Leasehold Reform

Mike Amesbury Excerpts

Tuesday 23rd May 2023 Commons Chamber

[Mike Amesbury (Weaver Vale) (Lab)]

Like many across the Chamber today, I rise to speak on behalf of my constituents in the north-west of England in Weaver Vale and the 4.86 million people trapped in this leasehold system. It is an antiquated and unjust feudal system, as pointed out by my hon. Friend the Member for Wigan (Lisa Nandy) from the Front Bench and by the Minister, the hon. Member for North East Derbyshire (Lee Rowley), who is not in his place at the moment. The system is unique to England and Wales. Ministers are keen to portray the Government as being outriders on a global scale, but maintaining feudalism and serfdom is surely no badge of honour and will have electoral consequences.

In 2017, I was not long elected as a Labour MP and a constituent from Northwich came along to my surgery and informed me about this strange system called leasehold, with ever-increasing ground rents, obscure service charges—also ever-increasing—incomplete unadopted roads, as Members have referred to, and strange administration charges for pets, extensions, alterations and for-sale signs. They could not sell their properties. I literally thought that she was making it up, until I had a conversation with my neighbour, my hon. Friend the Member for Ellesmere Port and Neston (Justin Madders), and others. I soon came to realise that this archaic system of leasehold was allowing developers, freeholders, managing agents, solicitors and insurers to make things up and put things up on an industrial scale.

Talking of an industrial scale, I also discovered that there are solicitors in cahoots with major developers, as has been referred to, offering no real choice and mis-selling leasehold houses as freehold. There is plenty of evidence of that, to which my neighbour the hon. Member for Warrington South (Andy Carter) has referred.

It does not stop. On Friday just gone, my constituent Christine came to see me and put considerable evidence under my nose of the continued legalised crookery—I will use that word that the Father of the House, the hon. Member for Worthing West (Sir Peter Bottomley) used. It is an absolute fraud of a system, with unexplainable and increasing levels of service charge and insurance premiums, dodgy invoices and a plethora of commissions, seemingly for everybody.

Despite a plethora of consultations, grand promises made recently and a short piece of legislation with a narrow scope, new homes to this day are being built and sold as leasehold. The provisions on ground rent going forward are not for the many, just the new. One bad apple was picked from the tree, but the orchard still stares our constituents and residents in the face on a daily basis. The previous Secretary of State promised that legislation was a starter before “the main course”. As shadow Housing Minister at the time, I argued that it was about time to kick this issue into the history books and that leaseholders needed

“an all-you-can-eat buffet of reform”.—[Official Report, 24 January 2022; Vol. 707, c. 796.]

They are still waiting and we are still frustrated.

We all know that it is time to put an end to this outdated practice, to usher in a new era of fairness and to protect the rights of every citizen in our great nations of England and Wales and their aspiration to genuinely own their own home. Leasehold is not home ownership. Let us kick it into the history books.

It is shocking that the Government now seem to be backtracking on their commitment to legislate effectively to put this feudal system into the history books. When I asked the Secretary of State in this very Chamber if he would legislate in the King’s Speech to remove leasehold, he replied, “Yes, that’s the plan.” It looks like that plan has caved in to vested interests. If anybody wants to look at some vested interests, go to the Electoral Commission website and look at where the donations of the governing party come from. I suggest that gives us a little bit of evidence.

This feudal leasehold, a relic of a bygone era, holds its grip on the dreams and aspirations of countless homeowners in England and Wales. It is a system that not only shackles their aspirations, but perpetuates an unjust power dynamic between freeholder landlords and leaseholders. The practice, unique to England and Wales, has no place in a society of modern values such as equality, justice and the empowerment of British citizens—or should I say, of English and Welsh citizens.

This U-turn by the Government is a complete betrayal, and they cannot escape that. Under this feudal leasehold system, homeowners find themselves trapped in a cycle of perpetual dependence, being subject to exorbitant ground rents, unreasonable service charges and ever-increasing lease extension costs. The impact of this feudal leasehold system is not, of course, limited to financial burdens alone. It breeds uncertainty and anxiety among homeowners, who live in constant fear of losing their home or facing arbitrary restrictions imposed on them by landlords. Let us not forget that, despite promises and legislation, the costs of the building safety crisis still fall on the shoulders of leaseholders, who cannot escape that injustice.

The time for change is upon us. We must collectively seize this opportunity to consign this feudal leasehold system to the history books. We have a moral duty to ensure that every citizen gets to own their own home and to control their own home, without fear or undue financial burden. To achieve this, the Government must take bold and decisive action. The Law Commission recommendations should be implemented in full. They should take heed of the Select Committee reports—the successive ones—and they must provide existing leaseholders with a clear pathway to enfranchisement, enabling them to convert their leases into freehold ownership at fair and reasonable prices. Marriage value must be scrapped, and Ministers must place restrictions and limitations on current ground rents and service charges, ensuring that they are reasonable, transparent and reflective of the services provided. As the Chair of the Select Committee, my hon. Friend the Member for Sheffield South East (Mr Betts), has mentioned, how about a housing court to deal with the several issues we have spoken about? Commonhold needs to be powered up to become the default tenure.

