Leasehold and Freehold Reform Bill

Report stage
Tuesday 27th February 2024 Commons Chamber

Consideration of Bill, as amended in the Public Bill Committee

[Relevant documents: Twelfth Report of the Communities and Local Government Committee of Session 2017-19, Leasehold Reform, HC 1468, and the Government response, CP 99.]

New Clause 26

LTA 1985: Crown application

“(1) Before section 40 of the LTA 1985 insert—

“39A Crown application

Sections 18 to 30P, and the Schedule, bind the Crown.”

(2) In section 172 of the CLRA 2002 (application to Crown of certain provisions)—

(a) in subsection (1), omit paragraph (a);

(b) omit subsection (3).”.—(Lee Rowley.)

This new clause, to be inserted after clause 41, would move provision about Crown application of the LTA 1985 currently in the CLRA 2002 into the LTA 1985, and clarify that the relevant provisions bind the Crown whether or not they relate to Crown land.

Brought up, and read the First time.

14:55

[The Minister for Housing, Planning and Building Safety (Lee Rowley)]

I beg to move, That the clause be read a Second time.

[Madam Deputy Speaker (Dame Rosie Winterton)]

With this it will be convenient to discuss the following:

Government new clause 27—Part 4: Crown application.

Government new clause 28—Redress schemes: no Crown status.

Government new clause 29—Part 5: amendments to other Acts.

Government new clause 30—Steps relating to remediation of defects.

Government new clause 31—Remediation orders.

Government new clause 32—Remediation contribution orders.

Government new clause 33—Recovery of legal costs etc through service charge.

Government new clause 34—Repeal of section 125 of the BSA 2022.

Government new clause 35—Higher-risk and relevant buildings: notifications in connection with insolvency.

Government new clause 42—Ban on grant or assignment of certain long residential leases of houses.

Government new clause 43—Long residential leases of houses.

Government new clause 44—Leases which have a long term.

Government new clause 45—Series of leases whose term would extend beyond 21 years.

Government new clause 46—Houses.

Government new clause 47—Residential leases.

Government new clause 48—Permitted leases.

Government new clause 49—Permitted leases: certification by the appropriate tribunal.

Government new clause 50—Permitted leases: marketing restrictions.

Government new clause 51—Permitted leases: transaction warning conditions.

Government new clause 52—Prescribed statements in new long leases.

Government new clause 53—Restriction on title.

Government new clause 54—Redress: right to acquire a freehold or superior leasehold estate.

Government new clause 55—Redress: application of the right to acquire.

Government new clause 56—Redress: general provision.

Government new clause 57—Redress regulations: exercising and giving effect to the right to acquire.

Government new clause 58—Enforcement by trading standards authorities.

Government new clause 59—Financial penalties.

Government new clause 60—Financial penalties: cross-border enforcement.

Government new clause 61—Lead enforcement authority.

Government new clause 62—General duties of lead enforcement authority.

Government new clause 63—Enforcement by lead enforcement authority.

Government new clause 64—Further powers and duties of enforcement authorities.

Government new clause 65—Power to amend: permitted leases and definitions.

Government new clause 66—Interpretation of Part A1.

New clause 1—Estate management services—

“(1) Within three months of the passage of this Act, the Secretary of State must by regulation provide for residents of managed dwellings to take ownership, at nominal cost, of—

(a) an estate management company, or

(b) the assets of an estate management company, or other company or business connected with the development or management of the dwellings, which are used to provide services to managed dwellings

if the estate management company or connected company or business does not—

(i) provide the residents of the managed dwellings with a copy of its budget for the forthcoming year and accounts for the past year;

(ii) give sufficient notice to enable residents to attend its annual meeting;

(iii) acknowledge correspondence sent by registered post to its registered office within a reasonable length of time.

(2) Regulations under subsection (1) may amend primary legislation.”

New clause 2—Estate management: compensation—

“(1) This section applies where the first and second condition are met.

(2) The first condition is that it would not be reasonable for the residents of a property to continue to occupy that property as their primary residence due to a defect which the estate manager—

(a) is responsible for remedying, or

(b) could reasonably have foreseen would arise.

(3) The second condition is that—

(a) the defect is the direct result of actions taken or not taken by the estate manager, or

(b) the estate manager has failed to remedy the defect within a reasonable period of time.

(4) The estate manager must—

(a) provide compensation to the residents of the property equal to any reasonable financial loss they incurred as a result of the defect, or

(b) provide suitable alternative accommodation for the duration of the period for which this section applies.

(5) No cost incurred by an estate manager as a consequence of this section may be recouped from the estate in question through an estate management charge.”

This new clause would allow estate residents to claim compensation or alternative accommodation where it is not reasonable for them to remain in their homes due to defects caused, or left unremedied for an unreasonable length of time, by an estate manager.

New clause 3—Prohibition on landlords claiming litigation costs from tenants—

“(1) Any term of a long lease of a dwelling which provides a right for a landlord to demand litigation costs from a leaseholder (whether as a service charge, administration charge or otherwise) is of no effect.

(2) The Secretary of State may, by regulations, specify classes of landlord to which or prescribed circumstances in which subsection (1) does not apply.

(3) In this section—

“administration charge” has the meaning given by Schedule 11 of the Commonhold and Leasehold Reform Act 2022;

“dwelling” means a building or part of a building occupied or intended to be occupied as a separate dwelling, together with any yard, garden, or outhouses and appurtenances belonging to it or usually enjoyed with it;

“long lease” has the meaning given by sections 76 and 77 of the Commonhold and Leasehold Reform Act 2002;

“service charge” has the meaning given by section 18 of the Landlord and Tenant Act 1985;

“landlord” has the meaning given by section 30 of the Landlord and Tenant Act 1985.”

This new clause would prohibit landlords from claiming litigation costs from tenants other than under limited circumstances determined by the Secretary of State.

New clause 4—Remedies for the recovery of annual sums charged on land—

“(1) Section 121 of the Law of Property Act 1925 is omitted.

(2) The amendment made by subsection (1) has effect in relation to arrears arising before or after the coming into force of this section.”

This new clause, which is intended to replace clause 59, would remove the provision of existing law which, among other things, allows a rentcharge owner to take possession of a freehold property in instances where a freehold homeowner failed to pay a rentcharge.

New clause 5—Abolition of forfeiture of a long lease—

“(1) This section applies to any right of forfeiture or re-entry in relation to a dwelling held on a long lease which arises either—

(a) under the terms of that lease; or

(b) under or in consequence of section 146(1) of the Law of Property Act 1925.

(2) The rights referred to in subsection (1) are abolished.

(3) In this section—

“dwelling” means a building or part of a building occupied or intended to be occupied as a separate dwelling, together with any yard, garden, or outhouses and appurtenances belonging to it or usually enjoyed with it;

“lease” means a lease at law or in equity and includes a sub-lease, but does not include a mortgage term;

“long lease” has the meaning given by sections 76 and 77 of the Commonhold and Leasehold Reform Act 2002.”

This new clause would abolish the right of forfeiture in relation to residential long leases in instances where the leaseholder is in breach of covenant.

New clause 6—Requirement to establish and operate a management company under leaseholder control—

“(1) The Secretary of State may by regulations make provision—

(a) requiring any long lease of a dwelling to include a residents management company (“RMC”) as a party to that lease, and

(b) for that company to discharge under the long lease such management functions as may be prescribed by the regulations.

(2) Regulations under subsection (1) must provide—

(a) for the RMC to be a company limited by share (with each share to have a value not to exceed £1), and

(b) for such shares to be allocated (for no consideration) to the leaseholder of the dwelling for the time being.

(3) Regulations under subsection (1) must prescribe the content and form of the articles of association of an RMC.

(4) The content and form of articles prescribed in accordance with subsection (3) have effect in relation to an RMC whether or not such articles are adopted by the company.

(5) A provision of the articles of an RMC has no effect to the extent that it is inconsistent with the content or form of articles prescribed in accordance with subsection (3).

(6) Section 20 of the Companies Act 2006 (default application of model articles) does not apply to an RMC.

(7) The Secretary of State may by regulations make such provision as the Secretary of State sees fit for the enforcement of regulations made under subsection (1), and such provision may (among other things) include provision—

(a) conferring power on the First-Tier Tribunal to order that leases be varied to give effect to this section;

(b) providing for terms to be implied into leases without the need for any order of any court or tribunal.

(8) The Secretary of State may by regulations prescribe descriptions of buildings in respect of which regulations may be made under subsection (1).

(9) In this section—

“dwelling” means a building or part of a building occupied or intended to be occupied as a separate dwelling, together with any yard, garden, or outhouses and appurtenances belonging to it or usually enjoyed with it;

“long lease” has the meaning given by sections 76 and 77 of the Commonhold and Leasehold Reform Act 2002;

“management function” has the meaning given by section 96(5) of the Commonhold and Leasehold Reform Act 2002.

(10) The Secretary of State may by regulations amend the definition of “management function” for the purposes of this section.”

This new clause would ensure that leases on new flats include a requirement to establish and operate a residents’ management company responsible for all service charge matters, with each leaseholder given a share.

New clause 7—Power to establish a Right to Manage regime for freeholders on private or mixed-use estates—

“In Section 71 of the Commonhold and Leasehold Reform Act 2002, after subsection (2) insert—

“(3) The Secretary of State may by regulations make provision to enable freeholder owners of dwellings to exercise a right to manage in a way which corresponds with or is similar to this Part.

(4) A statutory instrument containing regulations under subsection (3) may not be made unless a draft of the instrument has been laid before and approved by a resolution of each House of Parliament.””

This new clause would permit the Secretary of State to establish a Right to Manage regime for freeholders of residential property on private or mixed-use estates.

