Eddie Hughes Portrait Eddie Hughes
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I largely agree with the hon. Lady, not least because the ten-minute rule Bill to which I referred, which I brought to the House when I was a Back Bencher, completely endorsed her points. It is unfortunate that some people include such egregious terms in ground rents.

Mark Tami Portrait Mark Tami (Alyn and Deeside) (Lab)
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Does the Minister agree that this issue is about not only ground rents, but the admin fees that are often associated with any minor changes that the owner of the property wants to make? A lot of these properties are also linked with extra charges for management fees for the land and other things. The levels of charges placed on leaseholders are becoming totally unacceptable.

Eddie Hughes Portrait Eddie Hughes
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I do not want to jump forward several pages in my speech, but the right hon. Gentleman is predicting—or at least pointing to—the fact that we have identified this problem and have ensured that when we reduce ground rents to a peppercorn, people will not be able to cheat by introducing associated management fees and other charges. If he is looking for further changes, the second part of our seminal legislation, when it comes in due course, will no doubt satisfy his needs.

The starting point for this legislation has to be our shared recognition that for many people, to be a leaseholder is also to be a homeowner, and we are clear that homes that have been bought should be theirs to live in and enjoy, not be treated as cash cows for third-party investors. This Government are on the side of homeowners, which is why in our manifesto we committed to introduce this important legislation.

Hon. Members will be well aware of the problems that many leaseholders have faced in recent years, including, as pointed out by Opposition Members, spiralling ground rents and onerous conditions that have turned the dream of home ownership into a nightmare for some leaseholders. This Bill is the first of our seminal two-part legislation to reform and improve the leasehold system. Further legislation will follow later in this Parliament to continue to address the historic imbalances in the leasehold system.

Eddie Hughes Portrait Eddie Hughes
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The work of the CMA has been pivotal so far in already changing the behaviour of a number of significant developers. I have spoken to it recently; further work is ongoing and I hope that it will have further successes in the future. My hon. Friend is completely right to raise that point.

Both this Bill and the wider leasehold reform programme have been informed by consultation. I thank those present here today, including the Opposition Front Benchers, who have taken the time to discuss the issue. I look forward to further discussions over the coming weeks and months.

The Bill has a specific focus: the ground rent in future long residential leases. Some existing leaseholders face substantial difficulties, including costly enfranchisement, a lack of transparency and burdensome lease terms. Escalating ground rents in particular can reach unaffordable levels and make some properties difficult to sell. That is not right, which is why we have asked the Competition and Markets Authority to conduct a thorough investigation into potential mis-selling and unfair terms in the leasehold sector.

Mark Tami Portrait Mark Tami
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I have met many people who were told by the company that sold them their property that they would be able to buy the lease, only to find out, when they inquire to buy it, that it has been sold on to some financial institution. Does the Minister accept that point?

Eddie Hughes Portrait Eddie Hughes
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Once again the right hon. Gentleman points out an egregious and unfortunate practice that hopefully we will be finding ways to address in future.

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Lucy Powell Portrait Lucy Powell (Manchester Central) (Lab/Co-op)
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The Leasehold Reform (Ground Rent) Bill sets ground rents on new leasehold homes to peppercorn levels. We welcome this very small step towards reform, and will not oppose the Bill this evening.

Generating income through high ground rents is an outrageous practice, as has been discussed, but serious leasehold reform is long overdue. Leasehold has been the main way that properties in shared blocks or converted flats have been owned in this country. It stems from arcane feudal laws that date back to an era of landed gentry and aristocracy, and it needs reform urgently. In its more recent manifestations, there has been what can only be described as a scam on an industrial scale, as was pointed out by my hon. Friend the Member for City of Chester (Christian Matheson), against innocent leaseholders—and it increasingly affected new houses, not just flats. It is totally wrong, and it needs ending.

