PARLIAMENTARY DEBATE
Leasehold Reform and New Homes - 28 February 2024 (Commons/Westminster Hall)

I beg to move,

That this House has considered leasehold reform and new homes.

It is a pleasure to serve under your chairmanship, Mrs Harris. Yesterday, we had an excellent Report stage debate on the Leasehold and Freehold Reform Bill. I was really encouraged to hear from the Minister that the Government are looking at going further on two of the big things that we need to improve in the Bill: ending forfeiture and ending the private estates, or so-called fleecehold estates, model. I once again thank all the different bodies that have worked so hard to get us to this point, the Minister, who managed to get the time for this legislation, the ministerial team that came before him, and all the different bodies that provided useful evidence in Committee, including the Leasehold Knowledge Partnership, the National Leasehold Campaign, Harry Scoffin and Free Leaseholders, HorNet, the HomeOwners Alliance, and many more.

I do not want to just repeat all the points we made yesterday, but I will briefly touch on some, because my speech flows on from them. Yesterday, I quoted my constituent Karen, who said that dealing with FirstPort, her fleecehold company, is

“like having a part time job”,

and who is being charged for, among other things, terrorism insurance for a fence. I quoted my constituent James, who says that he spent

“about 50 days’ work over the first couple of years”

dealing with his unadopted estate and trying to put right some of the mistakes made by developers.

I quoted the residents of Hursley Park, who managed to get control over their residents management company because of a legal mistake by the developer, but years on are still fighting to avoid being lumbered with the cost of botched work by Mulberry Homes. Disappointingly, that developer will not even meet them to discuss it. I also quoted one of the residents of the Farndon Fields estate, who has had a long battle with a faceless fleecehold company called Chamonix that billed people for large sums, did almost no work, repeatedly billed people several times for things they had already paid, and generally behaved appallingly.

I want to bring out how some of those stories show the different ways that we can intervene to get rid of this awful, scamming industry, which sees councils and developers effectively colluding to stiff residents with big bills and poor services. The first step is to look at how homes are sold. Numerous Members in yesterday’s debate talked about constituents who had not realised what they would be liable for. That seems to be particularly the case where people are bribed by the developers to use their lawyers—oddly enough, developers’ lawyers do not always point out the big bills that people will face. That is the first thing we should look at.

The second step is to look at the whole planning process and the fact that permission is often given before there is clarity on adoption. That is a bizarre way of going about things. The residents of Devana Way in my constituency, who I did not mention yesterday, found that out the hard way. They bought beautiful, expensive homes on a nice tree-lined street, but during the process of haggling with the county council over adoption and who was going to look after the trees, the developer concluded that it would be cheaper to simply rip out all the trees—and that is what it did one morning, to the horror of residents. I do not blame councils for wanting funds to look after trees; in fact, I think we should make it a priority in local government finance to make sure that all residential streets come with trees. However, there needs to be clarity about the rules of adoption up front, not after the fact.

Likewise, we need to stop developers wriggling out of planning conditions more generally through variations, as one developer is trying to do at the top of Kettering Road in Market Harborough—it is trying to get rid of a bus service it promised when it was trying to get planning permission. One of the most common abuses is that developers promise that there will be a new GP surgery as part of a new estate, but in fact have no plan, no intention or no way to deliver it. I am afraid I know several colleagues who have had that happen in their constituencies.

The Minister has promised to make progress on forfeiture, one of the most important things we have to deal with. That is important across leasehold and on fleecehold estates, too, because the disproportionate threat that someone might lose their home over a tiny unpaid sum enables the fleecehold cowboys to terrorise people into paying up. People are being conned about what they are buying. As we said yesterday, Margaret Thatcher said that there was no prouder word in our language than “freeholder”. Many of those people believe they are freeholders, but do not realise the threat hanging over them. My constituent Karen said that purchasers on her estate were not told that they would have to pay an annual rent charge:

“the word ‘rent’ wasn’t used by anyone we spoke to. It was referred to as a ‘maintenance charge’—if it was referred to at all. I didn’t fully understand what ‘rent charges’ meant until about four years after we bought.”

That is another way that people are being mugged by the fleecehold estates model.

We need to do two things. First, we need to help the 3 million to 4 million people who are stuck on fleecehold estates. We could do that through something such as a right to manage, or better still we could give them the opportunity to have their estates adopted by the council, which is what many of them want.

Secondly, we need to end this model for the future, which again could be done in numerous ways. We could do what my hon. Friend the Member for North East Bedfordshire (Richard Fuller) suggested and prevent companies from charging for things that are usually provided by councils. Alternatively, we could use guidance to ban the model except in extreme and exceptional circumstances. I do not mind how we go about it, but we have to end the model.

I got a sense from the Minister yesterday that the legislation will go further. The Leasehold and Freehold Reform Bill is already a great achievement. It is the first time since 2002, I think, that we have legislated on this matter. According to the Opposition, there were some big missed opportunities when we passed that legislation, which has never been commenced—I think everyone across the House agrees with that. The Bill is already good, but I think I detected from the Minister that there are ways we can make it better, and I hope we will collectively be able to do that. To be clear, the people who have been stuffed by the fleecehold estates model do not want a marginal change; they want to end this fundamentally rip-off model.

I asked for this debate to be about new homes as well as leasehold, because sadly fleecehold is just one of the issues affecting buyers of new homes. I have been conducting a survey across Harborough, Oadby and Wigston of buyers of new homes, and I am struck by how widespread the problems are. In two different streets in different places in my constituency, residents have faced sewage in their street and even flowing up into their sinks, dishwashers and showers. There have been occasions when they have been unable to wash because of that.

In the first location, which I visited the other day, the problems have been going on for about four years. The developer plugged the sewage system from a new estate into a sewer for an older estate, causing the older sewage system to overflow with rain water. After four years of denials from the developer, the residents have proved, with the help of Severn Trent, where the problem is coming from. The developer has, in fairness, finally fessed up to causing the problem, and the new person in charge locally seems serious about fixing the problem, so I will not name them for now.