New clause 8—Regulation of property agents—

“(1) The Secretary of State must by regulations make provision for implementing the proposals of the Regulation of Property Agents Working Group final report of July 2019 as far as they relate to—

(a) estate management;

(b) sale of leasehold properties; and

(c) sale of freehold properties subject to estate management or service charges.

(2) Regulations under this section—

(a) must be laid within 24 months of the date of Royal Assent to this Act,

(b) shall be made by statutory instrument, and

(c) may not be made unless a draft has been laid before and approved by resolution of each House of Parliament.

(3) If, at the end of the period of 12 months beginning with the day on which this Act is passed, the power in subsection (1) is yet to be exercised, the Secretary of State must publish a report setting out the progress that has been made towards doing so.”

This new clause would require the Secretary of State to make regulations to implement the proposals of the Regulation of Property Agents Working Group final report within 24 months of the Act coming into force and to report on progress to that end at the end of the period of 12 months.

New clause 9—Qualifying leases for the purposes of the remediation of building defects—

“Section 119 of the Building Safety Act 2022 is amended by the insertion after subsection (4) of the following —

“(5) The Secretary of State may, by regulations, amend subsection (2) so as to bring additional descriptions of lease within the definition of “qualifying lease”.””

This new clause would give the Secretary of State the power to bring “non qualifying” leaseholders within the scope of the protections of the Building Safety Act 2022.

New clause 10—Meaning of “relevant building” for the purposes of the remediation of building defects—

“Section 117 of the Building Safety Act 2022 is amended by the insertion after subsection (6) of the following—

“(7) The Secretary of State may, by regulations, amend subsection (2) so as to bring additional descriptions of building within the definition of “relevant building”.””

This new clause would give the Secretary of State the power to bring buildings which are under 11m in height or have fewer than four storeys within the scope of the protections of the Building Safety Act 2022.

New clause 11—Report on providing leaseholders in flats with a share of the freehold—

“(1) The Secretary of State must publish a report outlining legislative options to ensure that all qualifying tenants in newly-constructed residential properties containing two or more flats have a proportionate share of the freehold of their property.

(2) The report must be laid before Parliament within three months of the commencement of this Act.”

This new clause would require the Secretary of State to publish a report outlining legislative options to provide leaseholders in flats with a share of the freehold.

New clause 12—Proportion of qualifying tenants required for a notice of claim to acquire right to manage—

“Section 79 of the CLRA 2002 is amended, in subsection (5), by leaving out “one-half” and inserting “35%”.”

This new clause would reduce the proportion of qualifying tenants who must be members of a proposed Right to Manage company for a claim to be made from one-half to 35%.

New clause 13—Prohibition on new leasehold homes—

“(1) Within three months of the passage of this Act, the Secretary of State must by regulations prohibit the sale of any new leasehold home.

(2) Regulations under this section—

(a) shall be made by statutory instrument,

(b) may not be made unless a draft has been laid before and approved by resolution of each House of Parliament; and

(c) may amend primary legislation.”

New clause 14—Premises to which leasehold right to manage applies—

“Section 72 of the CLRA 2002 is amended in subsection (1)(a), by the addition at the end of the words “or of any other building or part of a building which is reasonably capable of being managed independently.””

This new clause which is an amendment to the Commonhold and Leasehold Reform Act 2002 adopts the Law Commission’s Recommendation 5 in its Right to Manage report which would allow leaseholders in mixed-use buildings with shared services or underground car park to exercise the Right to Manage.

New clause 15—Meaning of “accountable person” for the purposes of the Building Safety Act 2022—

“(1) Section 72 of the Building Safety Act 2022 is amended in accordance with subsections (2) and (3).

(2) After subsection (2)(b), insert—

“(c) all repairing obligations relating to the relevant common parts which would otherwise be obligations of the estate owner are functions of a manager appointed under section 24 of the Landlord and Tenant Act 1987 in relation to the building or any part of the building.”

(3) In subsection (6), in the definition of “relevant repairing obligation”, after “enactment”, insert “or by virtue of an order appointing a manager made under section 24 of the Landlord and Tenant Act 1987”.

(4) Section 24 of the Landlord and Tenant Act 1987 is amended in accordance with subsection (5).

(5) Omit subsection (2E).”

This new clause would provide for a manager appointed under section 24 of the Landlord and Tenant Act 1987 to be the “accountable person” for a higher-risk building.

New clause 16—Commencement of section 156 of the CLRA 2002—

“(1) Section 181 of the CLRA 2002 is amended as follows.

(2) In subsection (1), after “104” insert “, section 156”.

(3) After subsection (1) insert—

“(1A) Section 156 comes into force at the end of the period of two months beginning with the day on which the Leasehold and Freehold Reform Act 2024 is passed.””

This new clause would bring into force a requirement of the Leasehold and Freehold Reform Act 2024 that service charge contributions be held in designated accounts.

New clause 17—Eligibility for enfranchisement—

“(1) The LHRUDA 1993 is amended as follows.

(2) In section 3—

(a) in subsection (2)(a), after third “building”, insert “, or could be separated out by way of the granting of a mandatory leaseback on the non-residential premises to the outgoing freeholder”;

(b) after sub-paragraph (2)(b)(ii), insert “or

(iii) are reasonably capable of being managed independently or are already subject to separate management arrangements;”

(3) In section 4(1)(a)(ii), after “premises;”, insert “nor

(iii) reasonably capable of being separated out by way of the granting of a mandatory leaseback and reasonably capable of being managed independently from the residential premises;””

This new clause would ensure that leaseholders in mixed-use blocks with shared services with commercial occupiers would qualify to buy their freehold.

New clause 18—Right to manage: procedure following an application to the appropriate tribunal—

“(1) The CLRA 2002 is amended as follows.

(2) After section 84, insert—

“84A Procedure following an application to the appropriate tribunal

(1) Where an application is made to the appropriate tribunal under section 84(3) for a determination that an RTM company was on the relevant date entitled to acquire the right to manage the premises, the Tribunal may, if satisfied that it is reasonable to do so, dispense with—

(a) service of any notice inviting participation;

(b) service of any notice of claim;

(c) any of the requirements in the provisions set out in subsection (2); or

(d) any requirement of any regulations made under this part of this Act.

(2) Subsection (1)(c) applies to the following provisions of this Act—

(a) section 73;

(b) section 74;

(c) section 78;

(d) section 79;

(e) section 80;

(f) section 81.””

This new clause would provide the appropriate tribunal with the discretion to dispense with certain procedural requirements where it is satisfied that it is reasonable to do so. It is designed to deal with cases where a landlord attempts to frustrate an RTM claim by procedural means.

New clause 19—Service charges: consultation requirements—

“(1) The Landlord and Tenant Act 1985 is amended as follows.

(2) In section 20ZA, after subsection (1), insert—

“(1A) “Reasonable” for the purpose of subsection (1) is a matter of fact for the tribunal, which—

(a) may or may not consider the matter of relevant prejudice to the tenant. If prejudice is to be considered the burden is on the landlord to demonstrate a lack of prejudice or to prove the degree of prejudice;

(b) must include consideration of the objectives of increasing transparency and accountability, and the promotion of professional estate management, as well as of ensuring that leaseholders are protected from paying for inappropriate works or paying more than would be appropriate;

(c) must consider the dignity and investment of the tenant, who should be treated as a core participant in the process of service charge decisions;

(d) must have regard to the tenant’s legitimate interest in a meaningful consultation process, bearing in mind that minor or technical breaches may not impinge on the tenant’s interest, nor prejudice the tenant;

(e) at its discretion may or may not consider a reconstruction of the ‘what if’ situation, analysing what would have happened had the consultation been followed properly. The landlord is liable for the costs of such a reconstruction.””

This new clause would set matters for the tribunal to consider when deciding whether to dispense with all or any of the requirements for landlords to consult tenants in relation to any major works.

New clause 20—Building insurance and section 39 of the Financial Services and Markets Act 2000—

“A landlord may not manage or arrange insurance for their building under the protections of section 39 of the Financial Services and Markets Act 2000.”

This new clause precludes a landlord from operating as an appointed representative under the licence of Broker, where the landlord has no such licence themselves.

New clause 21—Collective enfranchisement: removal of prohibition on participation—

“(1) Section 5 of the LRHUDA 1993 is amended in accordance with subsection (2).

(2) Omit subsections (5) and (6).”

This new clause would implement recommendation 41 of the Law Commission’s report on enfranchisement, that the prohibition on leaseholders of three or more flats in a building being qualifying tenants for the purposes of a collective enfranchisement claim should be abolished.

New clause 22—Leases for new dwellings: default length—

“(1) Where a lease is a regulated lease, it must be issued with a lease term of at least 990 years.

(2) In this section—

“regulated lease” means a lease which meets the following conditions—

(a) it is a long lease of a single dwelling;

(b) it is granted for a premium;

(c) it is granted on or after the relevant commencement day but not in pursuance of a contract made before that day; and

(d) when it is granted, it is not an excepted lease.

the “relevant commencement day” is 1 January 2025.”

This new clause would ensure that all leases created for new flats following 1 January 2025 come with a default length of 990-years, bringing the position of future private sector leases into line with the existing requirements under Home England’s new model shared ownership lease

New clause 23—Report on disadvantage suffered by existing leaseholders—

“(1) Within 12 months of this Act receiving Royal Assent, the Secretary of State must commission an independent evaluation of the matter set out in subsection (2) and must lay the report of the evaluation before Parliament.

(2) The matter is the extent to which a tenant who has extended their lease or purchased the freehold of their property after 27 November 2023 but prior to this Act receiving Royal Assent (Tenant A) is disadvantaged in comparison to a tenant who has extended their lease or purchased the freehold of their property after this Act received Royal Assent (Tenant B).

