Leasehold Reform

Debate between Peter Bottomley and Bob Blackman

Thursday 11th July 2019 Commons Chamber

[Sir Peter Bottomley (Worthing West) (Con)]

Not only do we think it is a scandal, but the buyers—the finance company—must have known it was a scandal. If the Government, Law Commission or Parliament come forward and say that those houses can be enfranchised on the basis of a formula that means that those buyers do not get their expected bounce of bonus or excessive profits, it will be their fault because they knew.

[Bob Blackman]

I thank my hon. Friend for that. He is absolutely right, and I compliment him on the measures he has taken on behalf of leaseholders over many years.

The issue of legal advice for individuals who are purchasing, particularly for the first time, is crucial. We found when we took evidence that developers give incentives, discounts and all sorts of other encouragement to first-time buyers to use the same solicitors as they are using. Of course, these solicitors are then acting on behalf of both sides and are not acting independently. That must be bad and this must be made clear in legislation.

On our recommendations on ground rents and onerous terms, the Government have said they have taken note but they have taken no action. The key here is that the Government seem to be driving the view that voluntary action is sufficient. After looking through all the evidence and hearing everyone who has come before us, my view is that voluntary action is not acceptable: we have to legislate and force developers to do the right thing, otherwise they will not.

I also think we have to draw a distinction. We need to legislate to protect people going forward and then consider retrospective legislation to right the wrongs that have been done to leaseholders over many, many years. I also believe that we should legislate to intervene on existing ground rents that are onerous—not only should we do this for future cases, but we should intervene to correct the position on existing leases, because we now have a position where first-time buyers have entered into a lease and cannot sell their property. It is outrageous that we have allowed them to get into that position.

The Chair of the Select Committee has mentioned the position on permission fees. It is outrageous that someone can put a conservatory on a property that they have bought and suddenly the developer is saying, “I want thousands of pounds because you put something on the back of your property.” That should be outlawed.

On service charges, sinking funds, estate management, enfranchisement and forfeiture, it is not good enough for the Government just to lean back and say, “We note what you’ve said and we will consider what needs to be done.” We need legal action. I suggest that when the Law Commission and the CMA report, we come forward with a substantial piece of primary legislation to correct this market, as that is what will be needed. Unless we commit to doing that right now, these developers will carry on fleecing their customers.