Housing: Unfair Leasehold Agreements

Lord Foulkes of Cumnock Excerpts

Tuesday 3rd March 2020 Lords Chamber

[Baroness Bloomfield of Hinton Waldrist]

I acknowledge my noble friend’s significant interest in and knowledge of this area from her position in Westminster Council. The assured tenancy trap relates to property sold as a lease but where the ground rents, due to escalation, exceed the £250 threshold outside London and £1,000 in London; in effect, it becomes an assured shorthold tenancy, meaning that the owner does not have the same rights as a normal owner and it can be repossessed if they fall into arrears. The Government are committed to addressing this issue via legislation, which will take long leases completely out of the assured shorthold tenancy regime and prevent leaseholders being affected by this issue completely.

[Lord Foulkes of Cumnock (Lab Co-op)]

The Minister rightly condemned and regretted when home owners were ripped off; would she care to comment on Persimmon Homes? The average cost of a house it builds is £250,000, on which it makes a profit of £65,000, and a large number of its homes have already been declared unsafe in relation to fire and other matters, yet last year the chief executive received a bonus on top of his salary of £73 million. Is that not absolutely outrageous? What are the Government going to do about that?

[Baroness Bloomfield of Hinton Waldrist]

As I said in a previous answer, the Competition and Markets Authority report updating its investigation into the extent of mis-selling and onerous lease terms will address this issue—maybe not the profit motive but the consequences of past actions. I note that in an action of Cardiff Council v Persimmon, Persimmon was forced to give 55 properties sold as leasehold on the St Edeyrns estate back to freeholders in an out-of-court settlement, so they were given their leaseholds as freeholds for nothing. We would like to see more of this happening. Regrettably, it was settled out of court before it became a court case so we cannot use that settlement as a legal precedent.