(3) The report must take account of the following factors—

(a) marriage value;

(b) the legal costs likely to be incurred by the freeholder; and

(c) any charge for which Tenant A would be liable but Tenant B would not.

(4) The report must make recommendations to redress any significant disparities between the costs for which Tenant A would be liable but Tenant B would not.

(5) The Secretary of State may by regulations give effect to any recommendations made in the evaluation.

(6) Regulations under this section—

(a) shall be made by statutory instrument; and

(b) may not be made unless a draft has been laid before and approved by resolution of each House of Parliament.”

This new clause would require the Secretary of State to commission an independent evaluation of any disadvantages faced by a tenant who has extended their lease or purchased the freehold of their property after the introduction of this Bill but prior to it receiving Royal Assent.

New clause 24—Asbestos remediation—

“(1) The Leasehold Reform, Housing and Urban Development Act 1993 is amended as follows.

(2) After section 37B, insert—

“37C Asbestos remediation

(1) This section applies where a claim to exercise the right to collective enfranchisement in respect of any premises is made by tenants of dwellings contained in the premises and the claim is effective.

(2) Not less than 3 months before the effective date of the enfranchisement, the landlord must cause a structural survey of the premises to be undertaken by an accredited professional to ascertain whether asbestos is, or is liable to be, present in those parts of the premises which the landlord is responsible for maintaining.

(3) Where the survey required by subsection (2) reveals the presence of asbestos, the landlord must, at the landlord’s cost, arrange for its safe removal.

(4) If the removal of asbestos required by subsection (3) is not carried out before the responsibility for maintaining the affected parts transfers to another person under the claim to exercise the right of collective enfranchisement, the landlord is liable for the costs of its removal.””

New clause 25—Right to statutory compensation when landlord alters premises—

“(1) This section applies when both of the following conditions are satisfied—

(a) the first condition is that there are premises in which at least one dwelling is let on a long lease to a person (“T”); and

(b) the second condition is that the landlord or any superior landlord (“L”) under T’s long lease undertakes substantial development to the premises containing T’s dwelling.

(2) When both of the conditions mentioned in subsection (1) are satisfied, L must pay to T compensation reflecting the disruption caused by the substantial development.

(3) The compensation due from L to T under subsection (2) is to be calculated and paid by L to T at a time and in a manner according to regulations made by the Secretary of State.

(4) Notwithstanding any term of any agreement to the contrary, whether the agreement is made before or after the coming into force of this section—

(a) T may set-off any part of any compensation due from L but not paid by L in accordance with this section against any service charges demanded by L; and

(b) L may not exercise or omit to exercise any right, or otherwise take any step, to prejudice T as a result of any set-off exercised by T in accordance with this section.

(5) The County Court has jurisdiction to determine any dispute regarding compensation payable under this section.

(6) Regulations under this section—

(a) are to be made by statutory instrument;

(b) may make provision generally or only in relation to specific cases;

(c) may make different provision for different purposes;

(d) may include supplementary, incidental, transitional or saving provision.

(7) A statutory instrument containing regulations under this section is subject to the negative procedure.

(8) In this section—

“long lease” has the same meaning has the same meaning as in Chapter 1 of Part 2 of the Commonhold and Leasehold Reform Act 2002 (see sections 76 and 77 of that Act);

“service charge” has the same meaning as in section 18 of the Landlord and Tenant Act 1985 (as amended by this Act);

“substantial development” means demolishing, reconstructing or carrying out substantial works of construction on, the whole or a substantial part of the premises.”

This new clause is proposed after clause 21. It would require landlords who extend or alter buildings to pay statutory compensation to residential leaseholders in that building, for example when adding new storeys under permitted development rights. Residential leaseholders would have the right to set-off this compensation against service charges if landlords did not pay.

New clause 36—Codes of management practice: requirement to adhere—

“In section 87 of the LRHUDA 1993 (codes of management practice)—

(a) after subsection (1) insert—

“(1A) If—

(a) the Secretary of State has not approved a code or codes of practice which appear to him to promote desirable practices in relation to all necessary matters concerned with the management of residential property by relevant persons within three months of the passage of the Leasehold and Freehold Reform Act 2024, or

(b) as a consequence of the withdrawal of his approval of a code or modifications under subsection (1)(c) it appears to him that codes of practice in relation to all necessary matters are no longer in place,

he must draw up a code or modifications in relation to such matters as he considers necessary and treat that code, or those modifications, as if submitted to him under subsection (1)(a)(ii).”

(b) in subsection (7)—

(i) omit the words “not of itself”, and

(ii) for “but”, substitute “and”.”

This new clause would amend section 87 of the Leasehold Reform, Housing and Urban Development Act 1993 so as to make the codes of practice allowed for under that section mandatory (paragraph (b)), and to require the Secretary of State to ensure that such codes of practice are in place (paragraph (a)).

New clause 37—Qualification in property management—

“In section 87 of the LRHUDA 1993 (codes of management practice), after subsection (6), insert—

“(6A) A code of practice approved under this section must require a person who discharges management functions in respect of residential property to hold a relevant qualification in property management.””

This new clause, together with NC36, would require any person who discharges management functions in respect of residential property to hold a relevant qualification in property management.

New clause 38—Information to be given to prospective purchasers of leasehold residential property—

“In the LTA 1985, after section 30P (as inserted by section 40) insert—

“Information to be given to prospective purchasers of leasehold residential property

30Q Information to be given to prospective purchasers of leasehold residential property

(1) The landlord must ensure that any person purchasing the lease of a dwelling is provided at the point of purchase with a copy of the Government guidance entitled “How to Lease”, as it may be updated from time to time.

(2) For the purposes of this section, “landlord” has the same meaning as in sections 30K to 30N (see section 30P).””

New clause 39—Rights of first refusal on disposal of freehold homes—

“(1) Within three months of the passage of this Act, the Secretary of State must by regulations provide for the rights of first refusal granted to qualifying tenants of flats by Part 1 of the Landlord and Tenant Act 1987 to be extended to tenants of freehold houses.

(2) Regulations under subsection (1)—

(a) may amend primary legislation;

(b) are subject to the affirmative procedure (but see subsection (3)).

(3) If before approving a draft of regulations under subsection (1) both Houses of Parliament have agreed amendments to that draft, the Secretary of State must make the regulations in the form of the draft as so amended.”

New clause 40—Failure of landlords to respond to requests for enfranchisement—

“(1) Within three months of the passage of this Act, the Secretary of State must conduct a review of the problems faced by tenants wishing to exercise their right to enfranchisement whose landlords do not respond to enfranchisement requests.

(2) A report of the review must be laid before Parliament as soon as it has been completed.

(3) The Secretary of State may by regulations implement any recommendation of the review.

(4) Regulations under subsection (3) may amend primary legislation.”

New clause 41—Report on disadvantage due to payment of marriage value—

“(1) Within 12 months of the passage of this Act, the Secretary of State must commission an independent evaluation of the matter set out in subsection (2) and must lay the report of the evaluation before Parliament.

(2) The matter is the extent to which a tenant who has been required to pay marriage value when extending their lease (Tenant A) is disadvantaged in comparison to a tenant who has extended their lease after the passage of this Act (Tenant B).

(3) The report must—

(a) make recommendations to redress any significant disparities between the marriage value costs for which Tenant A would be liable but Tenant B would not; and

(b) recommend the date after which Tenant A must have extended their lease in order to be eligible for any financial redress.

(4) The Secretary of State may by regulations give effect to any recommendations made in the evaluation.

(5) Regulations under this section—

(a) are to be made by statutory instrument; and

(b) may not be made unless a draft has been laid before and approved by resolution of each House of Parliament.”

This new clause would require the Secretary of State to commission an independent evaluation of any disadvantages faced by a tenant who has been required to pay marriage value when extending their lease in comparison to a tenant who has extended their lease after the passage of this Act and therefore not been required to pay marriage value.

New clause 67—Liability of freeholders for central heating failures—

“(1) Within 12 months of the passage of this Act, the Secretary of State must commission an independent evaluation of the matters set out in subsection (2) and must lay the report of the evaluation before Parliament.

(2) The matters are, where there is a failure of a communal central heating system for which a freeholder is responsible which lasts for a minimum of 24 hours—

(a) the extent to which a freeholder should be liable; and

(b) whether, if the freeholder is considered to some extent to be liable, financial penalties should be imposed on the freeholder.

(3) The Secretary of State may by regulations give effect to any recommendations made in the evaluation.

(4) Regulations under this section—

(a) are to be made by statutory instrument; and

(b) may not be made unless a draft has been laid before and approved by resolution of each House of Parliament.”

This new clause would require the Secretary of State to commission an independent evaluation of the matter of holding freeholders financially liable for long-lasting central communal heating failures where the freeholder has a responsibility for upkeep.

“New clause 68—Shared ownership—

(1) Within three months of the passage of this Act, the Secretary of State must by regulations create certain rights and obligations for leaseholders and freeholders on all leasehold properties which are subject to a shared ownership model created after 1967.

(2) The rights referred to in subsection (1) are that any leaseholder has the right to increase their share of the freehold in the property in increments of either ten percent or 25 percent on giving formal notice in writing to the freeholder.

(3) The obligation referred to in subsection (1) is that the freeholder may not charge a rent on their freehold share of the property which is greater than 2.75% of the market value of the share of the property which they hold.

(4) Rights and obligations created by regulations under this section are to apply notwithstanding any legal agreement previously entered into between the leaseholder and the freeholder.”

Amendment 3, in clause 3, page 2, line 19, at end insert—

“(2) After section 4(5) of the LRHUDA 1993, insert—

“(6) The Secretary of State or the Welsh Ministers may by regulations amend this section to provide for a different description of premises falling within section 3(1) to which this Chapter does not apply.

