Leasehold and Freehold Reform Bill
Public Bill Committee, 18 January 2024.
Clive Efford (Labour, Eltham)
Before we start hearing from the witnesses, do any Members wish to make declarations of interest in connection with this Bill?
Matthew Pennycook (Labour, Greenwich and Woolwich)
My wife is the joint chief executive of the Law Commission, whose work on leasehold reform we have regularly touched upon.
Mike Amesbury (Labour, Weaver Vale)
I am a member of the all-party parliamentary group on leasehold and commonhold reform.
Andy Carter (Conservative, Warrington South)
On that basis, I am also a Member of the all-party parliamentary group.
Clive Efford (Labour, Eltham)
I think you have to declare only APPG officer posts, not just membership of them. But thank you anyway; it is best to be safe.
Examination of Witnesses
Clive Efford (Labour, Eltham)
Q224 We will now hear evidence from Paula Higgins, CEO of HomeOwners Alliance, Bob Smytherman, chairman of the Federation of Private Residents’ Associations, and Sue Phillips, founder of Shared Ownership Resources.
Before calling the first Member to ask a question, I remind all Members that questions should be limited to matters within the scope of the Bill, and that we must stick to the timings on the programme motion agreed by the Committee. For this panel, we have until 12.10 pm, and that will be a sharp cut-off—a sharp guillotine. Would the witnesses like to introduce themselves for the record, please? Thank you, and welcome.
Clive Efford (Labour, Eltham)
Thank you for coming here and helping us with our deliberations.
Matthew Pennycook (Labour, Greenwich and Woolwich)
Q Thank you all for coming in this morning to give evidence. I will perhaps return to Ms Higgins and Mr Smytherman if we have time in the session, but could I start with two questions to you, Ms Phillips, on shared ownership?
First, the Bill makes provision for the treatment of intermediate leases in a number of areas, but it does not contain, as far as I can read, any measures to directly resolve many of the challenges that shared owners face. Could you give us your general views on the Bill from a shared-ownership perspective? What is missing? What might we look to include if we could?
Secondly, the Government tabled more than 80 pages of complex amendments to their own Bill yesterday. Among those were amendments that would exclude certain shared-ownership leases from enfranchisement and make the new valuation method for calculating the premium payable for shared owners non-mandatory. If you have had a chance to look at those—you may not have—could you give us your views on those specific amendments? We know that enfranchisement for shared owners is expensive—it is challenging—but, none the less, is it a regret, from your point of view, that these amendments have been tabled?
Matthew Pennycook (Labour, Greenwich and Woolwich)
Q Have you explored any quick fixes for what we might look to persuade the Government to incorporate?
Clive Efford (Labour, Eltham)
Does anyone have anything to add? Do not feel that you have to; I am not putting you on the spot.
Barry Gardiner (Labour, Brent North)
Ms Phillips, shared owners, under the Renters (Reform) Bill passing through Parliament, will get forfeiture: an improvement on mandatory grounds of possession for which relief cannot be sought in the court. Do you support, in this Bill, the right to abolish forfeiture? At the moment, I believe a shared owner has less security of tenure than a private leaseholder. Perhaps you could explain what, for example, a housing association that owns the other part of a shared ownership apartment can do to someone in circumstances where there is a dispute over a service charge and non-payment?Q
Barry Gardiner (Labour, Brent North)
Q It really is an equity trap, isn’t it?
Barry Gardiner (Labour, Brent North)
Q If the Bill were to introduce a provision that forfeiture were abolished, so that with a debt of, say, £5,000 or £10,000, you could not lose the entire value that you have in the property as a leaseholder, should that right similarly apply to shared ownership leaseholders?
Barry Gardiner (Labour, Brent North)
Q Okay. As shared owners, you pay service charges as well as rent and you are disadvantaged if there is poor maintenance of your buildings. Do you agree that shared owners should be allowed to claim the right to manage, as confirmed in the recent Canary Gateway case?
Barry Gardiner (Labour, Brent North)
Sorry, I couldn’t hear what you said there.
Barry Gardiner (Labour, Brent North)
Q In conversation with my colleague, Matt Pennycook, you talked about the lack of statutory lease extension provision. The Law Commission said that shared owners should have the right to extend. Do you consider that that would be a welcome amendment to the Bill?
Clive Efford (Labour, Eltham)
Just one last question, Barry, because I want to get other people in. I might have the time to come back to you if you have more, but—
Barry Gardiner (Labour, Brent North)
No, I will leave it there.
Andy Carter (Conservative, Warrington South)
Q Paula, your organisation, the HomeOwners Alliance, has described the Bill as a huge missed opportunity, because including flats in the changes was not done in this Bill. Would you like to elaborate a bit on that?
Andy Carter (Conservative, Warrington South)
Bob, is there anything you want to say on that?
Andy Carter (Conservative, Warrington South)
Q Can I just stick with you for a second, Bob? I will come back to you in a second, Paula. From your perspective as the chair of the Federation of Private Residents’ Associations, Bob, can you just talk us through the main elements of the Bill that will apply to your organisations?
Andy Carter (Conservative, Warrington South)
Q What do you think is missing from the Bill that would benefit your members?
Clive Efford (Labour, Eltham)
One more question, Andy, and then I am going to move on to get everyone in.
Andy Carter (Conservative, Warrington South)
Q Just so I understand, you do not object to leasehold continuing, but what is your view on new leasehold?
Clive Efford (Labour, Eltham)
I am sure I will have time to come back to you, but I just want to get the first batch of questions in.
Mike Amesbury (Labour, Weaver Vale)
Q Good morning. Paula, you also said that ground rents have not been tackled by this Bill; could you elaborate? What changes would you like to see?
Mike Amesbury (Labour, Weaver Vale)
That is great. Bob and Sue, do you have anything to add to that?
Mike Amesbury (Labour, Weaver Vale)
Thank you.
Clive Efford (Labour, Eltham)
If anyone has not asked a question and wants to come in, please just indicate. Matt, Barry and Andy want to come back, so I come to you, Matt.
Matthew Pennycook (Labour, Greenwich and Woolwich)
Q Two quick questions while I have got you here—on slightly different subjects. The first relates to the purchasing of a lease initially. In its 2018 consultation on implementing reforms to the leasehold system, the Government committed to requiring freeholders and managing agents to provide leasehold information at the point of sale within a defined time limit and a maximum cost. That is not in the Bill; would you welcome that being incorporated?
My second question is on the service charge provisions—clauses 26 to 30. In principle they might work very well; there is lots of detail to come through regulations. However, are there any specific ways in which you would like to see those service charge clauses tightened?
