Leasehold and Commonhold Reform — House of Commons, 2016-12-20
Topic: Housing
Ruth Margaret Cadbury (Labour, Centre-left): That is yet another example of poor practice—and that would be a generous term We have heard about the difficulties of people who buy park homes. They often do that because they cannot afford bricks and mortar, and park homes look, on the surface, to be an affordable option. We have heard about the charges on owner-occupiers for the "privilege" of modifying their own home, even if they have planning permission. We have heard about buyers who want to purchase the freehold finding it incredibly difficult to do so; some big-name volume housebuilders such as Taylor Wimpey and Bellway have been mentioned. The hon. Member for Kingston and Surbiton (James Berry) raised that matter Finally, and perhaps most shocking of all, there is the scandal of what I call the ground rent scam whereby a new asset class has been created as ground rents rise and rise, and properties are being treated as a marketable commodity over the heads of the owner-occupiers. Several hon. Members have mentioned this shocking situation. My hon. Friend the Member for Ellesmere Port and Neston described this national scandal as the PPI of the housebuilding industry I am looking forward to the Minister’s response. Before he thinks of saying that the examples brought here today from Members across the House are exceptions that prove the rule, I want to say that they are all too common. The APPG is a new group that has a large membership. A recent survey by LEASE, the Government’s agent, showed that 53% of leaseholders regret their purchase. If there are 4 million leaseholders in this country, and that is probably an underestimate, then 53% of 4 million represents an awful lot of people. Legislation has been changed to benefit far fewer than 2 million people Before the Minister thinks of talking about weighing up the relevant benefits to different parties as an excuse to delay radical change and review, I have to ask him whether it is right that people can buy and sell freehold interests and ground rents as a lucrative tradeable asset. The Leasehold Knowledge Partnership suggests that developers alone are now earning an additional £300 million to £500 million a year from ground rent reversionary sales of their head leases and freeholds—and that does not include the buyers and sellers of ground rent funds, such as Ground Rents Income Fund plc, whose website I visited earlier today. This asset class is one of the highest-performing investments for canny investors. I think that following this debate we know why Yet hard-working people—those who are doing the right thing by investing their hard-earned cash into buying a home—are being ripped off left, right and centre. The Government must act urgently to stop this gross exploitation of hard-working homeowners who are finding that they cannot sell their homes. In fact, the Government must do more than that. The Labour Government introduced commonhold in the Commonhold and Leasehold Reform Act 2002. My right hon. Friend the Member for Wentworth and Dearne (John Healey), who is here, was a key player in that. Commonhold works in the rest of the world—for example, in Ireland and in most of our ex-colonies—and it could work in the UK. Labour introduced the Act, but we accept that it is unfinished business. The Government should review it, consider amending it, and implement the necessary changes We call on the Government immediately to stop the scandal of exploding ground rents, which is the biggest legitimate scam in Britain. They should review how commonhold works and make it work, and also end leasehold tenure. We strongly argue that we need to update, consolidate and simplify all the legislation, not just add another Bill and yet more complexity. The Government should consider revising the law on replacing leasehold forfeiture, as the Law Commission has recommended. We ask the Government to consider proper regulation of managing agents and to simplify the right to manage, so that residents are able jointly to take control of the block in which they live.