, set up in 2011, for a vote on whether we remained in European Union. The organisation folded in 2016 when we had the referendum—well, they did well, didn’t they?

We ought to say to Commonhold Now, “Try to work with the people who have been campaigning for a long time on this, and do not start looking as though the new people on the block are going to be the experts.” Oddly, it has not approached me during its months of existence, and when it put out a press notice the BBC took it as though it was gospel and the Secretary of State had promised to abolish all existing leaseholds in double-quick time. He had not, and no one believed that he had.

If the BBC had had a housing editor for the past 15 or 20 years, we would be further forward and it would not have misled its viewers and listeners with the idea that anyone had suggested it would be possible to transform all leasehold agreements into commonhold ones quickly. However, it needs doing.

One issue that has not been raised yet arises in my constituency. I am grateful to my constituent Francine Stephenson for contacting me to ask whether

“there are any Government Grants or similar for having Solar Panels fitted on our property. We live in a block of flats and are planning to have a new roof fitted next year (money permitting) and wonder if it would be profitable to have Solar Panels fitted at the same time. Due to the expense….we wonder if the Government has or may have any suitable schemes to assist us?”

We know that most leasehold properties are in blocks of flats and that roofs need changing every 25 to 50 years. Why are we not getting on now with a way of making it possible for those involved, with or without unanimity, to have solar panels put on new roofs when they are brought up to a given thermal efficiency?

What are we going to do about decarbonising the heating smaller blocks? The larger ones do not have gas, but the smaller ones may, so what are we going to do about getting that changed so we have a thermally efficient building with a carbon-free system of heating? Had I been writing today’s motion, those are the sorts of issues I would have been adding in, rather than making it appear a bit more about party politics than about real concern for leaseholders.

I do know that people in the Opposition are deeply concerned about this issue, and I pay tribute to Jim Fitzpatrick, the former Member for Poplar and Limehouse, for his remarkable work. I also pay tribute to the leader of the Liberal Democrats, the right hon. Member for Kingston and Surbiton (Ed Davey), for previously co-chairing the all-party group on leasehold and commonhold reform, and the hon. Member for Ellesmere Port and Neston (Justin Madders) for all that he is doing.

The key point is that if we had been listening to those who first started campaigning for justice, we would be further ahead—I think there is all-party agreement on that. When Sebastian O’Kelly, the former property editor of the Daily Mail, and Martin Boyd, who had experience at Charter Quay in Richmond, Surrey, took up these issues, they thought it might be possible to achieve results fast—that did not happen. When Gavin Barwell, now Lord Barwell, became the Housing Minister, he said that the Government’s Leasehold Advisory Service would be unequivocally on the side of leaseholders. As far as I know, that organisation never once advised Ministers or their officials of the scandals that people rang it up about every day. That was the failure of the succession of chairs of that organisation—the chief executive could have done better as well.

I have found that there are a number of crooks in this business, one of whom is Martin Paine—he adds an “e” to the hurt he does. He would take leases that were about to run out and give informal extensions, not resetting the ground rent to zero, but saying that he was doubling ground rent from the time the lease was first given out. Nothing much has happened about this.

Without going through a list of all the other scandals, I ask the Minister: why not have a way of funding some test cases so that the courts can rule that this kind of crookery and thievery ends? We have done it with human rights and with the Equal Opportunities Commission in the past. A few test cases, with substantial resources behind them, would overturn many of these practices. Some of them are criminal and some are just civil, but all need challenging on behalf of the small person.

Let us look at the post-Grenfell consequences on fire safety. Our Fire Safety Act 2021 and Building Safety Act 2022 are imperfect. They have excluded too many small landlords unnecessarily and too many low buildings unnecessarily. That should be reviewed and changed.

So should the scandalous statutory instrument 2020 No. 632, the Town and Country Planning (Permitted Development and Miscellaneous Amendments) (England) (Coronavirus) Regulations 2020. It relates to permitted development rights and building up. Under emergency covid regulations, freeholders have the right in certain properties to stick one or two more floors on top of the building so that those who thought that they had the top-floor flat will find it is a building site for five years. The person who owns the building and tries to use those rights does not even have to inform the leaseholders that they are going to do so. Apparently, local councils have little power to block them.

[Sir Julian Lewis]

I declare an interest, as both a leaseholder and the owner of one buy-to-let flat. I have the direct experience of having had a top-floor flat and having had another floor and a roof garden built above it. After all the faults came about, many of which still persist, guess who had to pay, in one case more than £200,000, for remedying them? It was the leaseholders, not the freeholder.

[Sir Peter Bottomley]

The point is well made. I am sorry to go on for slightly longer than I ought, Mr Deputy Speaker, but I have been fighting on this subject for a long time and there are rare opportunities to get some of these things on the record.

The Minister has rightly talked about the commissions and loadings on insurance and the Competition and Markets Authority has looked at some of the insurance rates. The fact is that post Grenfell, the number of fires has gone down dramatically and it will go on reducing. It is not the high-rise properties that had most fires in any case, but the lower-level ones. We need to make sure that we watch all these issues and that the Government have people whose voices they listen to giving them advice on where action is needed.

We have to look at the Law Commission proposals. I hope that the Government will say in the King’s Speech say that they will get those through. When we were waiting for the King to come to Westminster Hall on the Tuesday before the coronation, I happened to be standing with the Leader of the Opposition and the Prime Minister. I said to the Prime Minister, “We need this legislation. It is going to be complicated in drafting but simple in politics.” I said in front of the Leader of the Opposition, “If you bring forward a Bill, it will not take a long time in this House. There will be detailed discussion but it won’t take a long time. No one will try to filibuster. It will have all-party support and we can get it through and change the lives of millions and millions of people.”

Only eight years ago, the Government thought the number of leasehold properties was about 2.5 million, but we now know it is about 6 million. We know that this is the fastest-growing element of the housing market.