Matthew Pennycook (Labour, Greenwich and Woolwich)
Q Just on whether we should require freeholders to have standardised information at the point of purchase.
Matthew Pennycook (Labour, Greenwich and Woolwich)
Q Do you want to say anything on service charges?
Clive Efford (Labour, Eltham)
Q Sue Phillips, I think you wanted to say something.
Clive Efford (Labour, Eltham)
We have just over 10 minutes left. I will bring in Richard Fuller and then we will try to get back to Barry and Andy.
Richard Fuller (Conservative, North East Bedfordshire)
We have been talking a bit about regulation, which is often seen as some sort of answer to problems and frequently is not—or, at least, is different from simplification or standardisation, which each of you have mentioned at different points.Q
Richard Fuller (Conservative, North East Bedfordshire)
When you say “regulated”, do you mean they should have a qualification—that they can tick a box to say, “I was qualified to do this”—or redress, as in, there is a regulatory body above them?Q
Barry Gardiner (Labour, Brent North)
MsQ Higgins, do you agree that it would be appropriate to allow leaseholders to withhold service charges where there has not been compliance with the very extensive requirements in the Bill to provide accounts no later than six months after, and so on? Is that an appropriate and proportionate way for leaseholders to be permitted to respond?
Barry Gardiner (Labour, Brent North)
Indeed, yes.
Clive Efford (Labour, Eltham)
This needs to be very brief.
Barry Gardiner (Labour, Brent North)
Q Thank you also for what you said about wanting all new apartments to be leasehold with a share of freehold, Ms Higgins. That was echoed by Mr Smytherman.
In so far as new apartments are going to have a share of freehold, Mr Smytherman, you indicated that you felt that you had got the best of both worlds as a director of a freehold franchise company.
Barry Gardiner (Labour, Brent North)
Q As a leaseholder with a share of freehold, if commonhold were to become available, do you think that it would be equitable and fair to charge you for the privilege of transferring to commonhold, or do you think that more people would take the opportunity to transfer to commonhold if that came?
Clive Efford (Labour, Eltham)
A one-word answer, please, because I have to get to the end.
Andy Carter (Conservative, Warrington South)
Q We have two minutes. I am conscious that you have talked to us a lot. Is there anything that you have not had the opportunity to tell us that you would particularly like us to hear from your relevant organisations?
Clive Efford (Labour, Eltham)
Less than a minute.
Clive Efford (Labour, Eltham)
Less.
Andy Carter (Conservative, Warrington South)
Thank you; that is much appreciated.
Clive Efford (Labour, Eltham)
Perfect, bang on. I am afraid that that brings this question session to an end. Thank you for coming in and giving evidence to us.
Clive Efford (Labour, Eltham)
Right, that is a surprise: we have sound and vision. Excellent. We were not expecting vision, so that is all the better. We will now hear oral evidence from Professor Andrew Steven, professor of property law at the University of Edinburgh, via Zoom, and from Professor Christopher Hodges, emeritus professor of justice systems at the Centre for Socio-Legal Studies at the University of Oxford. We have until 12.40 pm for this session. Could the witnesses please introduce themselves for the record? We will start with Professor Hodges.
Clive Efford (Labour, Eltham)
Members have a profile of our witnesses, so let us get to the questions. Thank you for that. Would our other guest introduce himself?
Clive Efford (Labour, Eltham)
We can see you, so if you want to come in on any question, gesticulate and you will hopefully catch my eye. That goes for both of you.
Matthew Pennycook (Labour, Greenwich and Woolwich)
Q Thank you for your time, gentlemen. We have half an hour, but I would love to get in three specific questions, so I encourage you to be as brief as you can while answering.
The first question is on commonhold. Professor Steven, you have published extensively on the Scottish experience of commonhold legislation; Professor Hodges, I believe that you are a member of the Commonhold Council. On Tuesday, we heard from Professor Hopkins of the Law Commission that there are risks associated with a partial implementation of the Law Commission’s recommendations on commonhold. Do you agree with that, and if you do, are there any sensible steps we might take via amendments to the Bill to pave the way for commonhold in the future—for example, share of freehold in flats?
Matthew Pennycook (Labour, Greenwich and Woolwich)
Q In that case, I will move over to Professor Hodges, in the interests of time, if that is okay.
Matthew Pennycook (Labour, Greenwich and Woolwich)
Q Unless they confound us, the Government have been very clear that they are not going to do a commonhold package. Would share of freehold be a good interim step?
Matthew Pennycook (Labour, Greenwich and Woolwich)
Q That is all I was looking for. My second question relates to non-litigation costs. The Government, when they published the Bill, claimed that it protected all leaseholders from non-litigation costs. However, clause 12 allows those costs to be passed on, either as they are or at a prescribed rate, in cases of low-value claims. That was because the Law Commission said that the shorter the expired term, the greater the risk for leaseholders in not extending but buying out their lease. This is a point about litigation in some senses, but do you think that, because of the difficulties of challenging a claim to that prescribed sum, leaseholders will be deterred from initiating the process of extending their lease or acquiring their freehold, if they still face, even at a prescribed rate, essentially non-litigation costs as part of claims?
Matthew Pennycook (Labour, Greenwich and Woolwich)
If you do not have anything to add Professor Stephen, I will move on to my third question.
Matthew Pennycook (Labour, Greenwich and Woolwich)
Q My last question relates to ground rents. Clause 21 gives effect to schedule 7, which provides leaseholders with a right to permanently replace their ground rent with a peppercorn, without extending their lease. However, the Government are proposing to apply it only to those with very long leases, so 150 years left or more. The rationale is, as per the Law Commission, that the shorter the unexpired term, the greater the likelihood of disadvantage. Do you have any thoughts on why the Government have chosen that 150-year limit? The Law Commission said 250 years. Do you think it is right, in principle, that someone with a 120-year lease, who may wish to extinguish their ground rent but not extend, is prohibited from doing so on the basis of the Bill, as it stands?
Clive Efford (Labour, Eltham)
Q Professor Steven, do you have anything to add?
Barry Gardiner (Labour, Brent North)
Professor Steven, my question is to you. Last week, in the House of Lords, the Government indicated that they were looking at the Scottish system of tenements. Could you perhaps explain that to the Committee? My understanding is that the Scottish Law Commission has been looking to review tenement structure and actually make it more like commonhold. Is it correct that there is a lack of standardisation and no ability to ensure those share costs are split proportionately under the tenement structure, and therefore that would not be a quick cut-and-paste for the Government if they are considering what to move forward to?
