Leasehold Reform
Debate between Heather Wheeler and Maria Eagle(4 years, 10 months ago)
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The Parliamentary Under-Secretary of State for Housing, Communities and Local Government (Mrs Heather Wheeler)
First, I wish to thank all the hon. Members for their detailed contributions on an issue that affects so much of England; nobody can fail to be moved by the stories we have heard today. Obviously, I wish to thank the hon. Member for Sheffield South East (Mr Betts) for raising this issue and for his work as Chair of the Select Committee on the recent inquiry and the 18 contributors today.
There are more than 4 million leasehold properties in the UK, and leasehold tenure allows people to complete the journey towards ownership. As many Members will know, the Committee’s report contained a number of recommendations concerning both existing and future leaseholders. The Government have welcomed, considered and responded to the recommendations, and we will now press ahead with our programme of reform.
When we first announced our plans to reform the leasehold sector in December 2017, we said that we wanted to get the detail right. That is why we consulted last year on the implementation of our proposals, including the leasehold house ban and ground rent reduction. We received nearly 1,300 responses, many of which were from leaseholders hungry for change. The responses have also allowed us to fine-tune our proposals, which will remove many of the current injustices from the future leasehold market.
We will go ahead with our original plan to reduce ground rents on future leases to a peppercorn, as opposed to £10. Through the Committee’s inquiry and our own consultation process, it has become clear that a peppercorn is clearly understood and is best for the consumer—this is a peppercorn of zero. In practice, this will mean that leaseholders will no longer be charged a financial sum for which they receive no material benefit. It will also remove the current financial incentive for developers to build leasehold properties, as ground rent income will no longer present a lucrative profit stream.
Mrs Wheeler
I will not give way, as I have a lot to get through and I believe I have some answers for people.
On the leasehold house ban, I am pleased with the profound impact our original announcement and the work of campaigners have had on the market. When we made the announcement in 2017, 11% of new build houses in England were sold as leasehold, whereas today the figure stands at 2%—I repeat that it has reduced to that level. Despite that progress, we will still legislate to ensure that in the future—save for in the most exceptional circumstances—all new houses will be sold on a freehold basis. Developers will no longer be able to use leases on houses for their own financial gain, a practice that had become the norm in some regions of the country and, as we appreciate, particularly in the north-west. These reforms will remove the incentives for developers and freeholders to use leasehold to make unjustified profits at the expense of leaseholders, and we will be pressing ahead as soon as parliamentary time allows.
On the matter of where ground rents are so high that it—
Oral Answers to Questions
Debate between Heather Wheeler and Maria Eagle(6 years ago)
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Maria Eagle (Garston and Halewood) (Lab)
May I welcome the new Secretary of State to his post and wish him well? Does he agree that no new house should be sold leasehold? There is no excuse for it. What steps will he take to help the many hundreds of thousands of people, including my constituents, who are now being financially exploited by their freeholds being sold on to dodgy characters?
Mrs Wheeler
I thank the hon. Lady for her very important question. The scandal over feudal leaseholds on new build is absolutely disgraceful. We are working very hard with the Law Commission to change the rules as to how this should go forward. I am delighted to say that some developers have got the point. In South Derbyshire, we now have big signs up on new build saying, “Freehold houses for sale here”.