Member Debate under Standing Order 11.21(iv): Leasehold residential contracts
Motion NDM6626 Mick Antoniw, David Melding, David Rees, Siân Gwenllian
Supported by Mike Hedges, Julie Morgan, Jenny Rathbone, Russell George, Jane Hutt, Darren Millar, Simon Thomas, Jayne Bryant, Janet Finch-Saunders, Lynne Neagle, Joyce Watson, Vikki Howells
To propose that the National Assembly for Wales:
1. Recognises that leasehold residential contracts continue to represent a significant proportion of new build properties in Wales; and
a) that leasehold residential contracts are often offered on disadvantageous terms, resulting in detriment to the home-owner; and
b) that leasehold home-owners have little protection from unreasonable fees and unreasonable delays when buying, selling or improving their property.
2. Notes the UK Government’s proposed ban on the sale of new-build leasehold properties in England.
3. Believes that the Welsh Government should take action to protect future home-owners by abolishing leasehold residential contracts in Wales.
Gareth Bennett AM
Party: United Kingdom Independence Party (UKIP)
Thanks to Mick Antoniw and the other sponsors of today’s debate. The issue of leaseholds and freeholds is not a new one in Wales. I’m not going to attempt to go all the way back to the eleventh century, as Mick did, but we did have a well-publicised situation during the 1950s when a large number of miners’ homes in the south Wales Valleys had leases that the occupiers weren’t able to purchase. At that point, one company, Western Ground Rent, held some 10,000 leases, and there were attempts to reform that situation in Parliament at the time, led by someone who was later my local MP, George Thomas. Now, whatever reputation George Thomas has these days, he was involved in at least one useful campaign, which was the campaign to reform leaseholds in Wales during the 1950s and 1960s.
As we’ve heard in today’s debate, though, there is evidence that leaseholds are still very much with us. As Mick Antoniw stated in his opening remarks, it’s estimated that there are some 200,000 leasehold homes in Wales, and there is the disturbing aspect that a significant number of new-build developments are being offered to house buyers coming into the market as leasehold.
One point that Mick made was that he acknowledged that there was a difference between leasehold flats and leasehold houses, and some would argue that there may be a case for flats being leasehold, as they clearly have communal areas and will also offer communal services. But, then again, the leaseholders are paying service charges for these facilities, so why should they be impeded from each owning their own freehold? In the case of leasehold houses, though, it is even odder that house builders are trying to fob buyers off with leasehold arrangements. In these instances there are no communal areas, there are no service charges, generally, so there is even less justification for not offering the freehold.
In recent years there have been whole new developments that have gone up in which all the houses on offer were leasehold, and Dai Rees began to mention the names of some of the companies that have developed those arrangements. I noted today that, currently, on Darlows’ website, there are no fewer than 185 leasehold properties on offer in Cardiff alone.
A significant problem is that many first-time buyers lack financial education of the sort that is needed when they enter the world of property purchasing. This is something of a failing of the education system, which is sometimes too academic in nature and offers not enough of practical relevance to school students. We do need to give young people some meaningful financial education to prepare them for entering the world of property, although that debate is perhaps for another day.
To return to the point at issue today, first-time buyers, desperate to get onto the housing ladder and knowing little, often buy a house, many of them not even understanding the difference between leasehold and freehold. Then, when they come to sell the house, they find that there is a significant difference between their market price and the market price of neighbouring houses in which the householders do own the freehold. For instance, one of my constituents, who lives in the Cynon valley, eventually sold her house for £110,000 because she was only a leaseholder, whereas other properties in the same street were going for £140,000. That is a significant loss, and that individual did not realise when she bought her property what a leasehold even was. So, this is one part of the problem we are dealing with.
Dai Rees made the point that, in these cases, we should try to do something to ensure that the legal advice that prospective house buyers are getting from solicitors does actually explain these differences between leasehold and freehold. But, of course, we’ve had a series of financial packages offered over the years in which false advice has been given, so I fear that, unless there is some kind of meaningful regulation, we can’t really rely on regulation to ensure advice that is given from solicitors. So, I believe there are many problems associated with leaseholds; legislation could well be the only way forward. The legal competence issue, which Dai Rees also raised, is a possible problem, so I’m interested to hear what the Minister says about that today, and how she clarifies that. But UKIP supports the principles behind this motion, that house buyers should not be ripped off, and is happy therefore to support today’s motion. Diolch yn fawr iawn.