Leasehold and Commonhold Reform

Ruth Cadbury Excerpts

Thursday 21st December 2017 Westminster Hall

[Ruth Cadbury (Brentford and Isleworth) (Lab)]

It is a pleasure to serve under your chairmanship, Sir David. I thank the hon. Member for Worthing West (Sir Peter Bottomley) and my hon. Friend the Member for Poplar and Limehouse (Jim Fitzpatrick) for introducing the debate. I also thank our colleagues in the Leasehold Knowledge Partnership, who have been a great help to me, both as a constituency Member and in my former housing role on the Opposition Front Bench. Frankly, they have been doing the work that LEASE should have been doing, but they have not been funded to do it by the Government. They have done a sterling job representing leaseholders and supporting the Members, local authorities and others who have supported leaseholders in recent years. I was on the Front Bench when we debated leasehold and commonhold reform on 20 December 2016 —a year and a day ago—but I will not repeat the arguments of my speech in that debate, which can be easily found.

There are many leaseholders in my constituency who live in the blocks of flats that have been built there in recent years, particularly in Brentford, my home town. Things have moved on in the past year, and many of us are grateful for the new tone from the Department, which can be seen from the release that it issued last night at midnight. Relatively recently, however, we have seen a racket growing, particularly from developers.

Ground rents for houses mean that people who had thought they owned their home actually own a depreciating asset. The racketeers are withholding the right to own and the right to manage. Freeholds are being sold on without notice. Links between freeholders, conveyancing solicitors and managing agents are far too close. People are having fees demanded of them on conveyancing that the solicitors did not originally tell them about, as well as fees for changes to homes, building extensions, sub-letting and so on. I was perturbed to hear from my hon. Friend the Member for Heywood and Middleton (Liz McInnes) of people being charged again down the line.

That is absolutely shocking. The examples we have heard already in this excellent debate show that elements of the private sector, instead of doing their job as developers and in some cases managing agents, are frankly taking homeowners for a ride, and that has to stop. We have heard about a series of things that are symptomatic of how freehold ownership has become an asset class in itself. Money is being made not on buying and selling, but on owning and ripping people off, and that has to stop. The extent of the problem is illustrated by the fall in the share price of McCarthy & Stone and other developers on the back of the Government’s announcement this week. That shows how much of their asset value is based not on what we should think of as their core business, but on these appalling practices that we have been hearing about.

I am grateful to the Government for the movement they have made on new build leasehold houses, ground rents and protecting leaseholders from possession orders. I also welcome the additional staffing in DCLG, and I hope that those things are an indication of a new-found commitment to serious change. Will DCLG fund the work recommended in both parts of the Law Commission’s report? The first part recommended a simplification of the law and improved fairness and transparency for leaseholders. The second part of its release earlier this week looked at the assignment of leases under new contracts, ground rents, which the Government mentioned, high fixed service charges and fees on assignment.

The single biggest opportunity for the Government is the introduction of a commonhold law that works. England is perhaps unique in that we have a lack of true rights for the owners of flats. We should learn from similar jurisdictions, such as Australia, and nearby jurisdictions such as Scotland. Previous Tory and Labour Governments have tried introducing commonhold law that works, and my right hon. Friend the Member for Wentworth and Dearne (John Healey) tried to do that. I am sure he will refer to that later this afternoon. Let us have another go at ensuring we get a commonhold law that works, because it would put a permanent end to the racketeering practices we have heard about today. The Minister can be assured that if the legislation he proposes is good, he will have support from many Opposition Members.

Among other things, the Government need to end the false departmental divide between the Ministry of Justice and DCLG and bring all the issues into one place. Like other Members, I ask the Minister to address the situation of the hundreds of thousands of victims of the current law who seek recompense for the failures so far. We cannot let them be left high and dry. We also need to address the challenge for residents’ groups in leasehold blocks of flat. Let us not forget that residents’ groups work as volunteers. Many have gone through or are going through the ever-twisting hoops to set up a resident management company. Some are trying to seek ownership. Even when they do not have the kind of freeholder that we have heard about today, that is a lot of work in their own time, and they need recognition and support for that. I hope the Government will take that into account.

Finally, I want to talk about post-Grenfell fire cladding. In my constituency, we have more than 300 leaseholders in the Blenheim Centre in Hounslow. The freeholder, Legal & General, has agreed to pay the full cost of the recladding that will need to be done and the back pay of the fire marshals, who were costing the leaseholders an awful lot of money. The total bill could be £10 million. I am also pleased that Notting Hill Housing has agreed to fund the recladding in the modular housing at the Paragon development in Brentford. That is not because of inflammable cladding, but because of the lack of fire breaks. My understanding is that those two cases are exceptions to the rule. There are an awful lot of leaseholders in flats across England where the freeholders are not prepared to pay the cost of recladding. There is an awful lot of uncertainty, and we have not seen a response of any substance from the Minister. We look forward to hearing that today.

[Sir Peter Bottomley]

The hon. Lady has raised a point that the hon. Member for Poplar and Limehouse also raised. LEASE has been given extra responsibility for trying to help people living in blocks that may be affected by post-Grenfell issues, but what is presently on the LEASE website is totally inadequate. It may be a start, but it is not good enough. LEASE should get together with the LKP to use the LKP information. That information has already been of advantage to a number of residents, and it could be of advantage to more. It will not solve all the problems, but why not try to put all the information together, rather than staying away from some of the people who have been helpful and putting responsibility on those who have not?

[Ruth Cadbury]

I concur with the hon. Gentleman’s comments. He is absolutely right. Mere words of comfort and a promise of mediation are not what leaseholders are looking for. Many leaseholders are working people or retired. All of their wealth and quite a lot of debt is tied up with their homes, and there is an awful lot of stress and worry across the country on the issue. I hope we will get something from the Minister today.

All that is left for me to do is to wish merry Christmas to you, Sir David, to fellow Members and to the many parliamentary staff who make our jobs possible in this place.