Gareth Johnson (Dartford) (Con) I beg to move, That this House has
considered freehold and leasehold reform in England. I will centre
my remarks on the issue of management companies and the fees that
they charge to people who live on newer housing estates. This is a
big and growing issue in my constituency, and I want to talk to the
House about some of the practices of management companies that
behave in the most appalling way—in respect of not just the
services...Request free trial
(Dartford) (Con)
I beg to move,
That this House has considered freehold and leasehold reform in
England.
I will centre my remarks on the issue of management companies and
the fees that they charge to people who live on newer housing
estates. This is a big and growing issue in my constituency, and
I want to talk to the House about some of the practices of
management companies that behave in the most appalling way—in
respect of not just the services they provide but the fees they
charge to homeowners on the estates for which they are
responsible. We have a large number of affected people in my
constituency, which is perhaps not surprising given that some
7,000 new houses have been built in Dartford over the last 10
years. Management fees are imposed on homeowners, whatever their
tenancy, to pay for the upkeep of communal areas and other
amenities.
It is hard for me to overstate how big an issue the conduct of
management companies is. Since announcing that I secured this
debate, I have had email after email from local residents at
their wits’ end, who complain about the practices of management
companies. Indeed, around 20% or 25% of people who attend my
surgeries are there to raise such experiences. Frankly, the
stories they have provided about the practices of management
companies are shocking.
The central allegation is that developers retain ownership of the
land once a house is built and then create a company or use an
existing company to sell the land to, so that they have the right
to be the estate management company. This happens without any
consultation at all with homeowners or anybody else, and without
sufficient regulation. Central to my speech is asking the
Government to bring in the necessary legislation so that we can
deal with this growing problem once and for all. What often
happens is that companies are set up or used to implement the
work or to liaise with residents, thereby creating several tiers
of companies for homeowners to deal with.
Take, for example, the Bridge estate in Dartford. The local
councillor, Clement Quaqumey, has raised the plight of local
residents who are enduring a nightmare. Because the Bridge
community is divided roughly half and half between businesses and
residents, the residents end up paying huge amounts of money to
receive little more than landscaping services. They have no
alternative but to pay the money, as they are committed through
the service charge deed they have signed. These contracts are the
source of the homeowner’s commitment. People unwittingly signed
up to the contracts without fully understanding their
implications.
Particularly when it is a seller’s market, people are desperate
to buy their dream home and never expect that management
companies will hike up their fees with little notice. When that
is challenged, however, it soon becomes clear that the homeowners
can do little or nothing about it. We simply cannot allow
homeowners to continue to be treated in this way.
A constituent contacted me yesterday to say that they are being
charged £2,500 a year for an extremely poor service. Such fees
are in addition to the council tax that homeowners still have to
pay in full. Homeowners understandably resent having to pay
council tax and a separate payment for the maintenance of roads,
pavements and play parks that can, of course, all be accessed by
the general public free of charge. This is a problem that has to
be addressed, and soon.
Residents of Ingress Park, another estate in my constituency,
have contacted me to say that this beautiful place to live—and it
is beautiful—is spoilt by the charges imposed on the homeowners
there. The charges make the properties harder to sell and create
bureaucracy that strangles the people living there. People
complain of the accounts not adding up—and that is if and when
they are able to obtain them. Again and again, I receive
complaints from residents who ask for accounts to show them what
their money is being used for but they are not able to obtain
them. Residents have also complained of contractors clocking in
late and leaving early, with nothing whatsoever being done to
check their behaviour.
One of the worst instances that I have dealt with was in a road
called Winston Close, which is in Stone in my constituency.
Residents were given just two months’ notice that their annual
fee was going to rise from just under £2,000 to just under
£6,000, to pay for windows to be replaced. To be fair to the
management company, it relented and phased that increase over a
longer period of time during which the windows would be replaced,
but it still led to huge increases for local residents, as well
as a lot of stress and upset. Had the original demand been
persisted with, the residents would have had no option whatsoever
other than to pay. That clearly illustrates what is wrong with
the current system of management fees. The management company can
literally treble the amount that homeowners have to pay, with
little or no notice, and the residents have no alternative other
than to cough up.
A constituent in Castle Hill, which is in the Ebbsfleet Garden
City area, also contacted me. He relayed to me that the fee for
residents in that area has recently been increased by 30%, yet as
a freeholder he does not have access to any dispute-resolution
tribunal, so he has just had to take that increase on the chin.
That cannot be right and this practice has to end.
I met residents of Bexley Park in my constituency who have
managed to secure the agreement of more than 50% of residents
that they should remove themselves from their management company
and go to another. I am sure Members will agree that it is no
mean feat to get over 50% of residents in an area to sign up and
say, “We no longer want to use our management company. We want to
transfer to a different one.” However, the original management
company cleverly said to them, “That’s absolutely fine, but we
want hundreds of pounds from you, and every single householder
has to pay that money before they are allowed to transfer.” That
was an impossible hurdle for those people to overcome, as the
management company knew.
We have to make it easy for residents to move to another
management company and thereby end the monopoly that such
companies enjoy over homeowners. There is currently no
competition because residents are stuck with their management
company, which has no incentive whatsoever to improve its
services or provide value for money.
Another constituent from Stone told me that they had questioned
some workmen in their communal area who were there to change four
of the fluorescent light fittings. It turned out that they had
travelled from Leeds to Kent to do that job and were charging
over £400 to do it. It was clear that that lady could do
absolutely nothing about the situation. There in front of her was
a clear example of the abuse that is meted out to homeowners in
some of these newer housing estates, in the form of someone being
sent from such a long distance away to carry out a fairly
straightforward job and then charging an exorbitant amount of
money for it.
Residents on the old Stone House Hospital site in my
constituency, which I understand comprises purely leasehold
dwellings, contacted me to complain that the freeholder was
forever changing and rarely cared about problems on the
development.
Another problem with the current system is that there is little
or no co-operation between management companies. Two or even more
management companies operate on some estates in my constituency,
so we end up with a situation in which separate people come to
mow the grass, with one at one end of the estate and another at
the other, when that job could have been carried out by one
individual mowing the whole estate. That lack of co-operation
illustrates the poor value for money. The examples instances just
go on and on—indeed, I could fill the whole 90 minutes of the
debate with issues that have been raised with me about poor value
for money, exorbitant fees and the unfair and unjust current
system.
I genuinely believe that developers and management companies are
taking advantage of how the public conceive of a freehold.
Understandably, people believe that a freehold will give them
full control over their property, but the reality on these new
estates is very different. So-called freeholders are not only
being forced to pay the charges, but when it comes to selling the
property they have to effectively ask permission from the
management companies to do so and have to pay a fee to those
management companies for a seller’s information pack. One lady
contacted me to say that when she questioned the management
company over the contents of her seller’s pack, it responded that
each query she raised with them would be charged at £60 plus VAT.
