Freehold and Leasehold Reform

Justin Madders Excerpts

Wednesday 5th July 2023 Westminster Hall

[Justin Madders (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 (Sir Peter Bottomley) and for St Albans (Daisy Cooper), 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 (Gareth Johnson) 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.

Leasehold Reform

Justin Madders Excerpts

Tuesday 23rd May 2023 Commons Chamber

[Justin Madders (Ellesmere Port and Neston) (Lab)]

I would like to start by taking the House back to 2012, when the right hon. Member for Welwyn Hatfield (Grant Shapps) was Housing Minister and appeared on Channel 4 to speak about leasehold, and said that only a “tiny, tiny, tiny” number of landlords caused problems. Since then, the Leasehold Knowledge Partnership, with Martin Boyd and Sebastian O’Kelly, along with the hon. Member for Worthing West (Sir Peter Bottomley), Jim Fitzpatrick, when he was a Member of this place, and the National Leasehold Campaign, have proved that analysis to be completely wrong. Let us be clear: those are the people who have contributed time and again to make this the issue that has led us to the debate today.

I got involved in the issue shortly after I was elected to this place. I remind the House of my opening comments in a debate that took place in this Chamber on leasehold:

“What we are discussing today is nothing short of a national scandal. It is the payment protection insurance of the house building industry. Every now and again a sharp practice comes to light which is totally unconscionable and of which every reasonable person would say, “We cannot allow this to continue. Parliament must act.” This is one such occasion.”—[Official Report, 20 December 2016; Vol. 618, c. 1342.]

I believe those sentiments have become widely shared by Members across this House, as details of the leasehold scandal have come to light. Indeed, those words could have been easily spoken by any number of Members, on either side, speaking today. But when did I actually say those words? 2016, some seven years ago. It is seven years since the sickness at the heart of our housing system was exposed, but for those who have been victims of the scandal, it seems very little has changed. They remain victims to this day. We cannot allow that to continue.

It is worth reminding ourselves why the issue has come up the political agenda. For me, the lightbulb moment came after I was approached by a couple of constituents who were concerned about having to pay ground rent on their newly purchased home—a home that was the sort of standard new-build construction that can be found anywhere in the country. Why were those properties leasehold at all? There were no common parts or complicated land ownership. The only reason these properties were leasehold was greed. That greed enabled a whole host of fees to be artificially generated, ensuring that every homeowner would be paying far more than they should, for each and every generation to come. What is the justification for those fees, except that it is what people have been signed up to, unwittingly and with poor legal advice? Well, we know what the CMA thinks about that argument. Prices quoted by the developer to purchase the freehold when the property was initially sold rose four, five or even 10 times higher once the developer had sold their interest on. Hundreds of pounds were being demanded for minor alterations to the property and thousands requested if planning permission was sought. Their home, the biggest single purchase most people will ever make in their life, had been turned into a cash converter for the anonymous freeholder.

Then there was the biggest insult of the lot: the ground rent. Initially, it was a modest fee, but a price escalator was hidden away in the small print. Sometimes it would double after 10 years, then double again after another 10 years, and so on. For some leaseholders, in a relatively short period their property became unsellable. The linking of ground rents to RPI is becoming a real issue with inflation so high, even making some of the outrageous doubling ground rent clauses seem reasonable in comparison. That is putting people in hardship, and it is the biggest insult of the lot because ground rent is, literally, money for nothing. Its payment is a complete legal nonsense that does not stand up to even the smallest amount of scrutiny. I do not give Vauxhall another £100 every time I drive in my Astra. If someone buys a home, that should be it; it should be theirs. It should not be a virtually unregulated income stream for an offshore investor who sees that home as just another number on the balance sheet.

As we have seen reported in the Financial Times last week, throughout history the cost of leasehold and freehold homes has generally moved in lockstep, but over the last five years the price of freehold properties has continued to rise but leasehold homes have not kept pace. There is no doubt that the Grenfell tragedy has played a huge part in that, as the inadequacies of the building safety regime have been laid bare, but I also believe that the general toxicity of leasehold as a form of housing tenure, with people unable to sell their homes, has played its part. Leasehold has clearly had its day, but we need the Government to finally consign it to the history books. The pieces are all in place. The knotty legal issues have been untangled and the argument that leasehold has had its day has been won. What is missing is the political will to get that change over the line.