(7) Regulations may not be made under subsection (6) unless a draft of the regulations has been laid before, and approved by resolution of—

(a) in the case of regulations made by the Secretary of State, both Houses of Parliament;

(b) in the case of regulations made by the Welsh Ministers, Senedd Cymru.”

(3) In section 100 of the LRHUDA 1993—

(a) in subsection (2), after “making”, insert “provision under section 4(6) or”;

(b) in subsection (3), after “making”, insert “provision under section 4(6) or”.”

This amendment would enable the Secretary of State or (in the case of Wales) the Welsh Ministers to change the description of premises which are excluded from collective enfranchisement rights. Such a change would be subject to the affirmative resolution procedure.

Government amendments 24 to 31.

Amendment 6, in clause 12, page 16, leave out from line 27 to line 20 on page 17.

This amendment would leave out the proposed new section 19C of the Leasehold Reform Act 1967, and so ensure that leaseholders are not liable to pay their landlord’s non-litigation costs in cases where a low value enfranchisement or extension claim is successful.

Government amendments 32 to 34.

Amendment 7, in clause 13, page 22, leave out lines 1 to 29.

This amendment would leave out the proposed new section 89C of the Leasehold Reform, Housing and Urban Development Act 1993, and so ensure that leaseholders are not liable to pay their landlord’s non-litigation costs in cases where a low value enfranchisement or extension claim is successful.

Amendment 2, in clause 14, page 26, line 40, at end insert—

“(ja) any matter arising under Clause [Estate management: compensation] of the Leasehold and Freehold Reform Act 2024.”

This is a paving amendment for NC2.

Amendment 1, page 28, line 11, at end insert—

“(8A) When considering any matter under this section, the appropriate tribunal must have regard to previous decisions made by an appropriate tribunal in matters which appear, to it, to be materially similar to the matter under consideration under this section.”

This amendment would require tribunals considering cases related to leasehold to have regard to precedent set by previous decisions of tribunals in similar cases.

Government amendments 35 and 36.

Amendment 17, in clause 22, page 39, line 14, leave out “50%” and insert “75%”.

This amendment would allow leaseholders with a higher proportion of commercial or non-residential space in their building to claim the Right to Manage.

Amendment 9, in clause 23, page 40, leave out from the beginning of line 27 to the end of line 27 on page 41.

This amendment would leave out the proposed new section 87B of the Commonhold and Leasehold Reform Act 2002 and so ensure that RTM companies cannot incur costs in instances where claims cease.

Amendment 19, in clause 29, page 46, line 26, at end insert—

“(iii) a statement of all transactions relating to any sinking fund or reserve fund.”

This amendment would require the written statement of account which the landlord will be required to provide to a tenant to include a statement of all transactions relating to any sinking fund or reserve fund in which their monies are held.

Amendment 12, page 47, line 16, at end insert—

“(8) Where a landlord of any such premises fails to comply with the terms implied into a lease by subsection (2), any rent, service charge or administration charge otherwise due from the tenant to the landlord shall be treated for all purposes as not being due from the tenant to the landlord at any time before the landlord does comply with those subsections.”

This amendment would require courts and tribunals to treat the landlord’s compliance with the implied term requirement for annual accounts and certification as a condition precedent to the lessee’s obligation to pay their service charges.

Amendment 13, page 48, line 11, at end insert—

“(9) Where a landlord fails to comply with subsection (1), any rent, service charge or administration charge otherwise due from the tenant to the landlord shall be treated for all purposes as not being due from the tenant to the landlord at any time before the landlord does comply with that subsection.”

This amendment would require courts and tribunals to treat the landlord’s compliance with the implied term requirement for annual accounts and certification as a condition precedent to the lessee’s obligation to pay their service charges.

Amendment 14, in clause 30, page 50, leave out lines 12 to 19 and insert—

“(4) P may not charge R any sum in excess of the prescribed amount in respect of the costs incurred by P in doing anything required under section 21F or this section.

(5) The prescribed amount means an amount specified in regulations by the appropriate authority; and such regulations may prescribe different amounts for different activities.

(6) If P is a landlord, P may not charge the tenant for the costs of allowing the tenant access to premises to inspect information (but may charge for the making of copies).”

This amendment would make the appropriate authority (i.e. the Secretary of State or the Welsh Ministers) responsible for setting a prescribed amount for the costs of providing information to leaseholders. That prescribed amount would be the maximum amount that freeholders and managing agents employed by them could seek to recover through a service charge.

Amendment 15, in clause 31, page 51, line 35, leave out “£5,000” and insert “£30,000”.

This amendment would raise the cap on damages under this section for a failure to comply with duties relating to service charges to £30,000.

Amendment 16, page 51, line 35, at end insert—

“(5A) Damages under this section must be at least £1,000.”

This amendment would insert a floor on damages under this section of £1,000.

Amendment 20, in clause 32, page 52, line 32, leave out from beginning to end of line 33 and insert—

“(a) exceed the net rate charged by the insurance underwriter for the insurance cover, and”.

This amendment would define an excluded insurance cost as any cost in excess of the actual charge made by the underwriter for placing the risk, where such cost is not a permitted insurance payment.

Amendment 21, page 52, line 35, leave out from beginning to end of line 6 on page 53.

This amendment, to leave out subsection (3) of the proposed new section 20G of the Landlord and Tenant Act 1985, is consequential on Amendment 20.

Amendment 22, page 53, line 18, at end insert—

“(5A) The regulations must specify a broker’s reasonable remuneration at market rates as a permitted insurance payment.

(5B) The regulations must exclude any payment which arises, directly or indirectly, from any breach of trust, fiduciary obligation or failure to act in the best interests of the tenant.”

This amendment would require “permitted insurance payment” to include payment of a reasonable sum to a broker at market rates for placing the cover, and to exclude any payments which have arisen from wrongdoing.

Amendment 10, page 60, line 2, leave out clause 35.

Government amendments 37 to 41.

Amendment 18, in clause 46, page 75, line 23, at end insert—

“(c) only where they are incurred in the provision of services or the carrying out of works that would not ordinarily be provided by local authorities.”

This amendment would mean that services or works that would ordinarily be provided by local authorities are not relevant costs for the purposes of estate management charges.

Government amendment 42.

Amendment 83, in clause 74, page 97, line 37, at end insert—

“(2) Within three months of the passage of this Act, the Secretary of State must publish guidance on the circumstances in which the Secretary of State will give financial assistance or make other payments under this section.”

This amendment would require the Secretary of State to publish guidance on the circumstances in which financial assistance would be made available for the establishment or maintenance of estate management redress schemes.

Government amendments 43 to 48.

Amendment 11, in page 104, line 30, leave out clause 83.

See explanatory statement to NC4.

Government amendments 85 and 49.

Government new schedule 1—Part 5: Amendments to other Acts.

Government new schedule 2—Categories of permitted lease.

Government new schedule 3—Leasehold houses: financial penalties.

Government amendments 50 to 53.

Amendment 4, in schedule 2, page 136, line 40, at end insert—

“(9) In setting the deferment rate the Secretary of State must have regard to the desirability of encouraging leaseholders to acquire their freehold at the lowest possible cost.”

This amendment would ensure that when determining the applicable deferment rate, the Secretary of State would have to have regard to the desirability of encouraging leaseholders to acquire their freehold at the lowest possible cost.

Amendment 5, page 138, line 6, at end insert—

“(7A) In setting the deferment rate the Secretary of State must have regard to the desirability of encouraging leaseholders to extend their lease at the lowest possible cost.”

This amendment would ensure that when determining the applicable deferment rate, the Secretary of State would have to have regard to the desirability of encouraging leaseholders to extend their lease at the lowest possible cost.

Government amendments 54 to 67.

Amendment 8, in schedule 7, page 168, line 15, leave out sub-sub-paragraph (a).

This amendment would ensure that all leaseholders, not just those with residential leases of 150 years or over, have the right to vary their lease to replace rent with peppercorn rent.

Government amendments 68 to 82, 84 and 23.

[Lee Rowley]

Let me begin by thanking Members in all parts of the House for their valuable contributions to the Bill. It is good to see that so many who have been involved so far are present; a number of them have been campaigning for these changes for years. I will not be able to name everyone, but I pay tribute to, in particular, my right hon. Friends the Members for Bromsgrove (Sir Sajid Javid), and for Newark (Robert Jenrick), my late right hon. Friend the former Member for Old Bexley and Sidcup, James Brokenshire, and my hon. Friend the Member for Redditch (Rachel Maclean), all of whom have played such important roles in preparing the ground for many of the measures before us today. They have all been invaluable in helping us to reach the point at which we deliver on the commitment that we made to reform a system that clearly needs change, and give millions the freedom, security and control over their life that comes with home ownership in its truest, fullest sense.

At a stroke, the Bill will provide that greater control for young people and many others. It will help to reduce unnecessary stress, uncertainty and wasted time by reforming a labyrinthine system and making it better. Buying a home, especially a first home, must be a moment of pride and celebration—a just reward for years of hard work, careful saving, sacrifices made, and doing the right thing. For some, however, the dream of home ownership is realised in soaring service charges, rip-off insurance commissions and escalating ground rents. Overall, and most infuriatingly, there is a sense of being left in the dark, and of a system that is working against, rather than for, the homeowner. That is bad for everyone, but it is notable that first-time buyers constitute nearly 50% of leaseholders; 15% of owner-occupiers are aged under 35. They are the future of our property-owning democracy, and they rightly expect and deserve to put down roots and have the same stake in society as previous generations.