In the second case, Meadow Hill in Wigston, the problem has been going on for about six years. The sewage system in the new estate is simply inadequate. The homes were originally built by Westleigh Homes and were taken over by Countryside Partnerships after completion, which itself has been taken over by Vistry Group. Vistry continues to deny the problem and will not take responsibility, even though I have seen for myself bits of toilet paper in the road that have come spurting up from overflowing sewers. Vistry does not fix the problem. It occasionally sends people to clean up, but mainly it is left to residents to clean up the faeces. I would like to invite Greg Fitzgerald, the chief executive officer of Vistry, to come to see the filth for himself, and I will perhaps ask him how much he would like to have it in his street and coming up into his home. Stephen Teagle, who runs Countryside Partnerships, would also be very welcome to join us to see that disgusting case.

Those are extreme cases, but I am struck by how often British developers sell homes with serious problems, either with the property or with the new estate. For example, a constituent in Wigston has faced a bill of about £10,000 to fix problems caused by his developer, which left his garden at a very steep angle. After two years of fighting, the developer, David Wilson Homes, has agreed to pay about 20% of the cost—a tiny fraction.

A constituent who moved into a new development in Kibworth faced numerous rat infestations due to the pipes in her new home not being fitted correctly. She also experienced mould in the bathroom because the bath was also not fitted correctly.

A constituent who moved into Wellington Place in Market Harborough had more than 200 snags on their property. The toilets did not drain properly, and the downstairs toilet did not work at all for many months, which meant that their disabled daughter had to go upstairs to use the loo. The entire garden needed to be excavated to be fixed and, alarmingly, the fire alarms did not work properly. My constituent found it difficult to get hold of the developer, Davidsons, to get any of those issues addressed, because it had sacked the people responsible for aftercare on the estate.

There are reasons such things happen. On the surface level, some developers are simply more serious about ensuring quality than others. It is not impossible to get it right in the current system, and many do. The Government’s creation of the new homes ombudsman service is a big and very welcome move towards tackling the problems directly. However, some of the problems also reflect wider problems with this country’s model of development: the so-called fast-turn model. In Britain, so much of the profitability of the industry turns on its ability to play our dysfunctional planning system rather than its ability to build in quality.

I was going to make this point today anyway, but as it happens the Competition and Markets Authority’s monumental investigation of the housing market, which was published earlier this week, gives us a huge amount of further evidence that the current model is dysfunctional. Naturally, the sharing of information and cartel-like behaviour between firms was the headline of the report, but many of the other findings are just as explosive. The CMA notes that

“housebuilders don’t have strong incentives to compete on quality and consumers have unclear routes of redress.”

It also notes:

“We see evidence of a statistically significant increase over time in the proportion of homeowners reporting higher numbers of snags, with 35% of respondents…in 2021-22 reporting 16 or more different problems.”

The report brings out what some of those “snags” look like in the real world. One homeowner notes:

“After moving in, my attic hatch fell completely out of the ceiling of its own, because the joiner had only used three screws to fix it instead of sixteen”.

Another says:

“The stairs collapsed while walking up [them] with my son.”

The CMA notes the growing volume of complaints about hidden charges. Among the CMA’s recommendations is

“requiring councils to adopt amenities on all new housing estates.”

That is a very good idea, which takes us back to the issue of leasehold, and I hope that the Government adopt it.

One of the great strengths of the CMA report is the way that it draws the links between the broken planning system and the industry that results from it. Following the conclusions of the Letwin review, the report concludes:

“The evidence shows that private developers produce houses at a rate at which they can be sold without needing to reduce their prices”.

In a paper that I wrote for the think-tank Onward six years ago, I tried to set out some of these dysfunctions. The complexity of the planning system increases market concentration directly and also indirectly, by amplifying the land price cycle, which leads to fewer and fewer developers in each economic cycle, as the small players go bust and are forced out of the market. I am encouraged that the Government are taking great strides towards a better model of development in this country by fixing those deeper, underlying problems.

The vision for more purposive urban regeneration set out in the long-term plan for housing is a good one. The recently passed Levelling-up and Regeneration Act 2023 creates stronger compulsory purchase order powers and requires the dark market in land options to be replaced by a register of land options. I look forward to us cracking on with the secondary legislation needed to bring that about. I also look forward to the Government taking further steps towards creating a more purposive, less passive planning system, in which deliberate, plan-led development becomes a greater share of development and small, speculative development, without the necessary infrastructure, becomes a smaller part of development. The Government are sold on that vision and are making big strides towards it. The current ministerial team—the Secretary of State and our brilliant Housing Minister, who is here today—have that vision and experience these issues in their own constituencies.

I am confident that we are moving in the right direction. I hope that, when the Leasehold and Freehold Reform Bill arrives in the House of Lords, the Government will proactively take steps to improve it to address these issues. If I read the Minister’s body language right, he clearly understands those issues and wants to act on them. I hope that we can agree to act as quickly as possible, because the issues that I have described in my constituency are horrendous. People have worked hard, saved up a lot, done all the right things, and bought a new home, but they are getting mugged by an industry that, although also having some good players, has some real cowboys. As I said yesterday, the people in my constituency want a new sheriff—in the form of our current Housing Minister—to ride into town on his white horse, blow some of those bad guys away, put right what is being done wrongly and address the glaring injustices that my constituents are experiencing.

I remind Members that they should bob if they wish to be called to speak.

It is a great pleasure to serve under your chairmanship, Ms Harris, and I thank my hon. Friend the Member for Harborough (Neil O’Brien) for securing the debate. He is doing a great service to leaseholders in every constituency and I can see that the Minister is determined to improve the situation for them. All Members receive loads of emails about this issue from constituents, who are often in very stressful situations regarding their leaseholds, and I hope that the wide-ranging reforms that the Government are pushing through will change that. Of course, for many, those changes cannot come quickly enough.

I want to raise one discrete issue that I urge the Minister to consider. When constituents contact me about an issue with leasehold, be it a service charge dispute or a problem with lease extension or parking, a theme that comes up far too frequently is that the leaseholder is required to receive advice on their purchase from a conveyancer recommended to them by the estate agent, who is of course the representative of the seller-freeholder. Although I understand that there is nothing unlawful or improper about that arrangement, its practical effect seems to be that the buyer does not get the robust and impartial advice that they need.