In particular we need to see greater powers for residents over the management of their homes, with new rights for flat owners to form residents’ associations and a simplification of the right to manage. We need leaseholders to have the right to extend a lease to 990 years with zero ground rent at any time, and we need to bring forward reform to the process of enfranchisement valuation for leaseholders, including on marriage values, and prescribing rates for the calculations of the premium. We need a crackdown on unfair fees and contract terms through the publication of a list of reasonable charges, requiring transparency on service charges and giving leaseholders a right to challenge rip-off fees and conditions or poor performance from service companies. We must end the right of third-party landlords to build on other people’s homes without considering their interests, their safety or the quality of their homes. We need to squeeze the freeholders until the pips squeak.

This debate is, at its root, about power, who holds it and how it is exercised. Who owns the land holds the power. That has always been true in this country, but we have moved on from the barons and the lords of the manor to the offshore private equity companies—a 21st-century update of the feudal arrangements that have for so long held this country back. It is an arrangement that no other country in the world has sought to replicate. We know that this Government are not keen on international comparisons but perhaps that ought to tell us something. It is clear from this debate that just about everyone agrees that something needs to change, but I am not confident that we will see change any time soon. I thought the Government were all about taking back control. Do they not realise that a leaseholder does not have control? How can they have control if someone is trying to use their home as a cash cow?

It is a shame that the Secretary of State is not here today to hear this debate. Perhaps he is interviewing the next Housing Minister, given that we have one every couple of months. He is probably the most able member of the Cabinet. Maybe the competition is not up to much, but I believe that he has the cognitive skills to recognise that leasehold as a form of tenure is an intellectual dead end for the freeholders, for his party and for anyone who tries to defend it.

The Law Commission has given us the route out of this mess and the case has been made, but what is lacking is leadership from the very top and the courage to say that this is a priority and this injustice has to come to an end. I believe that all those on the Government Front Bench should go back to the Prime Minister and deliver the simple message that if his party does not want to deal with this issue, it should stand aside and make way for one that does.

--- Later in debate ---

[Rachel Maclean]

If Members will forgive me, I am attempting to answer the questions they have already asked me, but I will give way briefly to the hon. Member for Ellesmere Port and Neston (Justin Madders).

[Justin Madders]

In her opening comments, the Minister referred to the reason why this motion has been tabled, which is media speculation that there is some backtracking from the Government’s commitments on this issue. The motion very clearly says that the Secretary of State should give an oral statement in one month’s time, and the fact that he is not here today sends a terrible message about his and the Government’s priorities. Surely, in the absence of the Secretary of State, the answer is to support the motion.

[Rachel Maclean]

If the hon. Member will allow me to answer the questions I have been asked, I will come to his points in my remarks.

We are making significant progress to afford real relief to leaseholders, which everyone in the Chamber is calling for, while reforming the system for the better. However, the questions facing leasehold tenure are not simply about money—important though those are—but also include, “Who decides?” For people living in a leasehold home today, we are going to make it easier and cheaper for them to take charge of their building, whether by taking advantage of our reforms to the right to manage or by going all the way and buying out their freeholds following our planned enfranchisement reforms. Both offer to put owners in the driving seat over the decisions that affect them.

In the case of new homes, our ground rent Act has cut off a key source of revenue for freehold landlords. Without strong economic reasons for developers to hold on to, or sell on, the freeholds of other people’s homes, we have created a powerful incentive for builders to put buyers in charge of their new homes from the outset. We know there is more to be done, which is why we are taking two key further steps on new homes.

First, we have made great strides in tackling the needless practice of selling new houses as leasehold. Our actions, including prohibiting Government programmes such as Help to Buy from funding new leasehold houses, have seen the share of new houses sold as leasehold cut from over 15% in 2016 to less than 2% today. But we are clear in our intention to go even further, which means that soon, other than in the most exceptional of circumstances, the selling of new leasehold houses will be banned altogether.