[Priti Patel (Witham) (Con)]

I would welcome my hon. Friend’s views on that point. What he has said is entirely correct. I have met so many first-time buyers in my constituency who are trapped, because they are stuck in a cycle of increasing service charges. Even worse, facilities companies are not maintaining properties when there are serious problems. I am meeting representatives of one of them, FirstPort, at the weekend, but a great many other examples have been cited in the House. We are deeply concerned, because our constituents have sacrificed so much. They have put all their investments and savings into their property, but there is clearly no accountability or transparency, and we hope that the Bill will change that.

[Hon. Members]

Hear, Hear.

[Lee Rowley]

My right hon. Friend is absolutely right, and the support that has just been expressed for her comments demonstrates that many of us see these issues in our constituency. As she says, it is vital that we give people who have made such sacrifices in order to achieve first-time home ownership the right to, and the greatest control over, that ownership.

[Eddie Hughes (Walsall North) (Con)]

In my constituency, Victoria Avenue (Harvest Grove) Management Company seems to be extorting money from leaseholders and not providing any of the works that it says it is providing. It is taking them to court and charging them for the benefit of having letters sent to them with invoices. Through this Bill, we desperately need to redress the balance between freeholders and leaseholders. Will the Minister see that that is the case?

[Lee Rowley]

My hon. Friend is absolutely right. He makes a very important point about transparency, which is at the heart of the service charge changes in the Bill. He makes an extremely important point about fairness. Not all companies will be doing things that are incorrect, but where they have been found to be incorrect, it is important that they shoulder their own costs.

[Chi Onwurah (Newcastle upon Tyne Central) (Lab)]

I thank the Minister for his generosity with his time. It is not only companies that are exploiting leaseholders; the St Mary Magdalene and Holy Jesus Trust in my constituency refuses to allow its leaseholders to extend their lease or buy their freehold. The charitable exception is very complex, and nobody wants historic houses to be sold, but these are ordinary terraced houses and the charity used to sell the freehold and, indeed, extend leaseholds in the past. Is it possible for the Minister to meet me or my constituents to look at how this issue can be addressed in the future?

[Lee Rowley]

I am grateful to the hon. Lady for outlining that issue; I know she has raised it in this place before. As she indicates, this is a complex area of law, but I am happy to talk with her separately on that matter in the coming weeks, if it is helpful.

How are we doing this? We are giving leaseholders more security over the future of their homes by increasing the standard lease extension term to 990 years, by making it cheaper and easier for leaseholders to buy their freehold, and by tackling unfair charges, exploitative practices and poor management. In doing so, we are overturning centuries of iniquity.

The Bill will also give leaseholders the control they deserve over the buildings they live in. At present, management companies are too often unaccountable to those who pay for them, meaning that they are able to charge excessive fees for poor-quality service. The Bill gives more leaseholders the opportunity to manage the buildings themselves, so that works get done properly and they have more of a say.

[Mr Clive Betts (Sheffield South East) (Lab)]

The Minister might anticipate the question I am going to ask, because I have asked it before. It is fine giving leaseholders easier ways to buy their freehold, until we come across companies such as Coppen Estates, which we have debated before. It just does not reply to letters. I think that we are now on our third recorded delivery letter to the company about the residents on the Flockton estate, who have just been sent enhanced bills for their ground rent charges, with no justification. They face threats if they do not comply. Where in the Bill is there any measure to make sure that Coppen Estates and the like respond properly in future or face consequences if they do not?

[Lee Rowley]

I am grateful to the hon. Gentleman. As he knows, we have debated the iniquities of Coppen Estates extensively, and I repeat that it is treating my constituents in a way that is inappropriate, in the same way that it is doing with his constituents over the border. Given that we are extending the opportunity for charges to go to tribunal, I hope that the hon. Gentleman’s constituents in Flockton will be able to go to tribunal and hold that company or other companies to account, should that be helpful.

Through the reforms, we will scrap the presumption that leaseholders must pay their freeholder’s legal costs, even when they win at tribunal, correcting another historical and unfair imbalance. Someone would not be expected to pay legal costs if they were successful in their claim in other cases, so leaseholders should not be treated any differently.

[Barry Gardiner (Brent North) (Lab)]

The Minister was most accommodating throughout the proceedings in Committee, and we are all grateful to him for the way in which he has listened.

Further to the point raised by my hon. Friend the Member for Sheffield South East (Mr Betts), the Minister will know that many developers have located themselves extrajudicially in places such as the Cayman Islands. Wembley Central Apartments Ltd in my constituency has finally ended up there, as have many others. What in this Bill will enable us to extend our reach and force such companies to respond, reply and do what the Building Safety Act 2022 already says they ought to do?

[Lee Rowley]

The hon. Gentleman makes an important point, which I know we debated in Committee. He correctly highlights the challenges in certain areas of enforcement. If I may, I will come back to that later in the debate.

[Stella Creasy (Walthamstow) (Lab/Co-op)]

I join my hon. Friend the Member for Brent North (Barry Gardiner) in recognising that this is not a partisan issue, because so many of us see the problems. The Minister talked about people not paying the costs when they win, but many will be shocked to discover that no precedent is set at a leasehold tribunal. We see companies exploit our constituents time and again, and it creates no precedent on which the courts and the tribunal courts could draw. Will he look at my amendment 1? It seeks to set that precedent and give people the protection of knowing that a freehold manager who has mistreated people will not be able to do it with impunity, because the courts will be able to take that into consideration if a tribunal has found that to be the case.

[Lee Rowley]

I am grateful to the hon. Lady, and I know that she feels strongly about this matter and has raised it previously. I am always happy to talk outside the Chamber, but the advice I have received is that, at the higher tier of the tribunal, there is the ability to give an indication of the direction of travel and a precedent can be set there. As I say, I am happy to talk to the hon. Lady separately.

In Committee, we made efforts to further improve and expand the Bill. We moved 119 amendments, including on expanding leaseholder rights of redress and providing new guarantees that leaseholders will receive sales information, and tabled a number of technical amendments to improve it. Today we are proposing further improvements, and I will now turn to the Government amendments on Report. I will first speak to new clauses 30 to 35, and amendments 23 and 49.

Building on the Building Safety Act 2022, the Government have tabled a number of amendments to clarify and extend protections in specific areas to further prevent freeholders and developers from escaping their liabilities to fund building remediation work. The Building Safety Act provided leaseholders with a range of protections to ensure that those responsible for building safety defects were made to carry out the works or pay for them to be carried out. However, before and during the process of remediation, relevant steps may be required to keep the building and the residents safe. Relevant steps include such measures as providing waking watches, fire sprinklers or simultaneous alarms. Unfortunately, there have been cases where the landlord has failed to put those in place or to pay for the relevant steps. That has caused the leaseholder to bear the financial burden or required the local authority to step in.

New clause 30 would place beyond doubt that the first-tier tribunal can order that the costs of the relevant steps are met when making a remediation contribution order or a remediation order. It is often the case that doing surveys or investigative works to discover the full extent of remediation required on a building takes time, money and effort, and those assessments can be invasive. New clause 31 would place it beyond doubt that the first-tier tribunal has the power to order that a respondent must arrange and pay for evaluations, surveys or expert reports to establish the full extent of a building’s defects.

On new clause 32, we know that in some instances, landlords of buildings that are 11 metres high or above are failing to provide alternative accommodation for leaseholders when they are decanted from their homes. This new clause would place it beyond doubt that, in addition to relevant steps and expert reports, the costs of alternative accommodation for leaseholders and other residents who are decanted from their homes can be recovered through remediation contribution orders.

On new clause 33, resident management companies and right-to-manage companies allow leaseholders to have more control over their buildings. However, such management companies are unable to fund litigation against non-compliant landlords, as they are unable to recover the costs for doing so from leaseholders in their buildings. This new clause would allow such management companies, where the relevant lease allows, to raise funds for remediation contribution orders, making sure that we continue to hold those responsible for life-threatening defects to account.

New clause 34 would repeal section 125 of the Building Safety Act, which was intended to allow for the recovery of remediation costs relating to residential buildings that are 11 metres high or above in an insolvency, and for these funds to be used to remediate the building. However, there is a conflict with insolvency law and a risk that, instead of being used for remediation, any sums recovered under section 125 could be directed to pay down the debt. This problem cannot easily be remedied, so we are seeking to repeal the section at this time.

New clause 35 proposes that regulators need to be made aware if those responsible for relevant buildings—that is, responsible persons—become insolvent. This new clause introduces a duty on insolvency practitioners to notify local fire and rescue authorities, local authorities and, where necessary, the building safety regulator.

I also want to speak to new clauses 42 to 66, new schedules 2 and 3 and amendment 84. We know that there is little justification for selling houses on a leasehold basis. For years, developers have exploited the sale of houses on a leasehold basis for the sole purpose of generating an income stream from ground rents and fees. This has been done at the expense of consumers, who receive little or no benefit in return. We promised to shut down this abusive practice by banning the sale of houses on a leasehold basis, and today we are doing so. Other than in narrow circumstances where a lease can still be justified, all new houses will need to be sold on a freehold basis.

[Wendy Morton (Aldridge-Brownhills) (Con)]

I am really grateful for this news from the Minister. It certainly goes a long way towards addressing my new clause 13. He speaks specifically about banning leasehold sales of new houses, but what consideration will he give to extending that ban to leasehold flats? I know that that is a concern for a number of us on both sides of the House.

[Lee Rowley]

I know that my right hon. Friend has campaigned extensively for the ban on leasehold houses, as many in this Chamber have done, and she has spoken up in this place on the issue before. I am grateful for her support for it. She also rightly talks about the extensive debate about the potential extension of the ban to flats. The Secretary of State has said at this Dispatch Box on numerous occasions that the Government remain keen to make progress on finding an alternative workable solution to leasehold flats—most people in this place recognise that that will probably be commonhold—and work will continue on that. We hope to make further progress on that in the future—

[Several hon. Members rose—]

[Lee Rowley]

Commonhold has clearly created a significant amount of interest.

