Leasehold and Commonhold Reform

Marsha De Cordova Excerpts

Thursday 21st December 2017 Westminster Hall

[Marsha De Cordova (Battersea) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Bone. I thank my hon. Friend the Member for Poplar and Limehouse (Jim Fitzpatrick) and the hon. Member for Worthing West (Sir Peter Bottomley) for their work and leadership on this important issue.

Leaseholder reform is often overlooked when it comes to the housing crisis. The reality is that we must view leaseholder reform as part of, not separately from, how we address the injustices of that housing crisis. Leaseholders face a number of exploitative conditions that relate to the way in which housing is seen as an economic investment, not as about homes. That is particularly acute in London, where we have the highest number of leaseholder sales. In my constituency of Battersea, which has become something of a developers’ playground in recent years, 83% of all property sales in 2016 were leasehold. As more and more high-rise developments go up, it is crucial that we ensure leaseholders have rights and protections, and that legislation is implemented to stop such exploitation.

One key issue that hon. Members raised, which my constituents have written to me about, is ground rent. With more and more developers selling flats on a leasehold basis, there is an incentive to set ground rent at a higher level and to build hidden charges into leaseholds. Developers have admitted that the returns from selling on ground rents can be up to 35 times the annual ground rent value, and can be more than the amount normally charged to the purchaser of a new build house for the freehold interest at the point of sale.

There is no duty on the freeholder of a house to inform the leaseholder of a change in ownership. Nor does the leaseholder have a “right of first refusal” to buy the freehold interest at that point. One of my constituents’ is subject to ground rent that will double every 15 years, which means that her property will become more and more expensive, and will be unsellable if she cannot afford the charges. Over time, the ground rent will rise to hundreds of thousands of pounds for a one-bedroom flat. My right hon. Friend the Member for Wentworth and Dearne (John Healey) rightly described this as legalised extortion in some of the worst cases. The Government must act to end this practice, and commit to help those already trapped in unfair and exploitative ground rent schemes. Nobody should be made homeless because of ground rent or trapped in a contract that means that they are unable to move on or afford to maintain the cost of their home.

[Mike Amesbury]

Does my hon. Friend agree that the evidence presented today and presented to us by constituents points to the fact that people have been mis-sold products? As my hon. Friend the Member for Ellesmere Port and Neston (Justin Madders) rightly said, this is the new PPI scandal.

[Marsha De Cordova]

My hon. Friend makes a very important point. I agree.

It is important that we regulate the new lease models that developers are creating. Shared ownership tenants in the new blocks along the river in my constituency find that the service charges do not seem to match up with the proportion of the housing estate they occupy.

We cannot forget leaseholders on council estates. Any so-called regeneration scheme must give owner-occupier leaseholders the same value and agreement on their flats or a like-for-like buy-in. Council estate residents must not be forced out of their communities when demolitions take place. Another major fear that many council estate leaseholders in Battersea have is the cost of the retrofitting of sprinklers. After the tragedy of Grenfell, councils have rightly sought to ensure that old tower blocks that are more than 10 storeys high have the same safety regulations as new builds. However, the Government are refusing to fund those crucial safety measures. Councils such as Wandsworth are planning to charge leaseholders for the work, which means charges of up to £4,000. Leaseholders on one of my estates—the Surrey Lanes estate—already face charges of £9,500 for recent window works, and they will now be hit with an additional £4,000. There is often an assumption that leaseholders can afford that, but that is totally untrue and misunderstands the circumstances of many owner-occupiers on our council estates.

Cladding is another issue in Battersea. Castlemaine Tower was found to have the dangerous cladding similar to that on Grenfell, and the council are paying to have it removed. In private blocks with that cladding, however, the private freeholder and/or landlord is likely to pass on the huge sums in charges to the leaseholders. I ask the Minister, what plans are the Government making with regards to safety works in the private-rented sector, in particular post-Grenfell, to ensure that leaseholders are not held to ransom by freeholders?

Finally, it is great to see that leaseholder reform is getting a higher profile, and that the work of the APPG is starting to have an effect on Government. As we become a more urban nation, more and more people will be living in apartments and high-rises, so it is crucial that we get things right.

My final, final point, Mr Bone, is to thank you and all hon. Members present, as well as all the parliamentary staff. I wish everyone a very merry Christmas.