Leasehold Reform

Matt Western Excerpts

Tuesday 23rd May 2023 Commons Chamber

[Sir Peter Bottomley]

The point is well made. I am sorry to go on for slightly longer than I ought, Mr Deputy Speaker, but I have been fighting on this subject for a long time and there are rare opportunities to get some of these things on the record.

The Minister has rightly talked about the commissions and loadings on insurance and the Competition and Markets Authority has looked at some of the insurance rates. The fact is that post Grenfell, the number of fires has gone down dramatically and it will go on reducing. It is not the high-rise properties that had most fires in any case, but the lower-level ones. We need to make sure that we watch all these issues and that the Government have people whose voices they listen to giving them advice on where action is needed.

We have to look at the Law Commission proposals. I hope that the Government will say in the King’s Speech say that they will get those through. When we were waiting for the King to come to Westminster Hall on the Tuesday before the coronation, I happened to be standing with the Leader of the Opposition and the Prime Minister. I said to the Prime Minister, “We need this legislation. It is going to be complicated in drafting but simple in politics.” I said in front of the Leader of the Opposition, “If you bring forward a Bill, it will not take a long time in this House. There will be detailed discussion but it won’t take a long time. No one will try to filibuster. It will have all-party support and we can get it through and change the lives of millions and millions of people.”

Only eight years ago, the Government thought the number of leasehold properties was about 2.5 million, but we now know it is about 6 million. We know that this is the fastest-growing element of the housing market.

[Matt Western (Warwick and Leamington) (Lab)]

The hon. Gentleman is an authority on this subject. Is he saying that the reason there is no urgency on this is that the developers are making colossal profits out of it, and that there is a true correlation between their excessive profits and the expansion in leasehold?

[Sir Peter Bottomley]

To a certain extent, I agree with that, but perhaps we can take it up another time or the hon. Gentleman could make his own speech later on if he so chooses.

I was going to make a point about retirement homes and end-of-life homes. We ought to have three times as many as we do. We need to attract people into decent homes, which are probably smaller and more thermally efficient, rather than them living in a cold, draughty place with many rooms that are not needed. I have an uncle who told me that his home in Taunton is so thermally efficient that he has not had to turn the heating on once in the four years that he has lived there.

If we can attract people into those homes with confidence, that will free up many more homes that will go to younger families, who will do up those homes with carbon-free heating, better insulation and all the kinds of things that we went through when we were young in the life cycle of housing, so we will all gain. That will not happen until we have housing providers who can be trusted. Again, I say to Mr McCarthy at Churchill, “I wish I could trust you. Why don’t you engage with us and show us that our doubts can be answered and that if your practices are unworthy you will have better ones?”

We had the same thing in the past with McCarthy and Stone—the McCarthys were obviously involved in that as well. Some of the managing agents there—this was when the Tchenguiz interests were involved—were involved in the scandal over call systems. They ran a cartel that saw leaseholders either unnecessarily paying out millions and millions of pounds to replace a system, or being overcharged. When the police came to investigate them, they declared themselves as having a cartel, which meant that they got let off completely free. That should not have happened. The first time that we lay complaints against these people, there should be action. The police need to be involved in these things as well.

I hope to have another opportunity in this Parliament to raise more of these issues. The key point is, why cannot we have action now on the scandals? Why cannot we frighten people?

On the overall costs of the defects in fire safety—not just cladding, but many others—why do the Government not get in the insurance companies, which covered the liabilities of the developers, the architects, the builders, the sub-contractors and everybody else, and say, “We want to have a few billion pounds from you as well, so that nobody is left in a home that is either unsafe or unsellable”?

We want people to have the confidence to live in their homes. I look forward to seeing what the Government do, and I am grateful to the Opposition for raising the motion, although I shall look down on them with less respect if they force it to a vote.

--- Later in debate ---

[Matt Western (Warwick and Leamington) (Lab)]

I recall, back in the 1980s, the scandal of endowment mortgages. Over the years, I have also owned leasehold properties and had my fingers badly burned, so I understand many of the issues that so many people across the country must be facing.

The public rightly want reform. When people, particularly first-time buyers, look to buy a property, they are not made aware of what they are entering into, particularly with leasehold agreements. They think they are buying a home, so they think they will own the home. Of course, they then discover that they have actually bought high ground rents and extortionate service charges, often for services that are promised but not delivered, such as the maintenance of green space. Homeowners are paying full council tax, yet they are having to pay perhaps another £300 to maintain the verges and parks around these new estates. Some developers promise a council tax discount, despite paying additional amounts to companies such as Greenbelt, which I believe is associated with Persimmon Homes.