[Bob Blackman (Harrow East) (Con)]

I thank my hon. Friend for giving way, and for what he is saying. There are certain building companies in this country—Bellway Homes, for example—whose policy is to sell the leasehold to leaseholders and sell the freehold to a company that then exploits every aspect of the freehold, without even informing the leaseholder that they have done this. Surely we can close this loophole—we could close it this afternoon—by ensuring that the freeholder must give the leaseholder the first right of refusal to purchase the freehold.

[Lee Rowley]

My hon. Friend raises an important point. I know that it is covered in an amendment put down by the hon. Member for Sheffield South East (Mr Betts), and I will come to it later in the debate.

[Mark Tami (Alyn and Deeside) (Lab)]

On the point made by the hon. Member for Harrow East (Bob Blackman), Bellway is certainly a company that has done this. Indeed, many people did not even realise that they had a leasehold house and only found out quite a while afterwards when all the costs started to come down the road. I welcome what the Government have done, but we must try to find a good solution for everybody who now finds themselves in this position, because in the years to come those houses could become very difficult to sell.

[Lee Rowley]

The right hon. Gentleman makes an important point about the need to ensure that this regime works. We recognise that there are challenges, which is why we are bringing forward a number of measures.

[Richard Fuller (North East Bedfordshire) (Con)]

On the point about existing contracts that have been signed by people purchasing a leasehold property, is it the Government’s view that those were legitimate contracts and that there is therefore a risk in trying retrospectively to reverse the conditions of those contracts? Or is it the Government’s view that those were abusive contracts and that there is therefore a public policy interest in retrospectively eliminating the leasehold element of them?

[Lee Rowley]

I hope that I will be able to answer my hon. Friends’ questions in a moment when I run quickly through our amendments. We are banning the sale of leasehold houses in all but unusual circumstances, but for those that are out there at the moment, there must be an ability to ensure that they can buy the freehold and move from the leasehold challenges to a freehold. Let me deal with some specifics that I hope will answer some of the questions that have been raised.

15:16

New clause 42 bans the grant of new long leases of houses. It will cover both newly built houses and existing freehold houses where the owner attempts to grant a new long lease. This new clause also closes a potential loophole by preventing the latest sale of a lease where circumstances have changed between the date the lease is granted and the date it is assigned. For example, this will thwart a developer from granting a lease of vacant land to a sister company, building a house on the land and then selling what is now a leasehold house.

New clause 43 sets out the broad conditions for what properties will be captured by the ban. Each of these broad conditions is then defined in the subsequent four clauses. New clauses 44 and 45 specify what constitutes a long leasehold interest for the ban. It adopts the established definitions in law, which are familiar to developers and home owners alike. New clause 46 sets a definition in law of a house for the purpose of this legislation. This is a broad definition that should reflect what prospective buyers would rightly consider to be a house. The definition will also capture attempts to create minor interdependencies between two properties, which developers might create to get around the ban. New clause 47 confirms what a residential lease is. It provides that a long lease of a property will be a residential lease if the lease does not prevent use as a separate dwelling. Again, this is a broad definition designed to prevent the mis-selling of leasehold houses and capturing only leases of properties used as a house.

We recognise that in a limited number of cases the use of leases can still be justified. For the purposes of this Bill we are calling them permitted leases. We have consulted widely on what should and should not be exempt from the ban, and even on the question of what is and is not a house for these purposes. The result is the collection of definitions now detailed in new schedule 2 to the Bill. These exemptions will allow vendors to continue to sell long leases on houses where the use of a lease can be justified. This includes land where properties cannot be sold on a freehold basis, such as inalienable National Trust land, or where the product relies on a lease connected to an active third party, such as shared ownership houses or community land trusts. We are able to—and we will, if need be—revisit these definitions and exemptions if innovation in the housing market requires it, or if we see evidence of poor behaviour.

New clause 49 would create an additional layer of protection for consumers and clarify which leases are permitted, usually when a developer intends to sell a number of new leases of houses on the same site. Those who intend to grant or sell leases that fall into one of the categories set out in part 1 of the schedule will be required to make an application to the appropriate tribunal for determination on whether the proposed lease is permitted. This includes houses sold on land leased before the Government announced their intention to ban leasehold houses in December 2017, and leases such as retirement house leases or those on inalienable National Trust land.

To add further clarity for consumers and subsequent buyers, the tribunal will grant a certificate confirming that the lease is permitted and under which category. Critically, this must happen before the lease is marketed, so that the potential buyer can proceed with the purchase with confidence, knowing that the house is exempt from the ban. This relates to the point made by the right hon. Member for Alyn and Deeside (Mark Tami). Not many developments will need to go through this process, but those operating where it is not always clear whether a lease is permitted or required will have to do so.

To ensure that consumers have access to the material information they need and that they have the confidence to make a decision when purchasing a new house, new clause 50 requires those proposing to sell a new lease of a house to make this clear when marketing the property. To ensure that vendors comply with the new marketing requirements, this measure will rely on new clause 59 to implement a new penalty regime. This includes a fine for failing to provide the required marketing information at the right time. We know that not all home buyers will read the detail of all the marketing information and that not all leases will be advertised, so new clause 51 introduces warning notices so that all vendors will have to alert purchasers in writing that they are entering into the lease of the house, or an agreement for the lease of the house, and informing them on what grounds that lease is permitted.

[Mark Tami]

I thank the Minister for giving way again. One problem is that many of these companies encouraged buyers to use their lawyers, who did not point out some of the pitfalls of leasehold properties.

[Lee Rowley]

The right hon. Gentleman is absolutely right, which is why I hope that measures such as new clause 51 go some way towards making it crystal clear that there is no way to get around this, and towards providing clarity to those who seek to buy a new property.

New clause 52 will require a statement on the front of all new leases declaring that it is a permitted lease and is not a long residential lease of a house. Should a developer make a dishonest declaration to His Majesty’s Land Registry, the homeowner may be able to exercise the redress right contained in new clause 54, which will allow them to acquire the freehold from the developer free of charge.

Under new clause 53, if a lease does not include the prescribed statements, His Majesty’s Land Registry will have the power to restrict the resale of the property until the right information and declarations have been provided.

[Mr Betts]

The Minister is talking about the information on houses. Will it also apply to flats so that, before anyone buys a property, it must be explained to them that they are buying a lease and what that entails? I tabled new clause 38, which says that everyone buying a lease should be presented with a copy of the Government’s “How to Lease” document. Everyone in this situation should be given independent advice.

[Lee Rowley]

I am focusing on homes, and we have been emphatic and clear that the sale of leasehold homes will be precluded other than in exceptional circumstances. I am happy to talk to the hon. Gentleman both later in the debate and outside the Chamber about whether further consumer protections for those purchasing a flat may be proportionate and reasonable.

New clause 54 grants homeowners who have been mis-sold a new lease of a house the right to acquire the freehold from the landlord, as well as any superior leasehold interest in the property, for zero cost. New clauses 55 and 56 set out protections and reasonable limitations on this requirement, and new clause 57 provides for the Secretary of State to make regulations setting out further details on how redress can be obtained.

We understand that granting homeowners the right to redress alone may not be enough to prevent bad actors from attempting to breach the ban on the sale of leases on houses, which is why we are introducing a system of financial penalties where there is a breach. These penalties will start at £500 for a minor breach, rising to £30,000 for the most serious breaches. To enforce this system of fines, as set out in new clause 58, we are asking all local weights and measures authorities to play a part where they see infractions in their area. We will also set out how they need to work through new clause 60.

The chief responsibility for investigating and taking action will lie with the lead enforcement authority. Through new clause 61, the Secretary of State will have the power to appoint the right authority to fulfil this important role, while new clause 62 details the duties. By amending the Consumer Rights Act 2015, clauses 63 and 64 also vest the appropriate investigatory and enforcement powers essential for both the lead authority and local authorities to carry out the job.

[Matt Rodda (Reading East) (Lab)]

Can the Minister assist me with a relatively unusual issue in my constituency? I have listened very carefully to his helpful speech. In the Loddon Park development on the edge of Woodley in my constituency, residents were sold properties only to discover in the small print of their contract, as my right hon. Friend the Member for Alyn and Deeside (Mark Tami) said, that they were expected to pay a standing charge to upkeep open space on this large development, even though they are freeholders of their own houses. Will the Minister look into this matter and write to me about what redress might be open to them?

[Lee Rowley]

I am very happy to write to the hon. Gentleman about the specifics.

In addition to the building safety measures and the ban on new leasehold houses, the Government have tabled a number of consequential amendments to refine and improve the Bill.

With the leave of the House, I will mention three key issues among the many that were brought to our attention in Committee. I understand these issues will be subject to further debate today, but I want to acknowledge that they are: capping existing ground rents, which has already been raised; leaseholder forfeiture, which I know will be raised; and support for the residents of freehold estates, which has already been extensively addressed.

I know that Members will have questions about the Government’s plan to address ground rents, and we have consulted on introducing a cap on ground rents in the Bill. We extended the consultation on request and, as a result, we are still considering our next steps. We will say more shortly.

[Wendy Morton]

The Minister is generous in giving way. Can he give us an indication of the timescale? Many Members will be interested to know the answer. And does he anticipate being able to introduce something when the Bill reaches the other place?

[Lee Rowley]

Although I cannot give the specific assurances that my right hon. Friend seeks, we are trying to work through this at speed. We recognise that it is an important issue, and we recognise that it is vital to today’s discussion. I know that hon. and right hon. Members will recognise that this is a hugely contested area in which there has already been significant discussion. People have very different views, so we want to make sure that, while we are moving at speed, we take our time so that we reach a conclusive decision through the right methodology and process.

