Leasehold Charges

Housing, Communities and Local Government – in the House of Commons at 12:00 am on 5th November 2018.

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Photo of Liz McInnes Liz McInnes Shadow Minister (Foreign and Commonwealth Affairs) 12:00 am, 5th November 2018

What recent steps he has taken to protect existing leaseholders from high leasehold charges.

Photo of Liz Twist Liz Twist Labour, Blaydon

What recent steps he has taken to protect existing leaseholders from high leasehold charges.

Photo of James Brokenshire James Brokenshire The Secretary of State for Housing, Communities and Local Government

Before I answer these questions, I am sure that the whole House will wish to join me in offering our condolences to the family and friends of Sir Jeremy Heywood, who passed away at the weekend. He demonstrated all that is precious in our civil service through the way in which he supported Governments of all colours, and the manner in which he supported four Prime Ministers. He showed leadership, real focus and ingenuity in dealing with challenging issues, as well as calmness and a real sense of humour. I know that he will be missed by everyone on both sides of the House.

Unfair leasehold practices have no place in a modern housing market, and neither do excessive ground rents that exploit consumers. I will be making clear to developers at a roundtable meeting later this week the need for the industry to provide greater support to existing leaseholders.

Photo of Liz McInnes Liz McInnes Shadow Minister (Foreign and Commonwealth Affairs)

I thank the Secretary of State for his response, and I would like to associate myself with his remarks about the sad death of Sir Jeremy Heywood.

Will the Secretary of State explain how the steps he has outlined will help my constituent, Linda Barnes, who owns a flat that is valued at £80,000 and pays an onerous ground rent of £400 a year rent on it? What help will he give so that such flats can become attractive to buyers again?

Photo of James Brokenshire James Brokenshire The Secretary of State for Housing, Communities and Local Government

I am conscious of some of the bad practices in the leasehold market, which is why I will be meeting the industry later this week to underline the need for redress and for solutions to be offered to people who have in some cases been mis-sold. I certainly take this seriously. I have also written to the Competition and Markets Authority and to the Solicitors Regulatory Authority, in the knowledge that there are serious questions about some of the practices involved, in order to ensure that we are taking action on a number of fronts in response to the challenges that the hon. Lady rightly highlights.

Photo of Liz Twist Liz Twist Labour, Blaydon

Three weeks ago, members of the Housing, Communities and Local Government Committee held a roundtable for leaseholders at the start of our inquiry. They told us about the problem of escalating ground rents that trap them in homes that they can no longer sell. They made it clear that they wanted existing leaseholds to be ended; does the Secretary of State agree with them?

Photo of James Brokenshire James Brokenshire The Secretary of State for Housing, Communities and Local Government

We are working with the Law Commission around greater enfranchisement in order to bring leaseholds to an end. I am also conscious that at least one provider in the market has offered some means of redress and of dealing with some of the issues, but the point is that we need to go further, and that is what I shall be challenging representatives of the industry on when I meet them later this week.

Photo of Peter Bottomley Peter Bottomley Conservative, Worthing West

The House will be grateful to the Secretary of State for saying that he is going to commit to doing all he can for residential leaseholders on existing leases, which are abusive. It is still not too late for the Competition and Markets Authority to declare some of those leases to be so unfair as to be unenforceable.

I hope that, in time, the Secretary of State will meet representatives of the industry, along with the Leasehold Knowledge Partnership and the Leaseholder Association —and perhaps the Chairman of the Select Committee, which is having hearings this afternoon—and that the campaigners and the industry will all meet together so that the Secretary of State is not hearing one thing in one ear and another thing in the other. We have to represent the leaseholders.

Photo of James Brokenshire James Brokenshire The Secretary of State for Housing, Communities and Local Government

I hear my hon. Friend’s message very clearly indeed. We have been provided with a number of examples of egregious practice, and I intend to challenge some of the concerns that have been flagged to me. I am sure that we will continue to have this conversation, but I have noted his points.

Photo of Desmond Swayne Desmond Swayne Conservative, New Forest West

The Law Commission process grinds on, but what advice can be given in the meantime to constituents who present with the most outrageous charges?

