It is a pleasure to serve under your chairmanship, Mr Bone. I, too, congratulate the hon. Member for Worthing West (Sir Peter Bottomley) on securing the debate, on the way he has, alongside my hon. Friend the Member for Poplar and Limehouse (Jim Fitzpatrick), campaigned on the many abuses in this sector, and on the way they have both led from the front with their joint chairing of the all-party parliamentary group on leasehold and commonhold reform. I am proud to be the group’s vice-chair. They have been superbly assisted by the Leasehold Knowledge Partnership, about which we have heard today. Collectively, they have all done a great job in bringing this issue to the attention of parliamentarians and members of the public.
I first spoke on this subject in the Chamber almost a year ago, at which point I described the scandal as the
“the payment protection insurance of the house building industry.”—[Official Report, 20 December 2016; Vol. 618, c. 1342.]
However, as more serial failures, incompetence and greed have emerged, I do not believe that such a description does it justice—and it is justice that millions of householders up and down the country now seek.
Where do we start with all this? We know that leasehold has been around for a very long time and has always had problems, particularly in relation to flats and buildings with common parts. However, in recent years it has become a cash cow for developers—household names,
whose reputations have rightly been damaged because of their avaricious approach to the very people who now find themselves unable to sell their homes, long after the developer has fled the scene. I am still waiting for someone from the house building industry to come up with a credible explanation as to how doubling ground rents provides any benefits to the leaseholder. I have heard countless tales about what salespeople say in the show home, how the nature of the tenure is not raised until very late in the day when commitments have been made, and how advisers have failed to inform purchasers about what they are being asked to sign up to.
It is also disappointing to see a certain smugness in some quarters regarding those who purchased leasehold houses, with suggestions that they should have known better. That ignores several factors, including the fact that many purchasers seem to have been let down by the advice that they received. One example that recently emerged was a property ombudsman case in June, where a long-term leasehold had been described as “virtually freehold” to purchasers, which is on a par with being a little bit pregnant. Ultimately, the ombudsman found in the purchaser’s favour that there was no such thing as a property being virtually freehold, and directed the sales agent to return £1,100 in legal and survey fees, as well as an additional award of £200. The fact that such a paltry penalty has been applied shows the desperate need to reform the market. Just over £1,000 refunded for a blatant mis-description of the biggest purchase anyone is likely to make is hardly a deterrent to those wanting to make a fast buck.
If so many people say that they feel they were not fully informed about what they were being asked to sign up to, I can only conclude that the problem does not lie with them. A survey of my constituents found that 92% who had used a recommended solicitor said that they felt they were not fully informed about the ground rent terms ahead of purchasing their home, That goes down to 71% for those who had chosen their own solicitor. Almost two thirds of those who responded said they had used a solicitor recommended to them by the developer, a figure that increased to 77% among those who had purchased their property using the Government’s help to buy scheme.
We have heard anecdotally that purchasers have felt pressured to use a solicitor recommended by the developer, and in some cases they felt they were required to use a recommended solicitor. In other cases they were told that only a recommended solicitor who was familiar with the development could meet the short amount of time imposed by the developer to complete the purchase. Again, why developers were insisting on time limits as short as four weeks to complete purchases is something I have never had an adequate explanation for. We wrote to all the main developers and a number of recommended law firms to ask them questions about this practice. They all denied that they required or pressured customers to use recommended solicitors, but some admitted advising purchasers that panel solicitors would be able to deal with conveyancing more quickly because they had experience of the sites and processes.