We have a particularly upsetting case in my constituency involving the purchase of a new build shared ownership flat using solicitors that the seller told the leaseholder to use. At no point was the purchaser told that if they wanted to extend the lease, they would have to do so before it dropped below 80 years—the marriage value threshold. They have missed that chance and now face a huge bill to extend the lease. That case may yet be greatly assisted by the abolition of marriage value, although I think the Minister should consider some of the unintended consequences that may come from that—but that is a separate question. The point remains that leaseholders, and particularly first-time homeowners, need clear and impartial advice about their rights and responsibilities, and any pitfalls and possible expenditures, during their lease term.

When I wrote to the Minister on this point, I was told:

“We can also say that we would expect conveyancers to deliver an effective service to their clients, including making them aware of any changes or conditions attached to the property before a purchase is finalised. It is essential that conveyancers deliver an effective service to their clients.”

Of course it is, but the problem is that few people have the means to take action when they do not receive an effective service, so the opportunity to hold conveyancers to account is limited for many people.

The Government should act to ensure that leaseholders have access to high-quality, unbiased legal advice. It must be relatively straightforward for the Government to prevent sellers from recommending conveyancers, simply leaving buyers to choose their own conveyancer, as most purchasers do already. One possible route to achieving that, alongside looking again at the rules relating to referrals to conveyancers—we actually need tougher rules—is an enhanced role for the Leasehold Advisory Service. As many people will know, that organisation provides brilliant advice to many leaseholders, but with additional resources it could perhaps do more to provide bespoke support in cases where it appears that the legal advice has somehow been dud. There does not necessarily need to be a cost to that; it might operate as a deterrent and straighten people up a bit.

Alongside new legislation, access to impartial advice and support when things have gone wrong would hugely empower leaseholders across my constituency, particularly in areas such as Denton and Springhead, and indeed across all constituencies, and we would spend less time late at night answering emails from people who find themselves in an unhappy and stressful situation.

It is a pleasure to serve under your chairmanship, Mrs Harris, and I thank the hon. Member for Harborough (Neil O’Brien) for securing this important debate. I want to focus on the issue of maintenance charges, given that the Leasehold and Freehold Reform Bill gives homeowners paying charges for the maintenance of communal areas the right to challenge the reasonableness of those charges and the standard of the service provided.

This Parliament has run out of road on so many issues. The Government have in deed, if not in word, taken the decision not to meet many of the challenges that people in my constituency face—problems I see every day—with measures such as social care reform, special educational needs and disabilities expansion, and fair changes to small and medium-sized enterprises taxation. However, I am glad that they are finally willing to tackle maintenance charges. Whether that is due to the particular passion of the Secretary of State will mean little to my constituents, many of whom are leaseholders and freeholders on new build estates who so desperately need this place to sit up and take notice of their plight.

The present system of maintenance charges and management fees is outrageous. A cowboy system with limited regulation has taken root and left residents with no transparency over how funds are used and no clarity on whether services provide value for money, and the fees charged are exorbitant and quite frankly offensive in the context of a crippling cost of living crisis and the highest tax burden on working people for 70 years. My constituents, as well as many of the constituents of Conservative Members, are being fleeced by these charges.

In the seven months since becoming the Member of Parliament for Selby and Ainsty, I have seen many instances of these charges being levied unfairly on local residents. I have already written to the Minister about a particularly egregious example in Carlton, so I will refrain from mentioning that case to give him adequate time to respond. However, I will mention the Harron Homes estate off Flaxley Road in Selby. The estate has been built for five years and is still plagued with problems. Residents still do not have working street lights, with families not able to go out in the dark. They have to put up with roads that have literal craters in them, ruining the cars on which people rely for work, since public transport in my area is so poor. I spoke to one resident who cannot even lock her front door at night, due to shoddy building work, and has to prop her door closed with a chair so that criminals do not break in and steal her possessions. That is all while each resident on the estate is shackled with eye-watering maintenance charges.

The lack of transparency and accountability in the new build homes sector has led to countless issues. From construction defects to unfair lease terms, homeowners are left feeling helpless, hopeless and at the mercy of developers who are seemingly determined to squeeze every penny they can out of hard-working people. That is a sad part of life in modern Britain. On new build estates across the Selby district, working people live in a broken system, being asked to pay more and more for less and less in return. They have been waiting for the Government to come and help them.

Perhaps the Bill will be the answer, but I caution against any watering down of its provisions; rather, I encourage ambition to ensure that it goes further and gives residents the support that they so desperately need, as the hon. Member for Harborough so eloquently outlined. I am sure that my constituents regret the lack of ambition that we have seen in the past, and although the Government are not going the whole way to provide leaseholders in my constituency with the help that they need, I am glad that they are taking action after 14 years to deal with the problem that, as the hon. Member outlined, has existed since at least 2002.

We can and should go further on this issue, and I am proud to support Labour’s plans to make it a requirement to establish and operate a residents’ management company responsible for all service charges, to give homeowners the accountability and responsibility that they deserve. I support the implementation of the Law Commission’s proposals on the right to manage, covering both flats and houses, as well as the proposals on enfranchisement and on commonhold reform. It is imperative that we address these challenges head on and enact meaningful reform to ensure fairness, transparency and security for all homeowners. The Government have started the job, but ultimately it will be a Labour Government who finally liberate leaseholders from the mercy of an arcane and discriminatory industry.

I am grateful to my hon. Friend the Member for Harborough (Neil O’Brien) and to the hon. Member for Selby and Ainsty (Keir Mather). They both spoke well yesterday on Report on the Leasehold and Freehold Reform Bill. I am grateful to my hon. Friend the Member for Gravesham (Adam Holloway) for his contribution and, if I may do so through you, Mrs Harris, I pay tribute to his late father, Rev. Roger Holloway, who got the OBE for services to whisky.

The problem of rentcharges that has been brought up matches the problem with estate management charges. Even today, in Durrington in my constituency, Terry Woodjetts has to make it a full-time job to get the developers to do what they said they would and justify their charges. I hope that the developers will co-operate fully. They say they will. They have made some progress, but why can they not get it right first time? If they do not get it right first time, why can they not get it right the second time when attention is drawn to it?

One of the issues that was rightly brought up in the debate yesterday is whether developers should lay down a bond that is available until an impartial local authority can say whether or not they have delivered. There should be ways of making it in their own self-interest to act in the interests of those to whom they sell homes.

