Housing and Homes — House of Commons, 2018-05-15
Topic: Housing
Justin Piers Richard Madders (Labour, Centre-left): We are facing a situation in which, for the first time, children can expect to earn less than their parents, and, after decades in which the number of houses built has failed to keep up with demand, we have reached a crunch point at which home ownership is so impossibly expensive that it appears out of reach to a whole generation. The only solution is a long-term, sustainable programme of council house building, along with the provision of genuinely affordable homes As we have only a limited time in which to speak, I want to talk about the lucky few who have already realised the dream of buying their homes, but have found that it is all not quite as nice as they expected. As we already heard, 69% of houses built in the north-west in recent years have been leasehold, and as we know, leasehold is a can of worms. I hoped that the new Secretary of State would be present to hear for himself just how rancid the whole business is According to research in my constituency, of those who purchased a leasehold property using a solicitor recommended by the developer, a staggering 92% said they were not fully informed of the ground rent terms when they bought their home. The result is that they have been unable to sell on their property. The illusion of home ownership is very real to them. The true owner of their property is likely to be an unaccountable, faceless investment company based offshore This matters because many of these accidental tenants have found that some of the terms in their lease, particularly in relation to ground rent, are so onerous that they cannot sell on their property. In one sense they are on the property ladder, but it is a ladder that only has one rung, and it is a rung that they are trapped on. If they find they are unable to move, they might want instead to improve their home and build an extension, but the permission fees for doing so, which are also in the lease, are so outrageous that it is not a realistic option. The term "fleecehold" has been created to describe these practices; the term sums up the avaricious nature of these freeholders quite nicely We all remain hopeful that there will be a satisfactory legislative solution to achieve a straightforward, efficient and fair process of enfranchisement either through Government legislation or my private Member’s Bill, but many thorny problems remain, particularly with covenants that involve fees and charges being levied on the home owner even after the freehold has been bought. And of course we need a thorough sort out of the fees that apply in the lease so that those who are not in a position to purchase the freehold are given confidence that those fees are reasonable In terms of fees that lie with the property regardless of the tenure, I refer to Gleeson Homes. It proudly proclaims to sell only freehold properties but it has a huge number of covenants that come with the land, and it is those that come with a fee that I am most interested in. Permission fees are levied for extensions and so on even if people just want to put a shed in. It says charges start at £200, but it does not say what they can rise to, and perhaps most ominously it says retrospective fees can be expensive. I really do not know why Gleeson wants to put itself in the position of a planning authority, but the key issue is that there are numerous ways in which developers can choose to earn funds but it does not always have to be through a series of opaque charges that are not always apparent to the home owner at the time of purchase We need developers to come clean with a full audit of everything that comes with the property that has an ongoing cost implication. The best way to do that is to undertake a Select Committee inquiry into the whole leasehold scandal so that we can have full transparency. There are many questions a Select Committee ought to ask. Why did developers decide to embark on this industrial-scale scam? What is the extent of ongoing charges that attach to properties? What were developers reporting to shareholders at the time they opened up this additional revenue stream? How did the lenders and the lawyers miss the fact that these leases might render the homes unsellable? What did those running Help to Buy think they were helping people to buy? And who exactly are the beneficiaries of those leases now If we are serious about meeting the housing needs of this country, we have to get a full understanding of how the cowboys, the spivs and the speculators were allowed to hijack this vital element of national infrastructure so that it is never allowed to happen again.