Barry Gardiner (Labour, Brent North)
Q Nothing takes away the capacity of people to disagree with each other. I want to ask you a further question, which Professor Hodges may also have a view on. In the early 2000s in Scotland, the Government did away with feu duty in one fell swoop. You got rid of the inefficiencies of that system. Is it not unfair that we are going through all these inefficient qualifying criteria to ensure that enfranchisement happens only on a development-by-development basis? Could we not do this in one fell swoop in England too? I see Professor Hodges is smiling from ear to ear, but I will allow you to come in first, Professor Steven.
Barry Gardiner (Labour, Brent North)
Q Just to make you feel a little better about disagreeing with your Law Commission counterparts in England, of course they were constrained in what they could do by the parameters the Government set them.
Richard Fuller (Conservative, North East Bedfordshire)
Q My questions are for Professor Hodges. We have to deal with the Bill as it is—on the commonhold thing—so, “Get it done” is not particularly helpful, if I may say. It might be a good indication, but not particularly detailed, so help us on the detail of that. Often in Parliament, we regulate and think that that is the solution. I do not know whether you have had a chance to look at some of the regulatory details in the Bill, but what would be your guidance be to us about where it is pointing in the right direction, where it might be going wrong, and the pitfalls that we should look out for?
Richard Fuller (Conservative, North East Bedfordshire)
I will come to that in a minute. But just in here, on this Bill, is there anything that we should look out for?
Richard Fuller (Conservative, North East Bedfordshire)
Okay, so more generally then, on regulators—Ofgem on energy prices and Ofwat on sewage and water—that approach seems not to provide the outcomes that perhaps were originally indicated when the legislation was passed. What are your thoughts about the political use of regulation? Is there anything from those general principles that you think might apply here?
Richard Fuller (Conservative, North East Bedfordshire)
Rules, codes, systems, data, penalties, redress, different organisations—this is your answer as a better solution to caveat emptor?
Richard Fuller (Conservative, North East Bedfordshire)
In all circumstances or specifically on this Bill? Well, we ought to stick to the Bill. I just want to be clear: you have just outlined the solution—this Bill is going part of the way to that—but the old way was, “I have personal responsibility,” “I am responsible for the decision I make,” “This is a very big decision about what I buy,” and so on. I just want to make sure that we are not trying to put too much faith—one of the last witnesses made some very good points on shared ownership and the fact that people may not have the encompassing knowledge—but I just want to make sure, from your expertise on regulation, that, in this field, you cannot see any damaging consequences for the principles of caveat emptor and personal responsibility by this regulatory structure that you have outlined?
Clive Efford (Labour, Eltham)
Please answer briefly if you can, because I want to get some more people in.
Clive Efford (Labour, Eltham)
Thank you very much. We have 10 minutes left. Mike Amesbury wants to come in, and then I will call Matt and Barry.
Mike Amesbury (Labour, Weaver Vale)
Q This question is to both witnesses. Are you satisfied with the provisions in the Bill to regulate what is commonly known as the “fleecehold” phenomenon, where what leaseholders pay for communal areas—in the broadest sense—maintenance, service charges and administration charges is uncapped? Is it strong enough at the moment?
Clive Efford (Labour, Eltham)
Professor Steven, do you have anything to add to that?
Matthew Pennycook (Labour, Greenwich and Woolwich)
Q I am trying to adjust my questions to your areas of expertise, but I am trying to focus on the Bill rather than abstract discussions about regulatory systems and what we might want. I have a specific question that follows on from Mr Amesbury’s question. Part 4 of the Bill provides for a new regulatory regime for private and mixed-use estates. Do you think that that is a good idea in principle? We in the House—particularly Mr Fuller and a specific set of Members in whose constituencies this is a very real issue—have been talking for years about a separate management regime. Do you think it is a good idea in principle to establish a completely separate stand-alone regulatory regime for estate management, or should we look instead to incorporate it in the existing system? Essentially, these people are all paying into the same pot, so should they not be covered by the same regulatory system?
Matthew Pennycook (Labour, Greenwich and Woolwich)
Q To be clear, I agree with you on managing agents; I am talking about the regulation of private estates. The Bill provides for a new regulatory regime for private estates, which are not currently regulated. It is separate from the service charge regime. I am just wondering whether your simplification point works in this case too.
Barry Gardiner (Labour, Brent North)
Q Professor Hodges, my colleague Richard Fuller sought to make a point about caveat emptor to you. Is it your experience that the inequity of power and information between developers or freeholders and the potential purchaser—the leaseholder—is so great that caveat emptor is inappropriate and that you need the power of regulation to sort out that inequity? I think it was the Law Commission that concluded that
“any financial gain for the landlord”—
or freeholder—
“will be at the expense of the leaseholder…Their interests are diametrically opposed, and consensus will be impossible to achieve.”
Barry Gardiner (Labour, Brent North)
Q Indeed. Thank you for that, and I think everyone will also want to thank you for your work on the Post Office inquiry.
I want to ask you about introducing insurance commission. I do not know whether you heard what the witnesses said on Tuesday, but you may know of the Canary Riverside case, in which £1.6 million in commission was given to a freeholder by the insurer—in a kickback—which was deemed to be inadmissible, and that is what the tribunal, mercifully, found. Although the Bill is outlawing commission, it is introducing fees for insurance services. In the Canary Riverside case, that is precisely what that £1.6 million was called. Do you fear that the Bill appears to dispense with commission, but actually reintroduces it by the back door?
Barry Gardiner (Labour, Brent North)
We will hear about—
Clive Efford (Labour, Eltham)
Can I just interject and ask whether Professor Steven has anything to add to what you have asked so far?
Barry Gardiner (Labour, Brent North)
Q Thank you very much, Professor Steven.
Turning to the value of the building and property rights, we heard from an eminent lawyer on Tuesday about property rights in relation to ground rent. Looking at enfranchisement, I think it was the Residential Freehold Association, which is charged with guarding the property rights of freeholders, that said that their share in the value of the building was only 2.5%. The corollary of that, of course, is that the leaseholders’ share in the value of the building is 97.5%. Do you feel that the way in which the costs of enfranchisement look at the total value of the building is therefore unjust?
Clive Efford (Labour, Eltham)
We have less than a minute left.
Barry Gardiner (Labour, Brent North)
Thank you very much. Professor Steven?
Clive Efford (Labour, Eltham)
I thank the two witnesses for taking the time to give evidence to us today. Thank you for beaming in, Professor Steven, and thank you for attending, Professor Hodges. We will now move to our next witness—Paul Broadhead, come on down.