Future of Social Housing

Justin Madders Excerpts

Wednesday 19th April 2023 Westminster Hall

[Justin Madders (Ellesmere Port and Neston) (Lab)]

It is a pleasure to see you in the Chair this afternoon, Mr Paisley. I congratulate my neighbour and hon. Friend the Member for Weaver Vale (Mike Amesbury) on securing this important debate and his excellent introduction on a subject that he is passionate about, as is every hon. Member here.

If our debates were guided by issues that constituents come to see us about, housing would be very near the top of the list. Whether it is tenants facing eviction, tenants coming to see me for the fourth or fifth time because the damp has still not been fixed, or people who simply want a roof over their heads, it is clear that we do not have enough housing at the right price, of the right quality, in the right places or of the right tenure.

I look at what the young people of today are facing: student loan repayments, sky-high private rents, huge deposits for a home, and maybe even saving for retirement. With inflation continuing to outstrip wage increases for many, even renting privately is a challenge, never mind saving for the future or for a home of their own. A young person who lives with their parents and cannot afford to move out, as many cannot, will probably not even qualify to get on the housing register in the first place. They are essentially trapped.

To get on the housing list now, people have to be in a pretty serious situation. Simply being unable to afford a place of one’s own is no longer enough. Even with those restrictions, there are nearly 6,500 people on the housing register across my local authority area of Cheshire West, with more than 1,500 in the most urgent categories. For context, in the past year, only 922 vacant properties were advertised across the whole of Cheshire West. The average waiting time for an applicant in band A—which is for the most urgent cases, such as those involving domestic abuse or homelessness—is around 22 weeks, while the longest wait is just over three years. Those are just the most urgent cases—the so-called lucky few who can even get on the register in the first place.

The only answer is to massively increase the amount of council housing. As the LGA says, a generational step change in council house building is required to boost housing supply. What we have at the moment is a lottery. If there is a central Government grant going, or a new private development, where the developers might be required to build a few affordable homes, we might get a bit of new social housing, but it is piecemeal and nowhere near enough to meet demand.

The new builds we are seeing are not even enough to replace the homes lost to the right to buy, never mind to meet existing demand. I understand why, in the rush to reach the decent homes standard, many councils transferred their stock to housing associations at the start of this century, but that has led to council housing becoming detached from the communities it is supposed to serve. It is now all about asset management.

Although our council has built what it can, it is nowhere near what it needs to be, because of the straitjacket imposed by Government. Most of the new social housing built in my constituency in recent years has been built by housing associations, often based many miles away from the constituency, with no connection to the area, other than having a few dozen homes there. I doubt very much that the leaders of those organisations have spent much time in the constituency, if they have visited it all.

When councils had the capacity and resources to plan over the long term for housing need, it was about so much more than just putting a roof over people’s heads. It was about building communities, and successive generations living side by side in secure, well maintained, low-cost homes. We have lost all that. Decent and affordable housing, built in sustainable, joined-up communities, has the power to fundamentally improve people’s lives, and the life chances of children in my constituency and across the country. What we have now is a market-first, people-last approach, which ultimately makes us all the poorer. Build more council houses and build them now.

Leaseholders and Managing Agents

Justin Madders Excerpts

Tuesday 28th February 2023 Westminster Hall

[Justin Madders (Ellesmere Port and Neston) (Lab)]

It is a pleasure to see you in the Chair today, Sir George.

I thank my hon. Friend the Member for Brent North (Barry Gardiner) for introducing the debate and setting out clearly why leaseholders are at the mercy of freehold managing agents who—unsurprisingly—put the interests of the freeholder above all else, from ignoring building defects to rinsing the leaseholders through service charges. That can be done through the padding of bills, the use of preferred contractors, commissions and organising buildings insurance.

I can recall one example in my constituency where the insurance company for a block of flats just happened to operate from the same address as the managing agents and the freeholder. Under what other contract would someone be expected to pay all the costs but not actually be able to see the terms of the contract? Yet that is what we see with these insurance deals. Thankfully, that is being investigated by the Financial Conduct Authority. This may well provide us with yet another payment protection insurance-style scandal.

