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News | Published May 28 2019

Mike Amesbury MP: The next PM must address "leasehold scandal"

Following his question during last week's PMQs, we spoke to Mike Amesbury MP about leasehold reform. Mike is Labour MP for Weaver Vale in the north west and a former member of the Housing, Communities and Local Government Select Committee. This is the third article in our series on leasehold reform and follows Bob Blackman's feature and the reaction of businesses to these calls for reform

"There aren’t many issues that command cross party interest and agreement in parliament at the moment – and given that we have just seen the Prime Minister resign, there was certainly not much that could have positively linked Theresa May with the concerns of many of her backbenchers.

"The leasehold scandal however is an issue that goes beyond party political boundaries – indeed politicians of all stripes will have likely knocked on a leasehold home over recent weeks during campaigning in either local or European elections.

"In a political sense, it’s surprising and disappointing that I have had to directly raise unfair leasehold practices with Theresa May three times.

The leasehold scandal however is an issue that goes beyond party political boundaries  

"This lack of action from the government is far more than just 'disappointing' for the thousands affected however.

"It’s scandalous, distressing, and for many means that their dreams are increasingly turning into nightmares.

"People and families moving into dream homes are facing massive unexpected bills for basic alterations to what they believed was their own bricks and mortar. Others are trapped and unable to sell a home that they had believed was their own – but now feels like anything but - due to legal chicanery and sometimes outright profiteering.

"Back in 2017, as a member of the Housing, Communities and Local Government Select Committee, I was pleased to be able to help secure an inquiry into a practice that has affected far too many of my constituents and many more beyond.

"It’s a national concern. As of last year, an estimated 47,000 new leasehold homes had been sold in the North West since 2010, almost two thirds of which were houses. This is comfortably the highest percentage of any region.

"While there is logic to leasehold and ground-rent arrangements in flats with communal areas, when applied to new build homes, the practice has led to widespread dissatisfaction.

"Homeowners can be locked into contracts which force them to seek permission to make basic alterations or to build extensions such as conservatories, despite no planning permission being required. Sometimes these costs can be eye-watering; £60 to obtain payment receipt, £120 to ask to keep a pet, £3,000 permission for a conservatory and £2,000 for an extension are all examples that have been highlighted to me.

As of last year, an estimated 47,000 new leasehold homes had been sold in the North West since 2010, almost two thirds of which were houses. This is comfortably the highest percentage of any region.

"One of my constituents was even threatened with legal action for displaying a 'For Sale' sign, while other properties were available.

"Some leaseholders have found they’re obliged to pay extortionate ground rents, which double every 10 years, while options to purchase leases are either hugely tricky, pricey, and in many cases they have been sold on to third parties. Owners do not have the same rights to first refusal on purchasing leases on houses as they do on flats, making it a lucrative money-spinner for the companies profiting from it.

"Many didn’t choose their own solicitor – often using the one their housebuilder suggested - and feel they were poorly advised when purchasing their home. I’ve had examples of buyers only being told the day before exchange, or being told that they could purchase it for a reasonable price, after a certain period of time, only for the lease to be sold on or the costs to have changed significantly.

"Survey data suggests almost six in ten leaseholders didn’t understand what being a leaseholder meant until they had already purchased the property and more than nine in ten leaseholders regret buying a leasehold property at all.

"The scandal mustn’t be written off as simply a collection of individual transactions between buyer and seller over which the government had no control. Many such sales were driven by Help to Buy, ultimately public money, and directors of major housebuilders have received massive bonuses while being complicit in such practices.

"The result of this is that for many 'homeowners', such homes are now unsellable as the liabilities are too much for potential buyers, or lenders won’t lend on them.

Survey data suggests almost six in ten leaseholders didn’t understand what being a leaseholder meant until they had already purchased the property and more than nine in ten leaseholders regret buying a leasehold property at all.