Photo of James Brokenshire James Brokenshire The Secretary of State for Housing, Communities and Local Government

Advice is being given by LEASE and others, but this is about transparency and providing more support, which is where the industry has a key role to play. That is why we will be making these points to the industry later this week, as well as looking at where the regulatory aspects might sit.

Photo of Hilary Benn Hilary Benn Chair, Committee on Exiting the European Union

Leaseholders in several private blocks in Leeds are being asked to pay huge bills to deal with unsafe cladding. The cost is between £10,000 and £28,000 for each leaseholder at Skyline Apartments, and the total cost of replacing the cladding in the Saxton development could be as high as £8 million. Given that my constituents are being asked to pay money that they do not have to deal with a problem that they did not create, when will the Government stop urging freeholders not to charge leaseholders and actually prevent them from doing so by law?

Photo of James Brokenshire James Brokenshire The Secretary of State for Housing, Communities and Local Government

We have taken several steps and put significant pressure on the industry, and that is starting to have an impact as many freeholders take the necessary steps to make buildings safe without passing on the costs to leaseholders, who should not bear them. I am happy to consider the right hon. Gentleman’s specific examples, because we are in direct contact with several different agencies, and indeed with local government about taking enforcement action, to see that work is done.

Photo of Bob Blackman Bob Blackman Conservative, Harrow East

I thank my right hon. Friend for his answers. I urge the Government to bring in legislation to bar such charges in future, but we would still need to address those who have been unfairly put in this position in the first place. I therefore urge my right hon. Friend to consider not only legislation for the future, but retrospective legislation to address the egregious practices that have taken place.

Photo of James Brokenshire James Brokenshire The Secretary of State for Housing, Communities and Local Government

As my hon. Friend will know, we are consulting on the implementation of a ban on inappropriate leaseholds on homes, which are the core of what we are discussing. Legislation will come forward once we have seen the responses to our technical consultation, and there will obviously be plenty of opportunity for colleagues to debate the matter further.

Photo of John Healey John Healey Shadow Secretary of State for Housing

I start by formally echoing the Secretary of State’s comments about Sir Jeremy Heywood. Many of us were privileged to work with Sir Jeremy, and he was an exceptional civil servant who gave outstanding service to this country. Our deep sympathies are with his wife and family at this time.

As we have heard, many of us have constituents who bought their home but then found that they do not own it and feel ripped off by unfair leasehold contracts. When we hear, repeatedly, that leasehold buyers did not choose their own solicitor, were wrongly told that they could buy their freehold cheaply at any time, or found out later that they had to ask and pay freeholders for permission to own a pet, change their carpets or build a conservatory, the individual cases add up to something bigger. The Government must act, just as with other mis-selling scandals, such as on pensions, mortgages or payment protection insurance. Will the Secretary of State today back an inquiry into this systematic mis-selling to leaseholders?

Photo of James Brokenshire James Brokenshire The Secretary of State for Housing, Communities and Local Government

I recognise and appreciate the right hon. Gentleman’s comments about Sir Jeremy Heywood. I know that that message will have been heard throughout the House.

The Housing, Communities and Local Government Committee’s investigation into leasehold is live, and I hope that the right hon. Gentleman recognises the seriousness with which we take the issues that he and others have flagged, and the troubling matters that pertain to some of the practices within the leasehold market. That is why I am taking action.

Photo of John Healey John Healey Shadow Secretary of State for Housing

It is not the Select Committee’s action that counts, but the Government’s action, which has been too weak and too slow and, critically, largely overlooks the plight of existing leaseholders. An industry survey shows that six in 10 leaseholders did not even know what being a leaseholder meant until after they had bought, and that nine in 10 regret having bought a leasehold at all. Those are classic signs of mis-selling—it is a national scandal. I will give the Secretary of State another chance: when will he stand up for leaseholders and launch an inquiry into mis-selling?

Photo of James Brokenshire James Brokenshire The Secretary of State for Housing, Communities and Local Government

Nobody is ignoring the issue. That is not only why we are legislating to address the inappropriate use of leasehold for new homes, but why I have underlined today the requests that I have made of the Solicitors Regulation Authority and the Competition and Markets Authority. We recognise that there are serious issues, which is why we are taking action. We want to ensure that leaseholders’ concerns are heard and fully understood, and that redress can be provided.