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9.13 pm
Mr. Henry Bellingham (North-West Norfolk): I am not a housing expert, and I represent a rural constituency where problems with leasehold are rare, as is demand for leasehold reform or commonhold. However, I have followed this issue in the past. I start by declaring an interest: I am a director and shareholder in a property company that owns mainly commercial but some residential property. However, none of it is let on a long lease.
Right hon. and hon. Members on both sides of the House have said how complicated, technical and detailed much of the Bill is. Why, then, is there a programme motion? There is so much agreement between the parties; everyone is agreed that we need to get on with considering the Bill and that it is vital to get the technical detail right. I should have thought that this was the last Bill to be timetabled. I shall certainly vote against the programme motion this evening because it is a disgrace to curtail debate on this important Bill.
Obviously, there have been several Bills on leasehold reform in the past, and I well remember the Leasehold Reform, Housing and Urban Development Act 1993, which was passed during the last Parliament of which I was a Member. At the time, I had serious reservations about the way in which the Act disrupted contracts that had been freely entered into. I was sympathetic to the argument that several large London estates were able to provide absolutely first-class planning and management policies that were beneficial to the wider environment and positive in terms of planning generally.
I entirely accept that, although the best landlords in London and other cities were excellent, the worst were quite appalling. That point has been made by several hon. Members, especially by Labour Members. In particular, in a very detailed and expert speech, the hon. Member for Brent, North (Mr. Gardiner) outlined many of his concerns about some of the antics and behaviour of the worst landlords in this country. However, the world has obviously moved on, and the large landlords in London have certainly adjusted their strategy to accommodate the current legislative framework.
I welcome the fact that the Government are moving forward cautiously on the leasehold reform front. Without doing anything too dramatic, they are building on the
previous Government's reforms. I also welcome the fact that leasehold will not be abolished. Like the Lord Chancellor, I very much hope that leasehold will wither on the vine and that the vast majority of new developments will indeed use commonhold.I welcome the commonhold provisions. To allow those who occupy property the right to own it absolutely and to manage the common parts through a common association must make sense. That reform is long overdue, and it obviously draws on patterns of land ownership in the United States, New Zealand and Australia. Perhaps one of the advantages of the lengthy delays in introducing the Bill is that we have been able to draw on the best of breed elsewhere.
I also welcome, with one reservation, the right to manage. It makes sense for tenants to be given the right to manage their buildings. They will not have to prove any shortcoming on the part of the landlord, and they will be given a chance perhaps to do a better job of managing their block or building. That is why the Opposition support the right-to-manage proposals, although some of the detail needs to be considered very closely.
I am sorry that the right-to-manage provisions exclude council premises, where the landlord is the local authority. Some 12 per cent. of right-to-buy sales have involved leasehold flats, and it is a great pity that public sector tenants should be excluded from the right-to-manage provisions. We need a new framework so that people can get on and manage the premises in which they live. That will always be a difficult job.
A great deal of research has shown that, very often, when people collectively buy the freehold of their flats and manage the building, many problems set in, a lot of disillusionment arises and many disputes take place. As one Lord said, we cannot legislate for people to love their neighbours, but we can legislate to make it easier for them to get on and co-operate. I very much hope that those provisions and especially the regulations and the manual of guidance will allow that to happen.
My final point is technical and relates to mixed developments. There is obviously a tendency for planning consent to be granted for new developments on condition that they include social housing. Great emphasis has rightly been placed on including affordable housing, housing association homes and council housing in housing developments. Planners often rightly insist on mixed tenure, which helps key workers in some cases. How much more preferable that is to the old-fashioned segregation of council housing from owner-occupied housing, which all too often led to the growth of large council estates, concrete jungles and the resulting social polarisation.