Examination of Witness
Clive Efford (Labour, Eltham)
Q We will now hear oral evidence from Paul Broadhead, the head of mortgage policy at the Building Societies Association. We have until 1 pm for this session. Could the witness introduce himself for the record, please?
Matthew Pennycook (Labour, Greenwich and Woolwich)
Q Thank you, Mr Broadhead, for coming to give us evidence. I have a very specific question about something that was briefly raised on Tuesday but that has not been explored in real depth. I have seen, as other Members may have, a noticeable rise in RPI-linked ground rent provisions in the wake of the implementation of the Leasehold Reform (Ground Rent) Act 2022—although they may not be connected. You will be aware that such terms could be considered onerous in certain circumstances. They would appear to be the result of specific mortgage lender policies, and somewhat at odds with the UK Finance position. What is your view on that trend and its causes and consequences? Specifically, how will the ground rent provisions in the Bill, namely the peppercorn 990-year lease extensions under clauses 7 and 8, the peppercorn variation under clause 21 and, potentially, complete abolition of ground rents on existing leases, impact on that trend? Will they mean that RPI-linked ground rent provisions are a thing of the past if this Bill is implemented?
Matthew Pennycook (Labour, Greenwich and Woolwich)
They can be far more punitive.
Barry Gardiner (Labour, Brent North)
Q Mr Broadhead, I do not know how long you have been working in your present capacity, but I suspect it is since 1984. In 1984, your organisation’s report “Leaseholds—Time for a change?” said that the “leasehold system is incompatible with home ownership” and that an Englishman’s leasehold home “is his landlord’s castle”. I thought that was a very elegant way of expressing what many of us think. Is that still your organisation’s view?
Barry Gardiner (Labour, Brent North)
That elegant comment.
Barry Gardiner (Labour, Brent North)
Q Let me ask you perhaps a more difficult question: how many of the mortgages that are lent to shared equity owners default compared with normal freehold owners?
Barry Gardiner (Labour, Brent North)
Sorry, shared ownership—where you have shared ownership in the property.
Barry Gardiner (Labour, Brent North)
Q Interesting. Why do you think the arrears levels tend to be higher?
Barry Gardiner (Labour, Brent North)
Or that property prices are too high, of course.
Barry Gardiner (Labour, Brent North)
Their income may be stable and reasonable—being in shared ownership does not mean that your income is unstable in any way.
Andy Carter (Conservative, Warrington South)
Q I want to pick up on some of the comments we heard on Tuesday around mis-selling. You mentioned the work the building societies—your members—would do to understand the affordability and the ability of a purchaser. What steps do your members go through to ensure that the person taking out the mortgage fully understands what they are buying? I am conscious that you will not necessarily always know all the things that they know. Could you just talk us through that area?
Andy Carter (Conservative, Warrington South)
Q I just want to be clear: from a consumer perspective, if somebody is buying a leasehold property, are your members telling them, “This is a mortgage for a leasehold property,” or do they not have that conversation?
Andy Carter (Conservative, Warrington South)
Q That leads me on to the regulation of managing agents and the property sector. Is that an area that your members have any views on? Is it something that you would welcome?
Mike Amesbury (Labour, Weaver Vale)
Q That point is very interrelated to this. A considerable number of leaseholders are excluded from provisions to remediate the buildings. An example is people in buildings that are below 11 metres, or it might be people who have more than three flats. How has the market been responding to that?
Mike Amesbury (Labour, Weaver Vale)
Q Would you welcome amendments to the Bill to try to capture that by regulation, by legislation?
Eddie Hughes (Conservative, Walsall North)
I am slightly confused. I thought it was now the case that properties did have to be advertised as leasehold or freehold. Has that changedQ ?
Eddie Hughes (Conservative, Walsall North)
Q So there is not an obligation currently for estate agents to market properties in a way identifying whether they are leasehold.
Eddie Hughes (Conservative, Walsall North)
Q Maybe I made a mistake. You said that it would take some time to unwind the fact that we have—currently—4 million leasehold properties in the country. Can you give us an idea of how long you think it will take, depending on the outcome of the Government’s recent consultation? Were they to move to peppercorn rates, how long would this take to unwind? And give us a flavour of what would be the complexities.
Eddie Hughes (Conservative, Walsall North)
Q But you are a man who knows, so even if you just give us your thoughts, that will be helpful.
Eddie Hughes (Conservative, Walsall North)
Q Or to make it possible. Just because it is possible, does not mean it will actually happen.
Eddie Hughes (Conservative, Walsall North)
That is very helpful, thank you.
Clive Efford (Labour, Eltham)
We have five minutes left. I will turn to Lee Rowley but please bear in mind that I want to bring in Barry as well.
Lee Rowley (Conservative, North East Derbyshire)
Q I do not want to divert the Committee away from the core discussion, but I will just pick up on something that yourself and Mike discussed a moment ago. On sub-11 metre buildings and potential challenges with fire safety, would you accept that our standards are life-critical safety standards, and that the likelihood of an issue in a sub-11 metre building is substantially lower than one in a building above 11 metres? Fundamentally, it is unlikely that those buildings would need remediation to the extent that would be needed in higher buildings. That is an accepted position of your members, I presume.
Lee Rowley (Conservative, North East Derbyshire)
I am not sure that I would accept that, but I will take that up with you and your members separately.
Barry Gardiner (Labour, Brent North)
Q I will pick up briefly on what you said to Mr Carter about the way in which sometimes your members were advising people, “Actually, this is leasehold, and there are these additional costs, and service charges are so expensive that we are not prepared to lend to you.” Are there any particular freeholders who have a reputation in the industry for doing that? I am thinking of people such as the Freshwater or Persimmon Homes, or any who seem to be known for their excessive service charges. Is there an automatic flag for them in the industry? Sitting where you are, you would have parliamentary privilege to name them.
Barry Gardiner (Labour, Brent North)
Q In that case, my question to you is: why not? You know very well that there are “fleeceholders” out there: freeholders who fleece their leaseholders. They have a reputation for doing it over many, many years. Should your industry not be advising somebody who approaches you for a mortgage about that, when you know full well that if they have a mortgage with that particular freeholder, the likelihood is that over the years those services charges will rack up and be abused in precisely the way that we have talked about with previous witnesses, about the inequity of power in this relationship? Indeed, these are the very issues that we are seeking to amend in this Bill. Why does your association not have those flags so that when it sees names such as Freshwater, it says to the person, “Look, we need to tell you a thing or two here”?