This is another outrageous example of the way that the dice are loaded against leaseholders, and the fact that anyone can set up as a property manager in this unregulated sector is unacceptable. Although leaseholders have the option, of course, of going to court to dispute charges, they will never get their legal costs back, even if they are successful. There could be the most egregious charges, and they could be thrown out of court as totally unreasonable, but it is still the leaseholder who ends up paying the bill for that legal action.

I also think that estate management companies on new-build estates, whether they are leasehold or not, need to be tackled, because the opportunities to inflate charges exist there almost as much as they do in a block of flats. Much as with leasehold itself, I do not accept that these arrangements are needed at all. The fact that developers choose not to pay a sum to the local authority for the financial commitment that is needed to maintain communal areas, instead saving themselves money by passing on the charge to homeowners, is another example of the rapacious nature of many in this sector. Not only do they make a saving at the start of the development, but they create an additional income stream by charging for communal services.

This situation will not end well. Sooner or later, residents who pay for the same service twice—once through their council tax and once through their service charge—will demand an end to this double-charging. However, as with leasehold, the guilty parties will have long since left town. These residents have even fewer rights than those in leasehold properties, but the central issue is the same: a system that puts power in the hands of those who have no business being involved with these people’s homes at all.

Finally, on leasehold more generally, the linking of ground rents to the retail price index is becoming a real issue, with inflation so high. It even makes some of the outrageous ground rent doubling clauses seem reasonable in comparison, and it is putting people in real hardship.

It is five years since we were promised that this feudal system of ownership would be ended, yet millions of people are still trapped in leasehold. We repeat our plea yet again—I am sure the Minister will hear this time and again today—for the Government to please get on and deliver the work of the Law Commission so that we can say goodbye to leasehold once and for all.

Building Safety

Justin Madders Excerpts

Monday 30th January 2023 Commons Chamber

[Michael Gove]

The hon. Lady is completely correct. There are some inherited structural problems with high-rise buildings in this country, which make life more difficult for residents living with disabilities. For example, we tend to have one staircase only, whereas other countries tend to have two. Critically, one recommendation from the inquiry—the need for personal emergency evacuation plans—is one that the Government have not yet met. I have been working with my colleagues in the Home Office to make sure that we do, but I understand her exasperation. We need to move more quickly to give disabled people the certainty that they will be safe.

[Justin Madders (Ellesmere Port and Neston) (Lab)]

May I point out to the Secretary of State, who chastised the previous Labour Government for not abolishing leasehold, that most of the industrial-scale scandals we are now familiar with developed over the past decade? I think we are all agreed, are we not, that leasehold’s time is up, so can he give us a date by which all our constituents will be free of that feudal practice?

[Michael Gove]

That will depend on how quickly this House can agree the passage of the Bill. Given the generous words from the Opposition Front Bench, if we introduce it in the Queen’s Speech, then I hope it will be law as quickly as possible. One thing we all recognise is that when a system of property ownership has grown up over centuries, unpicking it all requires delicate work, but that work has been done by the Law Commission and others. I hope that our friends in the Office of the Parliamentary Counsel, who are the unsung heroes and heroines of legislation, will hear the determined chorus of unity across the House asking for the legislation to be developed as quickly as possible.

Oral Answers to Questions

Justin Madders Excerpts

Monday 9th January 2023 Commons Chamber

[Lucy Frazer]

I have had a number of conversations with my hon. Friend; I know he is very committed to this area. He will know that we are bringing in legislation in due course that will make it much easier for leaseholders to enfranchise their leases. I am already looking at the particular area that he mentions.

[Justin Madders (Ellesmere Port and Neston) (Lab)]

Last month marked five years since a previous Secretary of State, the right hon. Member for Bromsgrove (Sajid Javid), promised to liberate leaseholders from “feudal practices”. We have obviously had some progress in terms of new builds, but existing leaseholders are still facing the same problems. I recognise the warm words from the Minister, but can she confirm that we will see legislation coming forward this year to deal with all the existing problems that leaseholders face?