Ironically, she was questioning the management company about
mistakes it had made in the pack. Such a system of having to ask
permission simply causes delay, unnecessary costs and, of course,
extra profit for the management company.
Moreover, people have no say in the running of the management
company or input as to what the priorities should be for an
estate. Whatever the management company wants for an estate is
done to the residents who live there. There is no way of avoiding
the exorbitant fees, no right to challenge and no conceivable way
of changing the management company. Quite frankly, it is a
licence for those companies to print money. If we do not
legislate quickly, we will create a legacy that will stay with
the British housing sector for generations to come. We should not
allow people to be treated in this way for simply wanting a nice
new home to live in.
2.43pm
(Ellesmere Port and Neston)
(Lab)
It is a pleasure to see you in the Chair, Mr Sharma. I state for
the record that alongside the hon. Members for Worthing West
( ) and for St Albans (), I am co-chair of the
all-party parliamentary group on leasehold and commonhold reform.
We are ably supported in that endeavour by the Leasehold
Knowledge Partnership, which works alongside the National
Leasehold Campaign. We have worked over a number of years to get
this issue right to the top of the political agenda, I am
grateful to the hon. Member for Dartford () for what he has said.
It is coming up to seven years since I first described leasehold
as the payment protection insurance of the housebuilding
industry. A couple of years ago, I said that estate management
fees would be the new PPI because, as we are hearing today, they
are clearly replacing leasehold as the new revenue stream to
fleece homeowners of money that they should not have to pay. I
have yet to hear a convincing argument as to why these companies
need to exist on standard estates. They are simply adopting the
works that the local authority used to do. When talking to
people, it is difficult to imagine any justification for why they
should have to pay twice for exactly the same services. That is
what they are doing, with the only difference being that if
people do not agree with the way council tax bills go, they can
vote the council out. There is no such power over the management
companies.
Management companies and fees will continue to be an issue: it
sounds as though they are becoming more and more widespread, and
there are now very few new estates where the model is not being
used. Frankly, though, I do not think there is any reason for it
to continue. It is beginning to raise some fundamental questions.
For example, there is an estate where people pay for litter bins
and collections, and they are saying, “Why should people who do
not live on this estate get to walk their dogs on it, because
they are not paying for cleaning the place up?” We end up in a
very bad place if we do not tackle these issues and weed out the
exploitation.
I say to those who raise these issues that we can see how knotty
some of the legal questions are, and they do need untangling—an
estate management company has a number of aspects to it—but
despite the legal technicalities we have won the argument that
leasehold is not fit for purpose, and that same argument needs to
be applied to estate management companies. We also need political
will to get the full reforms over the line.
Some might seek to defend the current system of leasehold.
Perhaps the promises made by the Secretary of State for
Communities and Local Government five and a half years ago have
been forgotten; we have had quite a few changes since then. It
would be churlish not to acknowledge that there has been some
progress in cleaning up the mess, but in terms of legislation to
help existing leaseholders, we have had very little action. The
noises coming out of Whitehall in recent weeks have been
concerning. For all the talk of change and promises made, perhaps
nothing will actually happen. We cannot allow this to continue.
We must ensure that justice is done.
People’s homes—the biggest single purchase they will ever make in
their lives—have been turned into a cash converter, usually for
an anonymous freeholder. It is the biggest insult in the history
of housing that people pay ground rent. Although it is initially
quite a modest fee, in the small print of a lot of these
agreements—which are, thankfully, being exposed now—the price of
ground rents goes up. With an escalator it can sometimes double
after 10 years and then double again after another 10 years. That
often means the property becomes unsellable.
The linking of ground rents to the retail price index is also
becoming an issue given the rise in inflation, which makes some
of the doubling ground rents seem slightly less outrageous than
they are. This is now putting people in real hardship. The
biggest insult of all is the fact that when people pay the ground
rent, they get absolutely nothing in return. It is literally
money for nothing and needs to be consigned to the dustbin of
history.
The Financial Times recently reported that throughout the history
of property the costs of leasehold and freehold homes have
generally moved in lockstep, but over the past five years the
price of freehold properties has continued to rise, whereas
leasehold properties have not kept pace with that rise. No doubt
Grenfell has played a part in that as the inadequacies of the
regime that tragedy exposed have been laid bare, but the general
toxicity of leasehold as a tenure has also made prices stagnate,
and the stories of people who are unable to sell their homes
because of unreasonable leases has played a part. The message is
clearly coming through that leasehold has to be consigned to
history.
The scandal has been going on for an awfully long time—for so
long that the National Leasehold Campaign is having its
activities immortalised in a play called “Fleecehold”, which will
be coming to London next month. I hope the Minister will have
time away from her duties to catch that. The fact that the
campaign has become a piece of theatre shows us how long we have
all been fighting for justice.
I absolutely agree that residents need greater power over the
management of their homes, and flat owners need new rights to
form residents’ associations. We need a simplification of the
right to manage, leaseholders need the right to extend their
lease to 990 years with zero ground rent at any time, and we need
to bring forward the proposed reform of enfranchisement for
leaseholders. We also need to deal with marriage value and
prescribe rates for calculating the premiums.
We need to crack down on unfair fees and increase contract
transparency, and we need to make sure that there is a proper
reference document for fees so there is no longer a service
charge rip-off. We need to give leaseholders the right to
challenge those fees and poor performance from the service
companies. We must also end the right of third-party landlords to
build on other people’s homes without any consideration, which is
another anomaly of the current regime.
We should regulate all managing agents and get rid of the frankly
ridiculous situation in which the property manager of a high-rise
building does not need to have any relevant qualifications. We
should bring forward the statutory protection of all
leaseholders’ funds, and give leaseholders the right not to pay
if the landlord does not deliver their accounts on time. We
should follow the example set by the Competition and Markets
Authority and require some developers to reset ground rents to
their original term.
We also need to look at shared-ownership properties, which are
becoming a bigger issue. The triple whammy of service charges,
rent for the bit that is not owned and ground rent is making it
impossible for people to sell them.
I expect the Minister will say that the Government remain
committed to leasehold reform but, with all due respect, it is
not her we need to hear from: we need to hear from the Secretary
of State or the Prime Minister himself. We need the Secretary of
State to come to the Dispatch Box and tell us without any
ambiguity what the Government’s position is. I say that because
exactly one month ago the House resolved that the Secretary of
State should make an oral statement by 23 June on the
Government’s proposals for leasehold reform. Well, we are still
waiting for that statement. What does the fact that the Secretary
of State cannot even adhere to a motion passed by the House
asking him to tell us what the plan actually is tell us about the
Government’s commitment to reform?
