Leasehold and Freehold Reform Bill

Ruth Cadbury Excerpts

2nd reading
Monday 11th December 2023 Commons Chamber

[Rachel Maclean]

No, because I need to make progress. Perhaps I will allow the right hon. Gentleman to intervene a little later.

The key factor here is choice. At present, leaseholders do not have a choice, or they have a fake choice. The Bill will give them a genuine choice when it comes to how they manage and own their homes. However, while I warmly welcome these measures, we can and must go further. May I draw the attention of the Secretary of State and the Minister to a few of my suggestions?

The measures in the Bill will clearly be of enormous benefit to individual leaseholders, making it easier and cheaper for them to buy freeholds or extend leases, but of course this is a very complicated area, and I know it will be difficult for many leaseholders to understand exactly how much they will benefit financially. My first suggestion, therefore, is the provision of an easy-to-use digital calculator enabling people to see what the Bill means for them.

Then there is the issue of commonhold fixes. I know that the focus here is on ensuring that leaseholders cannot be exploited and can take control of their homes, but there is a clear Conservative and free-market rationale for accepting the Law Commission’s recommendations on reforming commonhold so that more developers choose it, rather than leasehold, for new blocks of flats—not because they are forced to do so, but because it is the best option for their business model. Can the Government look at that again? All the work has already been done.

I strongly welcome the Government’s consultation on capping ground rents. As I said in an intervention earlier, the Secretary of State must look at who is making the representations, and bear in mind the old adage, “They would say that, wouldn’t they?” when people oppose such caps. We know that ground rents are sheer exploitation. Let us call a spade a spade: this is money for nothing. Can the Minister assure me that there will be time to get a cap into the Bill once the consultation has closed?

We have all heard of too many sad cases involving a hard core of truly exploitative and dodgy freeholders—the bad apples—ripping off and exploiting leaseholders. We know that there are some freeholders who treat people properly, but the others know that going to court will be too much hassle for most people, and indeed that the odd tribunal defeat is just part of the cost of doing business. We must do something to ensure that there is a real cost to those unscrupulous companies and their directors.

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

I thank the hon. Member for the work that she has been doing on this issue. However, she implies that the rip-off merchants constitute only a certain proportion of freeholders. Is she not aware that these people have been working in cahoots over the past 10 years, attending conferences, identifying the weaknesses in the law, sharing information and forming links with professionals such as agents and solicitors in order to rip off innocent leaseholders? This is a consistent, organised scam that has been growing over 10 years, which is why there are so many more problems now than there were, say, 15 or 20 years ago.

[Rachel Maclean]

Of course I am aware of that. When I was privileged to hold the position of Housing Minister, I strongly supported the relevant legislation, because those people sat in front of me and cried crocodile tears, telling me that if we went ahead with it we would destabilise the pensions industry and leave lots of little old ladies with no pensions—which is obviously complete and utter nonsense, as I am sure the Secretary of State and the current Housing Minister, my hon. Friend the Member for North East Derbyshire (Lee Rowley), will be able to tell me on the basis of the analysis that they have conducted.

We also need assurances about section 24 managers. I note that, in recent weeks, at least one freeholder has tried to wrest control of a building back from a court-appointed manager—a so-called section 24 manager—claiming that it is incompatible with the Building Safety Act 2022. That is obviously nonsense. If a freeholder has been found not to be managing his building properly, it shows some cheek to try to ditch a court appointee on such spurious grounds. I hope that the Minister will take the opportunity later to give us the Government’s view.

I welcome the Government’s intention of introducing building safety measures to ensure that remediation continues to accelerate, and to make it easier to ensure that the right people pay, but may I press the Minister for a little more detail? I know that, even as we speak, people are making serious decisions about their own finances.

My constituents in Brockhill, especially those in the Persimmon Homes development, have faced innumerable issues relating to freehold estates, and I must press the Minister on what measures he will introduce to help them and, most importantly, when he will do so. I know that the Government intend to introduce a right to manage for freeholders, and to challenge arrangements and charges through the first-tier property tribunal. However, I urge him to read again the Hansard report of the Westminster Hall debate in which I responded, on behalf of the Government, to my hon. Friend the Member for North East Bedfordshire (Richard Fuller), who had told a story about one of his constituents who had had to pay thousands of pounds for one lamp post. This is an outrageous state of affairs, and I want the Government to introduce measures that will tackle it and many others. Currently, throughout the country, people’s new dream homes are turning out to be a nightmare. They are being ripped off by small-print clauses that turn into big bills, and they have no redress. That must be fixed.