I turn to rentcharges. The Rentcharges Act 1977 said that, except in limited circumstances, new rentcharges could not be created after 1977, and that existing rentcharges would evaporate in 2037. One of those “limited circumstances” is when a freeholder has not paid a due cost, in which case the owner of the rentcharge, who might have no other interest, can apply to a court. The court has no discretion; it must grant a 99-year lease on a freehold property. Unwinding that can be expensive because there is no limit to the charge that the rentcharge owner can make on remedying the situation. I believe it is time for the Minister and his advisers to work on what they know is a difficult problem and deal with it.

Let me read what the Government themselves say about rentcharges. Their website states:

“A rentcharge is not the same as ground rent on leasehold properties. Find out more about leasehold ground rents.

Please do not send applications to redeem leasehold ground rents as they cannot be redeemed under the Rentcharges Act 1977.

If you are not sure if your property is freehold or leasehold, you can find out by looking at your property deeds or by visiting the HM Land Registry website.

Please do not send applications to redeem estate rentcharges or rentcharges that have been created after 22 August 1977, as these cannot be redeemed under the Rentcharges Act 1977.

Please do not apply if the rentcharge has already been redeemed directly with your rentowner (known as a private redemption). The Rentcharges team cannot provide a redemption certificate where a private redemption has occurred. Contact your rentowner or HM Land Registry”—

and it goes on.

It seems to me, having read that, that it ought to be possible for the Government, with or without the help of the Law Commission, to remedy the situation. If rentcharges should not exist and the powers of the rentcharge owner should not continue, the Government should act—deal with it, resolve it—and do so now. Anybody buying a freehold home where there might be a rentcharge liability has to get their seller to deal with it or take it on, with the consent of the mortgage lender if a mortgage is involved, which it will be, either for the new purchaser or the person they are going to sell to.

When they see these problems, Ministers should not delay or regard it as NIMTOO—“not in my term of office”. They should take responsibility and deal with it. The Government should get a social survey of people on new estates to see the problems that they have with estate management companies and estate management charges, and they should do a survey of solicitors, all of whom deal on their websites with the problems of rentcharges. They should get them together, have a roundtable, work out what would be effective and act. That would make people happier, take away the risks and take away half the fun that lawyers will have in trying to sort out the problems when they eventually come to court.

It is a pleasure to serve under your chairmanship, Mrs Harris. I congratulate my hon. Friend the Member for Harborough (Neil O’Brien) on securing this important debate. I am sure we all have constituency issues that emanate from this issue and I echo the points that he made yesterday and in today’s debate. In particular, I want to mention the issue of developers wriggling out of planning commitments. I have several examples of that and one, which I have discussed with the Minister, that is particularly egregious. I am sure I will mention it again in this House.

The Leasehold and Freehold Reform Bill is a landmark piece of legislation that will help every leaseholder in Hertford and Stortford and beyond, throughout the country. I know the Minister is more than aware of the problems with leasehold ownership. They are there for all to see: no control over agency fees, how the value of the property dwindles as the lease begins to elapse, how tricky and often expensive it is to extend a lease and how, in essence, it is not true property ownership.

I have heard the argument that if prospective leaseholders do not want to endure all those issues, they should simply not sign on the dotted line to become a leaseholder. That frame of mind shows a misunderstanding of the system and the lack of choice in it. To begin with, becoming a leaseholder is practically a rite of passage in climbing the property ladder nowadays. Many young people buy flats to begin with because they are smaller and cheaper, and try to use them as a platform to climb the property ladder, upsizing as they can, which is how I started. I should declare that I am the owner of a leasehold property now, although my freeholder is as wonderful and fair as they come. Perhaps that makes me the lucky one.

In many cases, people become leaseholders only to have the wool pulled over their eyes. For instance, I have heard stories of first-time buyers signing up to be leaseholders, accepting the estimated service charge amount when they do so. They then exchange contracts and, when they receive their leases to sign a few days before completion, the service charge amounts have more than doubled. What are the leaseholders to do? They have already exchanged contracts by that stage, which is the legal point of no return. Are we asking them to throw away their life savings—their deposit—or are we asking them to find hundreds or thousands of extra pounds out of their back pockets to cover the difference? I appreciate that advertising a lower than anticipated service charge might get more sales over the line, but I am sure that everyone would agree that more than doubling the amount on completion day shows how managing agents are seldom on the side of leaseholders.

I want to share a couple of examples from my constituents. One Hertford resident bought his flat seven years ago, with 109 years left to run on the lease. He has, however, received a quote from the freeholder of £10,000 to extend—not money he would find down the back of a sofa. That is an extraordinary amount. The other side of the coin is that, as the years of a lease become fewer, the value of the asset dwindles. My constituents have worked extraordinarily hard to buy their homes, and now they have to face headaches not that far down the line. It goes without saying that if someone owns a house by freehold, they do not experience any issues like that. They own a property and that is it.

Another constituent owns a flat with a doubling ground rent, which is currently £750 a year. They want to sell the flat but are having issues, as very few mortgage companies will lend against the property when a buyer’s affordability capacity is hampered so significantly by such ground rent levels. That leaseholder asked the freeholder for a quote to have the lease amended and a reduced ground rent. The freeholder flat out refused to negotiate. Why would they engage in negotiations? Ground rent is literally money for nothing for them. Meanwhile, either my constituent is stuck in a property that will become only more problematic over time, or they will manage to sell it to someone else who will simply inherit the same issues, not solving the problem. The greatest irony is that the leaseholder in question works as an estate agent. That totally dispels the notion that all one needs to avoid leasehold’s fundamental flaws is to be savvy in the property market.

I tell those stories to show how too common they are, and I know that the Minister is very engaged in these issues. The Leasehold and Freehold Reform Bill is the greatest opportunity in 30 years to put things right, and I support and welcome it. Personally, I would love to be more radical. I would like to see all leaseholders in flats turned into commonholders overnight, but I appreciate the complexity of doing so. Will the Minister mull over and comment on a two-stage plan? Even then, I know that it will not happen overnight. The first part will be to ensure that all future flat sales come with a share of the freehold. That will be a much-needed stopgap until the second stage, which is the total abolition of leasehold ownership in this country, turning leaseholders into commonholders.