Mixed tenure presents a big challenge for the commonhold and right-to-manage legislation. Traditional tenants—they are not long leaseholders or commonholders—may live in blocks of flats or dense developments that are made up predominantly of owner-occupied housing and they will also have views on how the block or housing development should be managed. Those tenants will have priorities and ideas, but their views cannot be taken on board under the Bill as it currently stands. I hope that the Minister will consider that point and accept the crucial need to develop sustainable forms of governance. If we can develop them, commonhold and the right to manage will play an important part in the urban renewal in which the Government believe.
I believe strongly in urban regeneration and I do not want any more greenfield sites to be developed than is strictly necessary. I want much more development to take place on brownfield inner-city sites such as the Nar-Ouse regeneration area scheme—the NORA scheme—in my constituency and the Anglia Canners scheme in King's Lynn. However, we need a framework for regeneration and, if the Bill goes some way to creating it, it might do a good job and more development might take place on brownfield sites.
9.21 pm
Shona McIsaac (Cleethorpes): Given the time available, I shall concentrate on one aspect of the Bill that has not been explored in the debate—its proposals on leasehold houses. There has been much discussion about commonhold and flats, but half the leasehold properties in this country are houses that are completely different from the flats on the market in London. Such houses are often in industrial areas where property values are very low.
Very few clauses in the Bill will change the legislation for houses, but I hope that we shall be able to consider those changes in more detail in Committee. However, I am pleased that the period for the residence test is being reduced from three to two years.
When a leaseholder passed away, the right of the family to purchase the freehold did not exist, so I welcome the changes that the Bill will make to allow families to enfranchise. In many cases in my constituency, families lost the home in which they grew up when the parent who was the leaseholder passed away.
The extension of the lease by 50 years is probably one of the most pertinent issues in the Grimsby and Cleethorpes area, where thousands of leasehold houses were built in the early 20th century. Given the nature of the area, many elderly people cannot afford to buy the freehold of their property. I have said to Ministers on previous occasions that many of the prices quoted are incorrect, but many people simply say, "I can't afford that." They therefore extend the lease not realising that they are like tenants and the house goes out of the family when the leaseholder passes away. I welcome the fact that people will be able to enfranchise when they extend the lease for 50 years.
I understand from my inquiries that the cost of enfranchising will be assessed on the special valuation basis and will include marriage value for lease extensions for houses. In effect, that may mean that the landlord will win yet again, so I would like that issue to be considered in detail. The original valuation basis could be used, but it might also be possible to have a lease extension of 99 years because that would take marriage value out of the equation.
I want briefly to mention the costs that are quoted in my area when people apply to buy the freehold of their houses. Such people have often paid their mortgages and everything else that the properties have required over the years. Leasehold houses are different from leasehold flats in that there is no obligation on the freeholder to do anything to such properties.
An average three-bedroom terrace house in north Cleethorpes can be bought for £20,000 to £25,000. I know that that is very different from the situation in the south-east. People in my area are being quoted prices for
conversion that are almost the value of the property. I came across one case in which the leaseholders were quoted £20,000 to buy the freehold of a property worth £30,000.I have been told that special valuation basis and marriage value should not apply to small Victorian terraced properties in my constituency. However, they are being quoted by freeholders time and again. The complexity of the mathematics, which other hon. Members touched on, in working out the prices means that leaseholders do not realise that they are being taken to the cleaners. As going to a leasehold valuation tribunal is daunting and expensive, no one in my area has been to one to establish a price. Unscrupulous landowners and landlords keep fleecing people. They simply open the cash tills, and that has to end.
We have to remember that leaseholders are home owners. That is how they perceive themselves. I hate using the word "tenant" for people who have paid a mortgage, funded all the home improvements and paid every bill over the years. In the recent census, such people put themselves down as home owners, not tenants. In any other legal form that they fill in, they are home owners. They have paid for everything and it is simply wrong that the law will still make them pay a bounty to remain living in their own homes. The freeholder has already benefited. I am afraid to say that the Bill will allow freeholders of leasehold houses to continue to benefit when all the money has been paid by the home owner, not the person who owns the freehold. That has to change. We have to stop people being fleeced. They have a right to live in a home for which they have paid.
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