Leasehold Reform

Lisa Nandy Excerpts

Tuesday 23rd May 2023 Commons Chamber

[Lisa Nandy (Wigan) (Lab)]

I beg to move,

That this House notes the commitment by the Secretary of State for Levelling Up, Housing and Communities in January 2023 to abolish the feudal leasehold system which he has acknowledged is an unfair form of property ownership; calls on him to keep his promise to the millions of people living in leasehold properties by ending the sale of new private leasehold houses, introducing a workable system to replace private leasehold flats with commonhold and enacting the Law Commission’s recommendations on enfranchisement, commonhold and the right to manage in full; and further calls on the Secretary of State to make an oral statement to this House by 23 June 2023 on his plans to reform leasehold.

It is always nice to see the Under-Secretary of State for Levelling Up, Housing and Communities, the hon. Member for North East Derbyshire (Lee Rowley) in his place, but there was a time when the Secretary of State, the right hon. Member for Surrey Heath (Michael Gove) could not resist a housing debate. His appearances in this Chamber are fast becoming rarer than the sight of a Tory councillor in the north of England. I worry that he may be in danger of becoming extinct.

Nothing, as the Minister knows and we know, matters more than a home. Security in your own home, the right to make it your own and the right to live somewhere fit for human habitation are non-negotiable. Housing may be a market, but it is not just a market—it is a fundamental human right. But for so many people in our country, what they thought would be the reward of years of hard work and the realisation of their dreams of home ownership are shattered by the reality of what it means to be a leaseholder.

[Mark Tami (Alyn and Deeside) (Lab)]

As my hon. Friend will know, in the north-west of England and north Wales, leasehold houses were sold for many years. People who were told at the time that they would be able to buy the freehold for perhaps a few thousand pounds, are now being asked for £20,000 or £30,000, which they cannot afford. They are finding that selling their house is becoming very difficult. Linked with that are often very high management fees. This is really affecting them and their lives. People tell me that they do not feel that they actually own their house anymore.

[Lisa Nandy]

My right hon. Friend is absolutely right. He has been a tireless campaigner for his constituents affected by this issue, but I fear we will hear so much more of that from all parties in the House today. We have heard it for years that people’s homes have become a prison. The shocking lack of information—or in the case he cites, misinformation—just compounds the injustice that is felt by many. So many leaseholders face the daily reality of appalling charges and uncertainty. This issue affects millions of people up and down the country. There are nearly 5 million leasehold homes in England: the majority of flats in the private sector and 8% of all houses in England.

[Catherine West (Hornsey and Wood Green) (Lab)]

My constituent has been charged £80,000, on top of really expensive mortgage payments which have gone up since last autumn’s disastrous budget. She is in tears and her mental health has collapsed. She is saying, “MP, what should I do?”

[Lisa Nandy]

The reality is that for so many of us—including myself as a constituency MP—there are few options available to people who find themselves in this situation. My own constituency had the 17th highest number of transactions for leasehold houses in the country last year. We are not just failing to solve the problem for people trapped in the situation; we are compounding it and making it worse, because more people are being sucked into this exploitative system.

[Emma Hardy (Kingston upon Hull West and Hessle) (Lab)]

As well as concerns for leaseholders, many people who own their homes have problems with management companies, which claim they are charging money for the upkeep of communal areas but increase the charges time after time. No one is regulating those companies; they are accountable to no one. Even as Members of Parliament it is difficult to hold them to account for their bad practice. Does my hon. Friend agree that the use of those appalling companies could be the next big housing scandal?

[Lisa Nandy]

It is already a scandal happening in plain sight. For that reason, I hope that we will hear from the Minister when he responds that the Government will commit to implementing the Lord Best working group recommendations as quickly as possible.

This is a huge problem, but it is almost uniquely ours. Virtually every country in the world apart from England and Wales has either reformed or ended this archaic feudal model. We stand as an outlier. The good news is that we know the answer. It has been clear since we received the Law Commission proposals in 2020 that we need new legislation to end the sale of new private leasehold houses, effective immediately after Royal Assent is given. We need new legislation to replace private leasehold flats with commonhold. Lots of promises have been made to that effect, but there has been little in the way of action.

[Kim Johnson (Liverpool, Riverside) (Lab)]

rose—

[Lisa Nandy]

I expect we will hear from my hon. Friend exactly what that has meant for her constituents.

[Kim Johnson]

I recently became aware of a situation in my constituency of a freeholder trying to do a lucrative deal to use the block to accommodate people seeking asylum. It tried to evict leaseholders under the pretence of a fire safety eviction plan. The residents rightly say that their sense of security has been fundamentally shaken. What does my hon. Friend think this Government should do to ensure that my constituents and millions of others are not denied the security of their tenures?