[Lucy Frazer]

What I can confirm is that we will be bringing forward legislation in this Parliament to make valuations easier for those extending their leases, to make the lease extension experience easier and cheaper, to make it quicker for freeholders to take control of the management of their buildings with a right to manage and a number of other measures.

--- Later in debate ---

[The Parliamentary Under-Secretary of State for Levelling Up, Housing and Communities (Lee Rowley)]

My right hon. Friend the Secretary of State is working to bring forward the developer contract; it has been discussed and debated for several months and we hope to have progress on it shortly. We are very clear that building owners ultimately have the responsibility to remediate these properties and make sure that leaseholders can continue to live their lives as they should be able to.

[Justin Madders (Ellesmere Port and Neston) (Lab)]

T3. Last month, Barclays announced that it was replacing its Ellesmere Port branch. We are losing shops in the town centre weekly. We have put in a levelling-up bid that we hope will address the issues, but every previous application has been rejected, so we are not hopeful of success this time around. What is the Government’s plan B for areas whose levelling-up bids are not successful?

[Dehenna Davison]

We keep that under constant review. We are looking at the provision of further funds, but also at simplifying funding through schemes such as the UK shared prosperity fund, to empower local areas to make decisions on what is best for them.

Social Housing Standards

Justin Madders Excerpts

Wednesday 16th November 2022 Commons Chamber

[Michael Gove]

The hon. Lady makes an important point. We have a number of very different things that are operating in tension and that we need to review. First, we need to ensure, at a time of rising prices everywhere, that tenants in social housing are not faced with increases in rents that further add to the difficulties they face. At the same time, however, registered social landlords and housing associations need money to provide new stock, to pay for repairs when materials are costing more, and to undertake some of the work on insulation and energy efficiency alluded to earlier, as well as, in some cases, the building safety work required in the wake of Grenfell. I appreciate the pressures under which they are operating and my commitment is to work with them constructively to try to ensure we can support them.

[Justin Madders (Ellesmere Port and Neston) (Lab)]

Like every other Member here, I get weekly concerns from constituents about mould in properties. Sometimes we are able to help them and we get there. It takes a long time and unfortunately problems often come back. Sometimes people come to see me who I helped when I was a councillor almost a decade ago and the problems have re-emerged, so there is something far deeper going on here—it is not just about trying to put these things right. The issue is across the whole sector. Every housing association in my constituency has these problems. There are issues of capacity, funding and accountability. I do not think these associations are accountable to the communities they represent. Can the Secretary of State say something about what he can do about that?

Management of the Economy and Ministerial Severance Payments

Justin Madders Excerpts

Tuesday 15th November 2022 Commons Chamber

[Justin Madders (Ellesmere Port and Neston) (Lab)]

A roof over your head, security at home and the peace of mind of knowing that at the end of the day you have somewhere to return to are the cornerstones of a happy and prosperous society. As we have heard, home ownership is the goal for so many of the constituents we represent and of those I speak with, and for years many have benefited from low and stable interest rates. Indeed, a whole generation of homeowners have taken their first steps on to the housing market knowing nothing other than that situation, which is one reason why I fear this current crisis is going to hit people harder and be more damaging than the previous interest rate rises we have seen.

The most immediate effect will be on those who do not actually own their home. There are many significant challenges people face when they are trying to get on the housing ladder, and the last few months have seen that ladder not just pulled up, but yanked away from hundreds of first-time buyers in my constituency. That has also placed many constituents who are already on the ladder in a position where their mortgages are no longer affordable.

Let us be clear: all of this was totally avoidable. It is the Conservative Government who have created this situation with their desire to turn the UK into a deranged economic experiment. This has spooked the markets, and while the main protagonists of this folly have gone, the Government remain, but it is the hard-working people who will pay the cost of this stupidity for many years to come.