We should commit to the total abolition of leasehold. It is time to be radical and ambitious, and to liberate millions of leaseholders from the myriad issues they face. With such an objective we can turn millions of people into proper homeowners overnight. It would give leaseholders more security and peaceable enjoyment of their tenancies, and it would truly give them a proper stake in society.

It is an absolute pleasure to serve with you in the Chair, Mrs Harris, and to follow the hon. Member for Hertford and Stortford (Julie Marson). I am very glad that she mentioned the question of a share of freehold: we pushed for that in Committee, and it is one of several measures necessary to pave the way for the commonhold future that so many of us in the House want to see.

I congratulate the hon. Member for Harborough (Neil O’Brien) on securing this important debate, on opening it as compellingly as he did and on the persuasive argument he made yesterday on Report on the Leasehold and Freehold Reform Bill. He spoke in support of greater ambition in addressing the many inequities of the leasehold system. Although I disagree with his assertion in yesterday’s debate that that Bill is our one chance to end the arcane and discriminatory practices that leaseholders and residential freeholders are at the mercy of, it certainly represents our only chance to do so in this Parliament. On the Labour Benches, we wholeheartedly agree that the Government should go further than the Bill does.

I thank all hon. Members who have contributed to the debate. Those contributions, like yesterday’s debate, highlight that there is widespread support across the House for ambitious leasehold and commonhold reform. Once again, I want to put on record the thanks of those on the Labour Benches to all those who have campaigned tirelessly, often over many decades, for an overhaul of leasehold law. In particular, I thank the leaseholders and residential freeholders who have resolutely refused to accept the inequities of the flawed system they are so often at the mercy of, and who have taken it on themselves to vigorously make the case for change.

In responding to the debate, I do not intend to revisit yesterday’s many principled arguments and exchanges on leasehold reform in general. Instead, I will simply provide some further detailed thoughts on some of the specific issues that have been raised this afternoon, starting with the management of private and mixed-tenure estates. The distinct set of problems faced by residential freeholders on those estates with charges and fees is well known and well understood. The Government have publicly recognised for at least six years that it is a very serious problem, and we welcome their decision to use the Leasehold and Freehold Reform Bill to introduce statutory protections for freehold homeowners that are equivalent to those enjoyed by long leaseholders in respect of service charges.

As the Minister will recall, in Committee we pressed for specific changes to strengthen the new estate management regulatory framework, not least to rectify some of the obvious deficiencies of the existing leasehold regulation regime that it mirrors. We hope that the Government will give them further consideration. In our view, of particular importance is the need for a right-to-manage regime for freeholders on private and mixed-tenure estates. It is not enough merely to give residential freeholders on those estates the right to challenge the reasonableness of charges and to hold estate management companies to account. They should enjoy the right to take over the management functions on their estate, and we believe there is appetite among freehold homeowners to exert more direct control in that way. In yesterday’s debate on Report, the Minister made it clear that the Government understand the strength of feeling on the issue and are considering it further. Will the Minister provide a little more clarity today and tell us whether the Government are seriously considering tabling amendments in the other place to provide parity between residential leaseholders and freeholders when it comes to the right to manage?

As the hon. Member for Harborough rightly argued yesterday, ensuring that residential freeholders on existing private and mixed-tenure estates are better protected is one thing, but reducing the prevalence of the arrangements is another. The Government must act to do the latter, as that is the best way of addressing the root causes of so many of the problems that residential freeholders face. However, we believe it would be wrong simply to force local authorities to adopt such estates without corresponding changes to ensure that the public infrastructure and amenities built on them are built to a determined, adoptable standard, so that financially hard-pressed councils are not forced to repair and maintain poor quality roads and common services at great cost. I would be grateful if the Minister could provide some assurances—we touched on this on Committee—that the Government are actively exploring the mix of legislative and policy changes that will be required to make progress on both of those fronts, adoption and common adoptable standards.

I apologise that I could not be here when I was supposed to be, Mrs Harris. I was meeting some people from Hong Kong on issues of human rights and freedom. I thank the shadow Minister for letting me intervene. Leasehold reform has been the subject of much discussion, such as in yesterday’s debate in the main Chamber. Does he not agree that there is a real need for urgent leasehold reform? It affects so many of our constituents—from young people, who are starting their lives, to older people, who are trying to downsize. We must make this change, especially at a time when every penny counts for most people, whether they are young or old.

I thank the hon. Gentleman for that intervention. I was starting to get troubled when I could not see him out of the corner of my eye; I am glad he has attended the debate and made that point. I am sure the hon. Gentleman will know Labour’s position: our concern is that the Bill does not go far enough by any means. It is distinctly unambitious. However, it does make important changes, and we think it is important that it receives Royal Assent before the end of the Parliament. For the reasons he outlined, we want to see it make speedy progress.

Let me turn to the issue of forfeiture, which the hon. Member for Harborough raised in his speech. As hon. Members will know, throughout the passage of the Bill, Labour has made the principled case for abolishing forfeiture and the windfall it provides to freeholders. As I argued in the debate yesterday, forfeiture is a wholly disproportionate and horrifically draconian mechanism for ensuring compliance with a lease agreement. Its continued use, and the chilling effect that results from its mere existence, continues to put landlords in a nearly unassailable position of strength in disputes with leaseholders. That is why it is routinely used by landlords as a first resort when seeking to recover alleged arrears of payments from leaseholders, and why the threat of it is invoked so often to deter leaseholders from disputing any unreasonable costs and defending claims.

Yesterday’s debate reinforced the fact that there is clearly a broad consensus in the House for getting rid of forfeiture. Although Labour is understandably disappointed that the Government resisted our second attempt to achieve that, we welcome the Minister making it clear that the Government are

“working through the detail of the issue”—[Official Report, 27 February 2024; Vol. 746, c. 197.]

and intend to report back to the House shortly. Can I encourage the Minister to do so as quickly as possible, and to provide us with assurances to that effect today? Determining precisely what, if anything, the House will put in place of the existing system of forfeiture is an extremely complicated undertaking. Given that the Government have had years to develop considered proposals in this area, it would be unfortunate if hon. Members were asked to take a view on complex and technical proposals without the time necessary to properly scrutinise them.

