Leasehold Reform

Ruth Cadbury Excerpts

Tuesday 23rd May 2023 Commons Chamber

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

Thank you, Madam Deputy Speaker—sorry.

[Mr Deputy Speaker]

It has been a long day.

[Ruth Cadbury]

Oh, it has, Mr Deputy Speaker. It has been a long week—and it is only Tuesday.

It is over six years since I first spoke about the issues facing leaseholders in this House, and these issues have only got worse for so many of my constituents. They are compounded, of course, by the consequences of the fire safety scandal that the Grenfell fire exposed. Members on both sides of the House have mentioned many of the issues that provide a significant proportion of our casework and take up the time of our staff. I particularly thank the Leasehold Knowledge Partnership for the advice and support it have given us and our constituents.

Reform is needed because, for so many living in my constituency, leasehold is the only way that most first-time buyers can get a foot on the housing ladder: 50% of all residential property purchases in London in 2021 were leasehold. The huge deposit and mortgage needed for a traditional two-up, two-down house in London, particularly in my west London constituency, coupled with the spike in mortgage costs, have now made it virtually impossible for families to buy a freehold home. This means that middle-income people and even those who many would call high-income people are pushed into buying a leasehold flat. Some young people—including many NHS workers, teachers and many more—can just about afford to go into shared ownership, but in my experience that is a particularly perverse form of leasehold.

Imagine how it must feel for a young couple, who have worked hard and saved up, when they buy their first flat. They get the keys and they are filled with joy, but then the problems first appear. They notice some antisocial behaviour, and they notice the failure of the managing agent to ensure the car park is properly secure. They report it, but nothing happens. Then they get a bill for the service charge, and it has more than doubled, plus it is not itemised. They are already struggling with the cost of the weekly shop, and then they are hit with another charge. They ask why the service charge has gone up, especially when standards in their block remain so low, and they do not get an answer. Then they find out that, in six months’ time, their share of the building insurance will go up not by 10% or 50%, but by over 200%. Where are they supposed to find this money? Imagine how it would feel with this constant hammer blow after hammer blow, and the dream of home ownership rapidly turning into a nightmare.

What I have described is one example from my constituency, but the many examples show that the central thread running through the existing leasehold system is the lack of power for leaseholders—the David against Goliath nature of the battle. Just last week, I met leaseholders in Aplin Way in Isleworth, who are facing an astronomical bill to replace the lifts in their block. It is 50 years old, so the lifts do need replacing. They have asked why it is costing so much when cheaper options are available, but they have not had a clear answer from, in this case, the housing association that owns the block. Their ward councillor, Tony Louki, and I have tried to seek answers, but even we have not had replies to our correspondence. After no response had been received, suddenly last week the contractors appeared on site. The leaseholders know they will soon be forced to pay their share of the astronomical bill, and this is causing particular stress to the many pensioners who own their own home in that block.

Being a leaseholder in this country is increasingly like trying to push an ever larger boulder up an ever steeper hill. The central point of frustration is the fact that leaseholders are being ripped off. They are paying eye-watering amounts every year, yet in many cases they do not know where the money is going. There is no transparency.

One particular case is at APT Parkview in Brentford, where there is a mix of leaseholders and tenants of the building owner. Leaseholders have seen their communal services keep rising in price, but then suddenly stop after they made complaints about their bills. One day there was no concierge, the gym was closed, there was no cleaning of the common parts and no security in the car park, but then there was a sudden extra charge for air conditioning on top of their existing rising energy bills. The case of APT Parkview has also shown the lack of enforcement action available to protect leaseholders. The council could not help, the powers of the ward councillors are limited, and when I wrote letters and raised the issues on the Floor of this House, they were still not resolved. The tenants in the block sought legal advice, and it appears that they have somewhat stronger rights than the leaseholders.

Another frequent offender in my constituency, although it is an issue across the country, has been FirstPort—it has been mentioned today. It regularly hiked up building insurance and service charges while ignoring the complaints and concerns that residents had about communal areas. Often it did not carry out the services for which people were supposed to be paying. Liam Spender, a committed campaigner on leasehold reform, recently took FirstPort to tribunal and won. David beat Goliath, and FirstPort had to pay back at least £479,000 in overpaid service charges to all leaseholders in the block. As my hon. Friend the Member for Dulwich and West Norwood (Helen Hayes) said, such problems have been compounded by the fallout from the Grenfell fire and the Government’s foot-dragging on that issue.

With leasehold, one never owns one’s own home but merely has the right to occupy it, and to sell that right for the remainder of the lease. It is not ideal, but historically it was a stable, normal type of home ownership that provided homes for many millions of people. Over the last no more than 20 years, we have seen the growth of what can only be called scams on the leasehold system, effectively monetising that system for profit, often offshore profit. Such scams include the extensive sale of freehold houses, extortionate service charges, the ground rent scandal, and developers selling the freehold from under leasehold flat owners, who were promised when their bought the lease that they would have the chance to buy that freehold. Then there are the close and unethical links between developers, freeholders, solicitors and managing agents. Scammers held conferences to network and share best—perhaps I should say worst—practice on how to exploit the glaring gaps in our leasehold system. We can plug some of the gaps, particularly for the benefit of existing leaseholders, but the only way to stop future exploitation is to replace private leasehold with commonhold.

The Secretary of State promised to reform leasehold and called it an

“unfair form of property ownership”.

Those of us speaking today agree with that, but where are the widespread reforms? Have plans been watered down by the Prime Minister? If so, that is no surprise from a Prime Minister who is out of touch with the reality facing leaseholders across the country, who does not understand the strain and stresses facing ordinary hard-working people who are trying to keep their home, and who is out of touch about the very country he is apparently running.

I am pleased that my hon. Friends the Members for Wigan (Lisa Nandy) and for Greenwich and Woolwich (Matthew Pennycook) have committed that a Labour Government would do what the Conservatives are too weak and out of touch to do, which is end the sale of new private leasehold houses, grant residents greater power over the management of their own home, and crack down on unfair fees, with the right to challenge those rip-off fees. I am pleased that Labour has committed to the Law Commission’s recommendations to make it easier to convert leasehold to commonhold, because for so many of my constituents, leasehold has turned into fleecehold.