I have spoken to one constituent whose repayment mortgage was unfortunately being negotiated right at the time the Government began their experiment. His family now face an increase in their mortgage repayments of £410 every single month. That is the sort of eye-watering, almost overnight increase in costs that all but the most well-off in society will have no chance of meeting. What of course makes this worse is that this comes on top of a year in which just about every expense a household will face has also gone up—council tax, energy bills and, of course, the weekly shop. Everyday costs have shot up well beyond any increases in wages, and those factors on their own are more than enough to put most households in trouble, but if we factor in mortgage increases of that degree on top, we reach a position that is clearly unsustainable.

We hear those seeking to absolve themselves of blame for this mess pointing to a pre-existing trend of increasing mortgage rates. While it is not disputed that there was indeed a slight upward trend before the kami-Kwasi Budget, there is no doubt that it is the Government’s reckless actions that have put rocket boosters under that trend, with the result that so much happened so quickly overnight. When the then Prime Minister and Chancellor decided to push ahead with their uncosted tax cuts, did they think for even a minute about what that might mean for people like my constituent who, over the next five years, will be paying an extra £25,000 on their mortgage? Of course they did not think about that; this Budget was not about my constituents’ interests or the interests of the vast majority of people in this country. And now my constituent asks:

“Can you please find out how the Conservative Government and their Prime Minister intend to fix an issue they created?”

Many of us would like to know the answer to that question, and if any who were in Cabinet at the time of that Budget but have since left would like to donate some of their severance payments to my constituent to help pay his increased mortgage costs, I am sure he would be grateful.

On severance payments, this Government have been doing their best to stop ordinary people from obtaining compensation when they lose their job, for example by reducing the number of people who can claim unfair dismissal. We should contrast that with the absolute bonanza of severance payments for departing Ministers. They do not have to work for two years somewhere before they can claim a redundancy payment or have the right to claim unfair dismissal; they get it from day one—no matter how badly they behave and what rules they break, they get those payments. Those are not the rules everyone else has to adhere to; that is indefensible.

Let us go through the catalogue of chaos that has become the hallmark of this Government. We have had four Chancellors in four months, and five Home Secretaries in three years—although two of those were, of course, the same person after they served a massive six days on the Back Benches in penance—and we have had five Education Secretaries in as many months. In total, we have had over 70 Ministers depart since July at a staggering cost to the taxpayer of over £700,000. That is not only a sign of a dysfunctional Government; we will be told on Thursday that we are all going to have to pay more tax and that public services funding must be cut, so it is an absolute disgrace that these payments have lined the pockets of people who had only been in the job two minutes—people who have had to resign because of things which, in many cases, if they did them in the real world, would mean they would not get a penny in compensation.

Another constituent, who was in the process of moving house at the time of the Budget, was advised that the products from their current lender had been removed entirely, preventing them from porting their mortgage; and, because the number of other products that were on offer was slashed to around 10% of what had been available the week before, they faced weeks of unnecessary anxiety. While they were eventually able to secure a mortgage, it has come at a cost of around £200 a month more than would have been the case had they completed on their mortgage only a week earlier. One might say that was unlucky timing; I would say it is unforgivable incompetence.

To provide some context, at the beginning of covid, when the world came to a halt, 462 financial products were removed from the market. When this mini-Budget came out some 935 mortgage products were withdrawn in just one day. On that measure at least, the Government have done more economic damage with their Budget than a global pandemic. Conservative Members should reflect on that, and have a sense of shame that it has come to this.

[Patricia Gibson]

Does the hon. Gentleman agree that the £65 billion used to shore up pension funds following the mini-Budget—£1,000 for every man, woman and child in the UK—is also a testament to the incompetence of this Government?

[Justin Madders]

Indeed; we are all the poorer for this folly and we will all be paying the price for many years to come. And where was the Prime Minister during all this? He did not say a word; I did not hear anything from him about why this was wrong. He kept silent and kept his cards close, playing the game, waiting for the opportunity to strike. But now it is his responsibility to clear this mess up and he had better do that.

While the markets have now begun to stabilise a little, the damage has already been done for many, with those coming off fixed-rate mortgages facing payment increases of five to seven times their current deal and some being shut out of the housing market entirely. Anyone on a fixed rate, and that is many of us, will be looking ahead in despair and fear over the next 12 to 18 months at what their mortgage payments will be. Martin Lewis has warned about a ticking timebomb; it is indeed a timebomb and, worse still, this did not need to happen at all.