[Lisa Nandy]

I agree; if we could just do what we have been promising for a long time, the reality for my hon. Friend’s constituents would be transformed from one of insecurity and anxiety to one of security and the foundation of a decent life. They are lucky to have her as their Member of Parliament to fight on their behalf.

It was in 2002 that the Labour Government introduced commonhold. There were voices even then—some of them in the Chamber today—who urged us to go further and end the injustice altogether. In the decades since, there has been growing recognition on all sides of the House that action is long overdue. In 2017, the Government said that they would legislate to prohibit the creation of new residential long leases on houses, whether newly built or existing freehold houses, other than in exceptional circumstances. That commitment was repeated in the 2019 manifesto and by the former Secretary of State, the right hon. Member for Newark (Robert Jenrick), yet leaseholders were left waiting.

[Mr Clive Betts (Sheffield South East) (Lab)]

We have had a further commitment from the Government along similar lines. In response to a Select Committee report in 2019, the Government said:

“The Government agrees with the Committee that, other than in exceptional circumstances, there is no good reason for houses to be sold on a leasehold basis.”

Four years later, thousands more properties have been sold on an unacceptable basis, and the tenants, effectively, of those properties who have been left to pay exceptional costs are not able to get out of the lease without very high charges.

[Lisa Nandy]

I pay tribute to my hon. Friend for the work that his Committee has done on this issue over a long period of time. As he said, there is no reason that this should continue except for a lack of political will to do what we have all acknowledged is the right thing.

Into this absurd scenario steps the current Secretary of State. I know that the right hon. Gentleman has the right intentions—indeed, his record has been clear. On 9 June last year, he told this place:

“it is absolutely right that we end the absurd, feudal system of leasehold, which restricts people’s rights in a way that is indefensible in the 21st century.”—[Official Report, 9 June 2022; Vol. 715, c. 978.]

On 30 January this year, he said in response to a question I posed to him:

“Finally, the hon. Lady asked if we will maintain our commitment to abolish the feudal system of leasehold. We absolutely will. We will bring forward legislation shortly.”—[Official Report, 30 January 2023; Vol. 727, c. 49.]

Now, we are told that the Secretary of State was being too maximalist. We have had grumbling from Government Back Benchers that the Secretary of State is being too socialist. Downing Street has stepped in, plans are being rowed back and he is not even able to set foot in the Chamber today. It is a bit of a mess, isn’t it?

In just a few months, the Government’s whole housing policy has completely unravelled. As my hon. Friend the Member for Hornsey and Wood Green (Catherine West) said, they crashed the economy and sent mortgages through the roof. They caved in to their own Back Benchers and, in one stroke, ensured that their own housing targets were not worth the paper they were written on. That led to dozens of councils reducing or halting altogether their house building plans, and a collapse in the projected number of houses built in coming years, in the middle of a housing crisis. The Home Builders Federation warned earlier this year that new housing supply in England would soon fall to its lowest level since the second world war.

While the Government are locked in internal battles on making basic improvements for renters, their Levelling-up and Regeneration Bill—their flagship legislation that was supposed to reform an archaic planning system—is stuck in the House of Lords, where it is commonly referred to as the Christmas tree Bill, as it has so many amendments attached to it. It does make us wonder what is actually the point of this Government.

The Secretary of State was clear that he would abolish leasehold. No one thought that it would be done overnight. The Law Commission report sets out a clear road map on enfranchisement, commonhold and the right to manage. The major leasehold groups have always recognised that it would take some time to phase out this archaic system, and so have we, but there is no excuse for inaction on the manifesto commitment to end the sale of new private leasehold houses, or for delaying the start of the process of phasing out existing leasehold and making commonhold the default of the future, as my hon. Friend the Member for Greenwich and Woolwich (Matthew Pennycook) has often said.

[Andrew Gwynne (Denton and Reddish) (Lab)]

My hon. Friend is setting out a compelling case for why leasehold needs to be consigned to the dustbin of history. It is not just the feudal system that needs to go but the sharp practices that go along with it. I have constituents who live in their own home. They do not own the land it is built on—they rent it—but they are not able to make even the most basic alterations to their house without getting the permission of the landowner, who then charges extortionate fees. That is just wrong, isn’t it?

[Lisa Nandy]

My hon. Friend is right. People who have bought their own home should have the right to change their doorbells and make basic alterations without seeking the permission of someone they have never met and will never meet. In many cases, they do not even know who that is. I pay tribute to him for his campaigning on this issue and for standing up for his constituents.