Has the Secretary of State been gagged by the Prime Minister?
There was a newspaper report last month that quoted someone from
Downing Street saying that the Secretary of State wanted to
be
“a maximalist on leaseholder reform, but we simply haven’t got
time to be maximalist right now.”
I have to say that, given the fact that we are regularly
finishing in this place three or four hours early, arguments
about there not being enough parliamentary time are not going to
wash.
Rather than relying on anonymous briefings to the press, the
Government’s position on leasehold ought to come very clearly
from the Secretary of State at the Dispatch Box. He should tell
us what he is going to do and when he is going to do it by. We
have had enough false dawns and jam tomorrow; we need action and
we need it now.
2.52pm
(St Ives) (Con)
I certainly find little to disagree with in the speech made by
the hon. Member for Ellesmere Port and Neston () and I commend my hon.
Friend the Member for Dartford () for bringing this issue to
the House. The problem is prevalent. Many of my constituents are
stuck in this time warp of managing their leasehold property,
which they never expected to have to do.
As we have heard, there is cross-party consensus on the need for
leasehold reform. I cannot put it better than the Government did
themselves:
“The existing residential leasehold system is fundamentally
flawed. It has its roots in the feudal system and gives great
powers and privileges to landowners. Despite a series of reforms
over the last thirty or so years, abuses continue to flourish
causing misery and distress to leaseholders.”
Since then, the Government asked the Law Commission to advise on
reform and made a manifesto commitment to advance it. They
fulfilled the first part of the Law Commission’s recommendations
by passing legislation to reform ground rents, but delayed on the
second part, on reforming existing leases. Constituents write to
me every month to ask when the second part will be introduced.
They think the Government are wasting time. Their leases are a
wasting asset; losing time means they lose part of their
property.
We know that a property-owning democracy gives people security
and the power to make choices, control their own lives, build
their communities and plan for the future. Leasehold ownership
puts limits on that power, and the Government’s delay to reforms
is preventing homeowners from making plans for the future. Take
the confusion about whether marriage value will be abolished so
that leaseholders no longer have to pay a premium to extend a
lease that has less than 80 years to run. One of my constituents,
Stephen, holds a lease on a property with the National Trust.
There are 81 years remaining, and he has to decide whether to pay
for a new lease now or wait to see whether the Government will
carry out their promise to abolish marriage value.
Another constituent, Amy, owns a leasehold property in London,
which she has been trying to sell. She has very sensibly moved to
my constituency to start a new life with her partner, but she
cannot sell her property because of safety defects that have not
been remedied. I will come back to Amy in a minute.
My constituency includes the beautiful Isles of Scilly, which
have been exempted from leasehold reform in the past. The off
islands and parts of St Mary’s are owned by the Duchy of
Cornwall. The Duchy’s leasehold properties were shielded from
enfranchisement because of their long historic or particular
association with the Crown. Regardless of whether or not those
properties should still be exempt from the Government’s reforms,
the Duchy is waiting to see what the Government’s plans are
before it even extends leases.
One of my constituents has been trying to extend the lease on his
property for nearly two years. He runs a business from the
property and needs to plan for the future. On each occasion, he
has been advised by the Duchy to await leasehold reform. I have
met the Duchy to challenge and address the situation. It is also
faced by many constituents who are waiting to hear the guidance
from Government, as it will have an impact on them.
I have worked with the Duchy and know its intention is to keep
islands as a living community. The Duchy is not one of the
ground-rent grazers we have heard about. It leases all untenanted
land on the islands to the Wildlife Trust at a peppercorn rent of
one daffodil a year. Some remnants of feudalism are charming;
leasehold is not. Government should push forward with their plans
for reform. This afternoon has shown that there is cross-party
support.
I want to return to the specifics of Amy’s case. Amy moved from
her flat in London three years ago to set up home with her
partner, now her husband, in my constituency. She owns 50% of a
one-bedroom shared-ownership flat. The housing association is
Metropolitan Thames Valley, and the developer Mount Anvil. She
put her flat on the market in August 2020, but it quickly became
clear that it would not be sold, as it is unmortgageable under
the current Royal Institution of Chartered Surveyors guidance.
Since then, she and I have been battling to get more information
from Metropolitan Thames Valley housing association. It has
undertaken inspections that show that cladding is not an issue,
but there are missing firebreaks, and concerns about wooden
walkways and balconies. Those relate to building regulations from
when the housing was first built and are nothing to do with
Grenfell Tower. Without those issues being fixed, under current
guidance, Amy cannot get an EWS1 and, as such, cannot sell. Her
building is under 18 metres, so she does not get the protections
that others do.
The Building Safety Act 2022, which we all promoted and voted
for, covers a lot of cladding, but is still very murky on other
fire-safety defects. Under the new waterfall system, the first
person to fix and pay for those issues should be the developer.
In this case, that is Mount Anvil. We are told by Metropolitan
Thames Valley that Mount Anvil had engaged in conversations but
has been less receptive recently. I know from my own work,
personally through my office and through Government Departments,
that Mount Anvil is not meeting the expected requirements. As a
result, potentially 50 properties in that block of flats are not
in a state in which they should be and cannot be sold. There is
no indication or hint that remediation work will start any time
soon.
Amy has been allowed to sub-let her property, simply because it
was unaffordable for her not to. She does not want to be a
landlord. She pays a lot of tax on it as a result, and 50% of the
property is owned by the housing association. The housing
association has also added £50 a year to her charges, on a
property she does not want to own. She wants to sell and is not
being allowed, simply because of delays in leasehold reform.
While she has shared ownership, she cannot get another mortgage.
She and her husband live in a section 106 affordable home in
Porthleven. They would move out of it tomorrow, releasing two
affordable homes to other families, if they were in a position to
sell the shared-ownership property. She cannot remortgage because
of the issues around her property so she has had to extend her
mortgage with Nationwide, which has allowed her to do that for
significant extra monthly costs. She is paying another £200 a
month for her mortgage, another £50 a month for her service
charge, and there is no information whatsoever from the housing
association or the developers about when they will do the work
and there has been zero progress with Mount Anvil. The building
is missing firebreaks, which have always been required under
building regs.
In August, it will be three years since she tried to sell the
property and started this journey. To this point we have not been
able to resolve it and in that time she has had to pay a further
£5,000 to deal with the lease extension, so she now has a
999-year lease, but, to add insult to injury, the Land Registry
has said she will not receive the documents she needs for a
further two years, which will make it even more difficult for her
to sell her property.
The simple solution is for the Government to deal with Mount
Anvil and the housing association and get them to do the work
they should be doing, not just for Amy but for the owners of all
such properties, as well as to further progress leasehold reform,
which we have all been asking for and have been promised.
