Leasehold and Freehold Reform Bill

Nigel Evans Excerpts

Report stage
Tuesday 27th February 2024 Commons Chamber

[Several hon. Members rose—]

[Mr Deputy Speaker (Mr Nigel Evans)]

Order. I am sure that everybody heard Madam Deputy Speaker’s request for brevity, as a number of Members wish to get in, and we have to accommodate everybody before 6 o’clock.

[Sir Peter Bottomley (Worthing West) (Con)]

I agree with a large part of what the Opposition spokesperson, the hon. Member for Greenwich and Woolwich (Matthew Pennycook) said, and with nearly all of what my hon. Friend the Minister said. Where I disagree with the Opposition spokesperson is that I think the Bill is ambitious in what it is trying to achieve, although we would all like it to go further. It is quite remarkable that this is the first major bit of legislation to help leaseholders since 2002—although we have had the Building Safety Act 2022, the Fire Safety Act 2021 and other things, which did some things towards that.

It is remarkable how few people know much about the role of residential leaseholders. They own nothing but the right to live in a home for a period. I declare that I am a leaseholder. I have a flat in my constituency for which there have been no problems and for which the Bill will do neither harm nor good, and I also have another leasehold property. If I happened to gain from the measures, I would give the benefit to a good cause—I am not here for myself; I am here for those who have been suffering for years.

I wish I could be at the Westminster Hall debate on BBC impartiality, but it conflicts with this debate. It is now 20 years since the peace activist and photographer Tom Hurndall was shot by a sniper in Rafah. The subsequent nine months of inquiry by the Israel Defence Forces were shocking. However, I will leave that to the other debate.

On leasehold reform, I believe that we have opportunities—both in the House of Commons and, perhaps more so in the House of Lords—to make significant progress. My hon. Friend the Minister will point out to me the consultation on permitted development rights that started on 13 February. Towards the end of the consultation document, paragraphs 43,44 and 45 appear under the heading:

“Construction of new dwellinghouses on a freestanding block of flats”.

That is a reference to the inexplicable and disastrous Town and Country Planning (Permitted Development and Miscellaneous Amendments) (England) (Coronavirus) Regulations 2020—SI 2020 No. 632.

Those emergency covid regulations, accompanied by an economic assessment of which, to put it bluntly, I would have been ashamed were I a better economist, allowed owners, landlords and freeholders of certain blocks to put an extra one or two storeys on top without consulting the existing leaseholders at all. How any Government—let alone one I support—could have done that is beyond my comprehension. There had been a consultation some years before, and the general consensus was, “Don’t do it,” so why has it been done? I hope that people will look at the consultation, which is open until April, answer questions 27 and 28, and give explanations of their own experiences.

A developer tried to put extra floors on top of the St Andrews Gardens building in my constituency. That was turned down flat by the local authority, but its decision was overturned on appeal by the Government inspector. The developer then tried again, advertising for sale flats that do not exist, even though nobody wants them as they will cause significant harm.

My new clause 25, which I am indebted to Liam Spender of St David’s Square in E14 for drafting, says that the landlord or developer will have to pay compensation to leaseholders if the effects on them are harmful. The Minister’s legal advisers may say that the clause is not perfectly drafted, although I think it is pretty good. Even if he cannot accept it now, will he go through the replies to the consultation, have a talk with Members of all parties who represent those affected, and consider whether the Government can bring forward in the House of Lords proposals that would undo the effect of 2020/632 and implement some of the preferred responses to the consultation, to which he may not have time to refer in his winding up?

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[Wendy Morton]

I rise to speak to new clauses 13, 23 and 41, which stand in my name. I wish to place on record my thanks to those right hon. and hon. Members who supported me with my amendments and to the Public Bill Office for assisting with advice on their drafting.

Today’s Bill is important and I think we would all agree that it is long-awaited. I spoke on Second Reading, when I declared that I, like probably many others here, am one of almost 5 million leaseholders in this country. I am also one of the many who has gone through that awfully stressful process of extending a lease—that was prior to my being an MP. What I have learnt since becoming an MP is that the issue of leasehold affects not just London and our great cities, but constituents in places such as Aldridge-Brownhills. It affects people who have bought a house on a leasehold basis and many apartment blocks that were built perhaps 20 or 30 years ago. That is why I have taken such a keen interest in this piece of legislation. Buying a home is the biggest financial commitment that most people will make in their lifetime, but they are probably unaware of some of the complications they may experience later down the line.

