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Freehold and Leasehold Reform — [Mr Virendra Sharma in the Chair]
05 July 2023
Lead MP
Gareth Johnson
Dartford
Con
Responding Minister
Rachel Maclean
Tags
EconomyHousingForeign AffairsStandards & Ethics
Word Count: 11679
Other Contributors: 6
At a Glance
Gareth Johnson raised concerns about freehold and leasehold reform — [mr virendra sharma in the chair] in Westminster Hall. A government minister responded.
Key Requests to Government:
Johnson calls on the government to introduce legislation addressing the issues of management company fees and practices, ensuring better transparency, regulation, and competition for homeowners' benefit.
How the Debate Unfolded
MPs spoke in turn to share their views and ask questions. Here's what each person said:
Lead Contributor
Gareth Johnson is concerned about the practices of management companies in newer housing estates, particularly regarding high fees charged to homeowners without consultation or sufficient regulation. He cites numerous examples of residents being overcharged for poor services and unable to obtain transparent accounts. One constituent was charged £2,500 a year for minimal service, while another faced a 30% fee increase with no recourse. Management companies often impose unfair conditions when residents attempt to switch to new management firms.
Derek Thomas
Con
St Ives
Derek Thomas highlighted the widespread issue of leasehold property management, emphasizing the need for reform to prevent further distress among homeowners. He cited a constituent named Stephen who is unsure whether to extend his lease due to uncertainty about marriage value being abolished. Another constituent, Amy, faces difficulties selling her leasehold property because of safety defects and guidance from the Royal Institution of Chartered Surveyors that makes it unmortgageable. Derek Thomas urged the Government to push forward with reforms, address developer responsibilities under the Building Safety Act 2022, and ensure timely remediation work.
Fiona Bruce
Con
Tewkesbury
Ms Fiona Bruce expressed deep injustice on behalf of constituents affected by property reform issues. She highlighted the lack of statutory rights for freeholders to challenge unreasonable service charges and maintenance standards, as contrasted with leaseholders' rights. She mentioned specific instances of residents in Bath Vale facing unreasonable charges such as £1,500 for insurance administration and water supply charges without actual usage. Requested the Minister to discuss with the residents mentioned in her debates.
Jeremy Corbyn
Ind
Islington North
Mr Corbyn expressed concern about the stress and financial burden faced by leaseholders due to excessive service charges, lack of control over management decisions, and threats of legal action for late payments. He provided examples of residents being charged excessively for minor works and electricity usage, highlighting a need for substantial investigation and reform in the leasehold system. Noted a challenge in legal processes or costs preventing residents from making justified challenges, despite government intentions.
Jim Shannon
DUP
Strangford
Jim Shannon highlighted the importance of leasehold reform in Northern Ireland, emphasizing that over 4,000 homeowners bought property under right-to-buy legislation but struggle to resell due to short leases. He pointed out that people are less likely to purchase homes with shorter leaseholds because of high ground rent and difficulty obtaining mortgages. Shannon also mentioned a Government survey finding that 70% of leaseholders regret buying leasehold properties, advocating for fair fees for services and urging the Minister to engage with Northern Ireland's Department for Communities.
Justin Madders
Lab
Ellesmere Port and Bromborough
Mr Madders expressed concerns about the exploitation of homeowners through estate management fees, arguing that these fees are unjustified and should be abolished. He cited examples of estates where residents pay for services that others who do not reside there benefit from without contributing financially. Mr Madders also highlighted issues with ground rent increases and called for comprehensive reforms to protect leaseholders.
Greenwich and Woolwich
Matthew Pennycook highlighted the poor service and abuses faced by leaseholders at the hands of managing agents. He called for action to protect leaseholders from exploitation, noting that relying on industry self-regulation is inadequate. Pennycook urged the Government to implement recommendations from a 2019 working group report on regulating property agents. He also expressed concern over the potential scaling back of commitments made by the government regarding comprehensive reform of the leasehold system.
Government Response
Rachel Maclean
Government Response
It is a great pleasure to respond to this debate and serve under the chairmanship of Mr Virendra Sharma. I thank my hon. Friend the Member for Dartford for securing today's debate, highlighting strong parliamentary interest on freehold and leasehold reform. The Government remain committed to creating a fairer housing system that works for everyone. We have introduced the Leasehold Reform (Ground Rent) Bill in 2021 which prevents landlords from charging financial ground rents in new leasehold homes since June 2022, but more is needed to address the power imbalance inherent in leasehold ownership. The minister acknowledges the issues raised by freeholders and leaseholders alike regarding high service charges, neglected repairs, and exploitative ground rents. She committed to introducing legislation that will give freehold homeowners rights similar to those of leaseholders, enabling them to challenge estate management charges at a property tribunal and seek better standards in services provided. The Government also intend to increase service charge transparency for leaseholders and make it harder for landlords or managing agents to hide rip-off charges, empowering leaseholders with clear routes to redress. Legal costs faced by leaseholders when challenging their landlord will be addressed, ensuring they are not subjected to unjustified legal fees and can claim costs from the landlord if appropriate. The minister reaffirms the commitment to ban the sale of new leasehold houses, promote commonhold as a freehold alternative, and simplify the process for extending leases or buying out freeholds through an online calculator and reforms to the right-to-manage system. Detailed reform proposals will be introduced in the King's Speech later this year.
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About Westminster Hall Debates
Westminster Hall debates are a chance for MPs to raise important issues affecting their constituents and get a response from a government minister. Unlike Prime Minister's Questions, these debates are more in-depth and collaborative. The MP who secured the debate speaks first, other MPs can contribute, and a minister responds with the government's position.