3.00pm
(Islington North) (Ind)
It is a pleasure to take part in the debate. I thank the hon.
Member for Dartford () for securing it, and every
one of us could amplify everything he said with very similar
experiences from our own communities, even though the areas we
live in are often very different geographically.
My constituency is spread between about 40% social rented, 30%
owner-occupation and 30% in the private rented sector. The debate
is essentially about owner-occupation and leaseholds, but within
that 30% very few, or certainly a declining number, are in what I
would call traditional freehold properties—where somebody owns
the house and land, and their costs are their mortgage, if they
have one, and all the relevant bills, but there are no service
charges because there is no other involvement.
Any place that is now sold in my constituency as a single-family
home inevitably gets bought by a property company and is divided
up into a number of flats. Dividing a place up into flats is not
of itself wrong, but the quality of the conversion is often a
problem as is the resulting ownership issue. In my constituency,
people who have bought a flat either in a new development or in a
converted property are suffering appalling levels of stress; they
believed they were going to have to pay a reasonable ground rent
and reasonable service charges and management fees but then find
after a very short time living there that they have no control
whatsoever over any of those issues.
The system is very badly designed. Indeed, perhaps it was not
designed at all, but it is so badly in existence that there is a
positive incentive to manage badly, charge extortionately and be
abusive towards those who live in these leasehold properties.
This has been recounted by the hon. Members for St Ives (), for Ellesmere Port and
Neston () and for Dartford and I can
absolutely relate to it.
Many people have got in touch with me about this and I want to
give an example. In a sense, the business model of those who buy
into the leasehold sector is appalling and offers incentives in
all the wrong directions. There are five examples of that. The
company that owns the property sets out charges to the
leaseholders in the property and will directly benefit from
having unnecessary work done in the building. Totally unnecessary
work is created by the management company, and the leaseholder
has no say in whether it is done and no say in the contractor who
does it, yet they have to pay for it. There is an incentive for
the company to choose the most expensive contractor and then
charge on for it. Some of these companies are also incredibly
litigious and threaten to take flat owners to court to start
proceedings for repossession as soon as there is any element of
late payment. Remember that many people who buy leasehold flats
for the first time are young and have young families. They are in
the most expensive and difficult times of their lives, and there
is the greatest pressure on them as a result, so the stress
levels are huge. The companies consistently use the same small
set of suppliers across many of their properties, and those
suppliers are also complicit in the running up or invoicing of
ridiculously high charges across their whole estate portfolio.
When residents try to communicate with the companies, they get
fobbed off, blocked, or threatened with legal action and legal
letters. The stress levels are appalling.
Let me give an example about electricity:
“In our most recent service charge 3 months ago, we were
collectively billed £4k for commons parts electricity”—
the common parts have the amazing total of 10 LED lightbulbs in
them, and:
“This was 10x the estimated expense for the period. Upon
inspection it became clear that the power provider…chosen for us
failed to take a single meter reading for the entire year and
‘estimated’ our bill.”
When the residents highlighted that, the company demanded they
pay the total figure anyway. They are now in dispute over it.
There are many examples of excessive charges for minor or often
unnecessary works or, as the hon. Member for Dartford pointed
out, ludicrous charges for the almost non-existent cleaning of
common parts. That can be just running a hoover over the carpet
once a month, yet people are told to pay several hundred pounds a
year for that kind of thing. It is the same with refuse
collection, rubbish collection and so on. There must be some big
changes to that.
The last testimony I will give is from somebody who bought a flat
that they believed would be affordable. They then discovered that
the company was
“proposing decorating works on our building at a cost of £19800.
We received a quote of £7600 for exactly the same work from a
local contractor. Although we nominated this contractor, as is
our right, they have chosen to go ahead with the company that
they always use. We can challenge this at tribunal but we would
need £8-£10000 upfront costs”.
They have to pay that even to get a hearing. If ever there was an
area that needed substantial investigation and reform, it is
surely this one. People feel disempowered, angry and frustrated.
They cannot sell and cannot move, and they have no idea what
charges are coming down the road.
I have dealt with many cases of leaseholders who either bought
their place from the local authority under right to buy or who
bought it from somebody else who did. They often dispute the
capital works charge or service charge. Sometimes they are right
and sometimes they are not, but there is a clear process by which
they can make that complaint. They can make it to the local
authority, which is accountable. It is not always perfect, but
there is usually agreement at the end, because there is a degree
of accountability. With the companies, there is no accountability
whatsoever. Every power lies with the person who has invested
money to make a vast return, and the returns that are being made
on leasehold properties are enormous.
I hope that the Minister will recognise that the stress that we
are expressing—
The Minister of State, Department for Levelling Up, Housing and
Communities ()
indicated assent.
I see the Minister nodding; I thank her. I hope that she
understands that the issue is not isolated to any one part of the
country. The whole country is suffering from this, and we
urgently need a serious process of leasehold reform that gives
people some power over their own lives and in their own
homes.
3.09pm
(Congleton) (Con)
I appreciate the opportunity to speak, Mr Sharma.
I support many of the comments that have been made, as I think we
are all here today because we want to express a sense of deep
injustice on behalf of decent, hard-working and responsible
constituents. We are all aware that the situation with matters of
property has prevailed for far too long without reform and is now
an injustice. As we all know, justice delayed is justice denied.
I know that the Minister is aware of the situation and has
limited powers to influence the parliamentary timetable, but I
implore her to go back to the Secretary of State following this
debate and communicate to him the sense of injustice, which we
are all communicating on behalf of our constituents.
I want to mention some of the multiple assurances on reform that
the Government have given over many years, and I will focus
particularly on the concern that my hon. Friend the Member for
Dartford () highlighted: the need for
freehold management reform. I do so on behalf of residents on
several estates in my constituency, but I will highlight just
one: Bath Vale. I will come on to give some examples of the
injustice that residents there have experienced.
We all agree that whereas long leaseholders in England and Wales
have a statutory right to challenge at a first-tier tribunal
unreasonable service charges and the standard of any work carried
out, freeholders do not have the same right. As long ago as July
2017, the Government recognised that in a consultation paper,
“Tackling unfair practices in the leasehold market”, saying:
“The contrast between the positions of freeholders and
leaseholders can be particularly clear where a developer retains
the ownership of communal areas and facilities and the
responsibility for their maintenance through a managing agent, or
where a developer sells on the ownership of the communal areas
and facilities to a private company”,
which often then appoints another management agent. The paper
continues:
“In all these cases, even though freeholders may be paying for
exactly the same services as leaseholders, they do not have a
right to challenge the reasonableness of service charges…which
qualifying leaseholders can do.”