As the Minister considers the matter of forfeiture, can I also press him to review the issue of rent charges? I am glad that the Father of the House and, I think, the hon. Member for Harborough mentioned it in their contributions. We must ensure there are no unintended consequences, but in our view there is a cast-iron case for abolishing section 121 of the Law of Property Act 1925 altogether. The remedies provided for by the Act, which amount, in essence, to freehold forfeiture, are a wholly disproportionate and draconian legacy of Victorian-era property law. Through clause 83 of the Bill, the Government are seeking to make palatable methods of enforcing legitimate and reasonable rent charges that are simply not justifiable in any form, and must be removed. I urge the Minister to reconsider the Government’s position on rent charges.

Before I conclude, I will touch briefly on ground rents, which the hon. Member for Hertford and Stortford mentioned. As Labour argued in Committee, over the past two decades, we have seen a system develop that is increasingly focused on generating assets by gouging leaseholders through ground rents that are, in historical terms, high to start with, and that escalate over the term of the lease. Leaseholders who have worked hard to purchase their homes in good faith are being asked to pay ever more money for no clear service in return, and many are experiencing considerable financial distress and difficulty selling their property, all to sustain the income streams of third-party investors. Unregulated ground rents of this nature in existing leases cannot be justified in our view. As I have previously made clear, I personally share the Secretary of State’s preference to cap ground rent at a peppercorn.

Although we do not discount the risks involved in any of the five options outlined in the recent Government consultation, Labour is clear that the Government must act to protect leaseholders from ground rent exploitation, and that, as I said in Committee, they should be courageous in determining which of the consultation proposals should be enacted.

The Minister made it clear in yesterday’s debate that the Government are considering next steps and were moving at speed in doing so. I will not press him this afternoon for any further detail, as I accept he will not be able to say any more today. However, can I press on him again, as I did on forfeiture, the need to share any detailed proposals with the House at the earliest possible stage, particularly given the implications of the range of options consulted on for the Bill that has now been sent to the other place? It will, as the Minister knows, involve the rewriting of several substantive clauses in the Bill, so we need that detail early on. I look forward to his response.

It is a pleasure to serve under your chairmanship, Mrs Harris. I thank all the Members who have contributed to the debate and those who are listening to it. The fact that we are talking about this issue for the second time in two days shows how important it is. It is clear, as we discussed yesterday, that Members on both sides of the House recognise that this area badly needs attention and reform. Thankfully, the general consensus across the House is that we have to move in that direction, so I hope the Bill, which went to the other place yesterday, will make fast progress there.

To be clear, the Government absolutely acknowledge this issue. We did so on Report yesterday, in Committee, on Second Reading and before that. Hon. Members have made very important points today, and have raised similar issues previously, about the iniquities in the system. They have spoken about the historical problems on the leasehold side and, more recently, but just as iniquitously, on the estate management side. Even those of us who believe that the Government should be very temperate in intervening in markets know it is right that when markets are not working, we should take action to straighten them out and remove the distortions within them. That is exactly why we introduced the Bill and are trying to ensure that it makes progress in the months ahead. We welcome the Opposition’s commitment to getting it on to the statute book at the earliest opportunity.

There are problems within the leasehold part of the discussion. The estate management issues have come into much sharper relief over the past couple of decades, particularly for those of us who have had significant amounts of new building in our areas. We can see, on a day-to-day basis, that a set of issues with individual estates clearly needs to be resolved.

As my hon. Friend the Member for Harborough (Neil O’Brien) and the hon. Member for Selby and Ainsty (Keir Mather) outlined, there is a particular issue with new homes, which I will talk about in a moment. Without rehearsing some of the previous arguments and discussions, I want to read into the record, for about a minute, the real progress that the Bill makes. It is important that the House and the other place do not forget that, as a baseline, we are making the biggest and most significant change to property law in this country in a generation; we absolutely need to acknowledge that.

We are making it cheaper and easier for leaseholders in houses and flats to extend their lease or buy their freehold. That is a significant intervention. We are increasing the standard lease extension term from just 90 years to 990 years, with ground rent reduced to zero. That is an extremely significant intervention. We are removing the requirement for a new leaseholder to have owned their house or flat for two years before they can benefit from these changes. We are changing the thresholds and non-residential limits within properties, and for the first time allowing leaseholders in buildings with up to 50% non-residential floor space to buy their freehold and take over its management.

Yesterday on Report, we added protections on top of the Building Safety Act 2022 to make the purchase and sale of leasehold and freehold estate properties quicker and easier by proving a maximum time and fee for the provision of information. Vitally, we are requiring transparency over leasehold service charges, which hon. Members talked about a moment ago. We are replacing building insurance commissions for managing agents, landlords and freeholders so that we get away from the frankly outrageous situation whereby there is little clarity about what is being paid for, who pays for it and whether there are kickbacks in the background.

We are scrapping the presumption that leaseholders will pay the freeholder’s legal costs when challenging poor practice. That is another absolutely outrageous historical iniquity that needs resolution. We are rightly extending redress schemes to managed estates. I know that some hon. Members would prefer them to be abolished, but it is absolutely right that there is a redress scheme in place.

As hon. Members know, yesterday we banned the creation of new leasehold houses. I do not like to ban anything at all because I think we have banned far too much in the United Kingdom over the past generation, but sadly, I am absolutely convinced of the necessity of a preclusion on leasehold houses, given the horror stories that have been outlined during the passage of the Bill and in the years leading up to it.

Will the Minister give way?

I will happily give way to the hon. Gentleman; I hope he is about to agree with me about the necessity of banning only very proportionately.

I am afraid that I am going to have to disappoint the Minister, because I disagree that the Government banned new leasehold houses yesterday. He did not address this in his wind-up speech yesterday, because he did not have a huge amount of time, but I want him to respond to my concerns about new schedule 2 providing for exemptions that are potentially so wide that they could allow for the creation of significant numbers of new leasehold homes over the coming years. Will the Government review their position on new schedule 2? Are they convinced that it provides for only very limited exceptions in unusual circumstances, as the Minister said yesterday?

