Protection for Homebuyers

Peter Bottomley Excerpts

Thursday 13th December 2018 Westminster Hall

[Kate Green]

Indeed I am, and that too is a point to which I hope to return in the course of my remarks.

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

I apologise for not being able to stay for at least the middle part of the debate, because of another parliamentary duty. Does the hon. Lady agree that one of the consequences of this debate and those BBC programmes is that publicity attaches to the builders? It would be a good idea for there to be some forum that other media could look at, so that the names of the builders that manage to build homes without defects or correct them quickly get praised, and those that do not get damned.

[Kate Green]

The hon. Gentleman has raised an important point about the impact on the reputation of the whole industry. Although some of the builders involved are household names, it is important to recognise that, as I have heard, some smaller local builders are implicated in delivering poor-quality build, whereas others meet a very high standard of both build and customer service. However, too often, it is the large developers—whose reputation people will be familiar with, and in which buyers might reasonably feel they could place some trust—that are letting their customers down so badly.

I will put on the record a few of the other major household names that I have heard mentioned, as although I will be talking about my constituents’ experience with Persimmon Homes, Persimmon is far from being the only offender. I have also heard about problems with Bellway Homes, which my hon. Friend the Member for Edinburgh South (Ian Murray) mentioned; Harron Homes; Charles Church, which is an arm of Persimmon; Linden Homes; David Wilson Homes; and Keepmoat Homes. It is entirely possible that colleagues will add to that list in the course of our discussion.

The problems of defects are compounded by the appalling customer service, and sometimes outright bullying, that homebuyers experience when they attempt to have defects remedied. My constituents in Woodsend began complaining about their new homes many months ago. Lisa tells me that she waited a year and a half before Persimmon even gave her a named customer service contact, although the company did find time in that period to pay its then chief executive a £75 million bonus. I wrote to the company on Lisa and her neighbours’ behalf earlier this year and was staggered to be told that it was not Persimmon’s policy to deal with MPs. However, it was not dealing with or responding to the homebuyers either. I think the House will agree that that is truly shoddy and reflects systemic problems that are incumbent on Government to sort out.

Buying a house is the biggest, most important purchase most of us will ever make. People work hard and save up for their dream home, but too often instead they are suffering huge cost, stress and inconvenience.

--- Later in debate ---

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

I will not speak for all that long. I thank the hon. Member for Stretford and Urmston (Kate Green) for introducing the debate and those who have already spoken on leasehold and other issues.

In West Durrington, where 700 homes are being built, Chamonix Estates, working for Taylor Woodrow and for Persimmon, have some questions to answer from the residents. Although it is probably better not to use today to put those on the record in detail, if it does not solve the problems, I will.

What we are talking about has happened in the social sector, too. When I first became a Member of Parliament, I represented part of the Ferrier estate in Kidbrooke, where the Greater London Council had managed to build 5,000 homes, but where there was no pub, post office, church or chapel, and the sewerage system worked the wrong way rather than the right way. It was demolished within 20 or 30 years. Things were almost unbelievable until we heard the cases of some residents represented by Members of Parliament here in the debate.

I have a question for the Minister; I am sorry to put it to her without notice, so perhaps an answer by letter to Members would work. If she or her officials listened to “Money Box” on BBC Radio 4, they would have heard that if landlords charge leaseholders directly, there is no VAT, but if they charge them through a managing agent, there is VAT. Even taking the inputs into account, there is still a charge of between 15% and 13% extra. That needs to be sorted out before or after we leave the European Union. Apparently, it is a European Union requirement—I do not know whether that is true. It seems vital that we should take the opportunity, rather than having artificial arrangements, to make it plain that if the leaseholder pays the service charge there is no VAT, whether they pay it through a managing agent or directly to the landlord.

We understand that officials in the Department have to work on leasehold issues with greater width and depth than they did 10 years ago because, then, they did not know how many residential leasehold properties there were and it was not anticipated that so many more would be built. If the majority of homes are leasehold, we have to put the majority of our effort into ensuring that new leaseholders of flats, old leaseholders of houses and flats, and everyone else, get a fair deal. The Prime Minister talks about justice for all—justice for those leaseholders should be a big part of that.