I raised many questions on Second Reading and I wrote to the Secretary of State. My hon. Friend the Minister has been very engaged with me, but I gently say to the Department that a bit more engagement with Back-Bench Members would help enormously. That said, I am clear that I want the Bill to succeed, although in common with many other hon. Members I still believe it could and should go further. I will not push my amendments to a vote today, but I want to make a few points in relation to them.

On new clause 13, the prohibition on new leasehold homes within three months of the passage of the Act, I appreciate and welcome what the Minister said from the Dispatch Box. The Government have long been committed to the provisions in that new clause and I have sought clarity about what exactly they intend to do. I have heard welcome news today, but I will continue to press the point about commonhold because that matters. Moving forward, if we are to continue to look at this legislation and get it through this place, we will have to revisit this topic to ensure we get the best for our constituents, whatever type of housing or home they live in.

New clause 23 seeks a report on disadvantage suffered by existing leaseholders. In effect it was the sunset clause I referred to on Second Reading. The extent of the number of leaseholders who started the process of extending their lease during the passage of the Bill and the impact on them is unclear. Many will have been waiting to see the outcome of this legislation. Quite feasibly, that group will include people who have been forced to extend their lease in order to sell their home because, as we know, it is very difficult, if not impossible, to get a mortgage on a short lease. I am certain some leaseholders will not have been able to wait for the Bill to reach Royal Assent. Such leaseholders risk being seriously disadvantaged, so new clause 23 would take steps to assess and remedy any unfairness by considering issues such as marriage value, legal costs and other charges. I do not think we fully appreciate the size of this group compared to the number of people who will extend their leasehold after Royal Assent.

Similarly, new clause 41 seeks to redress the imbalance and unfairness of marriage value for those leaseholders who extended their leases many years ago or prior to the Bill passing through this place. By seeking to produce a report on disadvantage due to payment of marriage value, I hope we can better understand the extent of some of challenges around a system that, as we have heard today, is feudal, difficult to navigate and has disadvantaged many leaseholders over the years. It is important that we do not lose sight of the need to address the issue of marriage value.

The fourth area of concern is ground rent. I did not table an amendment on this issue but I will touch on it again. Many colleagues on both sides of the House have mentioned it. The Minister was clear in his response to me, but we need to continue to push forward for change.

I will support the Bill and I welcome the steps that have been taken. However, from the many examples that colleagues on both sides of the Chamber have highlighted today and the examples we have all seen sent to our inboxes by constituents, particularly around the challenges of service charge, it is clear that we need to go further. I will continue to gently nudge the Minister; he is nodding his head. He does a really good job and I am certain he gets the issue, but let us continue to work together for the benefit of our constituents.

[Mr Deputy Speaker (Mr Nigel Evans)]

I have nine Members trying to catch my eye, so if people speak for about five minutes, that will allow everyone to get in roughly equally. There has been some slippage, I can see that.

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[Helen Morgan]

I thank the hon. Gentleman very much for his intervention.

I will conclude by saying that I support the amendments that would require professionalisation of the industry— that would be very sensible and consistent with other legislation that the House has passed. I also support new clause 5 and amendments 4 and 8, tabled by the shadow Minister, the hon. Member for Greenwich and Woolwich (Matthew Pennycook); new clause 39, tabled by the Chair of the Select Committee, the hon. Member for Sheffield South East (Mr Betts); and new clause 25, tabled by the Father of the House, the hon. Member for Worthing West (Sir Peter Bottomley). The Bill goes some way towards providing the protection that we need, but it needs to go much further to protect freeholders from rogue developers and estate management companies. I urge the Government to take that away and do more.

[Mr Deputy Speaker (Mr Nigel Evans)]

To protect the last six speakers and protect ministerial time as well, there is now a five-minute limit on speeches, which will give the Front Benchers sufficient time to respond.

[Rachel Maclean (Redditch) (Con)]

It was a great pleasure to serve on the Public Bill Committee on this Bill. We had a great debate, and there was actually a lot of agreement across the Committee Room. These are deeply Conservative reforms, championed by none other than Mrs Thatcher, starting in 1965, which she continued to do throughout opposition and during her premiership.

I gently say to Opposition Members, of whatever party, that they must not fall into the trap of making this a political football. They must engage with the seriousness and complexity of these reforms, in part because, as we have heard, they did very little to advance these very significant reforms during their own time in office. I suspect that they backed away from it because of the very significant legal challenges they would have faced, as we ourselves will no doubt face. Pretending they do not exist is not a serious position. I say to the Minister and the Secretary of State, who are aware of my comments, that we must not buckle, but must continue to take this forward.