The impact is not solely on those with mortgages. In my constituency, the pressure on the private rental sector is extremely high, which has already contributed to increasing rents. It is now impossible to secure a three-bed family property for less than £900 a month, which is about 50% of the average income in the constituency. I am already hearing from landlords who cannot afford to continue to rent out their properties without drastically hiking the rents, something many of them know is simply not realistic. They are therefore selling their properties, which will reduce the number of available properties in the private sector and push up rents again. Other landlords are now considering issuing section 21 notices to their tenants, because they know that if they relet the tenancies they can get 20% to 30% extra on the rents; that will push yet more people into homelessness.

Finally I want to say a few words about a group who, sadly, know only too well the impact of high mortgage rates: mortgage prisoners who have been trapped on standard variable rates for years. A constituent of mine is facing the 14th year on such a rate, and in October his mortgage increased once again by £100 a month. In 2021, he was on a fixed rate of 4.54%, double the average two-year fixed rate deal available at the time. Through no fault of his own, my constituent is limited in the mortgage products he can access and while the amendment to the Financial Services and Markets Bill would have capped mortgage prisoners’ SVRs and ensured access to fixed-rate deals under certain circumstances, the Government chose to vote that down. The measures introduced to provide switching options were found to have a limited effect by the Financial Conduct Authority, and with the contraction of mortgage products, hope for mortgage prisoners is now at an all-time low. They have experienced for years the issues that are now widespread in society, leading to frustration from many that their plight was met with little coverage or understanding when it could have been addressed and mortgage rates were historically low. I recognise those frustrations.

The Government also must ensure that any measures cover not just mortgage prisoners but other people who are trapped in their homes. Many leaseholders with unsafe cladding or other fire defects, and those with egregious ground rent clauses that make the properties unsellable, will see their costs increase due to interest rates going up, but they will not even have the choice of being able to sell their properties because a lack of Government regulation has let them down by leaving them in a home that they do not really own but they cannot leave. That is a wrong that it is taking far too long to put right.

Oral Answers to Questions

Justin Madders Excerpts

Monday 16th May 2022 Commons Chamber

[Neil O’Brien]

I will look very closely at them. I hope that through the very exciting talks that are going on, and through the Hull and East Riding devolution deal, we can pick up many more of the exciting opportunities in the area. Of course, the reviews of Labour’s performance in Hull are so good that it has just been kicked out of the council.

[Justin Madders (Ellesmere Port and Neston) (Lab)]

7. What steps he is taking to deliver long-term funding settlements for the levelling-up agenda.

[The Minister for Levelling Up Communities (Kemi Badenoch)]

We know how important multi-year certainty is to local authorities and we aim to provide it whenever possible. We are making £54.1 billion available to local government in England through this year’s settlement—an increase of up to £3.7 billion on last year. We are also providing an additional £1.6 billion of grant funding per year across the spending review period.

[Justin Madders]

Long-term challenges need long-term solutions. We have had too much of an ad hoc bidding war, which creates winners and losers. A perfect example is my constituency: in the past three years, we have had our bids to the future high streets fund, towns fund, Restoring Your Railway fund, levelling-up fund and Bus Back Better fund rejected. Any one of those could have made a real difference to the constituency, but after each bid, we have been back at square one. Can the Minister not see that to truly level up, we need a strategy, not a lottery?

Private Rented Sector Housing

Justin Madders Excerpts

Tuesday 15th March 2022 Westminster Hall

[Justin Madders (Ellesmere Port and Neston) (Lab)]

It is a pleasure to see you in the chair, Sir Gary. I start by congratulating my hon. Friend the Member for Liverpool, West Derby (Ian Byrne) on securing the debate and on his excellent introduction.

