Leasehold Reform (Ground Rent) Bill [Lords]

Mike Amesbury Excerpts

Report stage & 3rd reading
Monday 24th January 2022 Commons Chamber

[Mike Amesbury (Weaver Vale) (Lab)]

I beg to move, That the clause be read a Second time.

[Madam Deputy Speaker (Dame Eleanor Laing)]

With this it will be convenient to discuss the following:

Amendment 1, in clause 2, page 3, line 16, at end insert—

“Retirement developments where some leasehold residential flats have already been sold prior to commencement but others remain unsold

(12) A lease is an excepted lease if it is a lease of a retirement home in a development, where—

(a) other residential flats within the development have sold and completed on a long leasehold before the relevant commencement day under section 26(4) but it is a flat within the development which remains unsold, and

(b) the development commenced prior to 6th July 2021.”

This amendment seeks to avoid retirement developments where properties are on the market, but not fully sold by the time the Act comes into force for retirement properties, needing to have two lease types within one building, some paying ground rents and others funding the development of communal areas by another method.

[Mike Amesbury]

Let me begin by thanking all colleagues who have helped this short but important Bill through its stages so far, including our friends in the other place. In particular, I thank those who joined the Minister and me in scrutinising the Bill in Committee. Let me also begin with an apology to the Minister. I told him on the occasion of our final meeting in the Committee that that would be my last outing in respect of housing, having handed over the portfolio to my capable hon. Friend the Member for Greenwich and Woolwich (Matthew Pennycook), who is sitting behind me. I was wrong to say that, and I am very pleased that I was wrong. I stand here today ready to continue to raise an issue which matters hugely to me, to many of my constituents, and to leaseholders across the country—and, indeed, to the Minister himself.

Although the Bill is short, many important issues in it have already been covered extensively, first by our colleagues in the other place and then by Members here, in Committee. I do not wish to repeat too much of what has already been said, but the two new clauses tabled for Report are an opportunity for Members on both sides of the House to raise again two important aspects of the Bill.

New clause 1 would require the Government to produce draft legislation within 30 days to reduce ground rents to a peppercorn in existing long residential leases. The antiquated feudal system of leasehold is unjust for the many and not just the new. People in England and Wales have been trapped in that relic from the past for far too long. I urge the Minister to set them free, level up their life chances and support the new clause.

New clause 1 proposes that the narrow scope of the Bill be simply widened to improve the lives of leaseholders—the 4.5 million people trapped in this feudal system. Some 1.4 million of them are in houses, many in the north, the north-west and Wales, and may be experiencing high ground rents on top of other exploitative terms built into their leasehold contracts.

[Theresa Villiers (Chipping Barnet) (Con)]

We are all united in wanting to stamp out abusive practices with ground rents, but is the defect of the hon. Gentleman’s amendment not that it amounts effectively to a confiscation of existing property rights? That in itself has fairness issues, but it also deters future investment in our building stock. That future investment is needed, for example, if we are going to insulate against climate change and turn our buildings into more carbon neutral ones for the future.

[Mike Amesbury]

A feudal system of kings and barons needs to be kicked into touch. It is unjust and it is unfair. I am sure the right hon. Member will make an informed decision when it comes to the Division Lobby, but I know whose side I am on.

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

The Levelling Up, Housing and Communities Committee looked at the leasehold issues in some detail and produced a report that led to the Competition and Markets Authority conducting its investigation. We looked at the issue of property rights and took advice and evidence from leading property lawyers, who said that where there is a general public interest, it is perfectly reasonable under the European convention on human rights to go down the road being suggested, and that even for existing properties, the ground rent system and other leasehold issues could be changed to reflect the fact that currently they are simply unfair.

[Mike Amesbury]

I thank my hon. Friend for that intervention and all the work he and the Select Committee have done to move the matter forward. Together with the Select Committee and many others, I certainly want to see this system kicked into history.

I reaffirm that campaigners have waited long enough for change, and we should not keep them waiting any longer. A former Secretary of State, the right hon. Member for Newark (Robert Jenrick), referred to the Bill as the “appetiser” before “the main course”. Again, I affirm that what we need is an all-you-can-eat buffet of reform here and now.

Amendment 1, tabled by the right hon. Member for New Forest West (Sir Desmond Swayne), would prevent some retirement properties from being bound by the legislation. Unfortunately, we are not able to support the amendment. In fact, in Committee I tabled an amendment that would have done quite the opposite. Those who buy retirement properties should have been able to benefit from this new legislation and be put on par with everybody else. Justice is justice. The right hon. Member has certainly been consistent, but consistently wrong on this matter.

[Sir Desmond Swayne (New Forest West) (Con)]

Has it occurred to the hon. Gentleman that for many purchasers it will be in their interests to pay a lower purchase price and pay a ground rent, rather than to have to pay a very much higher price at the outset?

[Mike Amesbury]

I will agree to disagree. The Government have proposed a compromise, giving a longer transition phase for retirement properties, and we will support that approach, as was stated in Committee.

I find that the concerns of retirement community developers do not outweigh the need for those buying retirement properties to be treated fairly as consumers. Given the notice that the retirement community has had about the change, the transition period is generous enough. Many in the industry have done the right thing and already moved away from this income stream model, and I ask that their colleagues do the same.