[Vicky Ford (Chelmsford) (Con)]

My constituent is in a flat with a ground rent of £454 a year. As that is over the £250 threshold, it means that their property can be taken away from them if they fail to pay their ground rent. As a result, my constituent has failed to sell their property six times, even though they have had buyers. They are stuck in this flat, and they cannot get on with their life. Will the Minister please look at this threshold, which is causing real problems?

[Lee Rowley]

My right hon. Friend moves me on to my second point. We also recognise the strength of feeling on the vexed issue of forfeiture. The hon. Member for Greenwich and Woolwich (Matthew Pennycook) made a clear case on this in Committee, as did other Members, and I also heard a passionate and eloquent case in Committee from my hon. Friend the Member for Walsall North (Eddie Hughes).

[Eddie Hughes]

Will the Minister simply remove any opportunity for forfeiture? It is arcane and has no place in our system. I strongly suspect that would get support on both sides of the House.

[Lee Rowley]

The House sees my hon. Friend’s passion, which he demonstrated in Committee and is demonstrating again today. Both he and my hon. Friend the Member for Redditch made passionate cases in Committee.

I recognise that this is a real and significant problem, and there is a huge iniquity at stake. I have heard from colleagues, both today and previously, about why we should act, and we are currently working through the detail of the issue. We will report back to the House with more details shortly.

Finally, a comprehensive debate in Committee on freehold estates was led by my hon. Friend the Member for North East Bedfordshire (Richard Fuller). He is a committed campaigner on this issue, and I know that many other Members also have very strong views. I have also been involved in this in places such as Alderman Park and Hunloke Grove in my constituency. We understand the strength of feeling on this issue, and we are considering it further.

[Alistair Strathern (Mid Bedfordshire) (Lab)]

Residents of estates across my constituency are trapped in extortive relationships with unaccountable private management companies while their estates go unadopted. On Second Reading, the Secretary of State expressed his willingness to bring forward and consider measures to make sure that residents have the right to manage on such estates, at a bare minimum, before considering wider action. Is there any reason why the Government would not accept new clause 7 in the name of the shadow Minister to finally give the residents of these estates the right to manage and to get out of these extortive relationships?

[Lee Rowley]

The hon. Gentleman made that case in Committee, and I am grateful to him for that and for repeating it today. As I say, we understand the strength of feeling on the issue and are considering it further.

[Gareth Johnson (Dartford) (Con)]

rose—

[Lee Rowley]

I will give way one final time and then I will conclude, so that others can get in.

[Gareth Johnson]

These management companies that the Minister alluded to have a literal monopoly over the residents they are meant to serve—in effect, they control the residents, rather than the other way round—so I welcome the amendments made in Committee to ensure that residents can change their management companies. Will he give a commitment to this House that he will ensure that those amendments stay in the Bill, both here and in the other place, and that they will become law?

[Lee Rowley]

My hon. Friend has been a campaigner for many years on the importance of this matter, and I know how strongly he feels and how much he acts on it on behalf of his constituents. We are absolutely committed to making progress on estate management. The Bill demonstrates a significant step forward in doing that, and we will see what else we can do in the future.

[Neil O’Brien (Harborough) (Con)]

rose—

[Lee Rowley]

I am going to wind up so as to give others the opportunity to speak. To sum up, property ownership has been described as one of the bulwarks of individual freedom, and the measures I have described today are designed to give all homeowners, particularly the younger generation, the chance to gain a proper stake in our democracy. The Bill seeks to bring greater fairness, transparency and accountability to the system, and to give millions of people across the country a more secure foundation to get on in life, a stronger stake in our society and a solid platform for the future. I am grateful for all Members’ efforts to improve the Bill and for the scrutiny and debate it has received so far, and I look forward to hearing the further discussions to that effect this afternoon.

15:30

[Several hon. Members rose—]

[Madam Deputy Speaker (Dame Rosie Winterton)]

Order. Colleagues will see that a lot of right hon. and hon. Members wish to contribute to this debate, which has to finish at 6 pm. I will want to bring the Minister back for a short time. Another Deputy Speaker is taking over in a moment, but let me advise that those speaking from the Back Benches should be prepared to speak for between six and seven minutes, in order for us to get everybody in. I am afraid that that is because of the pressure on time. I call the shadow Minister.

[Matthew Pennycook (Greenwich and Woolwich) (Lab)]

I start by declaring an interest: my wife is the joint chief executive of the Law Commission, whose work in this area I intend to reference in my remarks.

I rise to speak to the amendments and new clauses that stand in my name. Before doing so, I would like to put on record my thanks to all those hon. Members who served on the Public Bill Committee for so ably scrutinising the many technical and complex provisions that the Bill contains. There were, as one would expect, differences of opinion and emphasis, but it was also evident that there is a shared recognition that the Bill can and should be improved further, and an unusual degree of cross-party agreement as to some of the ways that might be achieved.

Despite reams of Government amendments tabled in Committee and for our consideration today, this Bill remains a distinctly unambitious piece of legislation. That is a matter of deep regret to those on the Labour Benches, not only because the Government’s paucity of ambition will see exploited leaseholders wait even longer for the current iniquitous leasehold system to be ended, but because it is also manifestly clear that there is widespread support across the House to go much further than this limited Bill does. Responsibility for the fact that the Bill does not contain so many of the commitments that successive Conservative Secretaries of State have made over recent years, not least in relation to the promised widespread introduction of the commonhold tenure, ultimately lies with Ministers. They had the opportunity to bring forward bold leasehold and commonhold reform legislation, and they made a political decision not to do so.

Although the Opposition appreciate the understandable desire of many leaseholders to see this Bill completely revamped so that it lives up to the many weighty promises made by the Government since 2017, we made clear at the outset in Committee that we did not intend to try to persuade Ministers to radically overhaul it by means of the many hundreds of amendments that would be required to implement all the Law Commission’s recommendations on enfranchisement, right to manage and commonhold. That remains our position. Whether this Bill receives Royal Assent or not before this Parliament is dissolved, a Labour Government will have to finish the job of finally bringing the leasehold system to an end by overhauling it to the lasting benefit of leaseholders and reinvigorating commonhold to such an extent that it will ultimately become the default and render leasehold obsolete. I reassure leaseholders across the country that we are absolutely determined to do so.

We recognise, however, that this limited Bill will provide a degree of relief to leasehold and freehold homeowners in England and Wales by giving them some greater rights, powers and protections over their homes. For that reason, we are extremely pleased it will complete its passage today, but we are determined to send to the other place the most robust piece of legislation that we can. That means rectifying the Bill’s remaining flaws and incorporating into it a select number of measures to further empower leaseholders and improve their rights. With that objective in mind, we have tabled a series of amendments and new clauses for consideration today. That they are almost identical to a number of those we discussed at length in Committee is a deliberate choice that reflects not only the importance we place on the changes they seek to secure, but the distinct lack of convincing responses from the Minister in Committee as to why the Government felt they needed to resist them.

Part 1 of the Bill concerns leasehold enfranchisement and extension. In seeking to implement the small subset of reasonable and proportionate Law Commission recommendations, it is almost entirely uncontentious. However, we believe that several provisions in this part are defective. We sought to remedy their deficiencies in Committee and we have tabled a number of amendments in an attempt to do so again.

Amendments 4 and 5 concern arguably the most significant provisions in this part when it comes to ensuring that the process of extending a lease or acquiring a freehold is as cheap as possible for existing leaseholders—namely the proposed new valuation process as provided for in clauses 9 to 11 and schedules 2 and 3. The current valuation method has a number of manifest flaws, and we fully support the new method as proposed in the Bill. However, with the applicable deferment rate becoming the primary driver of price to be paid in enfranchisement or extension claims under the new method, as a result of the abolition of marriage and hope value and the peppercorning of ground rents in the valuation calculation, we believe it is essential that it is set in a way that is fair to leaseholders. While the Government ostensibly agree, there is nothing on the face of the Bill to ensure that that will be the case and we therefore remain convinced that this Government, or a future one, could be lobbied by vested interests to set a deferment rate that will be punitive to leaseholders.

In resisting our efforts to amend the Bill in Committee to guard against such an outcome, the Minister argued that the Secretary of State must have flexibility to make decisions on the rate or rates. We agree; we are not suggesting that we bind the hands of Ministers by prescribing the rate or rates on the face of the Bill, but we do believe that the legislation should be amended to place a clear obligation on the Secretary of State to set a rate or rates with the overriding objective of encouraging leaseholders to acquire their freehold at the lowest possible cost.

[Richard Fuller]

The shadow Minister is right that there was a lot of consensus in Committee, so I hope he will not mind me probing him on some of the language he just used about the issue of setting rates. We all want to see what the Government do on deferment and capitalisation rates, but the shadow Minister used the term “punitive to leaseholders”. Does he accept that already embedded in the issues about ground rents and the changes here is a substantial transfer of value from freeholders to leaseholders, that the people who are more likely to suffer from punitive behaviour are those who entered into contracts historically from the freeholder side expecting that those values would be considered, and that it is a public policy decision that will change the value in those contracts?

[Matthew Pennycook]

I understand the hon. Gentleman’s point, which he made in Committee as well, if I am not mistaken. We very much think the risk is on the other side of the scale—that is, that a Government would be tempted to set a rate that is damaging to leaseholders as a result of being lobbied by vested interests. While there is a balance to be struck, we think it is right that we put on the face of the Bill that the objective in setting the deferment rate as part of the premium calculation must be to ensure that leaseholders acquire their freehold at the lowest possible cost. Amendments 4 and 5 would ensure that that is the case and I commend them to the House.