My esteemed colleagues across the House, it is time to end this feudal system. Let us see this piece of legislation in the King’s Speech, and if it does not come, the Government should step aside, and the Labour party will deliver with a Labour Government in charge.

[Mr Deputy Speaker (Mr Nigel Evans)]

I call Ruth Cadbury.

--- Later in debate ---

[Kate Hollern (Blackburn) (Lab)]

It has been evident for years that the current leasehold system is failing. Indeed, it was the subject of one of the first pieces of casework raised with me in 2015, but the fundamental reforms that people have been crying out for have not been implemented. The Government’s failure to act means that far too many people continue to be denied power, control or even a say over things as fundamental as safety, security, and the future of their homes and communities.

We have heard that across parties everyone is committed to reform, but I remind the House that in 2019, the Government gave a commitment in their manifesto, and there were promises by successive Housing Secretaries in 2021, 2022 and 2023. Now the Government are rowing back on their commitment to end the sale of leasehold on new builds and introduce a system of commonhold as the default for the future. The watered-down commitments are simply not good enough, and given that the Leasehold Reform (Ground Rent) Act 2022 does not apply retrospectively, it affords no comfort or protection to those already bound to an existing agreement. The people who campaigned and eventually got us to this stage have been disappointed yet again.

Leasehold is disproportionately prevalent in the north-west, as I am sure you know, Mr Deputy Speaker. In 2021, 35% of transactions there were leasehold, which was second only to London at 50%. At 27% the north-west also has a particularly high level of leasehold house sales, while across the rest of England and Wales, proportions range from 1% to 6%. The Minister boasted about that 1%, but he was obviously not looking at the north-west—why would that surprise me? On at least one housing development in my constituency properties were sold as leasehold, and the developer subsequently sold on the freehold to another company with increased ground rent. There was no consultation with the homeowners, who had no say and no option to purchase it themselves. Worse than that, the increases were much higher than inflation. I have made numerous representations over many years to housing developers and the company that now owns the freehold on behalf of my constituents, but disappointingly I, like many others, have had little to no response.

Many of my constituents are trapped by this unfair system, forced to contend with high service charges, a lack of transparency over charges, freeholders who block attempts to exercise the right to manage, excessive administration charges, and charges for applications to extend lease agreements. It is outrageous. There is a lack of knowledge among people of developers’ rights and obligations to them.

I am pleased that the shadow Secretary of State, my hon. Friend the Member for Wigan (Lisa Nandy), recognises the need for fundamental leasehold reform. She has proposed five key measures to be included in a leaseholder reform Bill, with each aimed at protecting the rights and interests of leaseholders and ensuring a more equitable housing system. First, we need an end to the sale of new private leasehold houses—and that must be immediate. That will ensure that future homeowners are not burdened by leasehold arrangements but can instead own their home outright.

Additionally, private leasehold flats must be replaced with commonhold, a more workable and fair system that provides greater control and security for residents, with the recommendations of the Law Commission’s three 2020 reports implemented in full. In the interim, residents should be granted greater powers over the management of their homes, including the right of flat owners to form residents associations, empowering them to have a collective voice in decision-making processes. We must also simplify the right to manage, making it more accessible to leaseholders so that they can take control of the management of their properties.

Leaseholders should also have the right to extend their leases to 990 years with zero ground rent at any time. Alternatively, a cap on ground rent should be implemented at a maximum of 0.1% of the freehold value up to a limit of £250 a year. Those measures would provide leaseholders with greater security and affordability in extending their leases.

Enfranchisement valuation for leaseholders must also be reformed. By streamlining and clarifying the valuation process, we can ensure that leaseholders are treated fairly and not subjected to unreasonable costs.

Lastly, to crack down on unfair fees and contract terms, we propose the publication of a reference list of reasonable charges, ensuring transparency on service charges. Leaseholders should have the right to challenge excessive fees and conditions or poor performance from service companies. By holding those companies to account, we can protect leaseholders from rip-off charges and sub-par services.

[Mike Amesbury]

Will my hon. Friend pay homage to the National Leasehold Campaign and the Leasehold Knowledge Partnership? I know that they have been helpful to all of us.

[Kate Hollern]

I thank my hon. Friend for that.

People have worked so hard, only to be disappointed after such a long time. At the same time, with every delay, more and more people are getting trapped in these situations. Almost every country in the world apart from Britain has either reformed or abolished this archaic feudal model, but the Conservative party is not delivering. People should not have to wait any longer for basic rights over their own homes. I hope that the Government and Conservative Members will today stand up for their promise, recommit to it—they claim that everyone is committed to it—and do so with speed.