MPs Debate and Fleecehold

MPs in parliament

On Thursday 11th July MPs from both sides of the house urged the government to act on the recommendations of the select committee on Leasehold reform. In spite of its title this committee did also consider fleecehold and it is clear from what MPs are saying that there is very much greater awareness of the exploitative nature of this model too. These quotes are taken from the debate as published by They Work for You, where you can read the full debate.

Well done Hornets – all your MP briefings are paying off!

Quotes from the Debate:

Sir Geoffrey Clifton Brown , Cotswolds:

I have constituents in the Gallery who have had equal and similar problems with scams relating to freeholds. Freeholders buy their properties with a covenant—many covenants in some cases—that contain unquantified and unspecified obligations relating particularly to the common parts of their estate. When pressed, the smart salespeople in the smart furnished flat or house on the estate often say, “Well, it’s only a small amount. It will amount to a few hundred pounds.” However, when the buyer gets their first bill, they suddenly realise what they are locked into. In some cases, the charges are so high, as they can be with leaseholds, that the properties are effectively made unsaleable.

I pay great tribute to Amanda Davies from Burton Chase and Mike South in Victory Fields for bringing some of these anomalies to me. Like the hon. Member for Sheffield South East, I have written to the Competition and Markets Authority with a draft of how my constituents think the current system is being mis-sold. I hope that the CMA will take close notice of that.

Rosie Cooper, W Lancs

But it does not end there, because those who do engage and who manage to buy can find that they are buying not the freehold but a virtual freehold, whereby they have simply bought out the ground rent. Many of the conditions remain, with owners still being charged for work to be done, except now they have fewer legal rights to contest any excessive amounts because they entered into the freehold contract willingly and the amounts were unspecified.

Bob Blackman, Harrow East

On service charges, sinking funds, estate management, enfranchisement and forfeiture, it is not good enough for the Government just to lean back and say, “We note what you’ve said and we will consider what needs to be done.” We need legal action. I suggest that when the Law Commission and the CMA report, we come forward with a substantial piece of primary legislation to correct this market, as that is what will be needed. Unless we commit to doing that right now, these developers will carry on fleecing their customers.

I thank the hon. Gentleman for his contribution thus far. One aspect that has not come out during this debate, however, is the excuse used by developers about the use of common areas that need to be built on or utilised for the common purposes of all the houses in the development. Does the hon. Gentleman agree that that scandal needs to be exposed as well?

Marcus Jones, Vice Chair Cons party

We also need to make sure that we do not have leasehold houses; there is no necessity for leasehold houses. I know there is a cost involved, but we should move to a system where very little is provided by a managing agent and a tenant. People should get value for the council tax and we should go back to more of an estate being adopted and paid for by the local authority. People can then hold their local council to account if they are not getting what they are looking for.

Justin Madders

The hon. Gentleman is absolutely right to say that that is used as an excuse. When I was growing up, the common areas were usually run by a body called the local council, and rates or council tax would be paid to cover the costs. We need to look at the way that has been developed in recent years. Now, it is all about maximising profit.

Sarah Jones, Shadow Housing Minister On the governments lack of action in general:

We think the formulation of acting “whenever parliamentary time allows,” after nearly 10 years of Conservative government, is unacceptable. As Sir Geoffrey Clifton-Brown said at the start of the debate, this feudal system has been in place for around a thousand years. After a problem has existed for a thousand years, parliamentary time should allow for us to act. As my hon. Friend Justin Madders said, Labour Members and Conservative Back Benchers would support such legislation if it were introduced by the Government.

Sadly, Heather Wheeler’s response as Housing Minister did nothing to add hope that there will be any robust action from the government – but the pressure is on!


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