--- Later in debate ---

[Mrs Wheeler]

I thank the hon. Lady for that very useful intervention. My team will take that back and we will write to her with an answer.

We know more needs to be done and expect more to be done. That is why the Government announced measures to champion the rights of buyers of new-build homes, including a new homes ombudsman. That will provide one obvious place for consumers to go, and will have the powers such a body needs and the interests of consumers at its heart. It will ensure that when people buy a new-build home and do not find the standard of build they expect, they are treated fairly and their concerns are dealt with quickly. We will work with consumers and the industry to develop our proposals, which will be published in more detail soon and will set out the scope and powers of the ombudsman.

In the meantime, we have been challenging industry to improve redress in the shorter term. The work being done by the Home Builders Federation could lead to a voluntary new homes ombudsman and better redress for consumers in the short term, while Government works towards legislation. In our response to our redress consultation we will set out the standard we expect these voluntary arrangements to meet. We also expect that any new redress scheme for buyers of new-build homes should be free to the consumer, as in other sectors.

We believe there should be a clear and quick escalation route for issues of building safety and are exploring a number of options. Again, we call on the industry to implement actions and processes so that the examples we heard on BBC “5 live Investigates” do not happen in the first place. We want to see a marked improvement in the standards of new homes and will ensure that home buyers get those standards, not only for new-build homes but across the market.

Further to building regulations and standards of new-build finish, the leasehold system needs to be fair and transparent to the consumer, so that their home truly feels like their own. Unfair practices in the leasehold market have no place in the modern housing market, nor do excessive ground rents, which exploit consumers who get nothing in return. In July, the Government announced that no Government-funded scheme would be used to support the unjustified use of leasehold for new houses.

[Sir Peter Bottomley]

We are all grateful for what the Government have said in the past and what the Minister is saying now. One of the problems with ground rent is the question of what it is there for at all. The commonhold gets rid of ground rents. We do not know whether the help to buy scheme is used to commonhold. Can the Minister make an announcement about how that problem will be solved, so that commonhold homes can be accepted for help to buy?

[Mrs Wheeler]

There are discussions going on about commonhold. I will be happy to talk to my hon. Friend about this offline.

Our technical consultation on how to improve the leasehold market and make it fairer for consumers has now closed, and we are analysing the responses. We want to see developers support everyone who has onerous ground rents, including second-hand buyers, and for customers to be proactively contacted. We are helping existing leaseholders by making it easier and quicker for leaseholders to form residents’ and tenants’ associations. We are proposing a single, mandatory and legally enforceable code of practice covering letting and managing agents, giving people a clearer and simpler route to redress. We are publishing a how-to-lease guide for consumers and looking carefully at how we currently give support and advice to leaseholders.

The hon. Member for Washington and Sunderland West (Mrs Hodgson) was very interested in educating leaseholders. We are publishing the how-to-lease guide, which will educate leaseholders. We have also held workshops with the industry to develop the how-to-buy and how-to-sell guides, which will be published in 2019.

The hon. Member for Poplar and Limehouse asked about leasehold reforms. LEASE, the group that we use to help give information, is unambiguously on the side of leaseholders. LEASE no longer pursues any commercial interests and it does not advise leasehold professionals. [Hon. Members: “Good.”] Yay—I just had a good. Get that in Hansard—sorry, I shouldn’t say that.

The hon. Member for Washington and Sunderland West asked about permission fees. Lord Best has a working group that is considering permission fees and whether they are reasonable or they should be banned in total.

The hon. Member for Ellesmere Port and Neston (Justin Madders) mentioned the £10 ground rent. For a peppercorn to exist there must be a consideration of exchange of money. We are concerned that peppercorn could be open to abuse and therefore we have considered that an amount should be specified in statute. We have chosen £10 because that is the annual amount used for right to buys.[Official Report, 21 January 2019, Vol. 653, c. 1MC.]

[Mrs Wheeler]

Given the previous week’s history of sharing legal advice, I might skip over that one, if the hon. Gentleman does not mind. Perhaps he and I could have a cup of tea. The £10 peppercorn ground rent was part of our recent leasehold consultation and we will be considering our approach in light of the responses to the consultation.

[Sir Peter Bottomley]

How about 10 lbs weight of peppercorns?

[Mrs Wheeler]

Black pepper or white pepper?