Leasehold and Commonhold Reform — House of Commons, 2016-12-20
Topic: Housing
Gavin Barwell (Conservative, Centre-right): The hon. Gentleman makes his point forcefully. Whatever the actual figure—clearly, the work that was done resulted in the increase to which he refers—I think we can all agree that it is a significant part of the housing market, particularly in Greater London, which he and I have the privilege of representing Leasehold legislation has been amended on many occasions over the past 50 years to improve leaseholder rights, including the right to extend their lease, appoint a new manager, challenge unreasonable service charges and purchase the freehold. All of that legislation has helped, but it clearly has not solved the problem, which is probably a lesson for all of us. Why has it not solved the problem? I think that we can point to two clear things. First, the legislation is seen by many as complex, as a number of hon. Members have said, and that can cause problems for leaseholders and freeholders alike. Secondly—the hon. Member for Brentford and Isleworth (Ruth Cadbury), who spoke on behalf of the Opposition, referred to this—the 2016 national leasehold survey showed that 57% of leaseholders either somewhat or strongly agree with the statement: "I regret buying a leasehold property" That is a pretty sobering statistic We should accept at the outset that, whatever changes we make to the law, and whatever system we have for managing properties where a number of people have an interest in the land, some tension is inevitable. Even in those countries that have a commonhold system, some people in a particular block of flats might be keen for further improvements to be made, while others, who might be more financially challenged, might be more nervous about their service charge bills The hon. Lady said that she was concerned that I was going to respond by saying that the concerns that we have heard are just exceptions that do not represent the real problem. I assure her that the leasehold survey shows that they are not exceptions and that there is a widespread problem that needs to be addressed. I was asked directly whether I felt comfortable with the current situation. I assure hon. Members that I most certainly do not feel comfortable with the level of concern right across the country. Indeed, I am very keen to explore how we can promote greater transparency and fairness, and to work with all interested parties to improve leaseholders’ experience of home ownership This is a timely debate because it has highlighted concerns that others have raised, including the Law Commission as part of its consultation on the 13th programme of law reform. We are working closely with the commission and will use the examples raised today in our discussions with it I want to consider the issue of houses being sold as leasehold, which my hon. Friend the Member for Worthing West and the hon. Member for Ellesmere Port and Neston (Justin Madders) have mentioned. Leasehold has been a part of the housing market in this country for decades, even centuries. In the right circumstances, with the right safeguards, it can serve both leaseholders and freeholders well. As we have heard today, however, that is often not the case Analysis by LKP suggests that nearly 9,000 houses were built and sold last year as leasehold. Some have no shared services or estate management functions. In fact, they seem to exist only to create a reliable income stream from the ground rent, permissions to alter the property, and selling on the freehold at some point in the future. Developers can maximise their return by selling the freehold interest to the leaseholder at a higher value after they have moved in, or by selling it to a third party without informing the leaseholder. That is a critical point: if a freeholder wishes to sell a leasehold flat, the leaseholder has the right of first refusal, but that right does not extend to those in leasehold houses Those practices are not illegal, but it seems to me, and to the Secretary of State, to be one of those cases where there is a gulf between the letter of the law and our sense of what is right. Some of the cases that we have seen in the media and heard about today have highlighted some truly appalling behaviour. The Secretary of State and I have been looking closely at the issues raised in recent weeks and we are both absolutely determined to stamp out unfair, unjust and unacceptable abuse of the leasehold system A number of references have been made to Taylor Wimpey’s announcement that it will address some of our concerns about its use of leasehold. I am keen to hear more about what it plans to do, not just to stop such practices in the future, but to help homeowners who are currently stuck with ground rents rising much faster than inflation. The hon. Member for Ellesmere Port and Neston made that point powerfully. The leaseholder does not have to be very far into the lease in order to be stuck with that problem, which relates not necessarily to their actual payments at that point in time, but to their ability either to extend the lease or to sell the property to someone else.