Protection for New Home Buyers

Debate between Justin Madders and Luke Hall

Thursday 16th January 2020 Commons Chamber

[Luke Hall]

I am grateful to the hon. Lady for putting that point on the record. I hope that is one of the things we can discuss further in the weeks ahead.

We know that a stronger regulatory system is necessary, but it will not be enough to deliver the required cultural change, so we need industry to show the same leadership it has shown in successfully making building sites much safer for workers over recent years. They must also prioritise residents’ safety in the construction of high-quality buildings.

The Government welcome the action we have already seen from industry, especially the early adopters group, which has spearheaded the building safety charter. The charter demonstrates the commitment to putting building safety first, ahead of all other priorities. All those across the industry that are involved in the life cycle of a building should follow suit. The industry-led competence steering group has developed proposals for raising the competence of those working on buildings in scope of the new regime. We support the group’s proposals for an overarching system for competence oversight and have included them in our consultation as part of our package of measures to improve building safety. To drive progress further, the industry safety steering group, chaired by Dame Judith Hackitt, is holding industry to account for making practical and cultural change happen.

The hon. Lady raised the issue of leasehold. The debate has a particular bearing on leaseholders, and I am grateful to the hon. Member for Ellesmere Port and Neston (Justin Madders) in that respect as well. We know that leaseholders can too often face unfair practices, poor management of properties and difficulties in taking action to address problems. We are clear that there is no place in a modern housing market for unfair leasehold practices, and we are undertaking a comprehensive programme to reform the leasehold system to ensure homebuyers are treated fairly and protected from abuse and poor service.

We are moving forward with legislation to reform the leasehold sector. This includes the ban on new leasehold homes, restricting future leases to ground rent of zero financial value and closing legal loopholes to prevent further unfair evictions. We are committed to helping current and future leaseholders. We welcome the recent report of the Law Commission on enfranchisement valuation. This included options on how to make the cost of buying a freehold or extending a lease cheaper, and we are now considering those in detail. We look forward to further reports from the Law Commission on the broader enfranchisement process, reinvigorating commonhold, and improving the right to manage later this spring.

We are deeply aware of the issues surrounding onerous ground rent and other unfair terms which some leaseholders are facing. We encouraged the Competition and Markets Authority to investigate the extent of any mis-selling of leasehold properties, and we look forward to receiving its findings.

[Justin Madders]

Will the Minister give way?

[Luke Hall]

I will not if that is okay, because of time.

The independent working group reported last year, and we are considering its recommendations. We will announce our next steps in due course. It can be expensive to take legal action against a landlord when that is necessary, and we are deeply concerned that leaseholders sometimes have to pay their landlord’s legal costs, even if they win the case. That can lead to leaseholders facing bills that are higher than the charges they were seeking to challenge in the first place, and it can also deter leaseholders from taking their concerns to a tribunal at all. The Government believe that leaseholders should not be subject to unjustified legal costs, and we will close the legal loopholes that allow that to happen. Again, I am grateful for the hon. Lady’s contribution on that matter, and perhaps we can take the issue forward in the weeks ahead.

Our plans to reform the housing sector will be a collaborative effort with colleagues across Government. We are also closing a gap in redress for leaseholders by extending mandatory membership of a redress scheme to freeholders who do not use a managing agent. Managing agents are already required to belong to a redress scheme, but there is no such requirement for freeholders who do not use an agent. This change will give more leaseholders access to redress in the future.

There is much reform still to come, but we have taken action already. We have worked with industry to secure commitments to help existing leaseholders through our industry pledge. The leasehold sector is clearly ripe for reform, and I assure the House that the Government are fully committed to ensuring that such reform can happen.

Let me turn to the new homes ombudsman. Problems in the current redress system threaten the quality of the experience and product for new homebuyers. The Government are dedicated to ensuring that homebuyers are treated fairly when things go wrong, and for developers to up their game and get things right from the beginning. The hon. Lady raised important points about warranties, including warranty exclusions, the provision of clear information to consumers, and the resolution services of warranty providers. It is the responsibility of the Financial Conduct Authority to regulate new build warranties and protect consumers. If a consumer is unhappy with the warranty provider’s action, they can contact the Financial Ombudsman Service for free. I agree that consumers must be provided with clearer information on warranty cover, and we are considering how that is best achieved.

The hon. Lady made a valid point about potential conflicts of interest where approved inspectors have dual roles. Dame Judith Hackitt recommended that where they are involved in regulatory oversight, an approved inspector must be completely independent of the duty holder. The Government accept that recommendation and are working with the Joint Regulators Group, representatives of approved inspectors, and local authorities, to identify ways of minimising conflicts of interest and ensure sufficient regulatory capability and capacity under the new system. The industry has acknowledged many of those problems and is working to improve consumer confidence and trust.

In conclusion—time is short—the Government are committed to ensuring that the housing market works for everyone. That means building more of the right homes in the right places, and ensuring that when consumers purchase a new home, they have the protection they deserve and need. I assure hon. Members that as we work towards our ambition of building 300,000 new homes a year, residents in all tenures are safe. They must be treated fairly and be able to live in sustainable, high-quality homes.

Once again I am hugely grateful to the hon. Lady for her contribution, and we will make sure it is taken into account. I hope that we can organise those meetings in the week ahead and see what we can incorporate. I look forward to the Government driving forward that vital reform.

Question put and agreed to.