In October 2018, the Government published a consultation paper,
entitled “Implementing reforms to the leasehold system in
England”. Again, the paper announced an intention to
“create a regime for freeholders which provides that maintenance
charges must be reasonably incurred and that services provided
are of a reasonable standard. We will also replicate consultation
requirements and obligations on the provider of services to
provide information to the freeholder. Finally we will provide
freeholders with the ability to challenge the reasonableness of
the charges they are required to pay towards the maintenance of
communal areas and facilities at the First-tier Tribunal.”
The outcome of that consultation was published in June 2019, when
the Government recommitted to equal rights for freeholders, and
to a right to manage for residential freeholders, as part of
creating greater parity between leaseholders and residential
freeholders.
Time went by, and in August 2022 I wrote to the Minister’s
predecessor to highlight the issue on behalf of residents of Bath
Vale in Congleton. The difficulties that the residents have had
started 12 years previously, when the first properties were
built, and they still continue. The residents told me in 2020
that the reserves stood at several thousand pounds lower than
what residents expected, and some of the charges were highly
questionable—for example, a charge of £1,500 for insurance
administration, which was cancelled when the residents challenged
it. Similarly, water supplies had been charged for common parts,
running into thousands of pounds over several years, even though
there are no such water supplies. There were outstanding concerns
regarding a road completion that was not adopted by the local
authority, and woodland plans had not been implemented —to such a
degree that the appearance of the site was affecting residents’
ability to sell.
I wrote that letter on 11 August 2022. I received a reply on 4
January 2023—not from this Minister, I accept, but from a
predecessor—once again stating that
“the Government intends to legislate to ensure that freehold
homeowners who pay estate rent charges have the right to
challenge their reasonableness and to go to the tribunal to
appoint a new management company if necessary. We will also
consider introducing a Right to Manage for residential
freeholders”.
That claim was repeated in a debate that took place on 20 April,
and by then my hon. Friend the Member for Redditch () was the Minister. She will
remember that my hon. Friend the Member for North East
Bedfordshire () made an articulate case on
this very issue, much as my hon. Friend the Member for Dartford
has today. The Minister repeated the Government’s response once
again:
“We know that legislation needs to be introduced…We are committed
to introducing legislation to plug this gap. We intend to create
a new statutory regime”.
I do not need really need to go on, but the Minister said:
“We need to end this fleecehold situation where homeowners who
thought they had bought a home to live in…are subject to abuse
and find these charges escalating out of all
proportion”.—[Official Report, 20 April 2023; Vol. 731, c.
478.]
To close, I will repeat what I said at the start. My question is:
when? I urge the Minister please to inject a sense of urgency,
which there has clearly not been to date. These are decent,
responsible constituents who bought their own homes never
expecting to be in this situation. It is unjust. Will the
Minister meet me and residents of Bath Vale? She kindly offered a
meeting at that debate on 20 April, and I know she was sincere
and that her own response to this issue was genuine and
heartfelt. Will she now meet me and take back to the Secretary of
State that this situation cannot go on and that legislative time
must be provided to sort it out?
3.16pm
(Strangford) (DUP)
I thank the hon. Member for Dartford () for leading this important
debate on leasehold reform, or fleecehold as it might be for some
people—I think everyone who has spoken has said that. As often
happens in this House, whatever our political aspirations or
affiliations, we have been bought together by this joint issue.
It is always a pleasure to follow the hon. Member for Congleton
(). We have been together twice
in one day in Westminster Hall—we were here at 9.30 am and came
back for more at 2.30 pm—and we have also had many meetings today
on various issues. It has been a busy day for us all.
I have spoken on this issue many times in Westminster Hall and in
the Chamber. I have raised the importance of protection for
tenants regarding their leases and concerns about rising costs
for ground rent. Security of tenure is imperative for our
constituents, and we have to do all we can to assist them in
these matters. All Members present put forward a clear case on
behalf of their constituents, and I want to do the same. I look
forward to the response from the shadow Minister, the hon. Member
for Greenwich and Woolwich (), whose requests will be
as illustrative as ours. I look forward to the Minister’s
comments as well. As others have said, she has indicated a
willingness to respond in a positive fashion to try to address
these issues. Time is of the essence. That is the main point that
has been put forward, and I wish to make that point as well.
In the past, colleagues of mine have raised the issue of
leasehold reform in Northern Ireland. I will echo their comments
and reinforce their importance. More than 4,000 Northern Ireland
homeowners bought property under right-to-buy legislation, but
they may struggle to resell their homes due to the fact that it
is extremely difficult to obtain a mortgage on properties with
less than 85 to 90 years left on the leasehold. Many constituents
are only now becoming aware that many years of their leasehold
have expired, making it extremely less likely that they will be
able to sell their home. In addition, banks and building
societies will not lend money to cash-buy those types of
properties, so the hope that another cash buyer would even
consider purchasing these types of homes in the future is slim
or, indeed, non-existent. In theory, this will seriously
disadvantage those working people and families who aspire to own
their own homes but do not have the capital to purchase a home
outright.
One of Margaret Thatcher’s policies—she had many policies; I did
not agree with them all, by the way—was that people should own
their own homes. I always thought that was as it should be;
people aspire to own their own home and if we can help them to do
so, we should. However, the Northern Ireland Housing Executive
has stated that there is currently no statutory provision to help
deal with the problem that we are discussing today. From 1 April
1997 to 31 March 1998, 4,111 flats were sold with leases of 125
years or less. That leads me back to my earlier point that people
are less likely to purchase such homes because the leasehold and
ground rent can be quite debilitating. The Northern Ireland
Housing Executive does not hold information for housing
associations—they are different organisations, but still control
some properties—so the number of people affected will be much
higher.
I am aware that this debate is centred on England, but I always
like to give a Northern Ireland perspective. Everybody knows
that; I think Members expect it to be the case. It is how we
illustrate the issues. In this great House, of course, we
represent four regions—four nations within one—and it is what
brings us together that cements and strengthens our position.
This issue is a UK-wide issue and it must be addressed UK-wide.
When the Minister responds to the debate, I would be very keen to
know her thoughts on where the discussions will go with the
responsible organisations in Northern Ireland.
Given that there is no limit on service charges, insurance,
ground rent and forfeiture charges, leaseholders have been left
open to exploitation by their landlords. Given that there is no
such cap, we actively allow leaseholders to be taken advantage of
and there is no regulation or protection for them.
I have spoken in the past about the necessity of a fair fee for a
fair service. Other Members have also referred to that idea. A
Government survey has found that 70% of leaseholders regretted
buying a leasehold property. That is a staggering figure—almost
three quarters of them regret it. Although in Northern Ireland
there is the option to buy out a ground rent, that often comes at
a fee that people simply cannot afford to pay.
