Leasehold Reform

Thursday 23rd March 2023 Lords Chamber

Question

11:18

Asked by

[Lord Kennedy of Southwark]

To ask His Majesty’s Government when they intend to introduce legislation to end the residential leasehold system.

[Lord Kennedy of Southwark (Lab Co-op)]

My Lords, in begging leave to ask the Question standing in my name on the Order Paper, I refer the House to my registered interests and the fact that I am a leaseholder.

[The Parliamentary Under-Secretary of State, Department for Levelling Up, Housing & Communities (Baroness Scott of Bybrook) (Con)]

My right honourable friend the Secretary of State set out in the Commons his intention to bring the outdated and feudal leasehold system to an end. The Government wish to extend the benefits of freehold ownership to more home owners. That is why we have committed to end the sale of new leasehold houses and to reinvigorate commonhold so that it can finally be a genuine alternative to leasehold. We will bring forward further reforms later in this Parliament.

[Lord Kennedy of Southwark (Lab Co-op)]

My Lords, I thank the Minister for her response. The residential leasehold system is not fit for purpose. The Government need to make significant progress in this Parliament, as they promised. We are running out of time, and the purpose of my Question today is to seek absolute clarity. Will the Bill we are going to get in the next Session of Parliament abolish residential leasehold as a tenure? The answer is either yes or no.

[Baroness Scott of Bybrook (Con)]

Leasehold—the noble Lord is not getting a yes or no—is increasingly seen as an outdated form of home ownership and, as I said, the Secretary of State has set out his intention to bring this outdated and feudal tenure to an end. I cannot set out the precise details of the future plan at this stage. However, the Government are committed to creating a fair and just housing system that works for everyone, and we are taking forward a comprehensive programme of reform to end unfair practices in the home ownership market by reinvigorating commonhold, which will also give developers and buyers of flats a genuine alternative to leasehold.

[Lord Young of Cookham (Con)]

My Lords, these are difficult times for leaseholders. Many face high service charges as a result of the cladding scandal, while others, as my noble friend just said, are exploited by a minority of freeholders, and there is uncertainty in the market while we await the Government’s reforms. Can my noble friend do more to publicise the existence of a free, independent advisory service for leaseholders, which is supported by her department, and can she give an assurance that it will have the resources and skills to meet demand?

[Baroness Scott of Bybrook (Con)]

I think my noble friend is probably talking about LEASE, which is a government-sponsored arm’s-length body. The Government provide £1.9 million of funding every year so that leaseholders and park home owners can get free information and advice. We recognise that these people face some parallel complexities and lack of control over some of their properties. We are looking at LEASE—a new chair is being recruited at the moment—and we are looking for it to be a little more impactful, customer friendly and cost effective into the future, as well as leading important work to ensure that the voices of leaseholders and park home owners are listened to.

[Baroness Watkins of Tavistock (CB)]

My Lords, can the Minister assure the House that the future legislation will take careful consideration of issues relating to retirement homes and villages?

[Baroness Scott of Bybrook (Con)]

I am sorry—somebody was talking behind me. Can the noble Baroness please repeat that?

[Baroness Watkins of Tavistock (CB)]

My question was about ensuring that the future legislation will take into consideration retirement villages and communities.

[Baroness Scott of Bybrook (Con)]

Absolutely. It is extremely important; if the noble Baroness was in the Chamber last night she would have heard us talking about the planning system as well, making it clear that with an ageing population we need to consider homes of all types for older people in the future.

[The Lord Speaker (Lord McFall of Alcluith)]

My Lords, the noble Lord, Lord Campbell-Savours, is participating remotely.

[Lord Campbell-Savours (Lab) [V]]

My Lords, have Ministers noted the large number of leasehold ground rent investments on property auction sites, as landlords, aware of potential changes in the law affecting valuations, offload their leasehold ground rent investments? Innocent non-professional buyers, ignorant of potential changes in the law, are now buying them—caveat emptor—placing themselves at risk of substantial loss. Should government not consider secondary legislation which would alert an innocent market to the dangers of buying these leasehold ground rent investments?

[Baroness Scott of Bybrook (Con)]

The noble Lord brings up a very interesting point. I will take it back to the department and we will discuss it further. These are the sorts of issues that LEASE will be helping potential buyers work their way through.

[Lord Naseby (Con)]

My Lords, since there is a considerable challenge in the housing market, arising partly from Grenfell and the related programme, and there is a shortage of homes at every single level, is this not a case where His Majesty’s Government need to move with speed but also with thoroughness before we take any action?

[Baroness Scott of Bybrook (Con)]

My noble friend is absolutely right. Leaseholder issues are complex and contain a lot of legal issues that need to be dealt with. Therefore, we need to take our time, and we are doing so, but the government manifesto says that we will deal with this issue within this Parliament, and we intend to do so.

[Viscount Hanworth (Lab)]

My Lords, the Minister will be aware that freeholders have been empowered to impose the costs of any litigation that has been initiated by an aggrieved leaseholder upon that leaseholder. When will that extraordinary anomaly in British law be corrected?

[Baroness Scott of Bybrook (Con)]

The Government recognise that the existing statutory requirements do not go far enough to enable leaseholders to identify and challenge those unfair costs. We believe that leaseholders should not be subject to unfair legal costs and should be able to claim them from their landlords, and we are taking action to address that.

[Lord Stoneham of Droxford (LD)]

My Lords, in 2020 the Law Commission recommended commonhold ownership as an option. I thought the Minister committed to that in her Answer. Can she tell us how the Government see this proceeding, and is it one of the principal options that the Government are looking at?

[Baroness Scott of Bybrook (Con)]

The Government are looking at all options but, as the Secretary of State has said on a number of occasions, we are looking at commonhold.

[Lord Anderson of Swansea (Lab)]

My Lords, the only potential benefit I can see is inserting restrictions on non-conforming developments, which the leasehold system provides. It is a good start to call the system outdated and feudal, but can non-conforming developments be prevented by other means, such as the planning system?

[Baroness Scott of Bybrook (Con)]

The planning system will have to be looked into, but I can say that, interestingly, through the recent rent Act, new builds are now no longer or are very rarely leasehold—they are now freehold—so the developers themselves are looking at this. It is more complex in flats and with multiple occupancy, but in terms of houses very few leasehold properties are available.

[Lord Kamall (Con)]

My noble friend the Minister will be aware that in many cases the freeholder is a local authority. Can she advise us on what conversations her department has had with local authorities across the country, or representative bodies of local authorities, to make sure that they make it easier for leaseholders to acquire their properties?

[Baroness Scott of Bybrook (Con)]

I will write to the noble Lord with all the details of those conversations. They are being had, but I will give him more information when I write.

[Lord Kennedy of Southwark (Lab Co-op)]

My Lords, can I just draw the Minister’s attention to some of the excellent Private Members’ Bills, including my own, which seek to address some of the issues that the Minister herself wants to address?

[Baroness Scott of Bybrook (Con)]

I certainly hope that we get our Bill in before the noble Lord’s.

[Baroness Bennett of Manor Castle (GP)]

My Lords, community land trusts, co-housing schemes and co-operatives offer different models focused on building community, delivering for the common good rather than focusing on individual profit. Will the Government look into how they can strongly support these creative, innovative models of housing?

[Baroness Scott of Bybrook (Con)]

The Government do support those forms of housing. We will continue to do so and will look into how we can support them more in the future.