Mark Tami Portrait Mark Tami
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I have been struck by the way that two houses, next door to each other, may be exactly the same, but one can be leasehold and the other freehold. We see that all the time. When a house is advertised, the advert often says, “This is not leasehold”—it points out that fact. Leasehold properties are being devalued by the day.

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Lucy Powell Portrait Lucy Powell
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I am glad the right hon. Gentleman raises that point, because I am sure colleagues around the House will be keen to highlight—

Mark Tami Portrait Mark Tami
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Will my hon. Friend give way on that point?

Lucy Powell Portrait Lucy Powell
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I will first try to answer it, and then when I do not answer it very well, I will give way to my right hon. Friend to give a better answer. What I do know is that, unfortunately, many people who bought houses in this situation were advised to use the solicitor of the marketing company or company selling the houses—I have many in my constituency. So they were given poor advice, and this is a mis-selling scam as well. Would my right hon. Friend like to give a better answer?

Mark Tami Portrait Mark Tami
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My hon. Friend has in many ways made the point I was going to make. These people were often first-time buyers, keen to get on to the housing market and get their first home. They were told, “Don’t use this solicitor or that solicitor; use these ones, and we will give you a discount to use them”, and—shock, horror—many were not even aware, as my hon. Friend has made clear, of the property being leasehold, let alone of all the other charges associated with that.

Lucy Powell Portrait Lucy Powell
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Absolutely; my right hon. Friend makes a very good point as well. Many people, especially first-time buyers, do not understand the difference between leasehold, freehold and so on, and many of these issues come to light only as problems arise later or when they try to sell the property.

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Mark Tami Portrait Mark Tami
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Will my hon. Friend give way?

Lucy Powell Portrait Lucy Powell
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I will, because my right hon. Friend is an expert on this issue.

Mark Tami Portrait Mark Tami
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To list just a few examples that I have come across, some leaseholders who—in theory—own a house and the land around it are asked to pay if they want a pet or want to change the flooring in the house or the layout of the garden. People have said to me, “I’m paying a mortgage on a house that I don’t really feel I own.”

Lucy Powell Portrait Lucy Powell
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My right hon. Friend is absolutely right and he gives good examples, some of which I was going to use later. He makes a very good point—some of these charges are outrageous. Will Ministers respond to that and address how we can stop that practice?

Secondly, the millions of people already trapped in leasehold homes will see no benefit whatsoever from the Bill, so none of the examples that we have heard will end as a result of it. The Government have chosen to limit the scope of the Bill to new homes, which means those already facing these bills will see no benefit at all. Delay has real costs for them; the Minister can pass the buck on to us for what happened 11 years ago, but more than 2 million new homeowners have been trapped in this feudal leasehold system since his Government came to power.

The Competition and Markets Authority has done some good work taking down the largest and worst-offending of the freeholders, but we cannot wait for it to take on every single company involved in this outrageous practice. Will the Minister work with us and support our proposal, which we will table in Committee, to protect existing leaseholders?

Thirdly, the Bill does nothing at all to stop new houses being sold as leasehold. Leasehold houses are straightforwardly wrong, for the reasons that we have already heard. At the same time that the Government promised to set ground rents at a peppercorn, which the Bill does, they committed to ending the practice of newly built homes being sold as leasehold.

Half a million houses have been sold as leasehold since 2010, 60% of them in the north-west. Those homeowners face not just exorbitant ground rents but restrictions on how they can alter their homes. We have already heard some examples: if someone wants to have a pet, or if they want to make changes to the building, they have to ask permission. All too often, people are left feeling that they do not really own the home. When the leaseholder tries to escape this nightmare by buying out the freehold, they often discover all kinds of other restrictions that they were not told about when they bought their home. This needs to change.

As recently as 2017, the Government promised legislation to prohibit the granting of new residential long leases on houses. When will that come in, and why is it not included in the Bill? It makes no sense to me whatsoever that that has not made it into the Bill. Again, perhaps Ministers will work with us, and with some of my colleagues who are in the Chamber today, in Committee to end new leaseholds on houses altogether.