It is great to see the package of amendments laid by the Government, particularly new clause 42, which is a ban on leasehold houses. I want the Minister to think carefully about how he will address the inevitable imbalance in the creation of a two-tier system, in which some people will have the freehold of their house, but some will not. There is an additional imbalance between flats in our urban areas and new freehold houses. That point was very well made by James Vitali in a Policy Exchange report. I am slightly worried about the omission from this of retirement properties, so perhaps the Minister could return to that.

In Committee, I spoke about the need to truly move towards a commonhold system. I think the Opposition’s new clause 11 is something of that nature. I very much hope that, as the Bill goes through completing its stages, the Government—here or in the other place—can look at that suggestion. I think we do need to set out the future legislative scaffolding for our fifth term in office, and to build on the work we have done so that we can finally get rid of this leasehold system.

Other Members have mentioned a lot of the points I would have made about shared services. My hon. Friend the Member for Cities of London and Westminster (Nickie Aiken) raised that, and it is one of my concerns. My hon. Friend the Member for Harborough (Neil O’Brien) has done a fantastic job in talking about the lack of adoption by local authorities. There is also new clause 7, which I know is again an Opposition amendment, and new clauses 1 and 2. This problem is not going to go away. It is a blight on many homeowners in Redditch, and it also goes to the heart of our planning system. We really do need to look at that; we cannot pretend that it is going to solve itself.

I thank the Minister for writing to me about one of my concerns, which is litigation costs. I think new clause 3 looks at that. He has reassured me that what is in this Bill will go the distance in ensuring that leaseholders are not subject to unjust litigation costs by their landlord. That is one of the cases highlighted by Liam Spender and many others. These are hugely complex issues, but we must tackle them.

I want to see ground rents reduced to a peppercorn. It is pure extortion, and a feudal relic from medieval times when people were serfs and worked the land. We should not have this in 2024, or in any year. I refuse to believe that there is not a way, through the wit of man and the considerable intelligence of Ministers on the Front Bench, to solve the issue, perhaps where some financial assets are held in pension funds. I do not buy the pretence of that incredible con artist Mr Steve Whybrow and his outfit that somehow we are robbing pensioners. I would urge anybody with an interest in this debate to look at the genuine pensioners who are fighting for the right to have pure enjoyment of their own properties, which they richly deserve after a lifetime of working.

I will make my final remarks on forfeiture: it must go. The forfeiture of a long lease cannot be right. It cannot be right that a freeholder can hold this nuclear bomb over somebody such as Dennis Jackson, a pensioner, of Plantation Wharf. He disputed a £6,000 service charge, which led to an £80,000 legal bill, and he had his £800,000 flat forfeited during a 10-minute hearing at Wandsworth court. I thank LEASE for all the work it has done to help him. That just simply cannot be right, and we must address it. I want to see us finally finishing the job that Mrs Thatcher started when she was Opposition Housing spokesman in 1965. We must finish that job, and I thank the Minister for all the work he has done so far.

Leasehold and Freehold Reform Bill

Nigel Evans Excerpts

Consideration of Lords amendments
Friday 24th May 2024 Commons Chamber

Consideration of Lords amendments

[Mr Deputy Speaker (Mr Nigel Evans)]

I confirm that nothing in the Lords amendments engages Commons financial privilege.

Clause 12

Restriction on title

[The Parliamentary Under-Secretary of State for Levelling Up, Housing and Communities (Jacob Young)]

I beg to move, That this House agrees with Lords amendment 1.

[Mr Deputy Speaker]

With this it will be convenient to discuss Lords amendments 2 to 67.

[Jacob Young]

All amendments made to this legislation in the other place were minor and technical in nature, and serve to make the legislation function as intended.

This is a historic day for leaseholders: this package of reforms will transform the leasehold housing market and the lives of millions of leaseholders across England and Wales. Our reforms to lease extensions and the buying of freehold will give families and individuals security, which is a core Conservative principle. Giving more leaseholders the freedom to manage their own building will empower them to make important decisions themselves, such as choosing a management company that delivers good-quality work at reasonable prices, and will require management companies to up their standards and give leaseholders a better deal in order to retain and win business.

On service charges, leaseholders must be given more information as to what is being done to their property and what they are actually paying for. The requirement for landlords and management companies to specify exactly what the service charge entails will encourage higher standards among those companies and empower leaseholders to challenge poor service. That is because transparency is a core Conservative value, too. Similarly, our buildings insurance reforms will stop leaseholders being charged exorbitant, opaque commissions on top of their premiums and tackle the proven cases of insider trading in the market—fairness is another core Conservative principle.