I am grateful for the hon. Gentleman’s intervention. He and I have an active discussion about this, and possibly a slight difference of opinion about the potential impact of what we introduced. I do not wish to misrepresent him, but I think he accepts that some elements of what we brought forward yesterday, possibly those regarding the National Trust, are not controversial or contentious. There is a question about whether the measures should apply if, historically, organisations, entities or companies have agreements in certain ways. It is clear that this will be swept away; we are effectively discussing whether existing permissions on a particular type of prospectus, other than the small number of things such as the National Trust, should be swept away as well. I am sure that we will continue to talk about that, but we think that this proposition is a major intervention that honours the spirit of banning leasehold houses. Others may take a different view, but the Government’s view is that this is a significant step forward that adheres to the spirit of a ban or preclusion, and that will allow us to move forward.

I have highlighted the progress that has been and is being made, subject to what the other place does. I know, however, that hon. Members are very keen that we go further in certain areas, so I want to spend a few moments going through some of their suggestions. My hon. Friend the Member for Harborough made a powerful speech—again, he is the reason why we are speaking about this matter today, and it is important that we continue to have this conversation. We have heard some of the examples, both named and referred to, of the realities created by the system. No system is perfect—we can never design it such that there will not be some attempt to prang it in some way, shape or form—but large holes in the system have clearly built up and been exploited. Those have resulted in, for instance, the removal of trees from a tree-lined street. Unless there is some other reality behind that, there is absolutely no reason for it to happen. We have to move to a place where that does not occur, and we hope that that will be achieved in part by the changes made by the Bill. We recognise that there are further concerns, and we are considering those, but we all agree that some of the examples mentioned are not where we want to be. I hope that we may be able to say more on that going forward.

As I mentioned briefly yesterday, I also recognise this issue personally. I am not speaking today as a constituency MP, but only in the last month I have been in meetings with constituents who raised concerns about a Persimmon development and the clarity of information about service charges. So in my part of the world, I see issues similar to those raised by hon. Members, including my hon. Friend.

My hon. Friend also raised an important point about GP provision. I have been in this job for only four months, but I recognise the importance of this issue. My hon. Friend the Member for South West Bedfordshire (Andrew Selous) is particularly concerned about that, and I have spoken about it with my hon. Friend the Member for Hertford and Stortford (Julie Marson). It is another clear iniquity. As my hon. Friend the Member for Harborough says, people are doing the right thing, have worked hard all their lives and are buying properties, and although the sales particulars of those properties state that new GP provision will be on or near the site, suddenly that provision disappears into thin air between the point when the ink goes on the contract and the point when they move in, or within a few years.

We have already held a meeting on that issue with my right hon. Friend the Member for South Northamptonshire (Dame Andrea Leadsom), who is a Minister in the Department of Health and Social Care, and we are committed to trying to make further progress. A detailed discussion is needed, because a number of different issues on GP provision need to be unpacked.

First, there is the physical ability to provide bricks—places for people to operate out of—which is obviously the responsibility of the planning system or associated with it. The second issue is whether there could be some provision, but for whatever reason, the configurations, the preferred designs and so on make that cost higher than it otherwise should be. If that is the case, that needs to be looked into again, because there is no reason for making perfect the enemy of the good. Thirdly, we may have the bricks or provisions to provide the bricks, but if we do not have the people to provide the services, it does not help in any instance the people who have been sold the promise in the first place. A number of different issues will need to be unpicked, and I am working with my right hon. Friend from the Department of Health and Social Care on that.

My hon. Friend the Member for Harborough talked passionately and importantly about new homes and the related issues. As he indicated, when someone has done the right thing, it is absolutely incredible and unacceptable that there are the kind of problems that he has highlighted around sewage, snagging and the amount of time people have to take to get their homes up to the standard they thought they were buying in the first place, or to solve the problems they did not think there would be. It is also fair to say that, as MPs, we only hear about the difficult issues, and there are many thousands of homeowners who move into homes on a monthly and annual basis who do not have those issues. That is absolutely great, but we can all see in our postbags that there are significant challenges with regards to new homes. As my hon. Friend indicates, I hope that the new homes ombudsman will make progress, and the New Homes Quality Board is currently seeking to do that.

My hon. Friend the Member for Gravesham (Adam Holloway) is no longer in his place, but he raises an important point about conveyancing. The hon. Member for Selby and Ainsty made a similar point about people being encouraged to use a particular conveyancer, or a particular set of solicitors, and it may be that the output of that process, however it happened, meant they did not get all the information or certain things were not as clear as they could be. That is unacceptable. I recognise that we have to work through that issue. There is a very complicated interaction between standards, regulation and whether people are doing the right thing, even within a regulated industry. I think I should pick that up with my Ministry of Justice colleagues to see whether there is anything that we may be able to take forward.

The hon. Member for Selby and Ainsty made an important and eloquent case relating to some challenges that he and his constituents have experienced. I was campaigning on one of his new estates just a few months ago, possibly for a different candidate. I will make two points. He raised an issue with regards to Harron Homes. I say this not to make any particular point, other than that I had a similar personal and constituency issue with Harron Homes on the Regents Green estate in Grassmoor in my constituency a number of years ago. It took quite a bit of pushing, but in the end, Harron Homes moved and we got hundreds of snags unsnagged. I hope he has similar success on that.

I know the hon. Member’s point was not about seeking advice on how to approach Harron Homes; it was more broadly about the reality that this should not happen in the first place, and he is absolutely right. I hope that some of the work in the Leasehold and Freehold Reform Bill, and some of the things that the New Homes Quality Board is doing on a voluntary basis and the new homes ombudsman will do in the coming years will help to address some of those problems.

My hon. Friend the Member for Worthing West (Sir Peter Bottomley) is not just the Father of the House but the father of many of the innovations and suggestions in the Bill, given how long he has campaigned on this issue. He raised the specific issue of rentcharges, and I would say to him that I am always happy to hold roundtables, but we must make sure they have utility. We are clearly making progress with the Bill, and I hope hon. Members accept that that includes progress on rentcharges. Both I and the Secretary of State continue to be keen to have the discussion around rentcharges to see what might be possible in the future.

It is important to note that there is a complicated interaction, as there always is in such difficult areas of law, between the clear problems we see with rentcharges and the overall structure of how rentcharges are used on a broader basis—rentcharges are, for example, part of the estate management system. That is something we have to try and work through in the round, but I am always happy to talk more and to hold roundtables. We do understand that there continues to be a challenge there.