There was a lot more that the Government could have done in a simple first-step Bill, but I hope the whole House will recognise that wholesale reform of leasehold is long overdue. The building safety crisis has brought into stark relief how terrible our feudal leasehold laws are. Innocent leaseholders can be passed remediation bills totalling hundreds of thousands of pounds with no right of recourse. It is a David and Goliath situation that is hitting more and more homeowners across the country. Fixing the building safety crisis truly must mean fixing our outdated leasehold laws too.

As the last few years have shown, this is now an urgent task, so we call on the Government to do these simple things when it comes to wider leasehold reform: enable leaseholders to extend the lease or buy the freehold; make commonhold the norm, and make it much easier for properties to operate that way; abolish marriage value, as they promised they would; strengthen leaseholders’ voices and simplify the right to manage; give real teeth and real recourse to the bodies that are supposed to arbitrate and act on behalf of leaseholders, or create new ones altogether; and prevent freeholders in law from passing on extortionate costs for remediation works, or for putting right problems that they have created that are not the problems of the leaseholders, as well as the things that I have already discussed. Those are just some of the reforms that are urgently needed to ensure that no leaseholder is trapped against their will in this broken, outdated system.

In conclusion, the Bill is a tentative attempt at reform. While it is welcome, it represents a massive missed opportunity to transform a leaseholder sector that continues to scam working people on an industrial scale. Even in a slimmed-down Bill, the Government have failed to close loopholes, protect those already in leasehold homes or end the sale of new houses as leasehold altogether. Wholesale reform is urgently needed to ensure that nobody continues to be voiceless, trapped in leasehold homes they cannot sell, and facing ever-growing bills and charges.

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Robert Jenrick Portrait Robert Jenrick
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I will make progress, if my right hon. Friend does not mind.

The Bill was born out of two issues. One is a recent phenomenon, which the Front Benchers and other hon. Members have mentioned: the abuse of leasehold in recent years. A system that was never perfect and that many of us would wish to see reformed was subject to wholesale abuse and rip-off practices by developers and freeholders, who used ground rents as an income stream and escalated them, leaving leaseholders in a perilous position. Leasehold was used for properties for no good reason, purely to benefit from ground rents. We have heard about such examples, and particularly the use of ground rents for houses. It is difficult to see that any house needs to be built as a leasehold property. In different times, I have bought into the argument that there might be exceptional reasons why one would need to build such a home, but it is very difficult to think what those would be. The system is not used in other countries around the world, including in the United States, where there are gated communities, communities for the elderly—all manner of different homes. They are not being built as leasehold properties, so I do not see why they should be in this country.

Mark Tami Portrait Mark Tami
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I agree fully with that point. As the right hon. Gentleman said, this practice had largely gone away. For years, houses were not built as leasehold properties, but in the north-west and in north Wales, a group of builders decided that this would be an extra way of scamming—I use that word deliberately—even more money out of the people buying the properties.

Robert Jenrick Portrait Robert Jenrick
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The right hon. Gentleman is absolutely right; I do not disagree in any way. The north-west was particularly targeted, for reasons that I do not understand, with tens of thousands of homes built in this manner. It really was disgraceful. It gave leasehold a very bad name and necessitated these changes and others that will be introduced in future. The Bill ends these practices for new properties; that is key. It will ensure that the business model behind ground rents—the creation of such properties as leasehold to benefit commercially—will come to an end. We are already seeing its gradual reduction, and the Bill will lead to its elimination.

I want to address the point that was raised about why the proposals should be extended to retirement properties. As Secretary of State, I came under fierce resistance and lobbying from the retirement property sector. Its lobbyists approached Members of Parliament and my Department and threatened judicial review of our proceedings. I considered it to be an unfair practice, targeted at the most elderly and vulnerable in our society, that in addition to paying their service charge they should pay a ground rent that might escalate at a significant pace. Why not have a fairer and more transparent system where an elderly person knows exactly what they are getting when they pay the purchase price on their property and then when they pay the service charge on an annual basis, instead of receiving two bills every year? I think that is a simple matter of fairness and transparency, and it was the right decision to bring that to an end. We did, however, give a longer period for businesses to transition and to change their business model, which is why that part of the industry will not feel the force of the Bill until 2023.

