Leasehold and Commonhold Reform

Robert Courts Excerpts

Thursday 21st December 2017 Westminster Hall

[Robert Courts (Witney) (Con)]

It is an honour to serve under your chairmanship, Sir David. I join the chorus of well-deserved congratulations and thanks to my hon. Friend the Member for Worthing West (Sir Peter Bottomley) and the hon. Member for Poplar and Limehouse (Jim Fitzpatrick) for securing this debate, and for all their work with the all-party parliamentary group. I entirely echo the comments of my hon. Friend the Member for Hazel Grove (Mr Wragg); this was a very worthy application. I also sit on the Backbench Business Committee, and from my perspective, the issue needs to be raised.

I first came across the concept of leasehold while studying for my law degree in Sheffield. As is often the case in university towns, lots of the law students lived in streets surrounding the department. I was studying for my exams late one night when there came a knock on the door. There was a man there, on that dark, cold, wet winter’s night, demanding £2 for ground rent. When we went in the following day, it turned out that the same thing had happened to everybody on the same street; it had obviously been the annual whip-round. It became something of a curio—a legal curiosity that formed part of our studies as much as anything else—but in the years since then, it has become clear that the issue of leasehold on flats and houses is anything but a curiosity. It is absolutely iniquitous, and reform is needed urgently.

Let us assume for a moment that someone works hard at their job—perhaps they and their partner work all the hours that God sends—scrimping, saving and going without to put aside money for a deposit, and then goes to buy a house. In the flush of excitement at having successfully saved a deposit and secured a loan from a company, they agree to a ground rent of £200 or £300 a year. They might take that on, but as the years go past, they realise that it is simply another income stream for developers. In fact, it is a lot of money—more money than they can afford. Worse, as we have heard, the terms and conditions attached mean that their liabilities grow year by year. That flush of success soon turns sour.

Let us assume that someone buys a flat on a long leasehold term—99 years, for example. They may find after 15 years that they must renegotiate and ask for an extension of the lease. They may be granted one, at a cost of £5,000, £6,000, £7,000, £8,000 or more. They could enter into the process for leasehold enfranchisement, of which I also have experience; to earn money while I was waiting to go to Bar school, I worked for a while as a paralegal in the leasehold enfranchisement department of a law firm. I can inform hon. Members—although, of course, this audience needs no such information—that the law is fiendishly complicated and devilishly expensive. That is the situation in which leaseholders of houses and flats on long leasehold terms all over the country find themselves. It is iniquitous, and, as an hon. Member opposite said, it is a trap.

I suggest that reform is needed urgently. I will not speak for long, because I know that many others want to speak and add their practical experiences and those of the constituents who have written to them, but there is a great deal that the Government can do. I am delighted to see today’s announcement, but as other hon. Members have said, it is the beginning, and there is much more to be done.

I am glad that legislation will be introduced to prohibit the sale of new build leasehold houses and to restrict ground rents, but as we can see, and as Members have said, the real issue is legacy leaseholds and the people who are already in the trap, and I would like to press the Government on that in particular. What do the Government plan to do to support existing leaseholders by making it easier to buy a freehold or extend a lease? I have referred to both those points. They are extremely difficult and expensive at present, and I would like to know how they will be made easier, faster, fairer and cheaper. What role of the Upper Tribunal (Lands Chamber) might be extended in such circumstances? How can the law of commonhold, which was introduced but has not really taken off, be strengthened and extended?

This is not the time for me to go into the issue in any detail, but I would like the Government to consider that all of this grows from an historical anomaly. My example in Sheffield arose, as I understand it, from the fact that factories bought land and built houses on it, and that over time, different houses have been built but the land has been kept. The whole mess arises from historical legal points involving covenant law, and it all needs deep reform, root and branch. I ask the Minister to consider that. He might not be able to give me an answer now, but I would like to hear from him on that in due course.

I welcome the announcements made this morning about addressing the sale of new build leasehold homes, ground rents and loopholes in the law, but such law has no place in modern England. It does not exist in other parts of the world, as we have heard. Although I welcome what the Government are doing, I ask them to consider moving towards the long-term abolition of long leasehold tenancies in this country. They have already promised to do a lot, but much more can be done to help those who need help—those for whom affordability is a massive issue, and who find themselves in a trap that is complicated, expensive and not of their making.