Leasehold Reform

Rosie Cooper Excerpts

Thursday 11th July 2019 Commons Chamber

[Rosie Cooper (West Lancashire) (Lab)]

I thank my hon. Friend the Member for Sheffield South East (Mr Betts) for presenting the report on leasehold for debate. Before I make my observations, I must declare my interest as I am one of the many thousands to have been caught in the leasehold trap. It appears that we have 18th-century practices operating at 21st-century prices and, more fundamentally, that a person’s home is not really their own, with the freedom to do within it as they please. In West Lancashire, nearly a quarter of homes sold in 2016-17 were leasehold, and the figure was still over 15% in 2018. The issue seems to be that leasehold has strayed into being an extortionate money-making racket at the expense of house owners.

Owners are forced to pay extortionate ground rents and locked into rip-off service charges, with nearly 60% of them lacking an understanding of their contractual obligations. My hon. Friend talked about inducements to use the preferred solicitor of the developer and the lack of information that follows. I can tell the House for a fact that Redrow in the north-west simply passes all its clients’ details to Bannister Preston Solicitors LLP, and it is assumed that that firm will act for them. It is time for the Solicitors Regulation Authority to wake up and act.

Perhaps leasehold would not be talked about so negatively if leaseholders did not find themselves obliged to Dick Turpin-like companies that require them to stand and deliver—in this case, it is “your money and your home” that they are after. The Government also need to look at councils that, in concert with developers, contractually agree to sell the freehold to the developer, but only when all the houses are completed. That allows salespeople to say, “We don’t own the freehold,” knowing full well that they will. They then get a huge ransom from selling the freehold on before anyone knows, and they can say that that has nothing to do with them. In Liverpool, for example, the council sold the freehold of one site to Redrow for £1, which then sold it on for £175,000, saying that that was the best price for Liverpool’s taxpayers. Where was the district auditor? My colleagues tell me that this practice is not unusual and is happening all over the country. Liverpool has banned Countryside Properties, and the Mayor has rightly said:

“We will not be making any deals...with any developers that put people at risk.”

Is it now time to ban Redrow? We need to find a way to ensure that thousands who are already caught are given an exit option on fair terms.

Everyone knows that people are being charged to receive emails. It takes four weeks for someone to come. There are no phone numbers. People pay extortionate prices to carry out work on their own property. People are being misled, being told they can buy the freehold in a couple of years’ time for a few thousand pounds, only to find the freehold has been sold on, with no first refusal being given to the leaseholder. Some do not even offer direct debit, so those who forget to pay their twice yearly charge are slapped with further charges for late payment. People are sent threatening and heavy-handed letters.

But it does not end there, because those who do engage and who manage to buy can find that they are buying not the freehold but a virtual freehold, whereby they have simply bought out the ground rent. Many of the conditions remain, with owners still being charged for work to be done, except now they have fewer legal rights to contest any excessive amounts because they entered into the freehold contract willingly and the amounts were unspecified.

Sadly, owners are being led to the slaughter, let down by conveyancing solicitors who, despite their best efforts, cannot deal with these sharks. I firmly believe that, unless strong and immediate action is taken, people will have great difficulty when they come to sell their virtual freehold homes, with the covenants and conditions still remaining, in a few years’ time. I forecast to the Government that the freehold scandal will erupt again.

We need leasehold reform now. It is in the Government’s power to do it now, and households right across the country demand that they do it now.