"Thanks to the tenacious campaigning of those affected, and particularly the National Leasehold Campaign, what was largely a hidden scandal has at least begun to be recognised by some developers.

"However, even where this is the case, we are seeing barriers and problems.

"Some developers are now offering leases to owners at a reasonable rate – but they are retaining the restrictive permissions costs highlighted earlier, a practice campaigners have termed 'Fleecehold'.

"Others who have retrospectively reduced costs or barriers to buying leases are requiring individuals to waive any rights to future compensation or legal redress for mis-selling. This puts those affected in an unenviable position. Entirely understandably, they want to be able to move on and put what have often been distressing and costly experiences behind them. However, by waiving legal redress, it becomes more difficult for those responsible to be held to account, or for the full truth of what has happened to come out.

"It’s one reason why I believe the responsibility for helping to ensure accountability and fair compensation must rest with the government, rather than those affected.

"So far however, the response from the government has been not nearly good enough.

"As my colleague John Healey has previously outlined, we have had over 50 announcements on leasehold since 2010, including numerous consultations, sometimes on exactly the same issues. Indeed, the most recent government proposals are actually weaker than their previous plans, with a pledge 'to prohibit new residential long leases from being granted' being downgraded to only apply to 'a majority' of new houses.

"Even more concerning is the crux of the reason that I have had to ask the Prime Minister the same question three times.

"We have still seen no firm action for existing leaseholders.

"There has been no action to support home-buyers trapped in unfair leasehold contracts, and Theresa May’s response to my question - that the government will shortly respond to the MHCLG inquiry, falls well short of a guarantee to legislate.

"However, two days on from my most recent question to the Prime Minister, it is now confirmed that that the holder of that office will soon change.

"Anyone coming in to No 10 has a major job of coming up to speed with issues, policies and plans.

"Fortunately for the next incumbent, there is already a clear path to dealing with this particular leasehold injustice.

"Labour have called for the government to lead and legislate to overhaul the system for leaseholders who want to buy the freehold for their properties.

"They should be allowed to buy it at a fraction of the current cost, ideally based on a fair and reasonable multiple of the ground rent or a percentage of the property value.

"But even quicker action is needed for those leaseholders who have been misled about the property they have bought – and I know from speaking to my constituents that simply disregarding it as a failure to understand the small print of a contract is unfair and unrepresentative of the nature and scale of what has often happened.

"It seems clear that there is a systemic problem with the selling of properties on a leasehold basis, and only a full an independent inquiry into mis-selling can get to the truth.

"So far, successive Conservative Housing Ministers have offered warm words on the issue, but little action.

"The new Prime Minister should take the chance to grasp this issue with both hands, make it a priority to tackle it, and take the action necessary to secure justice.

"It seems clear that there is a systemic problem with the selling of properties on a leasehold basis, and only a full an independent inquiry into mis-selling can get to the truth.

"As Labour MP, I hope that shortly we will see a General Election, and therefore that it will be a Labour Prime Minister ensuring that action is taken.

"But failing that, I’m happy to offer some constructive advice to Theresa May’s successor – work with backbenches across the House to appreciate, understand and effectively tackle what my colleague Justin Madders has termed a “PPI like” scandal.

"The new occupant of No. 10 should listen to and meet the incredible campaigners who continue to work so hard to put this issue on the political agenda and get justice for those affected.

"I would be happy to arrange for the PM to meet them in my constituency - or even in their own new home in Downing Street, if they prefer.

"I know many of my MP neighbours and colleagues who have also been campaigning on this would welcome that too.

"Theresa May asked us the same question in Parliament three times – and ultimately realised that a fourth time was a step too far.

"Having asked about leasehold three times and not got a satisfactory answer from the most recent Prime Minister, I very much hope that her successor will speedily take the action needed.

"It would certainly be a step too far for those affected if I, or my colleague MPs, had to raise it once again."


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Mike Amesbury MP
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@@MikeAmesburyMP
May 28 2019

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