Furthermore, land and property service fees and solicitor fees
are paid separately, placing an additional burden on
leaseholders. There must be more onus on the responsibility that
ground rent must be paid. In Northern Ireland, if an individual
tries to buy out their ground rent but there is a record of a
missed payment, the additional payment can be up to six times the
missed amount, which again would be detrimental to the finances
of some families. There is something wrong with a system that
seems to penalise leaseholders, with all the advantage lying with
those who have control of their ground rent, or indeed landlords
or owners of land.
I strongly urge the Minister to engage with the Department for
Communities back home to see what steps can be taken to address
these issues, as they have proven to be prevalent in all of our
constituencies, whether in Northern Ireland, England, Scotland or
Wales. That means that these crucial issues need to be tackled
UK-wide.
3.23pm
(Greenwich and Woolwich)
(Lab)
It is a pleasure to serve with you in the Chair, Mr Sharma. I
declare an interest: my wife is the joint chief executive of the
Law Commission, the work of which I will cite later in my
remarks.
I congratulate the hon. Member for Dartford () on securing this important
debate, and I commend him for the remarks he made in opening it.
I thought that he did an admirable job of bringing home to the
House the poor service and, indeed, the abuses that many
leasehold and resident freeholders on private or mixed-tenure
estates routinely face at the hands of their managing agents. He
also made a strong case for action to ensure that leaseholders
and those residential freeholders are better protected.
I thank all Members who have participated in the debate. We have
heard a series of excellent contributions that have
highlighted—often in painstaking detail, because Members are
engaging with this on a weekly and monthly basis at their
surgeries—how, all too often, leaseholders in all parts of the
country are treated by developers, freeholders and managing
agents not as homeowners or even as valued customers but as a
source of profit to be gouged almost as those parties see fit in
many cases.
The hon. Member for Dartford focused his remarks on the problems
associated with managing agents and estate management companies,
and he was right to draw particular attention to them. The
Opposition, of course, recognise that there are good managing
agents who work hard to ensure that the residents they are
responsible for are safe and secure and that the homes they
manage are properly looked after. However, as we have repeatedly
argued over recent years, the case for doing more to protect
leaseholders from poor service and exploitation at the hands of
unscrupulous managing agents is as watertight as they come.
Relying on incremental improvement and the sharing of best
practice within the industry to raise standards is bound to
fail.
To bear down on bad practice and improve the lives of
leaseholders, the Government need to act. They have a ready-made
blueprint for doing so, because in 2018, Ministers tasked a
working group chaired by the noble with bringing forward detailed
recommendations on how a new regulatory framework for property
agents should operate. That working group’s final report, which
made a series of proportionate and sensible recommendations, was
published in July 2019, yet in the intervening 48 months, the
Government have done nothing to progress the implementation of
those recommendations.
It is not at all clear why that is the case, especially given the
fact that there are clearly opportunities to bring forward and
progress such legislation, with the paucity of business that the
House is dealing with at present. Can the Minister give us a
clear answer today to this question: do the Government intend to
implement the recommendations set out in the regulation of
property agents working group’s final report in what remains of
this Parliament? We are looking for a simple yes or no.
Regulating the dysfunctional property agent market alone is not
enough. It is the inherent flaws of the leasehold system that
ultimately enable substandard managing agents to abuse and
exploit leaseholders and residential freeholders. Even if the
Government did introduce regulation to raise standards and drive
change within the property agent industry, leaseholders would
still struggle with punitive and escalating ground rents,
unjustified permission and administration fees, unreasonable or
extortionate charges and onerous conditions that are often
imposed with little or no consultation. As my hon. Friend the
Member for Ellesmere Port and Neston () argued in a powerful
speech—I commend him for the dedication he has shown to securing
change in this area—what is needed is fundamental and
comprehensive reform of the leasehold system to address the
historical iniquity on which it rests and to ensure it works in
the interests of leaseholders.
However, having ostensibly agreed with us on that point, over
recent months it has become clear that the Government are likely
to row back on the commitments they previously made in respect of
leasehold reform. Let me remind the House what those commitments
were. In 2017, the Government asked the Law Commission to suggest
improvements to both the leasehold and commonhold systems, and
once the recommendations were published in July 2020, they made
it clear that they were considering how to implement all of them.
In 2022, the Government passed, with our support, the Leasehold
Reform (Ground Rent) Act 2022, which set ground rents on newly
created leases at zero. Ministers assured us that that
legislation was merely the first part of a two-part seminal
programme to implement wide-ranging reforms in this
Parliament.
In January this year, in an interview with The Sunday Times, the
Secretary of State went further and unambiguously announced his
intention to abolish the leasehold system in its entirety,
raising expectations correspondingly among leaseholders across
the country. Not only are leaseholders still waiting for the
publication of the leasehold reform part 2 Bill—the hon. Member
for Congleton () was right about the need for
urgency; leaseholders have been waiting for far too long for
change in this area—but credible recent reports have suggested
that while we will see a further piece of leasehold legislation
in the King’s Speech later this year, it is likely to be a more
limited one.
In the Opposition day debate we secured on this subject on 23
May, the Minister claimed that there had been no Government
U-turn on leasehold reform, yet she also repeatedly refused to
commit to the fundamental and comprehensive reform package that
leaseholders had been led to expect was forthcoming, and the
statement that the approved motion called on the Government to
bring forward by 23 June has not materialised. I will give the
Minister another chance today to unambiguously clarify the
Government’s position. If she was correct in asserting that there
has been no U-turn on leasehold reform, will she give
leaseholders across the country a cast-iron guarantee that the
Government will legislate to implement all the Law Commission’s
recommendations on enfranchisement, commonhold and the right to
manage before the end of this Parliament—yes or no? If she will
not do so, will she at least assure leaseholders who are watching
that a slimmed-down leasehold reform part 2 Bill will still
contain the most significant of the Law Commission’s
recommendations in relation to the right to manage and
commonhold?
I put that question specifically to the Minister because, in the
Opposition day debate on 23 May, Ministers reaffirmed their
commitment to taking forward a number of measures relating to
leasehold enfranchisement, from the abolition of marriage value
to a cap on ground rents in enfranchisement calculations, but we
heard next to nothing in that debate in the way of a solid
commitment regarding the right to manage or commonhold. That is a
matter of real concern because reform of both is essential if we
are to fundamentally and comprehensively overhaul the current
system.
Right-to-manage reforms are necessary to provide a remedy to
leaseholders who cannot afford to enfranchise, and commonhold
reforms are imperative if we are to have a viable system for
regulating blocks of flats apart from leasehold.