In conclusion, the Bill marks another milestone in the slow journey to put the feudal system of leasehold into the history books. I thank all those campaigners who have educated legislators and the Government to secure change. The investigation and intervention from the Competition and Markets Authority have shone an authoritative light on the leasehold scandal. Developers have been exposed and are now responding by ditching the practice of doubling ground rents every 10 years. I urge Ministers to strengthen the Bill for all leaseholders and back new clause 1.

[Sir Desmond Swayne]

I draw your attention, Madam Deputy Speaker, and the attention of the House to my entry in the Register of Members’ Financial Interests.

I am deeply embarrassed about the way that the retirement living industry has been treated over the past few years in the progress to this Bill. In recognition of the significantly greater capital costs of building developments that have communal areas, which have traditionally been funded through an income stream of ground rent, the industry was granted an exemption, or an assurance that it would be exempt from the provisions of the Bill, back in June 2019. That exemption was then withdrawn in January 2021. I understand that the decision to withdraw the exemption was made almost a year earlier, in February 2020, and that discussions about revoking the assurance of exemption had actually begun in August 2019. Throughout all that period, the industry continued to be reassured that the exemption was good and would hold, and it was not.

Throughout that period, the industry continued to raise capital on the basis of the model with which they had been told they could continue. The amendment goes one tiny little bit towards trying to remedy the damage that has been done. It accepts that the practice will have to end, but it asks for one tiny concession, namely that, when the provisions of the Bill bite in March 2023, properties that are part-sold can continue to sell the residual remaining flats or properties on the basis of a continued ground rent. Without that, what we will have is some properties within a development being worth significantly more in terms of the purchase price than others, and some properties paying a ground rent and others not. It will be hugely complicated and divisive. Therefore, the amendment merely asks for that to be addressed. At the most, if the provision were to pass, we anticipate that this would account for about 2,000 properties. I ask the Minister to reflect on this, and, even at this late hour, accept the amendment.

--- Later in debate ---

[Mike Amesbury]

I thank the Minister and everyone in the House who has been involved with the Bill: the Clerks, the Library specialists and the Bill team. I also thank hon. Members who have participated in each part of our proceedings, giving their time, effort and wisdom. I thank the many Members who contributed on Report: the right hon. Member for New Forest West (Sir Desmond Swayne), who is not in his place but we agreed to disagree; my hon. Friend the Member for Ellesmere Port and Neston (Justin Madders), the co-chair of the all-party parliamentary group on leasehold and commonhold reform; my hon. Friend the Member for Sheffield South East (Mr Betts), the Chair of the Levelling Up, Housing and Communities Committee; the hon. Member for Warrington South (Andy Carter); my hon. Friend the Member for Reading East (Matt Rodda); and the hon. Member for Strangford (Jim Shannon). They all made very powerful contributions.

I would like to reiterate and re-affirm the comments made by the Father of the House, the hon. Member for Worthing West (Sir Peter Bottomley) and put on record my thanks, and that of the Opposition, to the incredible campaigners at the National Leasehold Campaign, Catherine Williams, Katie Kendrick and Jo Darbyshire, and at the Leasehold Knowledge Partnership, Martin Boyd, Sebastian O’Kelly and, of course, the late Louie Burns. I want to pay my respects to the Father of the House, who has consistently campaigned on this issue and educated others, including me. I know he will continue to do so. I thank him.

They and many others have done the hard graft in fighting for leasehold reform and, with this Bill, they are only now beginning to see their efforts bear fruit. It is unfortunate that their wait will continue. The Bill represents the picking of a single apple in the orchard. It really is narrow in scope, a point acknowledged by the Minister. It does not attack the many issues raised by Members across the House that plague existing leaseholders. It will not deal with existing ground rent costs, untransparent service charges or management agent fees. It is crazy that anyone of us here or beyond could set themselves up as a management agent and charge astronomical and unfathomable service charges. Those issues must be dealt with sooner rather than later.

The Bill will not force accountability on freeholders or managers for their actions. It will not cover, as has rightly been pointed out, historical building safety costs, which are still being debated at considerable length in this Chamber. It will not deal with the cost or difficulty in obtaining enfranchisement, unfair contract terms or the many other issues still faced by homeowners locked in leaseholds, such as insurance, which is a major unfairness. The unfairness and injustice must be gone for good. The Government need to take further action. Leasehold is a system hundreds of years old. A 28-page Bill is not enough to finish it off—and we need to finish it off. The Bill is a good attempt at preventing future wrongs, but with so many real existing wrongs in front of us it is easy to see why leaseholders sitting in properties today will feel short-changed when new neighbours literally across the road will be freed from the problems that are still impacting them—a real injustice.

I am partially pleased—partially—that in advance of today’s debate the Government published a consultation on wider leasehold reform, but let us not pretend that that is a considerable step forward. We have been here before. We have had numerous consultations. A consultation paper published in 2017 on tackling unfair practices in the leasehold market was closely followed up in 2018 by consultation on implementing reforms in the leasehold market. We have had announcement after announcement from Government press officers. What we have not had so far is real and fundamental change. After hundreds of years of leasehold, patience is wearing thin. England and Wales are lagging far behind the rest of the world and our neighbours closer to home—I referred to Scotland.

In conclusion, the Government will have to do more, and do it quicker than “in due course”, to convince leaseholders that they are serious about taking on those vested interests to which Members from across the Chamber have referred. Members tonight have echoed the view that we need a clear timetable. Be the history-maker, Minister, set people free and usher in an age of commonhold.