Housing and Planning Bill

Written evidence submitted by the Campaign for the Abolition of Residential Leasehold (CARL) (HPB 58)

Proposals for amendments to the Housing and Planning Bill

End the leasehold homes scandal

1. The serious problems facing the country’s six million leaseholders must be addressed in the current Housing and Planning Bill now before Parliament. The extensive abuse of leaseholders by landlords and managing agents up and down the country has been well known for many years. This abuse is assisted by weak legislation combined with an intimidating and costly legal process facing leaseholders. A recent report by the Competition and Markets Authority said that leaseholders are not aware of the full extent to which they are being overcharged and defrauded because of the lack of transparency over service charges. There are five key reforms that are urgently needed in order to address the serious shortcomings of the leasehold system. It is vital that MPs insert amendments into the proposed legislation in order to put an end to the abuse that leaseholders face.

2. Set a date by which no more new residential leases can be sold – the only forms of tenure available from then on would be freehold in the case of houses, commonhold and cooperative ownership in the case of flats. This would enable those buying their flats to own and control the common parts of their blocks, and bring our system of home ownership into line with the majority of other countries. Leasehold tenure hardly exists at all outside of England and Wales.

3. Abolish the forfeiture rule since this move would limit the scope for landlords and managing agents to cheat leaseholders over service charges. The existence of forfeiture encourages landlords to overcharge leaseholders in the hope that they can then forfeit the lease and make a huge windfall gain.

4. Scrap the costly and intimidating residential property tribunal system, which is strongly biased against leaseholders, and replace it with a fully independent ombudsman scheme – funded by the industry but not controlled by it.

5. Change the valuation rules so that leaseholders are able to acquire their freeholds at a price reflecting the respective contributions of the leaseholders and the freeholders to the construction and maintenance of their buildings. Freeholders contribute nothing at all, whilst the leaseholders pay for everything. In the Republic of Ireland leaseholders are able to acquire their freeholds at a fraction of the market price; in the United Kingdom leaseholders are expected to pay considerably more than the market price.

6. Set up a specialist leasehold crime unit to deal with the fraud and corruption routinely being practised against leaseholders. There is serious malpractice taking place in the industry – including bid-rigging, falsification of invoices for work not done, theft of reserve funds, and excessive charges for minor administrative work. There are often huge mark-ups on buildings insurance.

November 2015

Prepared 17th November 2015