Leasehold Reform
Debate between Clive Betts and Ruth Cadbury
Mr Betts
We took evidence on that. There are caveats and conditions on human rights legislation. If there is a general good to be obtained, that can outweigh the particular interest of private owners of property. The Government have already got around that on enfranchisement. They have asked the Law Commission to recommend a simple enfranchisement that could mean that the freeholder receives less compensation when the leaseholder enfranchises. In that case, the Government are already considering reducing the value of enfranchisement to freeholders. That is no different from a recommendation to reduce the value of ground rents to freeholders in principle. That probably needs further work, but we had advice that it is possible. There will be a requirement for some compensation, but it need not be full-value compensation.
Ruth Cadbury (Brentford and Isleworth) (Lab)
I, too, would like to thank the Chair and his Committee, my hon. Friend the Member for Ellesmere Port and Neston (Justin Madders), the hon. Member for Worthing West (Sir Peter Bottomley) and my hon. Friend the Member for Poplar and Limehouse (Jim Fitzpatrick) who have raised this issue consistently in this House, certainly since I have been here.
The Leasehold Knowledge Partnership has been very helpful to leaseholders and to us on the legal issues. I am really pleased that the report says, rightly, that the balance of power is weighted against the leaseholder. The hon. Member for Rhondda (Chris Bryant) said that this is the modern equivalent of the racket that followed the dissolution of the monasteries. Does the Chair not agree that this is indeed a modern racket, whereby developers, solicitors and financiers, many of them offshore, are deliberately running a racket and organising conferences to share knowledge on how to rip off leaseholders?
Mr Betts
Yes. I too thank the Leasehold Knowledge Partnership for its work. My hon. Friend is absolutely right. Houses are being mis-sold in the first place. Then, when people are in a leasehold situation, they are being charged ridiculous amounts for permission fees for things that should be done anyway without the requirement of the freeholder to say yes. Service charges are put in for services that are often not delivered. Freeholders are making money out of that. We heard examples of freeholders contracting for insurance on the property and taking a percentage contribution out of the money they paid over. Those things are completely wrong. The sooner we can change the system, the better.