Leasehold and Commonhold Reform

Justin Madders Excerpts

Wednesday 2nd October 2019 Westminster Hall

[Sir Peter Bottomley]

We are not able to cover everything in a half-hour debate, but that is one of the issues to which I think the House of Commons needs to return. We ought to have a full-day debate, preferably in Government time and on the Floor of the House, so that many other Members can speak and be a voice for their constituents.

As an example for those who do not read Private Eye on the day it comes out, there is a story about Rothesay Life, which apparently has £1.5 billion of loans. It can revalue the interest over 30 years and take it almost as instant profit. That is the kind of thing that leads people to say, “I am going to be greedy and get away with things as long as I can.”

[Justin Madders (Ellesmere Port and Neston) (Lab)]

I echo the comments of my hon. Friend the Member for Poplar and Limehouse (Jim Fitzpatrick). We are very grateful to the hon. Gentleman for all the work that he has put into the campaign, which is growing stronger by the day. Some of the voluntary schemes that developers have entered into with leaseholders have a sting in the tail, with additional clauses carrying on afterwards. Does he agree that that example shows that it is important to get something on a statutory footing as soon as possible?

[Sir Peter Bottomley]

The whole House will agree with the hon. Gentleman. Incidentally, we got the Competition and Markets Authority to hold an investigation into leasehold and—this is one of my tributes to the Government—I want to say how grateful we all are for the matters that have been sent across to the Law Commission, with the aim of getting practical and fair proposals that can be enacted.

One such important issue is lease extensions. There are more than 1 million leases, mainly of flats, that are coming to the 80-year limit where they cannot be mortgaged and where the marriage value starts coming in. At the moment, it is very difficult to find a cheap, easy and fair way of getting an extension on a lease. As and when we come to the elimination of new ground rents, we should find a way of putting a sunset clause on old ground rents, and give an incentive to freeholders to come forward with ways of getting some capital value now, rather than none later on. They have had the dawn of their money, and there needs to be some kind of sharing of the dusk that stops the money rolling in. We need to find a way of saying to them, “Let’s agree a simple chart; if you take 10 years of existing ground rent, don’t start saying you will take a doubling, and a doubling again after that.”

I interrupt myself to say that there is one announcement from the last couple of days that is potentially very dangerous to leaseholders, which is the proposal that people can put two more storeys on top of a block without planning permission. If the block is owned by an outside freeholder, that will ruin the chance of enfranchisement. If it is going to happen, all the value should go to the leaseholders, not the freeholder. In fact, it might provide an incentive for the leaseholders to buy the freehold and then agree among themselves how to deal with building on, and having a bigger community. As I said, I own a lease and part of a freehold of a block in Worthing. I am also contracted to buy a leasehold flat that is being built at the moment, which might be built in three years’ time. If anyone thinks that I have an interest in this issue, I do—if I get any benefit from it, I will give it to a good cause.

To go back to LEASE, MPs have had difficulty with its two previous chairs. The first, Deep Sagar, showed no understanding at all that LEASE should not be helping rapacious freeholders or clever managing agents to screw money out of leaseholders. He moved on, but I must say incidentally to the civil service appointments people that they should count how many public appointments he has had—I think he has had more than the number of years I have had in the House of Commons, which is 45. The second chair was Roger Southam, whom I took on trust when he was appointed. Others said that he was not trustworthy. It turned out that I was wrong and they were right.

I hope that when a permanent chair is chosen for LEASE—it now has an interim chair—the stakeholders will be consulted on the process and, if possible, given a chance to comment on who might be on the shortlist. If they do not want to trust me, perhaps they could ask the hon. Member for Poplar and Limehouse or someone else to bring an impartial view. LEASE has been led for many years by Anthony Essien. I have no complaint about him; I have treated him with respect on every occasion, and vice versa.

LEASE has been changing: it is now unequivocally on the side of leaseholders, thanks to the intervention of Gavin Barwell, who was the first Housing Minister to get a grip on what was needed—he provided leadership in the Department, and I am glad that the Department has responded. LEASE’s website now has more than 100 categories under which people can interact and get some advice. The problem is that LEASE could not give all the advice on practical things.

For example, on the Grenfell Tower cladding issue, when the Government rightly said that no social tenant should have to carry the cost of re-cladding, the private tenants were left stuck, either in public or private blocks. The advice that the campaigning charity Leasehold Knowledge Partnership gave was right, while the advice that LEASE gave—to go to court—was wrong, because the tribunals had to reach the unfair conclusion that the leaseholder was stuck with the cost.

I pay great tribute to the then Secretary of State for Housing, Communities and Local Government, my right hon. Friend the Member for Old Bexley and Sidcup (James Brokenshire), who got the Government to agree—perhaps against the advice of some civil servants—to carry the cost. He solved a problem that would otherwise have hit many small people.

There are other issues that I could cover at some length. I pay tribute to the National Leasehold Campaign, and to Katie Kendrick and Jo Darbyshire; to Victoria Derbyshire’s programme on BBC 2, which gave the issue prominence at a time when it mattered; to Patrick Collinson of The Guardian; to whoever advises Strobes at Private Eye on leasehold issues; and to others.

I declare this in public: if any of these big property interests threaten defamation proceedings against any of the leasehold campaigners, I will say on the Floor of the House of Commons exactly what can be said about them, in spades—I won’t hold back. Up to now I have been pretty restrained, but I want people to know this: do not bully those who campaign for justice. We are all on the side of the small voice. By all means have discussion, and by all means have disagreement, but do not think that you can get away with lawyers’ letters of the kind that get prominence every now and again in Strobes’s legal pages.