Barry Gardiner (Labour, Brent North)
Q But you rightly said, Mr Broadhead, that your members would advise a prospective purchaser not to engage in a mortgage where it was leasehold, if they felt that the service charges would rack up and they would then be put into financial penury. Why do you not do it when you know that it will be the case?
Clive Efford (Labour, Eltham)
Order. I am afraid that brings us to the end of the time allotted for the Committee to ask questions and, indeed, for this morning’s sitting. I thank all our witnesses on behalf of the Committee for their evidence. The Committee will meet again at 2 pm this afternoon here in the Boothroyd Room to continue taking oral evidence.
(Afternoon)
Examination of Witnesses
Caroline Dinenage (Conservative, Gosport)
We will now hear oral evidence from our fourth panel. The witnesses are George Lusty, senior director for consumer protection, and Simon Jones, director of leasehold investigation at the Competition and Markets Authority. We have until 2.20 pm for this panel. Will the witnesses please introduce themselves for the record?
Caroline Dinenage (Conservative, Gosport)
Thank you.
Matthew Pennycook (Labour, Greenwich and Woolwich)
Chair, may I just declare, for reasons of completeness, that my wife is the joint chief executive of the Law Commission, whose work we continue to cite on a regular basis?Q281
Gentlemen, thank you for coming in to give evidence to us. I have two questions. First, in the 2020 update report on leasehold housing that the CMA published, you recommended reforms to
“the system of redress for leaseholders, to make it simpler and less costly for them to contest permission fees and service charges they think are unreasonable or excessive”.
What are your views on whether you think the Bill achieves that? If not, what needs to be incorporated to ensure that it does?
My second question is on the recommendations you also made on measures to address the assured tenancy trap, whereby leaseholders who pay ground rents in excess of £1,000 in London and £250 across the rest of the country
“risk having their home repossessed for non-payment”.
Again, does the Bill address that? If not, how specifically should we seek to improve it in that respect?
Matthew Pennycook (Labour, Greenwich and Woolwich)
Q Is that both recommendations, or just the second?
Matthew Pennycook (Labour, Greenwich and Woolwich)
Q May I press you on that? I asked a different witness about that this morning. The Government are saying that with low-value claims, the cost can be passed on, but that leaseholders would have to pay either that or a prescribed sum. I wondered, because we are talking about redress, given the challenges of going to the tribunal, will those leaseholders just end up paying the minimum prescribed amount for enfranchisement?
Matthew Pennycook (Labour, Greenwich and Woolwich)
Q Is it fair to say that with this legislation, we should look, where possible, to remove instances of where a leaseholder has to go to tribunal at all? In other words, if we said, “No leaseholder should be liable for a non-litigation cost in any circumstances”, on that particular point none of them would have to go to tribunal. Should we look to reduce the scope for tribunal use generally?
Caroline Dinenage (Conservative, Gosport)
I remind the Committee that we have only another 10 minutes or so left on this session.
Andy Carter (Conservative, Warrington South)
Thank you, Dame Caroline. Simon, the CMA carried out a two-year investigation into mis-selling. Are you satisfied that the Bill contains sufficient provision to address mis-selling and to improve consumer rightsQ ?
Andy Carter (Conservative, Warrington South)
Q We heard evidence today and on Tuesday of what appears to be quite widespread mis-selling, particularly in this sector. I know that you spent time in my constituency looking at the Steinbeck Grange case, but you were not able to enforce any outcomes from that. My constituents still do not feel that they have had redress. You mentioned the challenge of evidence: what would you say to my constituents who still feel that they have been mis-sold?
Andy Carter (Conservative, Warrington South)
Or they were not told at all. That seems to be more the problem: people were not told at all.
Andy Carter (Conservative, Warrington South)
I have one more question if there is time.
Caroline Dinenage (Conservative, Gosport)
We will come back to you at the end, Andy.
Mike Amesbury (Labour, Weaver Vale)
The CMA—including your good selves—has rightfully highlighted concerns around estate management and some of the charges commonly known as fleecehold. You said you were going to assess that information and publish your findings. Have you done that? It would be incredibly useful in shaping the responses in the Bill and perhaps strengthening some of the regulations particularly around park law.Q
Mike Amesbury (Labour, Weaver Vale)
Q Do you have anything else to add, Simon?
Mike Amesbury (Labour, Weaver Vale)
Thank you.
Richard Fuller (Conservative, North East Bedfordshire)
Q I want to follow on from the point made by my colleague, Mike Amesbury, about your November report. When it looked at estate management charges, there was a litany of abuses against residents who own their own home. As Mr Jones has just said, there was no information—or certainly not sufficient information—about obligations at the point of purchase. There was no transparency about the way in which information is provided. There were totally exorbitant charges for provision of basic things such as a bulb to go into a lamp post. There was an inability, or unwillingness, to provide annual reports to people, and limited to no redress for consumers.
I know that you are going to get to your final report in February. This Bill, helpfully in some ways, seeks to plug some of those gaps in the protection of people who own homes, but would it not be better for us to ban the lack of adoption right at the start? Should we not go to the source and find a solution as to why councils and housing estate developers are ripping off my constituents, and I am sure many others, who own their own homes? What can be done about that in this Bill?
Richard Fuller (Conservative, North East Bedfordshire)
Q My concern is that you are going to finish your report, quite rightly, in the fullness of time—that will be February—and this Committee will not be sitting in February; heaven help us, I hope not. Please could you go away with a piece of homework for tonight to write to the Committee about what ideas from your report so far could be put in the Bill on the adoption matter? I think all of us would find that very helpful.
Caroline Dinenage (Conservative, Gosport)
Thank you. A very quick question with a very quick answer, please. Barry Gardiner.
Barry Gardiner (Labour, Brent North)
In your leasehold update report 2020, you adumbrated numerous complaints and you said:Q
“It is a real concern that homeowners who have entered into a lease are captive consumers with very little influence over the costs incurred by landlords or their managing agents that will in due course be passed on to them.”
Do you believe that the Bill will give them control or simply greater transparency and access to understand their own exploitation, and has the CMA come across any comparable part of the economy where those paying the bills have no control over the bill or the standard of service?
Barry Gardiner (Labour, Brent North)
Q But you are concerned with the competition, and you have rightly pointed out that these are captive consumers.
Barry Gardiner (Labour, Brent North)
Q So this is not a free market as it stands.
Caroline Dinenage (Conservative, Gosport)
Order. I do apologise, but that brings us to the end of the time allotted for the Committee to ask questions. I thank our witnesses very much on behalf of the Committee.
Examination of Witness
Caroline Dinenage (Conservative, Gosport)
We will hear oral evidence from James Vitali, head of political economy at Policy Exchange. For this session, we have until 2.40 pm. Could you please introduce yourself for the record?