I hope the Minister will not refuse to engage with the questions,
because leaseholders across the country deserve answers now on
precisely what the Government mean when Ministers state that the
Government remain committed to bringing forward further leasehold
reforms, not least because, as the hon. Member for St Ives
() pointed out, so many
leaseholders have put transactions and their lives on hold while
they have waited, and continue to wait, to find out what the
Government ultimately intend to legislate for.
Unless and until leaseholders receive answers and a renewed
commitment from the Government to enact all the recommendations
of the Law Commission on enfranchisement, commonhold and the
right to manage, leaseholders will reasonably conclude that the
Government have scaled down their ambition, and that the only way
to ensure that the leasehold system is completely overhauled to
the lasting benefit of leaseholders, and commonhold reinvigorated
to such an extent that it becomes the default and ultimately
renders leasehold obsolete, is to vote Labour at the next general
election.
3.32pm
The Minister of State, Department for Levelling Up, Housing and
Communities ()
It is a great pleasure to respond to this debate and to serve
under your chairmanship, Mr Sharma. I thank my hon. Friend the
Member for Dartford () for securing today’s
debate, in which there is strong parliamentary interest. As many
Members have highlighted, I have spoken about these matters many
times in this Chamber and the main Chamber, but I am happy to set
out in a lot more detail the Government’s position.
I thank the other Members who have contributed, including my hon.
Friends the Members for St Ives () and for Congleton (), the hon. Member for Ellesmere
Port and Neston (), the right hon. Member for
Islington North (), and the hon. Member for
Strangford (), who highlighted many of the things that we can
learn from working across our United Kingdom. I am grateful to
him, as ever.
There is a broad consensus on the case for change. I want to
reassure Members that the Government remain committed to creating
a fairer housing system that works for everyone. We will
introduce further reforms in this Parliament to address the
historical imbalance in the leasehold system.
As this debate has shown, the imbalance stems from the unequal
power dynamic inherent in leasehold ownership, in a system with
landlords often acting in their own interests and leaseholders
bound by a lease that can be decades old and not easily changed.
As we have heard today, particularly from my hon. Friend the
Member for Dartford, freehold owners may also be subject to the
will of third party interests.
We have already taken important steps to address the matter,
having introduced the Leasehold Reform (Ground Rent) Bill in May
2021—I thank the hon. Member for Greenwich and Woolwich () for his and his party’s
support in passing that Bill. Since coming into force on 30 June
2022, it has prevented landlords in most new leasehold homes from
charging any financial ground rents at all. That was a very
important first step, but there is more to do to tackle the power
imbalance.
We are committed to improving leasehold tenure—by helping
existing leaseholders to better understand and challenge their
charges or the services they pay for, take control of their homes
or buy their freehold—and to providing a freehold alternative
from the outset, with improved rights for those that pay estate
charges.
As a tenure, residential leasehold is time-limited and control is
shared with the landlord. The leaseholder’s decisions about their
home, including the charges that they pay for services, are
usually made by someone else—the landlord or the managing agent
working for the landlord—but paid for by the leaseholders. The
landlord might not even live in the building or have the same
priorities and motivations in mind. We have heard multiple
examples today about how that negatively impacts leaseholders. My
hon. Friend the Member for Congleton is completely right to say
that those are decent, hard-working people who have done the
right thing and deserve to live in their homes in peace and
security. It is the largest asset they are likely to buy, so it
is wrong that they are being ripped off—if that is a
parliamentary term.
High service charges are being levied for carrying out simple
requests. Managing agents are not providing a level of service
that leaseholders should expect. Urgent repairs are being
neglected, crippling costs are levied for buying out or extending
a lease and leaseholders are charged exploitative and increasing
ground rents in exchange for no services at all. For freehold
homeowners who already have an expectation of control over their
properties, we understand the concerns raised today and we will
act. We will continue our programme of action to remedy those
abuses and provide the vision of home ownership that leaseholders
should expect, which is greater control over their own home,
greater accountability or involvement in key decisions on what
they are paying for and, ultimately, a place of safety, comfort
and security for them and their family.
The Minister says in her speech that the Government will act to
deal with the abuse by management companies and the imposition of
fees for freeholders. Does she mean by “act” that legislation can
be expected?
I ask my hon. Friends and other Members for a little patience
while I proceed through my speech. I want to set out precisely
the Government’s commitment to legislation because I know that is
the question that everybody wants to be answered and I have
limited time in which to do that.
My hon. Friends the Members for Dartford and for Congleton
pointed out that freeholders on new estates must pay charges
towards the maintenance or upkeep of communal areas. The
obligation to pay those charges might be provided by a deed of
covenant or through an estate rent charge that forms part of the
purchase contract. The Government believe that when buying a
home, it should be clear to potential purchasers what the
arrangements are for the maintenance of roads and upkeep of open
spaces, public or otherwise. That information is most often set
out in a freehold management inquiry form, which is published by
the Law Society and widely used across the sector. However, I
know that that information was not provided to some, or perhaps
not drawn to their attention, at the point of purchase.
Furthermore, in many cases contracts do not specify, limit or cap
those freeholder charges. To compound matters, when people
receive an invoice, they are not provided with information about
what the charges cover. Much as with leaseholders, that lack of
transparency, both at the homebuying stage and when people have
settled into their property, leaves homeowners in a vulnerable
position and is something that the Government intend to
address.
Leaseholders already have certain protections and rights that
will enable them to hold management companies to account.
Freehold homeowners have no equivalent, even though they might be
paying for the same or similar services, as highlighted in the
remarks by my hon. Friends. The current situation is unfair.
Where they are required to contribute, it is not appropriate that
people have limited rights to challenge those costs, and we are
committed to introducing legislation to plug that gap. We intend
to create a new statutory regime for freehold homeowners based on
the rights that leaseholders have, ensuring that estate
management charges are reasonably incurred, that services
provided are of an acceptable standard and that there is a right
to challenge the reasonableness of charges at the property
tribunal.
We will also give a right to change the provider of maintenance
services by applying to the tribunal for the appointment of a
manager. That might be useful if a homeowner is dissatisfied with
the service they are receiving or there is a significant failure
by the estate management provider in meeting their obligations.
We will also consider the option of introducing a right to manage
for freehold homeowners. It is not only estate management charges
that need to be reasonable; that principle must also apply to
administration fees that individual homeowners may face in their
dealings with the estate management company.
Turning back to leaseholders, as highlighted by the hon. Member
for Ellesmere Port and Neston and the right hon. Member for
Islington North, there is a similar situation. Leaseholders
complain of unreasonable and excessive service charges and we
strongly believe that service charges should be transparent and
communicated effectively, with a clear route to challenge or
redress if things go wrong. Many landlords and managing agents
already demonstrate good practice and provide relevant
information, but too many do not and are failing to provide
sufficient information or clarity to leaseholders, especially
over fees and service charges.