Finally, there is a need for regulation of the property management sector more broadly. I recognise that the Bill was not the right vehicle for it, but I urge the Minister to continue to push ahead with a reform that must happen, if not on this side of a general election, then on the other side.

We Conservatives believe that the opportunity to own one’s home is sacrosanct, and the Bill takes another important stride towards the creation of a true property-owning democracy. While, as we have made clear, we stand firmly on the side of fairness and those who want to own a home, we are still none the wiser when it comes to where Labour Members stand. One week they are on the side of the builders, not the blockers—or so they say. The next week, they are blocking our proposals to build 100,000 new homes that first-time buyers and young families would desperately want to possess. While they decide whose side they are on, we are taking important steps to improve the lives of millions up and down the country. I look forward to working with Ministers on the Bill as it goes through the House to strengthen some of its measures, particularly those on commonhold and freehold estates, and to ensure that we deliver on the promise that it holds.

Let me end by wishing my hon. Friend the Minister better luck than I had in his tenure of this important role. I especially hope that he can remain to finish the vital job of leasehold and freehold reform and restore true property ownership to millions. He will have my full support in the Lobbies.

--- Later in debate ---

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

It is a pleasure to speak on the Second Reading of the Leasehold and Freehold Reform Bill and to follow so many excellent contributions from Members across the House. They have all provided examples, most of which I have experienced in my eight and a half years in this place.

For years and years, leaseholders, campaigners and groups such as the Leasehold Knowledge Partnership have been warning the Government about the huge harm being done by our outdated, feudal and antique leasehold system. Many of us have raised it in this House. Problems with leaseholds is one of the biggest issues brought to me by constituents, and I am sure if the Minister joined me in meeting residents of just one or two blocks in my constituency, whether it was Great West Quarter in Brentford, Grove House in Isleworth or Wheatstone House in Chiswick, he would see the wide array of problems caused by the leasehold system.

We have had nearly four years of promises from successive Conservative Housing Ministers and Secretaries of State to commit definitely to leasehold reform. The Government have talked a good game but failed to deliver the big comprehensive package of reforms needed. This piece of legislation is yet another example of that failure.

This was supposed to be the grand reforming Bill from the grand reforming Secretary of State, who is not currently in his place. He has become the Conservatives’ Mr Fix-It. He was sent in to fix the justice system and then the Cabinet Office, and even to deliver the parting blow to the former Prime Minister. When he was presented with the leasehold system, there was a glimmer of hope that the Government would slay the vested interests and finally fix this antique system—but no, the right hon. Member has flinched. He has failed, because before us today we see a timid and narrow Bill that does not go anywhere near far enough to fix the problems faced by leaseholders.

Most new homes in my constituency are flats, not houses, so although ending the sale of leasehold houses is welcome overall, it will not help my constituents and the millions across the country who are still living in, or face the prospect of living in, leasehold flats. If the House will indulge me, I will give a typical example of why the leasehold system is outdated and just what the legislation should be addressing.

Imagine someone in their early 30s on the career ladder in a reasonably well-paid job. They have saved up for years, often while stuck in private rentals. They finally have enough for a mortgage, and they can just about afford the monthly repayment rates. They look across west London and cannot afford to buy a house, but they then see a glossy advert for a flat. At first glance, it looks perfect. They have worked out that they can get a mortgage and use their deposit to get a foot on the ladder. It looks as if their salary can pay the mortgage and the service charge, so they buy and assume that they have a stake in the home that they now own.

Too often, they are kept in the dark by solicitors who are often recommended by developers. They move in and the problems start. They notice a few problems: the promised concierge might not be there; the gym on the brochure never opens; rubbish is left in the hallways; the car park barrier and the door from the car park into the flats are often broken, creating a security hazard; and heating and hot water stop working for weeks on end. They report those issues, but nothing happens. Then, they get their service charge bill in the post: it has increased to more than £7,000 a year, over 50% more than what they were told they would be spending.