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Justin Madders Portrait Justin Madders
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My hon. Friend makes an interesting point. There is clearly an imbalance. We have already talked about how some enthusiastic first-time buyers who just want to get into their new homes put their trust in the people who have been assigned to deliver the legal niceties such as putting a value on the property and doing the conveyancing. They put their trust in those people, and sometimes that trust is betrayed through the egregious injustices that we have talked about.

Mark Tami Portrait Mark Tami
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My hon. Friend has mentioned management fees, which I see as the next scandal coming down the road. People who bought their properties and were being charged perhaps £100 or £200 a year will have thought that that was okay, but that might now have gone up to £500 or £600 and there are often additional charges because, for example, fences or certain parts of the ground are not covered. People have told me that they feel they are paying their council tax twice. That is how they see it, and it is totally unfair.

Justin Madders Portrait Justin Madders
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I thank my right hon. Friend and neighbour for his intervention, which leads me beautifully into the next section of my speech, in which I shall talk about exactly that.

I will never accept that it is right for developers to choose not to pay a sum to councils to adopt the communal areas, and that they instead save themselves money by passing on that cost to the homeowners and then make even more money from the homeowners by charging them for things that ought to be coming out of their council tax. Like my right hon. Friend, I worry that this trend will be accelerated because the ground rent gravy train is coming to an end, and that we will hear more and more stories of homeowners having no choice but to pay inflated annual service charges that, given the choice, they would prefer to pay through their council tax.

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Matt Rodda Portrait Matt Rodda (Reading East) (Lab)
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It is a pleasure to speak in tonight’s debate. I wish not only to address a number of issues that colleagues have raised, but to add in further details that I hope are particular to my constituency but fear may be common around the country.

First, I wish to support the points raised by my hon. Friend the Member for Manchester Central (Lucy Powell). Obviously, I welcome this Bill, which will help, but the broader point about the deep inequities of leasehold still stands true and we should be moving much faster on this important matter, trying to remove leasehold from the system of ownership in this country. Is it not incredible that the UK still has this medieval system of ownership, which, as has been mentioned, so discriminates against first-time buyers, people on lower incomes, older people and many other groups, which in many ways deserve more support and encouragement to get on to the property ladder? They deserve not to have their lives blighted by what is, sadly, sometimes the behaviour of irresponsible developers. I am not saying that all developers are irresponsible, but Members have clearly highlighted some awful and appalling examples of behaviour.

First, Loddon Park is a pleasant development on the edge of Woodley, a suburb of Reading. It is a relatively new and really quite beautiful development, with many attractive homes. The homes are freehold properties but some of the shared areas in the large development are subject to charges. In many ways, the sort of problems described so eloquently by my hon. Friend the Member for Ellesmere Port and Neston (Justin Madders) are also occurring for those at Loddon Park—several hundred people living in an attractive new development on the edge of an urban area in the south-east of England. The residents potentially face unlimited extra costs for the maintenance of some attractive grounds—including meadow areas, large ponds and other areas where children can play—because no cap was written into the charging policy and they did not realise that when they bought their properties.

As explained earlier by my hon. Friends the Members for Ellesmere Port and Neston and for City of Chester (Christian Matheson), as well as other colleagues, some of the first-time buyers we are talking about are unfortunately not always aware of some of the difficulties into which they might get themselves. There is an unequal situation in which on the one hand there are powerful and articulate developers with an excellent team of lawyers and on the other hand there are first-time buyers. That is deeply unfair. In this case, young families face potentially unlimited additional costs to pay for the upkeep of the rather attractive communal areas around their houses. That is very sad and deeply unfair. I respect the fact that the local authority had difficulties in trying to provide the properties, but I wish it had been more careful. There is also an element of involvement from Wokingham Borough Council, which is the local authority involved. Will the Minister look into that issue? I will write to him to explain the situation and ask for his help and support.