I should have said that I am a leaseholder. Let us say that one of my grandchildren was buying a freehold property where there was a requirement to pay charges. The idea that the rentcharge holder can, if there is a slip in paying the charge, turn a freehold property into a 99-year lease, which may knock hundreds of thousands of pounds off the value of a London property, is absurd. The sooner we can please have the roundtable, followed by action, the better.

My hon. Friend makes an important point about the current system, and I look forward to continuing to discuss that with him and those who are interested in this area and who wish to see further progress.

My hon. Friend the Member for Hertford and Stortford made a clear point about the importance of clarity of information for leaseholders. Given the preclusion that we are bringing forward, I hope she has seen that we have added clauses to the Bill to make it imperative that there is explicit clarity about whether leasehold houses are still being sold, in the limited instances where we think it is proportionate to do so. From a house perspective, there will be no ability for people not to know what they are buying because others choose not to make that clear.

The hon. Member for Greenwich and Woolwich—we have rehearsed many of these points already, so I will not seek to detain hon. Members—raised the issue of forfeiture. As I have said, and as I will happily repeat here again, we are working through the detail of that issue. We are very serious, and we recognise that it is an important issue and one on which the House has already indicated that it has a very strong view. We hope to be able to say something more on it shortly.

After we had had a number of Divisions yesterday, I saw on Twitter—I do read Twitter—that there was quite a lot of disappointment about the choice on forfeiture. I want to assure people who may be reading the Hansard of this debate or watching online that the Government are absolutely serious about this issue. We have been clear that we are looking at it seriously, and I hope we will be able to say something more. Many of us who have been in this place for a number of years now will know that there is some arcanity—if that is a word—or an arcaneness to some of the procedures. Sometimes things do not appear in exactly the linear sequence or sequential order that people would like, but I can assure those who are interested in this issue that the Government are looking at it seriously, and I hope to be able to report back to the House on it shortly.

Finally, I thank the hon. Member for Battersea (Marsha De Cordova), who is no longer in her place, but who raised important points about leasehold. I also thank, as ever, the hon. Member for Strangford (Jim Shannon), who highlighted the importance of reform in general. That is one of the reasons why we are bringing the Bill forward and seeking to make as strong progress as possible.

I recognise the useful contributions today, which build on Report stage yesterday and on the progress that the Bill has made in the House already. I hope that hon. Members who have been in today’s debate or been part of the process so far recognise that this is a strong proposition that the Government have brought forward. It is the biggest change to property law in a generation.

The Government and I recognise the desire of Members here, and of the House in general, to go further. We have said very clearly that we are looking at a number of areas, and my Secretary of State—my boss and the person who ultimately makes the choice—has indicated very clearly that he is keen to improve the Bill further. As I said in Committee, we will not be able to do everything, and there is always a discussion and a decision about how we prioritise the limited time of this House and the other place. However, we think that the Bill is a strong start, and we hope we will be able to improve it further. We look forward to being able to make real progress in this important area, which has needed reform for so long. Finally, after 20 years, we will be able to deliver that as part of this Bill.

Thank you for chairing this session, Mrs Harris. I thank all hon. Members for their interesting and important contributions during the debate.

My hon. Friend the Member for Gravesham (Adam Holloway) raised the issue of conveyancing being done by someone tied to the developer, and the bad incentives that that sets up. The hon. Member for Selby and Ainsty (Keir Mather) welcomed the action on maintenance charges but gave us a terrifying example of constituents getting the charges but no actual maintenance.

The Father of the House, my hon. Friend the Member for Worthing West (Sir Peter Bottomley), raised the case of Terry Woodjetts, and I really like his idea of a bond. I have long thought that, instead of councils having to take developers to court for infringements of planning conditions and building conditions, it would be much simpler if the onus was reversed so that a bond was held by the council and only released if developers did the right thing during the development process.

My hon. Friend the Member for Hertford and Stortford (Julie Marson) made important points about people finding out terms only once it was too late because they had paid the deposit or the whole whack, and about how even quite sophisticated people such as estate agents can end up being trapped by this complex system.

I have raised lots of harrowing cases in the debate, and lots of other Members have done the same. However, to end on a moment of light, when I think about the document I wrote in 2018, I am struck by the fact that, although politics—particularly this field—is not for the impatient, it is possible to make progress, and we are making progress. An example of that is leasehold houses. The promise alone that we were going to take the legislative action that we are now taking has driven down the number of leasehold houses very dramatically over recent years. I raised the issue of getting new GP surgeries in new estates, and we have already made progress on that through the new NPPF guidance. The conversation is continuing, and it is not a straightforward one. The Minister is right to read into the record the different elements of progress that have already been made in the Bill and to highlight the complexity and the fact that it is not straightforward to make further progress.

However, to end on a moment of optimism, I wrote about things such as the transparency of land options in 2018. I published my paper in 2018 and, as a Minister in the Department in 2021, I made the case for us putting that in legislation. We legislated in 2023, and we will be doing the secondary legislation in 2024. It takes a long time to do things, but we do eventually get there.

Capturing more land value for the community is something they do brilliantly in Hong Kong—the hon. Member for Strangford has been communicating with people whose human rights have been violated there. One thing they have always done well there is capture land value for the community, and we are making progress on that through the Levelling-up and Regeneration Act—not just the new infrastructure levy that we will roll out over the coming years, but the new compulsory purchase order powers, which I look forward to being used.

I have been making arguments for a long time about building in the wrong places without the right infrastructure. Again, we have made progress on that, whether that is the urban uplift, the objectively assessed housing need, which came in a few years ago, or the moves to liberalise brownfield development that have been mooted more recently. We have made progress towards all those things. I talk about the broken planning system, and we are making progress towards it being less broken than it was, but there is still a lot to do.

From that story of progress and of a lot of things needing fixing, I take an optimistic point, which is simply that, although there is a lot for the Minister to do, and it is not easy to make progress on these things, we have already made good progress, and we have another opportunity to make some big strides forward through the Bill. I am encouraged not just by the fact that the Minister is an able and brilliant Minister, but by his saying today that we will take the opportunity to go further on these things, which have caused such a lot of grief for my constituents. These are issues that we can fix.

Question put and agreed to.

Resolved,

That this House has considered leasehold reform and new homes.