One constituent has seen a trebling of their service charge since they bought their flat in 2017, but while the service charge goes up, the services get worse. Leaseholders feel that they are treated like cash cows. Then they are hit with an increase in their building insurance: what was £200 a year is now £400, £500 or more. They ask why those costs have gone up, but they do not receive a specific or clear answer. Many are faced with having to sell, sometimes at a loss.

If they were lured into shared ownership, managed by housing associations, they face additional problems. The part-buy/part-rent set-up is supposed to be targeted at keyworkers in the public sector, many of whom are on fixed pay. On top of the mortgage and service charges, those so-called owners—they are not really owners, are they?—find out that their rent is going up. In many cases, my constituents in shared ownership have seen rent increases of 6%, 7% or 8%. They only own 20% or 25%, and if they need to sell, they have to sell through their housing association, unless they are in the fortunate position of being able to step up and own the lease outright. A report that I read said that many housing associations drag their feet on resales as there is not much money to make from them. They focus their energy on getting the new blocks sold.

I have heard from many constituents who are shared owners. They wait months and months to sell, and have to pay for costly valuations, while they are trapped in limbo trying to get on with their lives. Many of my constituents who are leaseholders are also unable to sell because they are waiting for remediation work to begin on blocks deemed to be unsafe. Much of that emerged following the tragedy at Grenfell. Banks will still not approve mortgages for those blocks until the work is carried out, which means that, again, those leaseholders are trapped in limbo.

In one case in my constituency, Galliard Homes has delayed and delayed taking any action, despite promises that it would start months ago. Leaseholders in blocks below 12 metres are still responsible for funding building safety fixes. They were carved out and left to deal with the crisis themselves. For one of my constituents, that means a £20,000 bill hanging over their head. The building safety crisis is a wider symptom of the building culture that the leasehold system encouraged; a system in which a small number of people and companies are able to make huge profits, with absolutely zero oversight of the build quality.

Let me move on to repairs. The residents of Wheatstone House in Chiswick, which is managed by L&Q, face an example of poor repairs services. Leaseholders and tenants in that block have known their hot water and heating not to work for days on end. That started last winter and is back again this winter. Each time, residents get a lacklustre and slow response from L&Q. We saw a repeat of such poor service when Peabody-Catalyst dragged its feet for months in fixing the lift at Aplin Way in Isleworth, trapping some residents upstairs. The developer then tried to leave leaseholders with a huge bill. Others have district heating systems that run at 35% efficiency but cost a lot of money. What does the legislation do to address those issues?

On service charges, management companies have their cake and eat it. The hon. Member for Dartford (Gareth Johnson), who is no longer in his place, mentioned the excess charges, increases well above inflation, deteriorating service and opaque bills. Management companies are often too closely aligned by ownership with the freeholders. The same names keep coming up: Rendall & Rittner and FirstPort appear to be hoovering up the management contracts for a range of blocks, including housing association, shared ownership and resident management companies, all the while providing an appalling service to the leaseholders.

On declining value and the need to extend leases, constituents have told me about how they worry about their future if they have less than 80 years left on their lease. I do not think that the Bill does enough to address that challenge.

I am pleased that my hon. Friend the Member for Greenwich and Woolwich (Matthew Pennycook) has said that a Labour Government would go further and ensure that everyone who wanted to move from leasehold to commonhold would be able to do so. A Labour Government will make commonhold the default tenure for all new properties, and will carry out the Law Commission’s recommendations—I welcome that. Labour will also address the omission on deferment rates. We will do what the Conservatives have failed to do.

I have touched on only some of the many and varied issues that my leaseholder constituents have faced. The legislation does not go far enough for them and will not fix the problems that they face. It will not help those who are stuck in limbo and unable to sell, it will not help those who were tricked into shared ownership with false promises, and it will not prevent yet more leaseholders from having their lives turned upside down. When someone is handed their first set of keys, it should be a day of dreams, but for so many of my constituents and millions of people across the country, that dream has turned into a nightmare. The Government had a chance to end that nightmare through this piece of legislation, but they have failed to do so.