Before I mention another egregious example from the Reading East constituency, I offer my support to colleagues who have mentioned the issue of snagging and the problems with developers that prevent the adoption of roads. I know of cases in both Reading borough and Wokingham borough in which different developers have started to build a new estate and completed all the properties, which have been sold, but the roads, street lighting and other services have not been properly completed. Although the issue has gone on for years, there has been an ongoing tussle—similar to what the hon. Member for Thirsk and Malton (Kevin Hollinrake) mentioned—between council officers and developers. It has been deeply problematic for local authorities, which often have low levels of resource in their planning departments so are not well equipped to argue the case.

Mark Tami Portrait Mark Tami
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I totally agree with my hon. Friend. Quite often, the moment the developers sell the last property, that is it: they are not interested any more. They are not interested in snagging or doing the roads; they are off to build somewhere else. The problem is that, as my hon. Friend was saying, local authorities do not have the money to chase these people. In my opinion, if they do not finish an estate—what they were allowed to do under the planning permission—they should not be granted permission again to build anything else.

Matt Rodda Portrait Matt Rodda
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My right hon. Friend makes an excellent point. There should be much stricter rules on this issue, because such sharp practice by developers helps no one. It does not help the building industry as whole, homeowners, local authorities or, indeed, other businesses that have to operate. In one estate near me, drivers can feel the difference as they drive on to the unadopted piece of road because their vehicle goes over a huge bump. That is not good for anyone, including many of the small businesses that have to deliver to that estate. It is surely in everybody’s interests, including those of the wider building industry, to get on with it and come up with a clear, simple and fair solution to the problem so that we can all move on and not spend vast amounts of unnecessary energy chasing after developers to sort out problems such as lamp posts that do not work or roads that have not been finished off.

I wish to address a specific issue that relates to a social housing enterprise in my constituency that operates across large parts of Berkshire. I have been deeply disappointed by Housing Solutions and ask for the Minister’s help. This organisation appears to have badly let down a number of residents in Woodley, the Reading suburb I mentioned earlier. It applied for planning permission to build properties next to a transport depot, where there are a lot of heavy goods vehicle movements, and on an industrial estate. The properties have been sold in a part-ownership scheme to local residents who were desperate to get on the housing ladder and were finding it quite difficult because they are on modest incomes. The local authority gave planning permission and carried out all the relevant checks—again, this is Wokingham Borough Council not Reading Borough Council. There was nothing in planning law to stop these flats from being built next to a haulage yard. The local authority looked into it and it was not able to reject the plans on that basis—on the basis that the flats were close to a noisy and polluting business. However, it did try to insist on conditions on the development. Sadly, though, it appears from lengthy inquiries from my office and also from one of the local councillors—Councillor Shirley Boyt—that these conditions have not been met. Residents, including a constituent of mine, Elise Maslen, who lives in the development, were not told of the additional changes that would need to be made to these properties—in particular, the need to adapt to air quality problems, such as mechanical ventilation and other forms of enhancements to the properties. They were also not told about the noise and pollution from the depot when they purchased the properties. That has resulted in around 20 families being trapped in flats that they do not want to be in, suffering from noise and air pollution.

The local authority has tried to find a way of bringing these properties up to spec. It has insisted on Housing Solutions doing that, but there has been a great deal of delay. This has gone on for five or six years. Sadly, some of the residents have moved away and are now having to pay for the cost of living in these properties while also living at a new address. They are deeply concerned about the health of their children and of themselves. This seems to be an egregious abuse of the situation. While it is not directly related to leaseholders, it has many of the same features, with powerful organisations, sadly, abusing their position of power and ordinary householders struggling and being provided with incorrect information. I wish to write to the Minister to ask for his help on this matter because it is of huge concern to me, to the local community and to the residents concerned. They have been treated appallingly by the housing association.