Andy Carter (Conservative, Warrington South)
Q In the paper you have just talked about, you stress the importance of enabling enfranchisement for leaseholders to expand the number of people with authentic property rights. Do you believe that the Bill will make it cheaper and easier for leaseholders to buy their freehold?
Andy Carter (Conservative, Warrington South)
Could you expand on that?
Barry Gardiner (Labour, Brent North)
Q Policy Exchange describes itself as a conservative think-tank, so you and I might find ourselves rather strange bedfellows on this, but I welcome what you said about shared services. This whole section is really about competition and free markets and so on. Would you not agree that the leasehold system has all the hallmarks of monopolistic practices and market failure? It has a lack of choice, uncompetitive prices and high barriers to entry, and there is an inability to substitute a service, all of which are the standard accusations that a conservative think-tank might make of an unfree market, and it is against consumer interest. All credit to you, that is what Policy Exchange is supposed to be promoting: the free market and the interests of the consumer. Leasehold itself and the exploitation we have been discussing over the past few days are really embedded in a non-capitalistic structure, are they not?
Barry Gardiner (Labour, Brent North)
Q Thank you. Freeholders, in that sense—particularly in relation to ground rent—are really a rentier class because they are not providing a service in return for the revenue stream they are cashing in on.
Barry Gardiner (Labour, Brent North)
Q I cannot believe we are agreeing quite as much as this—this is wonderful stuff. That rentier class often says, “Well, we do provide a service,” but of course that is to conflate and confuse what they do with the service provided by a managing agent, which of course could be equally well performed by an enfranchised community that has the right to manage their own block. The domain of the freeholder is actually simply the accumulation of the ground rent, is it not?
Barry Gardiner (Labour, Brent North)
Thank you very much. In order to preserve both our reputations, I will not say that you agreed with me and I trust that you will not say that I agreed with you.
Richard Fuller (Conservative, North East Bedfordshire)
Q Let me attempt to get back on to Conservative territory, rather than Barry’s territory. There are many experts in this field, and campaigners have done some fantastic work. I am not one of them—I do not know about this—so allow me some naivety in the questions I pose. Is marriage value a real thing?
Richard Fuller (Conservative, North East Bedfordshire)
Q That did not quite answer my question. My question was: is marriage value a real thing? It could be large or small. Can you describe what it is and do you perceive that it is a real thing? I read somewhere about some vases—I do not know why we have these vase analogies sometimes—and I kind of get it. There is vase A and vase B—apparently they have to be Chinese—and when you put the two together, they are more valuable than they are separately. Is that a real thing? Do you understand that as a source of value? If you do, can you explain to me the legitimacy of transferring, at a stroke, £1.9 billion of that from one group of people to another, and that not to be described as a windfall gain?
Richard Fuller (Conservative, North East Bedfordshire)
Q I have one final question, if I may. I know it is not quite at a stroke, because I think it is when they come up, but is there any way of mitigating? It seems to me that when you take something away from one person incompletely and you cannot actually say, “Well, the value wasn’t there”—I understand fee-for-service but marriage value is different from that—there is no other mitigation for the loss of that party, and there is not in the Bill. We can agree that marriage value needs to go; we are finally going from class A of people to class B of people. We could, however, then put in some mitigation for those who are having a loss, which would be usual if they had not done something materially wrong. What do you think about that?
Richard Fuller (Conservative, North East Bedfordshire)
Oh, it is much wider than that.
Richard Fuller (Conservative, North East Bedfordshire)
Exactly.
Barry Gardiner (Labour, Brent North)
Q On the point of marriage value, Mr Vitali, let us go back to free market principles. You and I would agree that a free market is one in which properties are sold between a willing seller and a willing buyer—would you not?
Barry Gardiner (Labour, Brent North)
Q Of course, the argument that Mr Fuller sought to put forward to you was based on the old cup and saucer analogy, or the pair of vases being more valuable than the one. In this situation, we do not quite have a willing seller and a willing buyer. We have an encumbered buyer, because they are trammelled by the fact that they have lived in that property for the past 30 years, and they now see it becoming worthless. When the Custins v. Hearts of Oak decision in 1967 went through, the Government immediately came back in primary legislation, and legislated to abolish marriage value precisely because of that purpose. If I might impair my socialist credentials even further, it was Margaret Thatcher who sought to abolish it outright, and it was only the foolishness of the subsequent Prime Minister, John Major, that brought it back in for flats in 1993. Is that not your understanding of how a free market should actually work, between a willing buyer and a willing seller?
Barry Gardiner (Labour, Brent North)
We will agree on that one.
Andy Carter (Conservative, Warrington South)
Q James, we are fortunate to have you here, as somebody who thinks a lot about the property sector. We are legislating in one area; quite often, there will be implications in the broader sector. Have you put any thought into that? Could you share any views on unintended consequences that we might need to watch out for elsewhere in the property market?
Andy Carter (Conservative, Warrington South)
So your solution is to deal with houses and flats.
Caroline Dinenage (Conservative, Gosport)
Barry, very quickly.
Barry Gardiner (Labour, Brent North)
Q On mixed use, you made a very good case about the reasons for looking at the shared services previously. Would you be in favour of seeing the Bill say that the threshold should increase not simply from 25% to 50%, but maybe to 75%?
Barry Gardiner (Labour, Brent North)
Q Sorry—this is not about the number of people for an enfranchisement; this is on the shared services point that we discussed earlier. It is about if it should be where the actual commercial element of the building is more than 50%. The limit was 25%; now it is proposed to be 50%. Actually, given that the right to manage would apply only to the leasehold part of the building, it would seem fair that that should be as high as, say, 75% commercial and 25% leasehold, because at the moment it is one person—the freeholder—who is the counterparty for the shared services. In this case, it would be the managing agent of the right to manage leaseholders.
Caroline Dinenage (Conservative, Gosport)
Order. I am afraid that brings us to the end of the time allotted for the Committee to ask questions. I thank the witness very much on the Committee’s behalf.
Examination of Witnesses
Caroline Dinenage (Conservative, Gosport)
We will now hear oral evidence from Philip Freedman from the conveyancing and land law committee at the Law Society, and Philip Rainey from Tanfield Chambers. We have until 3.10 pm for this session. Could the witnesses introduce themselves for the record?Q
Caroline Dinenage (Conservative, Gosport)
It is not very helpful when you are both called Philip—Philip Freedman.
Caroline Dinenage (Conservative, Gosport)
Thank you.
Caroline Dinenage (Conservative, Gosport)
You may.