Then, we turn to the millions of freeholders living on new estates who are impacted by poor service, bad management and opaque fees. Those estates and the properties on them bring joy, security and futures for everyone who has purchased those properties, including the 1 million households that will have been created in this Parliament. I can tell the House today that the Government’s target of building 1 million new homes in this Parliament has been met. These further rights for homeowners on private and mixed-tenure estates encapsulate what the Bill is trying to do: bring fairness, security, transparency and competition to freehold estates. It is not right to force someone who has bought a freehold property to deal only with one management company, which is not required to give any information or charge reasonable fees—a monopoly.

The Bill will explicitly ban the creation of future leasehold houses. This is a once-in-a-generation reform that will alter the housing market forever, and I commend the Bill to the House.

[Mr Deputy Speaker (Mr Nigel Evans)]

I call the Father of the House.

[Sir Peter Bottomley (Worthing West) (Con)]

I think the whole House wishes that the Secretary of State was able to be with us. He is one of the people who has helped to move this forward, together with the junior Minister. I say to Michael: well done, not just on education, but on getting a grip of the horrors in residential leasehold.

After the Grenfell fire tragedy, people realised that those stuck with the bill not just for cladding but for every other fire defect were not the developer, the architect, the surveyors or the suppliers of components, but the residential leaseholders who by law are only tenants and own not a single brick in the building. It was when the Secretary of State came in that the action started. Actually, he was not the first. Two other Secretaries of State had to give instructions to their permanent secretaries to start giving out some compensation. I still commend to the Government having an agency to take over potential claims of all residential leaseholders, taking action against those responsible and holding a roundtable with all their insurers. That would get £10 billion in almost overnight, saving the money going to the lawyers.

To return to the Bill, there has been cross-party agreement over the past eight years that something was needed. The Law Commission produced many recommendations, most of which are in the Bill. I will not go into all the detail of the debate that I heard in another place, where some Members seem to think that people’s property rights are being harmed. I do not remember those Members of another place complaining when the disgraceful statutory instrument 632 came through in 2020, boosting landowners’ values by about £5 billion. The only people paying that were the leaseholders.

I am very grateful to the people who have supported the all-party group on leasehold and commonhold reform. Katherine O’Riordan has done really well on that, as have the trustees of the campaigning charity Leasehold Knowledge Partnership, Martin Boyd and Sebastian O’Kelly, together with new trustees, including Liam Spender, who has done a great deal in fighting off very bad landlords in the east end of London.

Three problems remain, on which the House will want to see the next Administration take action urgently. One is that forfeitures, as the whole House accepts, is a draconian system that must go. The threat of losing the home is one thing, but all the equity going to the landlord is totally another, and that should be stopped. In one case in which I was involved in Plantation Wharf, someone was at risk of losing £600,000 over a disputed bill of £7,000.

Secondly, the commitment to bring in a ground rent cap has not come forward but it must be introduced. I acknowledge that I have a share of a small block of leasehold flats in Worthing where I have a home, and I own another leasehold property that I let out, but I will not benefit from this because I have negotiated with my landlord that they will pay the ground rent for the next 30 years, which will see me out. We need a ground rent cap. We know that ground rent turns to peppercorn if there is a legal extension, and we ought to get to that as fast as we can. If on the way we have to stop at £250 a year, that is fine.

The last thing is that we need to recognise that a move to commonhold is the only way forward to ensure an effective housing market. We ought to stop new residential leasehold properties being sold, and we ought to find a way to help existing leaseholders avoid facing penalties from external landlords, who can go into all sorts of bad behaviour, whether on insurance commissions or other ways of taking money off leaseholders improperly. That would be in the interests of both landlords and leaseholders.

I congratulate the Government and thank the Minister for his attendance. I am very grateful to the Opposition for helping persuade the Prime Minister that this Bill could come forward in this last Session of this Parliament. I claim the credit because on the Tuesday before the King’s coronation, I was standing with the Prime Minister and the Leader of the official Opposition and I said to the Prime Minister that the Opposition would help him—Rishi looked at Keir, Keir nodded, and now we have the Bill.

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Lords amendment 1 agreed to.

[Mr Deputy Speaker (Mr Nigel Evans)]

With the leave of the House, I will put a single question on the Government motions to agree to Lords amendments 2 to 67, otherwise we would be here a long time.

Lords amendments 2 to 67 agreed to.