Leasehold Reform

Nick Boles Excerpts

Wednesday 4th December 2013 Westminster Hall

[The Parliamentary Under-Secretary of State for Communities and Local Government (Nick Boles)]

It is a pleasure to serve under your chairmanship, Mr Turner. I feel much safer with you watching over us.

I congratulate the hon. Member for Poplar and Limehouse (Jim Fitzpatrick) on securing this debate and on speaking with both passion and persistence on an issue that I know is of great importance to his constituents. I also thank my hon. Friend the Member for Worthing West (Sir Peter Bottomley) for his contribution and his persistence in pursuing the matter, which some might view as arcane but is a very real source of worry and distress in many people’s lives.

I am responding to this debate in place of the Housing Minister, the Under-Secretary of State for Communities and Local Government, my hon. Friend the Member for Keighley (Kris Hopkins), as he is required to respond to an Opposition day debate on business rates. I may not be able to address all the issues, and if I try to do so, I might not address them as intelligently as he would have done, but I know that he is happy to write to hon. Members to follow up on any issues. Of course, he is also happy to hold the meeting mentioned by the hon. Member for Poplar and Limehouse, to which he has already committed.

Residential leasehold is indeed an important and growing housing sector. Many leaseholders, like my hon. Friend the Member for Worthing West, are happy with their home, but we recognise that some leaseholders are not. The Housing Minister’s postbag makes that very clear.

The hon. Member for Poplar and Limehouse has raised a wide range of issues, and I will attempt to address as many as I can in the time available. I am glad to have been asked how the redress schemes will assist leaseholders and others. Since 2010, the Government have become increasingly aware of the issues in the residential leasehold sector, particularly to do with the quality of service. The Enterprise and Regulatory Reform Act 2013 gives the Secretary of State for Communities and Local Government the power to require all residential letting agents and property management agents in England to be members of a Government-approved redress scheme. We are making good progress on implementing those powers, and we expect to start approving such schemes early in the new year.

[Sir Peter Bottomley]

I have a brief technical point that I do not expect the Minister to answer today. In law, a leaseholder is a tenant, but leaseholders are not always counted as tenants, so will he try to check whether the schemes will cover leaseholders, as well as people normally referred to as tenants? Perhaps the Housing Minister can come back to us on that.

[Nick Boles]

My understanding is that it will, but we will certainly write to my hon. Friend to reassure him. I skipped over a sentence that seems to imply that it will be the case, but we will confirm that to all right hon. and hon. Members present.

I want briefly to address the right-to-manage legislation. I must admit that this is the first time I have ever heard about it, so I may not make as much sense as hon. Members deserve. The leasehold right-to-manage legislation is designed to be available to as many private sector leaseholders living in blocks of flats as possible. The right was designed for use on a block-by-block basis. Applying the legislation to estates is complex and might result in the right becoming less, rather than more, accessible. Right-to-manage ballots can be complex and potentially expensive, and the legislation sets out in detail the procedures that all involved must obviously follow and comply with. The provisions aim to protect the interests of all parties, including those of the leaseholders. I am sure that my hon. Friend the Housing Minister will be happy to discuss that further if appropriate.

The hon. Member for Poplar and Limehouse mentioned high charges to leaseholders for repairs, insurance and utilities. The law provides leaseholders with a range of important rights to do with service charges, including the right to be consulted, the ability to challenge the reasonableness of charges at independent tribunal and the right to obtain information.

The right hon. Member for Oxford East (Mr Smith) mentioned older and vulnerable leaseholders, who may find it onerous or stressful to attend a tribunal or to exercise their rights. Free initial legal advice is available from the Leasehold Advisory Service—LEASE—which is funded by my Department.

[Sir Peter Bottomley]

I want to add a tribute to Anthony Essien, the chief executive of LEASE. He and the Master of the Rolls, as the head of the Court of Appeal, would agree that judgments by the Leasehold Valuation Tribunal and on appeal need to be trawled through, so that instances of when poor, ordinary people have been frustrated at great cost and worry can be collected. As the hon. Member for Poplar and Limehouse (Jim Fitzpatrick) said, the costs pile up and then come back as service charges. More work is needed.

[Nick Boles]

I hope that I will be able to address, at least in part, the question of the ability of property management companies to recover their legal costs from leaseholders, even in cases where the leaseholder is the successful party, by adding them on as service charges for the following year. Whether the landlord can recover his legal costs, and if so, in what way will depend on the terms of the individual lease. Even when a lease does allow the recovery of legal costs as a service charge, the courts and tribunals still have the power to prevent that from happening by issuing what is known as a section 20C—of the Landlord and Tenant Act 1985—order, if they judge it appropriate. Of course, to get such an order does require someone to go through the court or tribunal. Each case will be determined on its merits, and independent legal advice should be obtained, but where leaseholders believe that they have grounds to do so, they should consider applying to the court or tribunal for such an order.

I want to address questions about the Office of Fair Trading. There have been several reviews, and I want to ensure that I get the information correct. I am advised that the OFT is carrying out an investigation into property management groups that use associated companies to supply security systems and other services, and I believe that it expects to report on that shortly. The OFT is also undertaking a separate market study of property management, but that is only in the initial stages, so I am unable to say exactly how long it will last or when it will report. I do know, however, that the OFT is seeking views on the scope of the study, which should be provided by January. I am absolutely certain that the Housing Minister will be able to provide more detail when he meets hon. Members.

At the end of his speech, the hon. Member for Poplar and Limehouse asked what is perhaps the most important question, which is whether the Government are saying, “Nothing to see here, move along,” or whether they are recognising the problems and abuses and the fact that, while some steps have been taken, including those in the Enterprise and Regulatory Reform Act 2013, other subjects may need examining. I reassure the hon. Gentleman and others that we do understand that there is abuse and that there are vulnerable people who are not best placed to defend themselves. We are open to conversations about ways to improve matters without massively over-complicating systems or adding hugely to the burden on either the taxpayer or leaseholders.

[Sir Peter Bottomley]

Does the Minister agree that, in addition, the professional standards bodies for surveyors, bankers, barristers and others should review whether the actions of some of their members should lead to reviews of whether professional standards are being met? If someone does something illegal, that is clearly wrong, but someone doing something that is against the public interest should not happen in a profession.

[Nick Boles]

It is certainly the case in other professions that people can be struck off, even if not found guilty of a criminal offence, for breaking the code of that profession. I am sure that every profession will want the public to have full confidence in its professional standards and in its maintenance and enforcement of them.

Question put and agreed to.