Leasehold and Commonhold Reform

Debate between William Wragg and Mike Amesbury

Thursday 21st December 2017 Westminster Hall

[Mr Wragg]

There was certainly an iniquity there, which needs to be resolved.

Like many right hon. and hon. Members present, I am dealing with a number of cases and complaints on behalf of my constituents. I am pleased to be able to put some of them on the record in this debate. A resident of the new build estate at Strines in my constituency informs me that he is entering the fifth year of his lease, and the prospect of his ground rent increasing is causing him a great deal of trepidation. He is paying £250 plus a £300 service charge. Along with the worry about the additional strain on his finances, he is rightly concerned at the possibility of his property becoming less attractive for sale.

Several residents of the new build Offerton Park estate tell me that property developer Bellway recently transferred the freeholds to a financial management company called Adriatic Land 6, so they are now subject to above-inflation ground rent increases every 10 years. They were not offered a chance to buy the freehold themselves at a reasonable cost.

The residents of Davies Court in Romiley, with whom I had a very enjoyable meeting last month, and who are predominantly retired, face annual ground rents of £450. That is £450 being demanded from pensioners for the ground their houses stand on. The managing agency for the building, FirstPort Retirement Property Services Ltd, also charges residents spurious administration fees when homeowners carry out improvement works, such as installing fitted wardrobes or new bathrooms, at their own expense. The company even attempted to charge one retired lady an £80 administration fee when she bought a cat. She refused to pay.

These are just a few examples from my post bag that highlight the unfair and, in places, absurd situation.

[Mike Amesbury (Weaver Vale) (Lab)]

A similar practice was highlighted just last week by one of my constituents in Winnington in Northwich. One householder tried to sell their property and put up a “For sale” sign, but because of various caveats that applied to the lease, she was told that she had to remove the sign. She could not post a “For sale” sign; does the hon. Gentleman not think that is scandalous?

[Mr Wragg]

I am surprised that the agency did not charge a ground rent for the “For sale” sign—that would have been more appropriate—but the hon. Gentleman is absolutely right to highlight that example from his constituency.

I am pleased that the Government are taking action through the recent White Paper to tackle the unfair practices that we see. Future homebuyers may be protected by limiting the sale of new build leasehold houses to exceptional circumstances. I also welcome the Government’s moves to tackle the scourge of escalating ground rents, with the intention to limit ground rents in new leases to start and remain at the peppercorn level.

While I welcome those measures, they really are just the first steps in achieving transparency and fairness for the growing number of leaseholders. They may make the situation easier going forward, but are far more difficult to apply retrospectively. The far more intractable problem—and the one facing my constituents whom I referred to earlier—is what to do about current homeowners on existing leases altering the terms of a lease part-way through. Ministers ought to consider what steps could be taken to help those already facing onerous ground rents or unreasonable and spurious administration fees. That could include, for example, steps to tackle unreasonable ground rent rises within existing leases at their next review period, or to strengthen the rights of homeowners for redress for unfair lease terms.

In conclusion, I welcome the Government’s plans to limit leaseholds on future new build homes and to cap ground rents, but I am concerned about whether any new legislation will retrospectively benefit homeowners already in this invidious situation. There must be more support for existing leaseholders, including making buying a freehold or extending a lease easier, faster, fairer and cheaper. Leasehold property law is a complex area, and not being lawyer myself, I cannot profess to be an expert. So I look forward to what the Minister, who no doubt has the excellent support of the legal team in his Department, has to say in response to the points raised. May I take this opportunity to wish you, Sir David, and one and all a very merry Christmas?