As I have said before, if the issues that we debate in this place were guided by the issues that constituents come to see us about, housing would be very near the top of the list and debated far more often than it is. Whether it is tenants facing eviction, or tenants coming back to see me in my constituency surgery for a fourth or fifth time because the damp still has not been fixed, it is clear that we do not have enough housing in the right place, of the right quality or of the right tenure. That is in part because the private rented sector has changed beyond all recognition in recent years and legislation has not kept pace with those changes. The last piece of comprehensive legislation to affect the private rented sector was over 30 years ago, with the Housing Act 1988. Since then the sector has doubled in size, and that exceptional market growth, made possible by financial incentives for landlords, together with the lack of regulation, has been characterised by insecurity, poor conditions and sky-high prices.

The biggest irony, certainly in my constituency, is that many of these private sector properties were once in public ownership, before they were sold off at a discount rate, allowing many people to own their home for the first time, which is a good thing; but that generation has moved on. Those council houses were not replaced and the first proud home owners have often been usurped by private sector landlords. So we now have the ludicrous situation where in two properties, standing side by side, one tenant will have a much lower rent, much greater security and can usually be confident that any issues they have with the property will be dealt with by the regulated, accountable social landlord, but the other has none of those things. If anything demonstrates the short-term thinking that has guided housing policy for decades, that is it.

In a debate only last week, I described how reliance on the private sector had increased in my constituency due to the chronic lack of affordable and council housing, and how it was now rare to see properties offered at a rental value equivalent to the local housing allowance. A recent search of locally available properties revealed only two within the rental liability that would be covered by the LHA, with others ranging from £30 to over £200 above the required rate.

That is not a sustainable situation. People simply cannot afford to put a roof over their head in that situation, let alone pay for the increasing bills, energy, food and council tax that we hear so much about. But today’s debate, as we know, focuses specifically on poor conditions in the private rented sector and rightly so, because private renters live in the poorest-quality homes in this country, with more than one in five properties in the private sector classed as non-decent. That may well be because, in part at least, it accounts for some of the oldest housing stock, with a third of all private rented sector properties built before 1919, so it is not a surprise, perhaps, that on average private rented sector properties have worse energy standards, meaning that the tenants have to pay significantly higher heating bills due to poor insulation, inefficient heating systems or a lack of double glazing. This is important because, as the cost of living crisis starts to bite and energy prices continue to go up, it is private renters, who are already paying higher housing costs, who will be worst affected. Of course, many private rents are higher than mortgage payments and certainly higher than social housing costs. How can we justify that situation?

As we have heard, many constituents have come to their Members of Parliament with issues with their properties. I will give one example: a property that was not watertight, so that the back door leaked every time it rained; pest control issues; electrical issues, with some of the plug sockets not fitted to the wall correctly; and issues with windows sealed shut and others that could not be closed or locked. I am sure we can all agree that that is just a snapshot of the conditions that people have to live with.

Too often, people are scared of raising concerns because of the risk of retaliation by the landlord. As we have heard, tenants who received a section 21 eviction notice were twice as likely to have complained directly to their landlord, five times more likely to have gone to their local authority and eight times more likely to have complained to a redress scheme, prior to receiving their eviction notice, resulting in a staggering 46% chance of their being served with a section 21 notice within six months of the complaint.

I met a couple this weekend who were in that position. They told me that they had been raising disrepair issues with their landlord for five years. When he finally acted, what did he do? He began work on repairs but decided to evict them at the same time. They are now living in temporary accommodation. No wonder people are reluctant to challenge landlords.

For too long, private rental properties have not had the priority they deserve from Government. A need for improvement of renters’ position was acknowledged in 2019, and again in the Queen’s Speech of 2021. Both committed to bringing forward reforms to drive improvements and standards in the private rented sector but, as we have heard, we are still waiting for those improvements. We were expecting a White Paper last autumn. In reply to my written question on the matter last month, the Minister said that would now be spring. We are now in spring, and I am hoping to hear from the Minister when we might see that White Paper and the Government finally taking the action that many Members want to see.

Housing is a basic human right. Decent and affordable housing has the power to improve people’s lives fundamentally and the life chances of children in my constituency and throughout the country. Every day that the Government delay reform is another day that people are living in cold, unsafe, insecure and unaffordable homes. For millions of people, that is an unacceptable situation that has to change, because they deserve better.