Caroline Dinenage (Conservative, Gosport)
Thank you. I remind the Committee that we have until 3.10 pm for this session.
Matthew Pennycook (Labour, Greenwich and Woolwich)
Q Gentlemen, in our evidence sessions so far, we have had very wide-ranging discussions —let me put it that way—not just about the principle of the Bill but about property rights, the functioning of market capitalism and liberal democracy, and everything but. As the shadow Minister for the Bill, I would like to use your expertise to focus on what is actually in the Bill and how we might improve it, so my first question is a very specific one on clause 12. I think I put it more to Mr Freedman than to Mr Rainey because of that Law Society briefing. It relates to valuation, which is one of the more complex matters that the Bill deals with.
The Law Society has expressed concern that the provisions in clause 12 designed to protect most but not all leaseholders from non-litigation costs that landlords may incur when responding to an enfranchisement or lease extension claim may cause issues, because under the proposed new valuation method, the price payable may be below full open market value. Could you clarify why you believe that to be the case? The standard valuation method in schedule 5 provides for a market value element. Why does the Law Society believe that it does not represent full open market values?
Matthew Pennycook (Labour, Greenwich and Woolwich)
My question is: why do you not think that the valuation method in here is full market value?Q
Matthew Pennycook (Labour, Greenwich and Woolwich)
Q That is very clear and very useful.
I have a second question, relating to clause 59, which concerns regulation of remedies for arrears of rentcharges. Do you agree with my view that the Government are trying to fix a historical law that is essentially beyond repair? Should we be looking to abolish section 121 of the Law of Property Act 1925?
Matthew Pennycook (Labour, Greenwich and Woolwich)
Q I will quickly come to that, but do have anything to add in relation to clause 59, Mr Rainey?
Matthew Pennycook (Labour, Greenwich and Woolwich)
Q That is extremely useful. I wish that we had you both for more than half an hour.
I have one quick final question on the abolition of forfeiture. Would you agree that we should do away with forfeiture entirely—it sounds like you do—on the grounds that it is a wholly disproportionate response to the breach of a lease? If so, what should we replace it with? Is suing for a debt—as happens with any other debt—and an injunction if the breach relates to conduct a sufficient response or, if we abolish forfeiture, should we be looking to replace it with some other system of recompense?
Matthew Pennycook (Labour, Greenwich and Woolwich)
That is all extremely helpful. Thank you very much.
Richard Fuller (Conservative, North East Bedfordshire)
Q Our previous witness, Mr Vitali, talked about potential concerns about the effect of regulation on people’s understanding of property rights. Do you have any significant concerns about how the Bill affects property rights? If you do, what should we do about them?
Richard Fuller (Conservative, North East Bedfordshire)
You are a lawyer.
Barry Gardiner (Labour, Brent North)
Q Mr Rainey, first, thank you for what you said about the preferability of commonhold to leasehold. Is it your view, therefore, that it would be good if the Bill were to make all new flats that are constructed leasehold with a share of freehold, as a staging post, in effect?
Barry Gardiner (Labour, Brent North)
Q Yes, I was taken by your remarks earlier about the disputes that can go on even where you have an enfranchised situation.
Barry Gardiner (Labour, Brent North)
Unfortunately, legislation cannot make your neighbours more considerate. I often wish it could.
Barry Gardiner (Labour, Brent North)
Any new build.
Barry Gardiner (Labour, Brent North)
Q I want to probe your thoughts on what I find a very tricky part of the way in which the pieces of legislation are now interacting with each other. One of the great freedoms for leaseholders who either cannot afford or do not wish to enfranchise themselves, but where the building has deteriorated to a terrible state under the existing freeholder, is the provision for a court-appointed manager under section 24 of the Landlord and Tenant Act 1987.
That is something that I hope we very much want to protect, because these leaseholders really require the protection of a court-appointed manager. However, the Building Safety Act 2022 bars the court-appointed manager from being an accountable person and from taking full responsibility for the necessary safety remediation works. That responsibility under the BSA ’22 regulations is now being given, in effect, to the one person whose track record shows that they are incapable and not to be trusted to perform the obligations of managing that building—namely, the freeholder who let it go to rack and ruin in the first place. The leaseholders, whom the courts sort to protect, will have that former, negligent freeholder back in charge. I do not know, but I am looking to you to tell us, how one might draft an amendment to the Bill to preserve the protection for leaseholders who find themselves in an incredibly invidious position.
Barry Gardiner (Labour, Brent North)
I was aware that you were involved in the case, but I did not want to drag you into the specific—I wanted to keep you at the general.
Barry Gardiner (Labour, Brent North)
Q Right. You think faster than I can even listen. Are you saying that we could introduce an amendment to this Bill that amended the Building Safety Act 2022 in such a way that we could ensure that those protections continue?
Barry Gardiner (Labour, Brent North)
Q I suppose my real question is, would you care to write to the Committee framing such an amendment?
Barry Gardiner (Labour, Brent North)
I have no doubt that the Secretary of State could do that, but I always feel more comfortable if things are on the face of the Bill.
Barry Gardiner (Labour, Brent North)
Q If I can prevail on you for just a little longer, could you explain the just and convenient test, and how the BSA has affected that?
Barry Gardiner (Labour, Brent North)
I am sure hon. Members can ponder on your words and work it out from there. Thank you; that is really helpful.
Eddie Hughes (Conservative, Walsall North)
Mr Freedman, you represent developers and investors as part of your job. You just referenced the possible impact on pension funds. How significant is that? I am hearing, on the one hand, that people have very diverse portfolios, so although it would be a big number, it would be broadly distributed, nobody would actually feel any real impact and this is just a bit of shroud waving by people who would rather be very rich instead of quite rich. However, there are other people who say, “Hang on a sec, this is not very Conservative, is it?” or, as has been said, that we are talking about transferring wealth from one bunch of people to another. Clearly, Parliament can do that, but the impact might be greater on one than the otherQ . I just wondered about your thoughts on that.
Eddie Hughes (Conservative, Walsall North)
You do not have a view. We will not take your professional—
Mike Amesbury (Labour, Weaver Vale)
Q Your organisation has said it is disappointed that the Bill does not deal with the regulation of managing and property agents. Can you elaborate on that? What needs to be included in the Bill?
Lee Rowley (Conservative, North East Derbyshire)
Mr Freedman, in terms of your previous but one comment, to Eddie, on how you were told about the potential impacts on pension funds and the like, can you tell us, either now or separately if you prefer, who told you that? What is the source?Q
Caroline Dinenage (Conservative, Gosport)
Thank you very much. That brings us to the end of this panel. May I thank the witnesses very much for their evidence? We will now move on to the next panel.
