Leasehold Reform

Richard Holden Excerpts

Tuesday 3rd June 2025 Westminster Hall

[Ruth Cadbury]

A lack of transparency is a theme that comes up again and again, particularly for the people who are effectively the victims. I will press on because I want to get to the end of my speech if I can.

The complex state of leasehold means that many different parties have realised that they can fatten the goose with ease, and often without scrutiny and enforcement as the hon. Member has said. First, that was often done through ground rent. Properties would often charge a ground rent of between £250 and £1,000 a year in London. I would call it money for old rope, but that would insult old rope.

That tactic was later replaced as more buyers and solicitors became aware of it, particularly around the sale of flats, so we then saw service charges being used as the new cash cow. A typical building in my constituency, which is often a flat built since 2000, has a service charge of £6,000, but some have charges as high as £7,000 or £8,000 without anything like that value of service being delivered.

For too long, it has been possible to raise service charges without limit—often vastly above inflation and with no clear breakdown. Leaseholders will buy a property and think that the service charge is paying for services such as—to take examples from my constituency—the post room, receptionist, home cinema, car park and security. In fact, they find that the post room and the home cinema are closed, the receptionist is not full time, the car park gets flooded and the security is non-existent.

If a person bought such a product on the open market, trading standards would have a field day—but leasehold is not a fair market. If we invented this market system now with its wide cast of cowboys and profit strippers, it would appear like something out of a Victorian novel. Ted Heath called it the “unacceptable face of capitalism”, but that is how we have got here.

I will not regale the House with the efforts to tame and reform leasehold over the past decade. As a member of the all-party parliamentary group on leasehold and commonhold reform, I know that many hon. Members have been working on it. The previous Government’s changes were welcome, and MPs from both sides of the House have stood up, spoken and acted, particularly thanks to the support of the APPG and the work of the Leasehold Knowledge Partnership and the National Leasehold Campaign. I know that the Minister gets this issue and knows it inside out too.

I want to talk about my constituents’ experiences. For many people in west London, the high cost of property means that buying a house is out of reach, but people on good salaries can, just about, afford a flat for upwards of £500,000.

[Mr Richard Holden (Basildon and Billericay) (Con)]

I thank the hon. Lady for securing this incredibly important debate. One of the issues in my constituency, which is very similar to hers, is that people are buying new flats or houses under the freehold system, but with so many covenants involved that they are also being charged the sort of service charges that she has mentioned. Does she agree that whatever the Government do— I welcome the good approaches in this place—they must also cover some of the covenant issues around freehold?

[Ruth Cadbury]

I agree with the right hon. Member. There are so many issues that the Government have been looking at, and are going to have to look at, particularly to ensure against unintended consequences.

With prices of upwards of half a million, even with the help of the bank of mum and dad, many of my constituents have no choice but to buy a leasehold flat, even when they have a good income and perhaps help with the deposit. That means that a whole generation in London risks getting trapped as leaseholders.

The key problem is that at first the terms can seem straightforward. A person pays their mortgage and then they pay their service charge and ground rent, and for the first year, it might be okay. They might notice some problems in the communal area, but the real kicker comes when they get the first increase in their service charge. I have seen constituents whose service charge has increased by 50% or even 100%.