Leasehold and Freehold Reform Bill

Nickie Aiken Excerpts

2nd reading
Monday 11th December 2023 Commons Chamber

[Nickie Aiken (Cities of London and Westminster) (Con)]

Leaseholders at 8 Artillery Row pay on average £2,000 in service charges each month. The managing agent, Avon Ground Rents Ltd, refuses to disclose what is included in those charges and to provide invoices. One of the charges was £30,000 for legal and professional fees, requested without explanation or detail, even though leaseholders asked—reasonably—for information for over two years.

Leaseholders in Neville House in Westminster are living in a cladding nightmare. Although Westminster City Council issued a hazard awareness notice on the building, no remedial works have been undertaken because the managing agent, Estates & Management Ltd, has failed to agree with the developers, Berkeley Homes, on the terms of a survey licence. As a result, the homes are unsellable.

The leaseholders of Blake Tower on the Barbican estate are living in a building with ongoing fire safety issues. The developer, Redrow, committed to dealing with those issues but has yet to undertake the necessary inspections. The tower also has building defects so serious that they have resulted in several flats being unliveable. The local authority, the City of London Corporation, shares my concerns and those of my constituents, and I understand that it is about to take action.

Those are just a few examples of the appalling behaviour of freeholders in my constituency. I have been contacted by countless leaseholders who routinely report appalling practices related to service charges, the cost of major works and the extortionate charges they face when renewing their leases. When they request information or explanation, they often face a wall of silence from freeholders and their agents. “Extortionate” is probably the correct word, as what some freeholders and their accomplices—including managing agents, lawyers and accountants—are involved in is often little better than extortion. Those freeholders should instead be described as freeloaders.

The Bill responds to the concerns raised by so many of my constituents. For example, clause 27 aims to make service charges more transparent, ending the practice of demanding unexplained service charges that too many freeholders engage in, often just to profit off leaseholders. The introduction of a standardised form for freeholders requesting service charges from their leaseholders is certainly welcome, but I would like more detail about what information will need to be disclosed and how much warning freeholders will have to give leaseholders regarding costs.

Too many of my leaseholder constituents have told me that they choose not to take their landlords to tribunal, as they could be liable for their huge legal fees even if they win. I therefore welcome clause 34, which responds to that concern by ensuring that leaseholders will no longer be liable for those costs. I also welcome the fact that the Bill overhauls previous legislation by increasing the standard lease extension term for houses and flats to 990 years, as well as reducing ground rent to a peppercorn upon payment of a premium. That will ensure that leaseholders can enjoy secure, ground-rent-free ownership of their own property without the hassle and expense of repeated lease extensions.

Another game changer in the Bill is the commitment to removing marriage value. For far too long, when leaseholders want to extend their leases, they have been at the mercy of their freeholder and that freeholder’s agents, and have faced some questionable practices. The Bill makes it cheaper and easier for leaseholders to extend their lease or buy their freehold. It removes the requirement to pay marriage value, capping the treatment of ground rents at 0.1% of the freehold value in the calculation and prescribing rates for that calculation.

Clause 22 will increase the non-residential limit of a block from 25% to 50% when it comes to securing the right to manage and enfranchisement, meaning that more blocks that are a mix of residential and commercial property will have the right to manage and buy their freehold. However, that still requires 50% of the leaseholders in a block to agree to go ahead with the right to manage, which could prove near impossible for many of my constituents, due to the unique nature of the Cities of London and Westminster. Over 1,300 properties in the City of London, and a staggering 12,100 in Westminster, have owners who live abroad or are owned by companies using central London’s golden postcodes as a place to park their cash. As such, while my constituents and I warmly welcome the Government’s intention to support leaseholders who want to manage their blocks, it will prove difficult in my constituency to achieve the 50% of signatories required.

If the proposed legislation is to achieve what the Government hope for constituencies such as mine, I ask them to consider making the thresholds more flexible—perhaps by stating that 50% of signatories should be leaseholders of apartments that are their main home, rather than an investment, or reducing the threshold for the right to manage to 35% of leaseholders. I would welcome further discussions with the Minister, my hon. Friend the Member for North East Derbyshire (Lee Rowley), on that point. I thank him for meeting me and my leasehold reform working group, made up of constituents who are dealing with some of the most egregious freeholders in my constituency. The 50% threshold was discussed in some detail with the Minister at that meeting.

Another area of huge concern for leaseholders is the cost of major works and estate management charges. I have lost count of the number of constituents who have contacted me for help regarding those issues: for example, leaseholders living on the Golden Lane estate in the City are being asked to pay tens of thousands of pounds extra because the freeholder, the City of London Corporation, is 20 years behind schedule. In Russell House and Churchill Gardens, which are both in Pimlico, residents are failing to secure details on timings and costs from Westminster City Council.

Time and again, I receive complaints from constituents living in private and social blocks that, while they appreciate that they have to pay for major works and repairs, they want the freeholder—whether it is a private company or a local authority—to be open and transparent about costs. I therefore welcome clause 40 of the Bill, which will provide more transparency about major work costs. Similar to service charge expenses, landlords will have to fill out a standardised form to demonstrate exactly how the leaseholders’ money will be spent and ensure that the works are carried out to a certain standard.

I take this opportunity to thank Harry Scoffin, the founder of Free Leaseholders, for his incredible work. His support and technical knowledge has been invaluable to me and my constituents when considering the Bill. I welcome the Bill, and look forward to working with the Minister and my constituents to ensure that we end the many questionable practices of some freeholders and ensure that the leasehold and freehold system in this country is open, transparent and fair.