5. Member Debate under Standing Order 11.21(iv): Leasehold residential contracts

Part of the debate – in the Senedd at 4:15 pm on 31 January 2018.

Alert me about debates like this

Photo of David Rees David Rees Labour 4:15, 31 January 2018

Now, to those who say a leasehold house is sold at a lower price than the freehold house, because that's what they would sell it as, that's been shown to be incorrect. It actually appears to be simply a way of exploiting the home buyer—to actually get somebody to think that accepting a leasehold was a normal way of buying a home these days. It's not, and it wasn't.

On occasions, the details and the consequences of the contracts they went into were never fully explained to them. And, again, that is crucial. It's very often because the developers would sell to the person—. I've been there, with my family and my children, to these houses and they say, 'We've got the solicitors. They know how we work. It's easy for them to do it.' Of course, then they encourage you to use their solicitors because they have the contacts, but they don't tell you what the nitty gritty is behind the detail, and that's the problem.

So, whilst they may present it as a cheaper option, it's not clear to the leaseholder what additional medium and long-term costs they will incur as a consequence. There are some leases that have terms that become increasingly onerous. I think Siân Gwenllian highlighted it, what is known as the Taylor Wimpey approach—the 10-year doubling costs—and that is frightening, because sometimes there are 250-year leases and you're talking about 25 doublings. It'll be huge. It is something we need to address here in Wales.

So, what can the Welsh Government do for other things? For new builds there are two things: ban it; stop it. But also, the Help to Buy schemes: don't help to buy leasehold properties. Make sure that developers know that if they want to encourage people to buy the properties with Welsh Government funding, you are saying, 'On the basis only if it's freehold, not leasehold.' Easy, quick win. So, that's one aspect. Obviously, on developments, don't let it happen; ban it outright for new properties.

But then that leaves the problem of the existing properties. What are we doing? Because I have tenants—. We've been very good today; we haven't named companies. I'll name them. Barratt in my constituency—very highly popular, doing a lot of leasehold properties and selling new properties as leasehold. Persimmon is another one. I've also got—. You'll remember. The Member for Llanelli will be interested in Trinity Estates. That's another one that runs a management company running flats in my area. It runs them in Llanelli as well. These are companies that are passing on the leasehold to third parties without the leaseholder knowing. They don't tell the leaseholder they're passing it on. It goes on once, twice, three times before somebody actually finds out now who owns the leasehold. Consequently, the charges are going up. The flats in Jersey Quay in my constituency, which are managed by the company—I've just forgotten the name of it.

In Trinity Estates, those owners actually have problems. They have to give a percentage of the selling price, if they try to sell the flat, to the management company. The management company can just take money out of their accounts for service charges, without giving them notification. They have increased their service charges by 33 per cent over the last 12 months. This is totally unacceptable to people. They can't sell their houses, as you said, which means people going into the properties can't move on. They're stuck. They can't progress. They can't even get jobs differently. They can't go anywhere. So, you are tying people into a situation that they can't get out of. We must support these families, these young people. Most of them are first-time buyers. We must help them so that they can become socially mobile, they can increase their lives, they can improve.

It's about time that the developers were held to account, it's about time the management companies were held to account, and it's about time the Government actually now did something that it promised to do. I understand that the Wales Act might muddy the waters a little bit because it's changing from, 'Property is reserved, housing isn't', but this is housing. It's the ultimate housing issue—come with a little umbrella. So, I'm pretty sure you can do it.

So, Minister, I would like you to actually stop this process. Stop our constituents being trapped in a situation that they can't get out of and ensure that they're not being—I'll use the word—fleeced by management companies, so that they can actually not just simply afford their mortgages, but afford to live. Because we have situations where a £500 fee is taken out a month. Well, that's someone's mortgage gone. Just gone. They can't pay the mortgage because they've just had that money taken away for the service charge. It's got to stop. We've got to make sure people are protected. We've got to make sure that the residents, the tenants and the leaseholders are protected, not the management companies.