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.

--- Later in debate ---

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.