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.