We recognise that the existing statutory requirements do not go
far enough to enable leaseholders to identify and challenge
unfair costs. That is why we will take action to support and
empower leasehold homeowners. We will take action to increase
service charge transparency to help leaseholders better
understand what they are paying for, make it harder for landlords
or managing agents to hide rip-off charges and enable
leaseholders to more effectively challenge unreasonable fees or
charges. I also want leaseholders to know that they can seek free
advice from an organisation funded by the Government, the
Leasehold Advisory Service, if they are concerned about charges
that they are asked to pay.
That sounds like a very promising development. Is the Minister
aware that there is sometimes a problem with the ability to
challenge because of legal processes or the enormous costs
involved, so some people, such as the residents I was referring
to, do not have the power to make a challenge even though that
would be very justified?
I thank the right hon. Gentleman for that point and he is
absolutely right. He will hear about some of the things we are
going to do to make it easier and fairer and not as expensive to
challenge, and I shall to set out some more detail now.
When leaseholders challenge their landlord, we know, as the right
hon. Gentleman said, that they are sometimes subject to
unjustified legal costs, and we are committed to ensuring that
leaseholders are not subject to them and, where appropriate, can
claim the legal costs from the landlord, which certainly seems
fairer than the current situation. Currently, if set out in the
lease, leaseholders might be liable to pay their landlord’s legal
costs regardless of the outcome of a dispute—even if they win the
case. That is a classic case of heads you win, tails you lose.
Also, the circumstances in which a leaseholder can claim their
own legal costs from a landlord are currently very limited. That
may lead to leaseholders facing higher bills than the charges
being challenged in the first place and can deter leaseholders
from taking their concerns to the courts or property tribunal, as
the right hon. Gentleman says.
Whether on freehold estates or in leasehold or commonhold blocks,
we are committed to raising professionalism and standards among
all property agents, protecting consumers while defending the
reputation of good agents from the actions of rogue operatives. I
know that my hon. Friend the Member for Dartford has been working
on that issue in his constituency, and I can assure him that I
will continue to work with industry—I have regular dialogue with
it—on improving best practice across the sector, including on
codes of practice for property owners.
Ground rent was particularly highlighted by the hon. Member for
Ellesmere Port and Neston, and we are concerned about the
escalating costs of ground rents for leaseholders who still pay
them. As many will know, we asked the Competition and Markets
Authority to investigate the potential mis-selling of homes and
unfair terms in the sector and it has been successful in securing
commitments benefiting over 20,000 leaseholders, including
removing doubling ground rents.
Both enfranchisement and the right to manage help give
leaseholders greater control. In most cases managing agents would
still be used, but they would be accountable to leaseholders
directly, rather than a third-party landlord, ensuring that
interests are aligned. For those who want greater control over
their homes, many leaseholders find the process for extending
their lease or buying their freehold prohibitively expensive,
complex or lacking in transparency and we equally understand that
many right-to-manage applications fail on technicalities
attributed to overly detailed procedure, which is why we asked
the Law Commission to look into that. It has since published
reports on enfranchisement, valuation and the right to
manage.
To reduce the cost of enfranchisement, we are committed to
tackling the problems with these existing arrangements at their
root. We will abolish marriage value and cap ground rents in
enfranchisement calculations, so that leaseholders who currently
pay onerous ground rents do not also have to pay an onerous
premium to buy their freehold. These changes will result in
substantial savings for leaseholders, particularly those with
less than 80 years left on their lease. These changes will also
make sure that sufficient compensation is paid to landlords to
reflect their legitimate property interests.
To make the process simpler and more transparent, we will
introduce an online calculator to help leaseholders understand
what they will pay to extend their lease or buy it out, and the
Government are committed to reforms to improve access to the
existing right to manage, whereby leaseholders may take over the
management of their block without having to buy the freehold. We
want to make the process of exercising the right to manage
simpler, quicker and more flexible, and make the operation of it
more effective. To that end, we are carefully considering the
detail of the Law Commission’s recommendations.
To give homeowners greater control, we want to make sure that the
benefits of freehold ownership are extended as far as possible.
We remain committed to banning the sale of new leasehold houses
so that, where possible, all new houses are provided as freehold
from the outset. For flatted developments, we want to
reinvigorate commonhold so that it can become a mainstream and
widespread freehold alternative to leasehold for both new and
existing flats. Again, we are reviewing the Law Commission’s
detailed recommendations, which propose legal fixes that will
make commonhold a desirable alternative in more and more
settings. We have established the Commonhold Council, made up of
consumer and housing industry experts, to advise the Government
on how to prepare both consumers and the market for the
widespread use of commonhold. Furthermore, the Leasehold Reform
(Ground Rent) Act 2022 is levelling the playing field for future
commonholds as well as benefiting new homeowners. It removes
ground rents from new leaseholds, and the associated financial
incentives for developers to build leasehold over commonhold,
where ground rents were never permitted.
I thank my hon. Friend the Member for Dartford for prompting such
a vital debate and everybody for their contributions, and I am
pleased that we have been able to discuss these issues properly.
We plan to introduce reforms in the King’s Speech, which will
take place in the autumn, so the reforms should take place within
this Parliament. I recognise that every single Member would like
a more detailed timeline, but I will continue to have these
discussions, as Members have implored, both with my colleagues in
the Department and with those across other channels who are
responsible for tabling legislation.
Would the Minister be willing to have a discussion with the
residents I have referred to in more than one debate? I would be
very grateful.
Of course. I would be absolutely delighted to meet my hon.
Friend’s residents. I implore her to contact my office so that we
can arrange that as soon as we can.
I hope this debate has demonstrated to the House, leaseholders
and homeowners on freehold estates across the country our
continued commitment to reform and to making things better. I am
grateful to Members across the House, campaign groups and members
of the public for highlighting the difficulties that homeowners
face. As I am sure Members can appreciate, this is a significant
undertaking, and I look forward to coming to the House with more
detail as soon as I am able to.
3.47pm
I thank all right hon. and hon. Members for their contributions
to the debate. The consensus on both sides of this Chamber is
that we need to see a transfer of power from management companies
to homeowners, so that we can end the poor value that is too
often provided by management companies, end the exorbitant fees
and, perhaps most importantly of all, give homeowners the power
to transfer from one management company to another, which is
currently restricted. I am grateful to both the shadow Minister,
the hon. Member for Greenwich and Woolwich (), and the Minister for
their responses, and I certainly look forward to His Majesty’s
speech.
Question put and agreed to.
Resolved,
That this House has considered freehold and leasehold reform in
England
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