Leasehold Reform (Hansard, 17 March 1999)

§ Mr. Gareth Thomas (Clwyd, West)

I beg to move, That leave be given to bring in a Bill to amend the law with regard to leaseholds in relation to housing for older people; and for connected purposes. The case for reform of leasehold law is overwhelming and is recognised by many, not least the Government. Leasehold law embraces a feudal system and is a relic of the past. It creates a gross imbalance in terms of power and control between the rights and responsibilities of leaseholders and landlords. It is a system which is susceptible to grave abuse, and many hon. Members will be familiar with the many examples of exploitation, especially of older people in leasehold accommodation. Such abuse includes excessive management charges, poor-quality services and spiralling costs.

I remind the House that, in England and Wales—it is an English and Welsh problem—some 2 million homes are held under leasehold tenure. It is not just a London issue. A reform process has been under way in the House for many years, and many hon. Members, especially from Wales, have been involved. The Government have acknowledged the need for comprehensive reform of leasehold law, and their consultation paper has been widely welcomed. I also welcome the presence of the Under-Secretary of State for the Environment, Transport and the Regions, my hon. Friend the Member for Greenwich and Woolwich (Mr. Raynsford). He is an acknowledged expert in this area and I hope to have a constructive discussion with him on the issues that I shall raise.

The consultation paper does not go far enough in one vital area—the provision of leasehold retirement housing for older people. That area is capable of statutory definition. Leasehold retirement housing consists of blocks of purpose-built flats with communal facilities sold on long leases with age-restrictive covenants.

There are about 100,000 such housing units, many in retirement areas such as north Wales, including my own constituency. The hardship caused to holders of long leases by the defects of the present system justify special legislative consideration. I shall enumerate some of my reasons for believing that to be so.

Older people are vulnerable to financial abuse. Many live on fixed incomes and are less able financially to move elsewhere. Many move into purpose-built homes to escape the headaches and hassles of keeping larger homes. Many are unwilling to rock the boat. The average age of people who live in retirement leasehold properties is about 78.

There has been rapid growth in this sector of the housing market. Elderly people are particularly reliant on services provided by landlords or management agents, which are one attraction of this form of housing. Particular problems arise from spiralling service charges and lack of accountability, especially for the management fee element of the service charge. Despite glossy brochures and sophisticated promotional devices that help them to decide to move into such properties, people often feel that they do not ultimately get what they had bargained for. That causes great concern, particularly among older people who find services deteriorating.

1140 Elderly people find leasehold valuation tribunals, which were meant to provide some redress in cases of dispute with landlords, inaccessible and unaffordable. I know of numerous examples of hardship. One of my constituents has encountered a string of problems over many years with the quality of service: rooms have been left dirty; house managers' hours have been cut; and there has been no cover at weekends. Much distress has been caused to residents, and my constituent feels powerless to do anything about it.

My Bill will address that mischief in three ways: first, by putting a cap on the management fee element of service charges; secondly, by enacting the right-to-manage provisions contained in the consultation paper to which I have referred; and, thirdly, by making leasehold valuation tribunals more accessible.

I propose that the cap on the management fee element should apply to all public and private retirement leasehold homes. I intend to incorporate the formula for leasehold schemes for the elderly, which applies to no less than 25 per cent. of retirement leaseholders. I disagree with the preliminary view in the White Paper that the leasehold schemes for the elderly formula should be scrapped. Many leaseholder organisations believe that it is an important yardstick, and that it should be extended, not curtailed.

Average service charges amount to £1,400 a year, a large element of which is the management fee paid above staff costs and other disbursements capable of verification. The problem is that the management fee is not provable by receipts or paperwork, which creates a temptation for hard-headed landlords to increase it willy-nilly.

The Bill will enact the right-to-manage provisions contained in the consultation paper. That will give substantial extra leverage to tenants. That right should apply across the board, to both registered social landlords and private landlords. I remind the House that no less than 50 per cent. of retirement leaseholds are run by housing associations or their subsidiaries. Housing associations have moved on from the early days. Their work is to be welcomed. Of course, they are charitable organisations with charitable objectives, but they have become more hard-headed businesses, and there is no reason why there should not be a level playing field between the private and the public sectors.

The Bill would also give the right of first refusal to registered social landlord tenants, as well as the right to appoint a new manager. Those are lacunae in the present system as it relates to leaseholders of registered social landlords.

Finally, the Bill would make the leasehold valuation tribunal system, which tends to be rule bound, more accessible. I would eliminate the fee of £500, make representation available and facilitate alternative dispute resolution.

The form of housing to which I have referred presents an attractive and viable option for those who want to be independent for as long as possible. Better regulation would improve confidence in this sector of the housing market. It would also provide valuable protection for the elderly. I commend it to the House.