Don’t trust developers to put right the wrongs that they created, Clive Betts tells government

Commons debate, July 11 2019

Government is being too trusting of developers who created the leasehold scandal, according to Clive Betts MP, the Labour Sheffield South East, who chairs the Communities Select Committee.

Mr Betts made the remark on July 11 in a Commons debate on the government response to his committee’s devastating report on the leasehold sector.

Mr Betts was referring to developers offering to amend doubling ground rents to rise in accordance with RPI in vague and unscrutinised redress schemes.

He said:

“Frankly, we are concerned about the level of trust the Government are placing in the same industry that created the onerous leases in the first place. The Government do not go far enough.

“Often the [developers’ revised ground rent] links to the retail prices index can lead to high figures. Often deals do not apply to the resale of property and of course they do not cover permission charges or any of the arrangements that have been arrived at. So we certainly want to go a lot further than that.”

Mr Betts’ speech was a strong defence of his all-party committee’s report, and critical of government – while praising both the Leasehold Knowledge Partnership and the National Leasehold Campaign Facebook group.

Mr Betts noted the dithering over setting new group rents to zero – government flirted with the idea of a minimal £10 ground rent (to which the Welsh government curiously favours) – and not much action on commonhold.

Stop stooge solicitors

“We also called for a ban on inducements for purchasers to particular solicitors.

“The government have not gone that far; they have talked about better redress, greater transparency and asking the regulators to be more proactive. We do not think that goes far enough.”

Competition and Markets Authority

Leaseholders will be pleased to learn that Mr Betts has met with the former MP Lord Andrew Tyrie, the chair of the Competition and Markets Authority, which is investigating the leasehold mis-selling scandal.

“He is committed to the inquiry that he has announced,” Mr Betts told the Commons. “He wants to do something.”

Retrospective action to put past wrongs right

“We have also called—these are important issues—for onerous ground rents and onerous permission charges to be dealt with retrospectively. They both need addressing. We could do it in the human rights legislation. We took detailed advice and evidence on this. Again, the Government’s response seems to be, “Well, voluntary deals are being done with various developers about this.”

Mr Betts could only raise a small part of the findings of leasehold sharp practice exposed by his committee, but he found time to condemn “scandalous” permission fees imposed by freeholders and management companies:

“£3,500 to put a conservatory in, before starting with the cost of the conservatory; £68 for a doorbell; £100 to answer an inquiry. These are outrageous fees. They are not justifiable. They are unfair and scandalous, and action needs to be taken on them.”

Mr Betts also raised the issue of unfair legal costs at the property tribunal.

“We also recognise the Government’s commitment in most cases to ban the freeholder collecting from leaseholders the costs of going to a tribunal when the freeholder loses.

“That is an important step. It is frankly outrageous that someone can win a case in a tribunal and then find that they are paying the price of winning through extra lease and service charges.”

Finally, Mr Betts condemned the Government for being “a bit mealy mouthed on forfeiture, even though it is completely wrong and unjustifiable”.

Forfeiture

“It might not happen very often, but the ​threat of forfeiture forces many leaseholders not to challenge and to back off, so we need action there as well.”

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LKP comment

This was an excellent speech by a very experienced MP who recognised a complete scam when he saw it. To their credit, so did the rest of the Communities Select Committee.

Their report is a vindication of everything that the Leasehold Knowledge Partnership has been campaigning for since it was founded in January 2012.

Thank you, Mr Betts.

Full debate here: Leasehold Reform 2019-07-11