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Leasehold Life would like to thank the Federation of Private Residents’ Associations for supplying the following extract from the Housing Strategy Debate where Baroness Gardner of Parkes raised concerns on behalf of leaseholders. She also raised the issue of Commonhold which the FPRA had also brought to her attention.

“Together with health and welfare, housing is crucial in our individual lives and in creating and maintaining a fair and just society. In this excellent report, many of the desirable options are set out clearly, but not all. I intend to draw attention to some of the significant omissions that I believe the Government should add to their considerations”.

Interests

“My interest is on record in the Register of Lords’ Interests. As a small-scale landlord, I have had residential property for over 40 years, and I have been able to do what I see one in two people in the UK would wish to do, according to the report-that is, build my own home. In my local government days and as a member of the Greater London Council, I was responsible for almost one-quarter of the council stock, including in the Barking and Dagenham area, which features in this report. I was on the boards of the Woolwich Building Society and a housing association, and I was a vice-president of the National House-Building Council for seven years. However, none of that is current; it is all in the past, so I am giving your Lordships a view of what I saw then and how I see things now”.

Managing Agents

“Two days ago, the Minister answered my Question in the House about leaseholders and the problems they experience with managing agents. One aspect not covered yet of considerable concern-and those with an interest have come back to me about it since-is the lack of transparency and the possible practice of managing agents receiving commission, which they are not disclosing and about which they often refuse to answer questions, for services they are providing, such as insurance and works”.

Ombudsman

“The noble Lord, Lord Best, in his supplementary question raised the subject of an ombudsman scheme to protect leaseholders. At present, this is voluntary but I think that it should be obligatory for managing agents to belong to such schemes. There are almost 2 million leaseholders, and this lack of transparency impacts on everybody from social housing associations to those in premier leasehold properties. The right of tenants to have their deposits protected, whether held by a landlord or an agent, has been of great benefit to tenants”.

Commonhold

“The concept of commonhold was introduced in the Commonhold and Leasehold Reform Act 2002. I took part in those debates from the point of view of my direct experience of the equivalent strata title in New South Wales (19 Jan 2012 : Column 718)”

“Sadly, commonhold has gone nowhere and very small numbers of such developments have been built. I feel very strongly about the idea of commonhold and it is time to look further at this form of tenure which works so well. Freeholders here do not like it because it means that they lose the right to sell and resell leases over many years. It is definitely in the interests of flat owners and it is much more effective than any available right to manage”.

“There is no mention in this report of looking further at these issues or of encouraging developers to opt for commonhold in new blocks under construction. The Federation of Private Residents’ Associations has told me that many members would be interested in converting their properties to commonhold but that the barriers are too great for existing blocks as 100 per cent of the residents must support the change. Therefore, conversion to commonhold is too difficult. The 100 per cent proviso is why there is commonhold in only a very small number of newly built blocks. It has not been given a real opportunity to test the system. Obtaining even a simple majority may be difficult, especially in blocks where some people are resident only for limited periods, such as a year”.

“However, it would be desirable for the Government to conduct consultation on this issue, as I am convinced that it would be a preferable system to the present leasehold management system. Commonhold is a system whereby all the leaseholders in a block are members of the body corporate which owns and controls the block. They are able to select managing agents or arrange for matters to be handled by some other person, but they are the body corporate. Paragraph 2 of the Executive Summary to the report says that, “we need to get the housing market-and in particular new house building-moving again”.

Paragraph 29 of Chapter 2 quotes 133,000 stalled units. Here is an opportunity for the Government to provide an incentive for the construction of enough commonhold properties to be able to see clearly the effectiveness or otherwise of this form of tenure”.

“I am pleased to see that Tony Pidgely is to lead an advisory group as, although I do not know him personally, I know that he is not only a hugely successful property developer but also an imaginative innovator with great experience. Paragraph 44 of Chapter 2 says: “We are keen to see innovative approaches and a wide range” of new experiences”.

Infrastructure

“I have made a real mess of my papers, for which I apologise. At Paragraph 46, there is talk of where infrastructure exists and does not exist. Again, I raise a point which I raised on the Localism Bill, that for areas which are supposedly green belt but have small patches of infill and where all the infrastructure already exists, I think that the documents and the advice sent out by the department should make it clear that there is a possibility of using those small patches”.

Mortgage Market

“I want to talk about the mortgage market because I strongly support the idea of people buying their own homes. In the past few weeks, I have been involved in helping a young person to try to buy their flat. The flat was formerly a social housing flat. It is on about the 15th floor of a block. I went with the person to Barclays, which apparently is willing to offer mortgages to most people, subject to their circumstances (19 Jan 2012 : Column 719)”.

“The young person was going to buy the property, let it for two years and then, when they had finished their studies, move to where they were going to work and live in the flat. There was no problem about the fact that the flat was let to someone on housing benefit. The young person would buy it in that way; the housing benefit was enough, although there is no way of knowing whether that will remain the case with the coming changes to housing benefit. The young person was urged to check carefully the present circumstances under which the person on housing benefit was renting the flat”.

“What stunned me was when Barclays said that it lends on only a small number of high-rise properties. I asked what was regarded as high-rise and was told: everything above seven floors. In London, seven floors is not high-rise; one has only to look out of the front door here to see tower blocks everywhere. Barclays further said that its restrictions applied particularly to former local authority properties. That made it a double problem for this young person to buy a flat which was within their means and which would have given them a home to live in when the time came”.

“Barclays is out of date; I do not think that high-rise is something that people worry about. I know people on the staff here who live on about the 20th floor. They say that they have to get used to a small amount of movement in the building because the structure has to have a degree of flexibility. They say that you get used to it very quickly and that people are very happy in these places. To condemn former social housing because it was built by local authorities is very wrong. In my day, local authorities were still building to Parker Morris standards, which were way above any standards that could be afforded by private developers. Far from being below standard, they were almost above standard. There is something very wrong if people now say that these blocks, particularly if they are social housing, are not acceptable for mortgages. Unless people can get mortgages, how will we increase home ownership, which should be our aim?”

GOVERNMENT RESPONSE

The noble Baroness, Lady Gardner, returned to a few of the aspects that she raised a couple of days ago. She referred, in particular, to commonhold and rent to buy. Commonhold has always been very difficult, as I think we all realise. Indeed, when the noble Lord, Lord Whitty, took the relevant legislation through the House, it was recognised that there were going to be difficulties with it. I think that the noble Baroness is correct in saying that there had to be a 100 per cent buy-in, particularly in blocks of flats, and that that was almost impossible to achieve.

The Ministry of Justice, which is responsible for the commonhold policies now, does not intend to do anything more about this at the moment, but it is recognised that it is a possible way for people to get their own homes without the problems of management and freehold.

The full debate in the Lords on Thursday 19 Jan 2012 is available here.

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