The scale of this is extraordinary. I understand there are about 5 million leasehold homes in England, including 8% of houses, and I know just how prohibitively expensive this can be. The absence of sinking funds, the lack of management reporting, the extortionate insurance payments, the charges for permission to make changes, the fact people cannot have bicycles on their property, the fact they cannot fit an electric vehicle charging point, and other ridiculous things—the list goes on.

[Sir Peter Bottomley]

In addition, the people who manage even large blocks need no qualifications, and there is no full protection for leaseholders’ money.

[Matt Western]

The Father of the House is absolutely right. In one of the properties in which I was a leaseholder, we set up as directors and took control of the property. We appointed our own management company, at significantly lower cost, to address some of the massive overcharges we faced.

In 2014, the Competition and Markets Authority estimated that the average service charge amounted to just over £1,100 a year, suggesting that service charges could total between £2.4 billion and £3.5 billion a year. My hon. Friend the Member for Sheffield South East (Mr Betts) highlighted the 2019 Select Committee report—I was privileged to sit on that Select Committee—which identified that, too often, leaseholders, particularly in new-build properties, have been treated by developers, freeholders and management agents not as homeowners or customers but as a source of steady profit. We concluded by urging the Government to ensure that commonhold became the primary ownership model for flats in England and Wales, as it is in many other countries. Of course, that has not been adopted.

[Stephen Doughty]

Does my hon. Friend share the frustration that many of my constituents face? When they try to set up “right to manage” companies, and to move towards taking over their freehold, the process and the disputes about which buildings and outhouses constitute part of their property make it extraordinarily complex, and often expensive, to take control of management accounts.

[Matt Western]

My hon. Friend is absolutely right. It is incredibly complex and extremely expensive to go through that process.

The last Labour Government’s Commonhold and Leasehold Reform Act 2002 introduced commonhold as a new tenure, which this Government should have pursued over the past 13 years. Progress was not made for two reasons: the conversion from leasehold to commonhold requires consent from everyone with an interest in the property, as my hon. Friend just said; and developers do not want to build new commonhold developments because there is no incentive and no financial upside, as my hon. Friend the Member for Ellesmere Port and Neston (Justin Madders) highlighted. This Government have ignored these exploitative practices, and the ever-louder calls from the public to end them, for 13 years. They launched the Commonhold Council two years ago, so will the Minister update us on what has happened with that? It appears to be nothing.

The public are aware of the Conservative Government’s broken promises. Their 2019 manifesto promised to address this issue by implementing a

“ban on the sale of new leasehold homes”.

That has not happened. Even the Housing Secretary admitted that they should end this “absurd, feudal” system, but we are 13 years on from the last Labour Government and nothing has happened. This Government have let down the public. I appreciate that there is a high incidence of these cases in the north-west England, but there are also some in my constituency. Groups of residents across my local towns are keen to take control of the development of their blocks, but it is too expensive and complicated to do so, as many Members have been saying. In one block of 70 flats, the residents have managed to take that on, but the previous managing agent took £76,000 from the residents’ account and they have not been able to recover the money. The residents are keen to ensure that managing agents are better regulated in any proposed legislation.

As my right hon. Friend the Member for North Durham (Mr Jones) said, there is so much sharp practice out there. That is why Labour would implement the three Law Commission 2020 reports in full. They included measures designed to make it easier for leaseholders to convert to commonhold; to allow shared ownership leases to be included within commonhold; to give owners a greater say over how the costs of running their commonhold are met; and to ensure that they have sufficient funds for future repairs and emergency works.

[Andrew Gwynne]

My hon. Friend mentioned sharp practices, which I mentioned to those on the Labour Front Bench at this debate’s opening. I can give many examples from my constituency, but one of the latest involves leasehold companies, or their agents, sending out innocuous questionnaires to people about improvements they may have had done to their homes. People are filling those in and sending them back in good faith, and then getting a bill for the privilege.

[Matt Western]

My hon. Friend is absolutely right about that, and I have examples of that in my constituency; letters will suddenly appear demanding, let us say, £13,000 from each and every resident for changes that have been made and claims of service.

For some time, Labour has been pressing the Government to bring forward the promised leasehold reform part 2 Bill and to ensure it contains those recommendations set out in the Law Commission reports of 2020. As I mentioned at the outset, we have had so many scandals associated with property and mis-selling over the years, including endowment mortgages. There is now an entire parasitic industry surrounding home ownership in this country and it needs to be addressed. The situation is so much better in other countries around the world.

Twenty-one years ago, Labour introduced the Commonhold and Leasehold Reform Act 2002. For the past 13 years, the Government have not seen this issue as a priority. The developers are profiteering and there is a correlation between the profits being made by those companies and the exploitative practices that go on around leasehold developments. This is a scandal and Labour in government will bring an end to it.