Leasehold Reform (Ground Rent) Bill [Lords]

I beg to move, That the Bill be now read a Second time.

As hon. Members may know, I have long championed a root and branch comprehensive reform of our leasehold system. It has been a long journey to get here from my private Member’s Bill—Ground Rents (Leasehold Properties) Bill—to try to overhaul the regulations on ground rents. It is particularly gratifying to be standing here today as the Minister responsible for this hugely important legislation.

The Bill will make home ownership fairer and more transparent for future generations of leaseholders. We will do this by reducing the ground rent on new residential long leases where a premium is paid to a peppercorn. I am sure that this change, which will benefit thousands of future leaseholders, will be welcomed right across the House.

I lobbied for an exemption for the retirement living industry, which was granted and then withdrawn in January this year. Why was that?

I appreciate my right hon. Friend’s strong lobbying on this matter. I think the Government decided that it was appropriate to treat all leaseholders the same and therefore we made that change, although we did allow an extension in the introduction of that to April 2023.

The bit I do not understand is why we have leasehold at all. It is just preposterous nonsense, is it not? It is a feudal relic. Would it not make far more sense to have some kind of commonhold situation for flats, which is what they have in nearly every other country in the world and, I think I am right in saying, also in Scotland? Does that not make far more sense? We can then just get rid of leasehold completely.

I thank the hon. Gentleman for his intervention. I wonder why, in the brief periods when Labour has been in control, it has not done so itself. I guess English law is pretty complex, so it would not be so straightforward to simply withdraw it on the basis that he suggests. Perhaps when Labour is in power again at some point in the distant future, it will be able to return to this matter.

The Minister is being generous in giving way. He may not wish to be as radical as my hon. Friend the Member for Rhondda (Chris Bryant) is suggesting, but does he share my concern at some of the greedier developers, who are insisting on a year-by-year, annual increase? For example, ground rents are going up and up in New River Village in Hornsey. I have to name the Berkeley Group, because it really should know better. It has done very well, including throughout coronavirus, given all the leg-ups that it has had from the Government through various coronavirus packages, and it really should not be demanding multiples every year from my poor old leaseholders.

I largely agree with the hon. Lady, not least because the ten-minute rule Bill to which I referred, which I brought to the House when I was a Back Bencher, completely endorsed her points. It is unfortunate that some people include such egregious terms in ground rents.

Does the Minister agree that this issue is about not only ground rents, but the admin fees that are often associated with any minor changes that the owner of the property wants to make? A lot of these properties are also linked with extra charges for management fees for the land and other things. The levels of charges placed on leaseholders are becoming totally unacceptable.

I do not want to jump forward several pages in my speech, but the right hon. Gentleman is predicting—or at least pointing to—the fact that we have identified this problem and have ensured that when we reduce ground rents to a peppercorn, people will not be able to cheat by introducing associated management fees and other charges. If he is looking for further changes, the second part of our seminal legislation, when it comes in due course, will no doubt satisfy his needs.

The starting point for this legislation has to be our shared recognition that for many people, to be a leaseholder is also to be a homeowner, and we are clear that homes that have been bought should be theirs to live in and enjoy, and they should not be treated as cash cows for third-party investors. This Government are on the side of homeowners, which is why in our manifesto we committed to introduce this important legislation.

Hon. Members will be well aware of the problems that many leaseholders have faced in recent years, including, as pointed out by Opposition Members, spiralling ground rents and onerous conditions that have turned the dream of home ownership into a nightmare for some leaseholders. This Bill is the first of our seminal two-part legislation to reform and improve the leasehold system. Further legislation will follow later in this Parliament to continue to address the historic imbalances in the leasehold system.

I pay tribute to the Minister for the work that he has done so far. He may know that constituents on Steinbeck Grange in Warrington South have been calling for changes for almost 10 years. Will he give an update on the current Competition and Markets Authority investigation, which is vital to people living in Warrington?

The work of the CMA has been pivotal so far in already changing the behaviour of a number of significant developers. I have spoken to it recently; further work is ongoing and I hope that it will have further successes in the future. My hon. Friend is completely right to raise that point.

Both this Bill and the wider leasehold reform programme have been informed by consultation. I thank those present here today, including the Opposition Front Benchers, who have taken the time to discuss the issue. I look forward to further discussions over the coming weeks and months.

The Bill has a specific focus: the ground rent in future long residential leases. Some existing leaseholders face substantial difficulties, including costly enfranchisement, a lack of transparency and burdensome lease terms. Escalating ground rents in particular can reach unaffordable levels and make some properties difficult to sell. That is not right, which is why we have asked the Competition and Markets Authority to conduct a thorough investigation into potential mis-selling and unfair terms in the leasehold sector.

I have met many people who were told by the company that sold them their property that they would be able to buy the lease, only to find out, when they inquire to buy it, that it has been sold on to some financial institution. Does the Minister accept that point?

Once again the right hon. Gentleman points out an egregious and unfortunate practice that hopefully we will be finding ways to address in future.

That prompts the question of what proposals the Minister may have to enable leaseholders to enforce the purchase of freeholds from such companies. Does he have plans for that?

As my right hon. Friend will know, unfortunately I am not the Secretary of State, much as I would like to be. [Interruption] Not yet, anyway. It is best to leave the fine detail of the formation of future legislation to the Secretary of State to decide. However, I look forward to discussing the matter further with my right hon. Friend as we progress.

I have listened to my right hon. Friend the Member for Alyn and Deeside (Mark Tami) and others. The Minister is waiting for the Competition and Markets Authority report, but is he prepared to say, even before that report has concluded, that on the basis of all the evidence we are hearing from right across the House, what we are seeing is nothing more than a financial scam from a bunch of greedy speculators?