It is a pleasure to serve under your chairmanship, Mr Bone. I thank my hon. Friend the Member for Poplar and Limehouse (Jim Fitzpatrick) and the hon. Member for Worthing West (Sir Peter Bottomley) for their work and leadership on this important issue.
Leaseholder reform is often overlooked when it comes to the housing crisis. The reality is that we must view leaseholder reform as part of, not separately from, how we address the injustices of that housing crisis. Leaseholders face a number of exploitative conditions that relate to the way in which housing is seen as an economic investment, not as about homes. That is particularly acute in London, where we have the highest number of leaseholder sales. In my constituency of Battersea, which has become something of a developer’s playground in recent years, 83% of all property sales in 2016 were leasehold. As more and more high-rise developments go up, it is crucial that we ensure leaseholders have rights and protections, and that legislation is implemented to stop such exploitation.
One key issue that hon. Members raised, which my constituents have written to me about, is ground rent. With more and more developers selling flats on a leasehold basis, there is an incentive to set ground rent at a higher level and to build hidden charges into leaseholds. Developers have admitted that the returns from selling on ground rents can be up to 35 times the annual ground rent value, and can be more than the amount normally charged to the purchaser of a new build house for the freehold interest at the point of sale.
There is no duty on the freeholder of a house to inform the leaseholder of a change in ownership. Nor does the leaseholder have a “right of first refusal” to buy the freehold interest at that point. One of my constituents’ ground rent will double every 15 years, which means that her property will become more and more expensive, and will be unsellable if she cannot afford the charges. Over time, the ground rent will rise to hundreds of thousands of pounds for a one-bedroom flat. My right hon. Friend the Member for Wentworth and Dearne (John Healey) rightly described this as
legalised extortion in some of the worst cases. The Government must act to end this practice, and commit to help those already trapped in unfair and exploitative ground rent schemes. Nobody should be made homeless because of ground rent or trapped in a contract that means that they are unable to move on or afford to maintain the cost of their home.