Leasehold Costs

5. What steps she is taking to help tackle increases in leaseholders’ costs.

The Government recognise the considerable financial strain that opaque and unfair fees and charges are placing on leaseholders across the country. As my hon. Friend will know, on 21 November last year, I made a written ministerial statement setting out the steps the Government intend to take to provide leaseholders with greater rights, powers and protections over their homes by implementing those reforms to the leasehold system already in statute. We will also progress the wider set of reforms necessary to end the feudal leasehold system for good.

I welcome this Labour Government getting a grip on the feudal racket that enslaves leaseholders to ever-rising management fees and ground rents, making it impossible to pay and impossible to move. Will the Minister provide transitional arrangements to cap those costs while ensuring that all new developments—even developments that are soon to enter the planning stage, such as the one at York Central—can make the transition to commonhold as soon as the law changes?

The Government have no plans to cap service charges for tenants and leaseholders, given that would prevent necessary funds from being raised for legitimate purposes, but we do plan to tackle unregulated unaffordable ground rent provisions through legislation. As the White Paper published today makes clear, we want to make the process of converting to commonhold as easy as possible, and we will set out proposals in the draft leasehold and commonhold reform Bill, which is to be published later this year.

I welcome the Government’s announcement today of changes to leasehold and the introduction of commonhold, but thousands of leaseholders across the country are still crippled by both high service charges and failing delivery. I am sure that the inboxes of Members across the House are full of complaints from constituents, particularly in relation to FirstPort management company. What can the Government do to hold individual management companies accountable for the services they deliver to our residents?

As the hon. Gentleman will know, we intend to bring into force this year the provisions of the Leasehold and Freehold Reform Act 2024, which is designed to drive up the transparency of service charges so that leaseholders can challenge them more easily if they consider them to be unreasonable. We intend to strengthen the regulation of managing agents, imposing minimum standards in relation to, for example, qualifications. I would say to any managing agent—and I know that Members across the House have been holding them to account—that they should improve their performance in the light of the changes coming forward in the near future.

I call the Chair of the Select Committee.

I thank the Minister for his comments over the weekend—we really do need to ensure that we ban new leaseholds—but, as he knows, leaseholders have been promised this many a time before, and many will be going to sleep tonight with only a little sigh of relief because those bills will continue to come. The Minister mentioned the White Paper; can he tell us what the status of existing leaseholders will be when the measures to end leasehold are finally introduced?

Let me explain, as simply as I can, what we want to do. As the White Paper makes clear, we will ban the sale of new leasehold flats so that commonhold becomes the default tenure, and we will ensure that the process of conversion is as simple as possible so that those leaseholders in existing leasehold blocks who want to make that change can do so as simply as possible. But we have to ensure that those who do not want to make that change have the powers, rights and protections in relation to their homes that will give them the immediate relief that my hon. Friend talks about.

What steps are the Government taking to help those leaseholders with doubling ground rents who now feel trapped and unable to remortgage or sell their properties without meeting the massive costs of changing their leases, which, as I know from personal experience, can amount to five-figure sums?

I well recognise the problem. As the hon. Gentleman will probably know, historically ground rents were nominal sums—often peppercorn sums—but over the past 20 years we have seen a very different system develop. We have made a commitment, which we will honour, to take action on unregulated and unaffordable ground rents through legislation, and we will provide further details in due course.