… And veteran Clive Betts, chair of Communities Select Committee, leads laments to absence of leasehold in Queen’s speech
By Harry Scoffin
Bob Blackman MP raged at the self-serving nature of third-party freeholders in the Commons earlier this week.
In a debate on the Queen’s Speech, the Harrow West MP demanded that “freeholders take responsibility” for the cladding scandal.
He also suggested that the government should not wash its hands of leaseholders living in high-rise blocks with deadly non-ACM cladding, saying that:
“It is absolutely repugnant that leaseholders could end up paying the cost of making the buildings safe.”
At present, the government has only pledged funds to remediate privately-owned residential buildings where there is Grenfell-style cladding.
The intervention is notable coming from a Tory MP.
A member of the Communities Select Committee, Mr Blackman has inquired into building safety post-Grenfell and the leasehold sector.
He will be aware that under landlord and tenant law, freeholders – in spite of being the self-proclaimed “long-term custodians” – are not liable to pay a penny towards the upkeep of their buildings. Cleverly-worded leases with variable service charges usually indemnify freehold landlords against running costs.
In many cases, the original developer has no responsibility for the site, having sold on the freehold to an investor years ago.
And no law can force freehold owners to pay for the removal of lethal cladding without affecting their property rights … and being subject to a successful legal challenge.
Only the state, which for years has presided over a deregulated construction and building inspection process, can come to the aid of leaseholders facing financial ruin to pay to remove cladding off buildings that are not even theirs.
The government’s confused handling of the cladding scandal – rescuing leaseholders in buildings with Grenfell-style cladding while leaving those in equally dangerous blocks to fight it out with their shadowy freeholders (sorry, ‘building owners’) – only adds to the sense that England’s ancient property laws have allowed an asset class to sneakily insert itself into ordinary people’s homes.
The case for replacing leasehold with the more transparent and democratic alternative of commonhold is now overwhelming, having received a boost from the cladding crisis which has confirmed that third-party freeholders are utterly pointless.
Cladding crisis reveals why freeholders are an impediment to any solution
Mr Blackman was joined by Communities Select Chair Clive Betts, who used the debate to register his “disappointment” at the apparent stalling of leasehold and commonhold reform by the Boris Johnson administration.
He said that although government has pledged to take action on a prospective basis, “we have still not got a clear commitment to legislate for existing leaseholders who have been mis-sold leases and ripped off by service charges and other permission fees. That is simply not acceptable.”
Mr Betts said:
“I want to raise one or two other issues that are not in the Queen’s Speech – I am disappointed about that – on which the Select Committee has asked for Government action.
“Leasehold reform is a major issue across the House; 700 pieces of evidence were submitted to our Select Committee inquiry. The Government’s intentions are set out for new properties, particularly for new houses not being leasehold, and restrictions on service charges and other costs on leasehold flats. However, we still have not got a clear commitment to legislate for existing leaseholders who have been mis-sold leases and ripped off by service charges and other permission fees. That is simply not acceptable.
“I think that we produced a very good Select Committee report, which was widely welcomed by Members across the House. It is disappointing to see no reference in the Queen’s Speech to leasehold reform.”
Justin Madders MP, deputy chair of the All Party Parliamentary Group on leasehold reform, also weighed in.
The Labour MP for Ellesmere Port and Neston criticised what he saw as a disconnect between the frenetic social media activity of Communities Secretary Robert Jenrick and his department that preceded the Queen’s Speech and what actually ended up in the legislative programme:
“Let us not forget about the leasehold scandal. Although the Government said a lot in the build-up about what they would do on leasehold reform, with heavy social media plugging, the heavily trailed policies of peppercorn ground rents and a ban on leasehold houses did not feature in the Queen’s Speech.”
He pressed for the release of leasehold prisoners in unsellable houses with punitive ground rent terms, who he said made their purchases based on “a paucity of information at best or, at worst, as part of a systematic deception” by the volume housebuilders.
Mr Madders also rehearsed the cross-party argument for urgent leasehold reform, to appeal to a government with a majority of minus 43:
“The Westminster Hall debate last month revealed a great deal of support across the House to do something. I would have hoped that the governing party, which does not have a majority, would want to show that it is on the side of ordinary people and that it can make a difference to people’s lives.
“There is a high degree of consensus on the way forward, and legislation is needed to help existing leaseholders out of the vice they are in.”
Can LKP esatabish when the Law Commission will be issuing a final report (promised “later in 2019”) and exactly when will CMA follow suit.