Bob Blackman MP: "For too long customers have been ripped off"
At Prime Minister’s Questions on 10 April, I asked whether the government would legislate in line with the recent report from the Housing, Communities and Local Government select committee on leasehold reform.
Our committee, chaired by Clive Betts (Labour, Sheffield South East), took evidence from all interested parties: companies with stakes and dealings, tenants and customers, and parliamentarians with an interest in the subject.
The enquiry was a long time coming and the committee sent a letter to James Brokenshire in July 2018 advising that our collective interest in the subject had shifted from concern to genuine desire to reform the policy area, thus we commenced the inquiry.
What united the committee – coming from a mix of political and professional backgrounds – was our shared sense of injustice at how people have been treated. We came across some genuinely shocking examples of bad practice, poor conduct and questionable ethics in how people were dealt with by industry professionals.
The report which was finally published led to my question to the Prime Minister and I stand by the closing remark: voluntary codes have not, cannot, and will not correct this situation.
For too long customers have been ripped off, and the overall effect has led to a situation whereby the market is dishonest, distorted, and unfair to the customer. In the most extreme cases some freeholds have been sold without the leaseholder even being notified – literally sold from under them.
Less extreme cases, yet still appalling, include ground rents being doubled and permissions for minor improvements arising to staggering charges. All in all, this is a sorry state of affairs.
Our report made recommendations which we believe would restore parity and make the market fairer for consumers. A few examples of these include:
· We urge the Government to ensure that commonhold becomes the primary model of ownership of flats in England and Wales, as it is in many other countries.
· The Government should require the use of a standardised key features document, to be provided at the start of the sales process by a developer or estate agent, and which should very clearly outline the tenure of a property, the length of any lease, the ground rent and any permission fees.
· The Government must also close the legal loophole allowing developers to sell freeholds to subsidiary companies, which means leaseholders lose out on the opportunity to purchase the freehold at whatever price it is offered to the new freeholder.
· The Competition and Markets Authority should investigate mis-selling in the leasehold sector within the next six months and, where appropriate, make recommendations for appropriate compensation, with the option of enfranchisement.
· The Government should undertake a review within the next six months to determine whether existing routes to redress are satisfactory or whether a new scheme should be established.
· The Government should invite and fund the Law Commission to conduct a more comprehensive review of leasehold legislation, incorporating a full review of the Commonhold and Leasehold Reform Act 2002, the Landlord and Tenant Act 1987 and other relevant legislation.
· We recommend that the Government should revert to its original plan and require ground rents on newly established leases to be set at a peppercorn (i.e. zero financial value).
Our report is just what a problem like leasehold reform needs: bold and daring ideas which cover new ground. We now urge the government to follow our lead, listen to the evidence, and legislate accordingly.