I ask Ministers to take this issue back to the Secretary of State when they next see him. He will know that the delay is a significant setback for leaseholders, who have been left waiting for far too long, and for all of those who have campaigned so hard and for so long and thought they could finally see the light at the end of a very long, very dark tunnel. Let me place on record our thanks to Katie Kendrick at the National Leasehold Campaign and Commonhold Now for all they continue to do. Tireless advocates in this place include my hon. Friends the Members for Weaver Vale (Mike Amesbury) and for Ellesmere Port and Neston (Justin Madders), and the father of the House, the hon. Member for Worthing West (Sir Peter Bottomley).

I hope that the Minister will be keen to talk about legislation that we are told will be forthcoming in the autumn. The Labour party strongly believes that it is a no-brainer to crack down on unfair fees and contract terms, to require transparency on service charges and to give leaseholders the right to challenge rip-off fees and conditions or poor performance, along the lines we have heard about from many Members present.

[Mark Tami]

My hon. Friend is being generous with her time. I have met many people, particularly first-time buyers, who purchased a leasehold property and were offered a discount by the developer selling the house for using its lawyer for the transaction. Surprise, surprise—the fact that it was leasehold and the pitfalls were never pointed out to them. That seems to be a common practice.

[Lisa Nandy]

That story illustrates so well that that form of tenure—that feudal, archaic system—has become home for sharp practice all over the place. We have heard that from hon. Members over and over on both sides of the House, and it is about time we stopped it. We can take important steps forward on ground rent and extending leases that will make life easier for many, but after all that has been promised, leaseholders have the right to expect their Government to go further. Will the Minister give us a cast iron guarantee that the Bill they have promised will bring to an end the sale of new private leasehold houses at the point the Bill comes into force, ensure those provisions are applied retrospectively to December 2017, a promise that has been made repeatedly by this Government, and bring in a workable system to replace private leasehold flats with commonhold?

Back in May 2021, the Government launched the Commonhold Council, an advisory panel of leasehold groups and industry experts to inform the Government on the future of this type of home ownership. Can the Minister update the House on when the Commonhold Council last met and what its recommendations are for bringing in a commonhold system? As he will know, commonhold has been in force since 2004 but has failed to take off for two main reasons: first, conversion from leasehold to commonhold requires unanimity from everyone with an interest in the block, which has proved difficult to achieve, and, secondly, developers have not been persuaded to build new commonhold developments.

Members on both sides of the House are acutely aware of how complex an issue this is to get right, but complexity is not an excuse for inaction. Credit must be given to the three Law Commission reports that represent a detailed, thoughtful road map, which Labour has committed to implement in full. It is only by implementing those proposals in full that the commonhold system will sufficiently improve, so that leaseholders can easily convert to commonhold, gain greater control over their properties and have a greater say in how the costs of running their commonholds are met.

The proposals would go further still to support those on low incomes and those who have found themselves trapped in leasehold by improving mortgage lenders’ confidence in commonhold to increase the choice of financing available for homebuyers. They would allow shared ownership leases to be included within commonhold and enable commonhold to be used for larger, mixed-use developments that accommodate not only residential properties, but shops, restaurants and leisure facilities.

We have debated these issues in this Chamber so many times since the appalling tragedy at Grenfell, when a group of people were rendered invisible to decision makers only a few miles away, with the most appalling and tragic consequences. Clearly, the burdens that homeowners have long laboured under, because of the disfunction of the property agent market and the inherent flaws of the leasehold system, have become more acute over recent years as a result of the building safety crisis and surging inflation.

That combination has already pushed many hard-pressed leaseholders to the brink of financial ruin. How can we accept that these rip-off companies, on behalf of owners we often do not even know—we do not have the right to find out who they are—are allowed to tell people whether they can even change the doorbell on their own home, as my hon. Friend the Member for Denton and Reddish (Andrew Gwynne) said, or make minor changes that would make all the difference to their lives? Who can doubt that a person’s home is, in most cases, the biggest investment they will make? So it is simply unacceptable for so many homes to be built on an exploitative and unjust business model.

Levelling up, which is included in the name of the Department, was supposed to answer a clamour for more control and agency, and give people who have a stake in the outcome and skin in the game a greater ability to make decisions about their own lives. As I have said in this place before, that is the legacy that we should seek to build, and we should do so in tribute to the tireless campaigners and in honour of those who lost their lives in Grenfell. We must build a fairer, more just system that is fit for the 21st century.

Everybody, everywhere in the United Kingdom, regardless of the type of tenure that they happen to hold, has the right to a decent, secure, safe home—full stop. We could end these arcane rules and give power back to people over their own homes, lives and communities. Politics is about choices and Labour is clear—we choose to bring this injustice to an end. Change is coming and the Government now have to decide: will they enable that change, or seek to block it? Whose side are they on?