Examination of Witness
Caroline Dinenage (Conservative, Gosport)
We will now hear oral evidence from our seventh panel. Jack Spearman is chair of leasehold reform at the Residential Freehold Association. For this session, we have until 3.30 pm. Could the witness please introduce himself for the record?
Matthew Pennycook (Labour, Greenwich and Woolwich)
Q Mr Spearman, thank you for coming to give evidence to us. The Government’s 2017 consultation on tackling unfair practices in the leasehold market, which I think attracted more than 6,000 responses, found that freeholders regularly price-gouge leaseholders on service charges, ground rents, lease extensions and freehold acquisitions, as well as making arbitrary and unjust rules about what leaseholders can and cannot do with their homes. Is it not the case that many, if not all, of your members routinely engage in rent-seeking behaviour by gouging leaseholders as a matter of course and that the concerns of the RFA about the Bill are almost entirely related in various ways to how it might frustrate them or prohibit them from doing so?
Matthew Pennycook (Labour, Greenwich and Woolwich)
Q Okay. I may come back to some other specific issues if we have time, but specifically on insurance, the Financial Conduct Authority’s report of September last year on insurance for multi-occupancy buildings found evidence of high commission rates and poor practice, which were
“not consistent with driving fair value to the customer”.
It also found that the mean absolute value of commissions more than doubled between 2016 and 2021 for managing agents and freeholders of buildings with fire safety defects. Is it not fair to say that, again, many, if not all, of your members have benefited hugely from soaring buildings insurance premiums over recent years, so do you think the Government are entirely justified in seeking by means of clause 31 to limit their ability to charge insurance costs?
Matthew Pennycook (Labour, Greenwich and Woolwich)
Q Just briefly while we are on that, have you got any sense of whether your members are complying, or are prepared to comply, with the new FCA rules that are coming into force at the end of this month with regard to the right to request to see the insurance?
Andy Carter (Conservative, Warrington South)
Q Thank you very much for your written submission to us. You say in there: “The RFA has serious concerns that the Government’s proposals to cap ground rent will lead to significant cost to the UK taxpayer…and have…negative consequences for leaseholders” What are the costs for UK taxpayers of this piece of legislation?
Andy Carter (Conservative, Warrington South)
Q Okay. In terms of the Bill setting out regulation for property managers, we heard from the Competition and Markets Authority earlier, and it has found significant areas of concern within this sector. Do you accept that it is an area that needs regulation and that there are bad practices at play here?
Andy Carter (Conservative, Warrington South)
Q Do you think a voluntary code is sufficient?
Andy Carter (Conservative, Warrington South)
Q I note that you use the term, when we are talking about capping rents, that it will send “a very damaging signal” to investors. Is that still your opinion—that investors are getting the wrong message from Government?
Andy Carter (Conservative, Warrington South)
Is this not the right thing to do? When you look at the practice that has been going on and the evidence that is there—the mis-selling and appalling behaviour—
Barry Gardiner (Labour, Brent North)
Q I want to pick up on what Mr Carter said and your insistence that capping rents was sending the wrong signal to pension funds. I trust you are aware of the statement from the Pensions and Lifetime Savings Association that said that pension funds aggregate allocation to all types of property—commercial as well as residential—and that accounts for 4% of all pension holdings, and that none of their members have expressed any concerns with them about proposed changes to rules affecting leasehold and ground rents. Were you aware of that?
Barry Gardiner (Labour, Brent North)
Well, it came from the Pensions and Lifetime Savings Association.
Barry Gardiner (Labour, Brent North)
Q If we are talking about, “Directly to the Government”, the Government’s own statement noted that the pension funds held less than 1% of assets in residential property, and added that any hit to pension funds would be within normal investment and depreciation tolerances. They said:
“We do not think it is fair that many leaseholders face unregulated ground rents for no guaranteed service in return.”
So the idea that you seemed to put out—“My goodness, the housing market was going to collapse because pension funds were not going to invest in property any more because they weren’t going to be able to extract the ground rents”—is a nonsense, is it not? You talked about £100 ground rent, but you know what is being done here. Your members are not limiting to £25 or £100 ground rents or peppercorn rents. Over the past 15 years, they have created a rentier structure wherein they can extract revenues from the ground rent that are exorbitant—in some cases, £8,000 a year for no service. Is that not true?
Barry Gardiner (Labour, Brent North)
Q Nonsense. Justify the word “steal”. I would say the word “steal” is justified when there is no service being provided, and yet you are charging for it, even if it is only a chocolate bar.
Barry Gardiner (Labour, Brent North)
Q Remediation—because the freeholder did not ensure the proper safety of the building in the first place.
Barry Gardiner (Labour, Brent North)
Q Mr Spearman, since we have limited time, let me turn to what you are saying to the members of the public. You have engaged in a number of polling operations. You have told people that only 1 in 4 people in a block would be able to agree with each other about how to manage that block. The implication is that many leaseholders do not want to take on the burden of management and, actually, some of them are incapable of taking on that burden of management—almost as if you are providing them with this wonderful service that they would not want to get rid of. But the figure of 1 in 4 people that you quoted in your survey was 1 in 4 people in the United Kingdom, and not leaseholders at all, was it not? It included people in Scotland who are not involved in the provisions of leasehold in England and Wales. So you went out to people who had no connection as leaseholders and surveyed them, and then claimed that was an argument.
Richard Fuller (Conservative, North East Bedfordshire)
On a point of order, Dame Caroline. I am wondering whether my colleague, Mr Gardiner, is getting to a question rather than just expressing a view.
Barry Gardiner (Labour, Brent North)
I just did, but you interrupted.
Caroline Dinenage (Conservative, Gosport)
We do have very limited time, Barry, and other people want to ask questions, so can you bring it to a question swiftly?
Barry Gardiner (Labour, Brent North)
Indeed. Mr Spearman, you have misled people in the polling surveys and the conclusions you have drawn from them, have you not? Your own members—Consensus Business, Long Harbour and Wallace Estates—did surveying in which they found that 67% of residential leaseholders said that they would wish to take control of their building and get out from under you, but you suppressed that, did you not?
Barry Gardiner (Labour, Brent North)
A manager who works for a freeholder can be no different from a manager who works for an enfranchised set of leaseholders, can it? So the idea that the complexity is beyond the leaseholders is simply not a fair comparison.
Caroline Dinenage (Conservative, Gosport)
Order. We have time for only one more question, Barry. Can I move on to Richard Fuller, please?