Leasehold Reform (Hansard, 18 July 2000)

§ Shona McIsaac (Cleethorpes)

I beg to move, That leave be given to bring in a Bill to enhance and protect the rights of homeowners in purchasing the freehold of their house; and for connected purposes.

To put my case simply, I want to bring in a Bill to stop greedy landowners insisting that home owners—usually pensioners in my part of the country—pay them tens of thousands of pounds simply so that they can stay in their own homes. I wish to thank the chairman of the all-party group on leasehold reform, my hon. Friend the Member for Brent, North (Mr. Gardiner), the Campaign for the Abolition of Residential Leasehold and LEASE—the Leasehold Advisory Service—for their support on this issue.

Two million people live in leasehold properties; there are thousands in my constituency. That is a time bomb waiting to go off. Unless the Government wake up and do something urgently, thousands of pensioners could find themselves on the streets through no fault of their own. Councils will have to pick up the tab, while landowners and landlords will be laughing all the way to the bank.

Many homes built in the Victorian building boom in the 19th century were sold on 99-year leases. Those leases are now up for renewal, and people who have worked hard all their working lives to pay off their mortgages are being asked to fork out vast sums to buy the freehold of homes that they thought they already owned. Residents are being asked to pay up to £30,000 to purchase the freehold of those houses. In Grimsby and Cleethorpes, that is more than the value of the property.

Of course people who cannot afford to buy the freehold can extend their lease by 50 years, but, in doing so, they lose all their rights to buy the freehold and, in effect, become tenants. That is a scam by the landlords and landowners. It is a scandal that those who have contributed nothing for almost 100 years can waltz in and demand from home owners outrageous sums so that they can stay in their own homes. Those landlords and landowners never laid a brick or paid to build the houses. They never paid a penny towards their upkeep and improvement over the years. They never paid a household bill, insurance, the rates or the council tax. Yet they want tens of thousands of pounds from mainly elderly people—often widows—who simply cannot lay their hands on such sums. The law must be changed to stop leaseholders being fleeced by unscrupulous landowners.

Leasehold is a fundamentally flawed system of home ownership. It is a throwback to feudal times. Someone who wrote to me recently called his landlord a modern-day robber baron. The leasehold system enables the landowners to benefit from a rise in property values at no cost to themselves.

My right hon. Friend the Minister for Local Government and the Regions said: leasehold tenure is totally unsuited to the society of the 20th—let alone 21st century—which still allows abuses to flourish and causes misery and frustration to many leaseholders. I shall tell the House about some of the misery that I have come across in my constituency. One woman was quoted £20,000 to buy the freehold when there was still 30 years on the lease. Another pensioner is frantically trying to 247 raise money from relatives to meet a demand of £10,000 to buy her freehold, which is due to expire soon. She cannot get a bank loan for that sum because she is aged over 80.

Another frail widow wanted to sell her house so that she could go into residential care. Her lease is due to expire, and she too has been quoted £10,000 to buy the freehold. She had hoped for comfort and care in her remaining years, but is now fraught with worry about raising money that she simply does not have. Another family who could not get hold of the necessary money have resigned themselves to extending the lease for 50 years. Those people have become tenants, losing the right to buy their freehold. They no longer own their own home. In all the cases that I have given, the mortgages had been paid off. People thought that they owned their own homes.

We must reform the completely unrealistic conditions that apply when families inherit leasehold houses. To buy freehold, family members must have been resident in the house at the time when the deceased passed away, and they must have been resident for three of the past 10 years. Everything is stacked in favour of the landlords: few families can meet those conditions.

The Under-Secretary of State for the Environment, Transport and the Regions, my hon. Friend the Member for Sunderland, South (Mr. Mullin), wrote to me saying that people who inherit a lease will often be unable to qualify to buy freehold and might have to pay large sums for it. I can offer the example of a constituent who passed away in January, leaving his house, with the mortgage paid, to his family. The family discovered that the lease ran out at the beginning of April. The freeholder, a Mr. J. C. Mountain, refused at first to sell the freehold. When I put pressure on him, he agreed to do so, and wrote to me on 13 March—days before the lease expired—quoting a price of £35,000 if my constituents were to inherit their parents' home. They could not raise the money and have lost their parents' home. The freeholder is laughing all the way to the bank.

Owners of freeholds, such as Mr. Mountain and the estate of the Earl of Yarborough, must be delighted that the Government have been slow to introduce measures to stamp out their nice little earners. Landowners also fail to tell people about their rights—leasehold valuation tribunals, for example. Bully-boy tactics are being used to scare pensioners into coughing up the dosh.

Ultimately, the Government must keep their manifesto promise to abolish leasehold as a form of housing tenure. Today, however, I seek to protect the rights of homeowners through the abolition of marriage value as part of the calculation in determining the price of a freehold. We must get rid of the special valuation basis for calculating the price of a freehold, which, because of high prices, freeholders in Grimsby and Cleethorpes are using wrongly to determine prices. The special valuation basis, under which the landowner must receive 50 per cent. of the marriage value and compensation for any severance and losses while the leaseholder must meet his or her own costs and those of the landowner—is wrong.

My hon. Friend the Member for Great Grimsby (Mr. Mitchell)—who is not present—has told me that Grimsby grannies, many of whom are widows of trawlermen for whom he has fought for many years, are losing their homes while the Government dither.

248 I therefore introduce this Bill to enhance the rights of owners of leasehold houses by abolishing marriage value when considering the purchase price of the freehold, by extending the rights of family members to purchase the freehold of a house on inheriting it and by extending the right of homeowners to purchase a freehold if, at the end of a 99-year lease, they extend it.