Part 2 of the Bill makes changes to other rights of long leaseholders. It contains the four clauses in the Bill that implement Law Commission recommendations on the right to manage, several of which we have sought to improve, as well as clause 21, which makes provision for a new enfranchisement right to extinguish a ground rent without having to extend a lease. We still have absolutely no idea how this clause—or clauses 7 and 8, for that matter—will interact with any proposals that might emerge from the recently closed consultation on restricting ground rents for all existing leases. The Minister must provide further clarification on that; it cannot be right that we could be dealing with such a significant issue when we get to ping-pong stage, in due course.

We very much welcome the intent of clause 21 and schedule 7, which it gives effect to. Even if unamended, they will ensure that some leaseholders can enjoy reduced premiums and secure nominal ground rent ownership of their properties without the need to go through the challenge and expense of repeated lease extensions. However, we remain unconvinced by the Government’s proposed conferral of this new right only on those leaseholders with leases with an unexpired term of more than 150 years. In resisting our attempt to remove the 150-year threshold from the Bill in Committee, the Minister essentially made two arguments. The first was that there is a need to

“put a finger on the scale”

somewhere. In other words, the Government take the view that the new right must be restricted based on lease length. The second argument was that in determining the threshold for restriction, the primary consideration should be which leaseholders are

“unlikely to be interested in, or do not need, a lease extension.”––[Official Report, Leasehold and Freehold Reform Public Bill Committee, 25 January 2024; c. 271.]

We do not believe that either argument is particularly strong.

First, any long lease threshold for the new right is ultimately entirely arbitrary, as evidenced by the fact that the Government chose a different threshold from the one recommended by the Law Commission.

Secondly, there is a principled argument that we should trust leaseholders to make decisions based on what is right for them and their individual circumstances, rather than denying a broad category of leaseholders a new statutory right on the basis that Ministers know best what is in their interest—a viewpoint that we would have assumed those on the Conservative Benches would support.

As I put it to the Minister in Committee, there could be all sorts of reasons why someone with a lease shorter than 150 years might want to buy out only their ground rent, including simply that they are unable to afford the premium required to secure a 990-year lease under clauses 7 and 8. Denying them that right on the grounds that other leaseholders might advertently or inadvertently disadvantage themselves by using the new right to extinguish only their ground rent strikes us as overly paternalistic and misguided.

We remain of the view that there is a strong case for simply deleting the 150-year threshold entirely given that the “remaining years” test that applies is arbitrary and that the most common forms of lease are 90, 99 and 125 years. Amendment 8 would do so, thereby making the new right to replace rent with peppercorn rent available to all existing leaseholders. I commend it to the House.

Part 3 of the Bill contains a wide range of measures relating to the regulation of leasehold. We have tabled several amendments designed to strengthen the provisions in it. Arguably, the most important are amendment 10 and new clause 3, concerning litigation costs. Although we support the aim of scrapping the presumption that leaseholders will pay their freeholders’ legal costs when they have challenged poor practice, we believe that, in merely limiting the ability of landlords to do so, the Government are creating an incentive for freeholders to litigate in a way that is likely to erode the general presumption they are seeking to implement.

As we argued in Committee, a far more sensible approach would be to legislate for a general prohibition on claiming litigation costs from leaseholders, and then to provide for a limited number of defined exceptions to that general rule by means of regulations—for example, in cases in which the landlord is a leasehold-owned company, or in which the costs are, in the opinion of the tribunal, reasonably incurred for the benefit of the leaseholders or the proper management of the building. Taken together, amendment 10 and new clause 3 would provide for that approach by leaving out clause 35 and replacing it with a new clause that provides for a general prohibition on claiming legal costs from tenants, and for a power to specify classes of landlord who will be exempted from it. I commend them to the House.

Mr Deputy Speaker, we want to see a number of other changes made to the Bill to provide leaseholders with better protection in law and to pave the way for a commonhold future. To that end, we have tabled amendments and new clauses to, among other things: abolish the draconian rent charge remedies provided for by section 121 of the Law of Property Act 1925; provide for mandatory residents’ management companies in new blocks of flats; establish a right to manage regime for residential freeholders on private or mixed-use estates; bring forward legislative options to facilitate leaseholders in new blocks of flats being granted an automatic share of freehold; and regulate managing agents.

Of particular importance to us is the need to ensure that the Bill abolishes forfeiture and the windfall it provides to freeholders. As we argued in Committee, forfeiture is a wholly disproportionate and horrifically draconian mechanism for ensuring compliance with a lease agreement. Over the course of nearly a century, this House has taken intermittent steps to tighten the laws of forfeiture, yet its continued use and the chilling effect that results from its mere existence continues to put landlords in a nearly unassailable position of strength in disputes with leaseholders.

The Opposition are not suggesting for a moment that this House abolishes the right of forfeiture in relation to residential long leases and replaces it with nothing. There must be effective means of ensuring compliance with a lease agreement, and we are more than willing to work constructively with the Government to determine what alternative arrangements are needed to deal with breaches of covenant or unpaid arrears. But forfeiture operates to the prejudice of leaseholders; it cannot be justified, and we must use the Bill finally to do away with it. We believe there is broad consensus across the House for grasping the nettle and abolishing forfeiture, and new clause 5 would do so, and—notwithstanding the very positive noises that we heard from the Minister—I urge hon. Members from across the House to support it.

Finally, let me turn to the 100 Government amendments to the Bill that were tabled last week, 29 of which were submitted just before the deadline on Thursday. In doing so, I feel I must put on record once again the Opposition’s intense frustration at this Government’s continued practice of significantly amending legislation as it progresses through the House. The sheer volume and complexity of amendments that this Government now routinely table to their own legislation represents a departure from established practice and one that acts as a serious impediment to hon. Members effectively scrutinising legislation, and increases the risk that Acts of Parliament contain errors that subsequently need to be remedied.

The Government amendments that have been tabled for consideration today fall into three broad categories—namely, shared ownership, building safety and new leasehold houses. I will take each in turn, starting with shared ownership. Although I am increasingly personally of the view that there is a growing case—one that is reinforced by the treatment of shared ownership in the Bill—for primary legislation to address various issues arising from shared ownership as a tenure, Government amendments 24 and 29, which relate to it, are not contentious and we support them.

15:45

We welcome the Government’s decision to use the opportunity presented by the Bill to make a number of changes to the Building Safety Act 2022 to ensure it operates effectively, although the very fact that Ministers are having to completely overhaul arrangements that came into force less than two years ago—for example, replacing the regime for dealing with insolvent developers and orphaned buildings by means of new clauses 34 and 35—vindicates entirely the concerns the Opposition expressed back in 2022 about the way in which the then Building Safety Bill was overhauled at pace via hundreds of Government amendments tabled in the other place, which noble Lords had relatively little time to consider carefully or properly scrutinise.

I want to raise two issues of concern about the Government amendments relating to building safety. First, new clauses 30 and 31 expand the concept of a relevant defect to which the leaseholder protections in the Building Safety Act apply and which tribunals can order landlords to remediate. Although we obviously take no issue with amendments designed to provide further clarification on how the Act operates, I would be grateful if the Minister could tell us why the Government believe these new clauses are even necessary, given that the president and deputy president of the upper tribunal in the Olympic Village case ruled that the tribunal already has the power under the Act to order remedial works in respect of a relevant defect, where the works are designed to reduce the risk posed by that defect, not necessarily eliminate it completely. In addition, given that the Government are clearly willing to act retrospectively, I would be grateful if the Minister can tell us why they will not go further and take steps to guarantee that leaseholder protections under schedule 8 to the Act apply irrespective of when service charge demands were issued, thereby preventing the Court of Appeal from potentially overturning the November 2023 ruling of the upper tribunal to that effect.

The second issue concerns new clause 32, which expands the categories of costs that leaseholders can seek to recover by means of remediation contribution orders and will allow for the recovery of costs associated with professional expert services and any temporary accommodation. However, it will not allow leaseholders in buildings with fire safety defects to attempt to recover the significant costs associated with soaring buildings insurance premiums, which in many cases will continue to be levied after remediation works have completed. The Government are rightly trying to improve the situation in respect of insurance charges by means of clauses 32 and 33. Will the Minister tell us why they will not allow such costs to be recovered via an RCO?

Of course, not one of the eight Government amendments that relate to building safety resolves the underlying problems with the Government’s approach—namely, the detrimental impact of the decision to exclude certain categories of leaseholders and buildings from the protections that have been afforded to others under the 2022 Act. We therefore tabled new clauses 9 and 10, which would give the Secretary of State the power to bring non-qualifying leases and buildings respectively within the scope of the protections of the Act. I commend them to the House.

I turn lastly to new leasehold homes. The Government were rightly mocked in the aftermath of the Bill’s publication for claiming that it ended leaseholds on newly built houses in England and Wales, when it contained no such provision. On Thursday, they finally tabled amendments that appeared to make good on their promise. There was only one problem: their purported ban on new leasehold houses does not actually ban all new leasehold houses. Indeed, it is unlikely even to ban most of them, because new schedule 2 still allows new long residential leases of houses to be created in instances where a superior lease has been granted before 22 December 2017.

The Minister suggested in his opening remarks that the Government were thereby allowing the sale of new leasehold homes only in unusual circumstances, but they are introducing far from a limited exception. We literally have no idea how many undeveloped plots of land and properties within them might be subject to such superior leases, or how many could still be granted subject to agreements made under such terms—for example, where a developer has purchased a pre-2017 head lease on a site but has not built it out. Given that we know that developers routinely use intermediate leases both for financial purposes and to insulate themselves from various consumer rights and protections, the prevalence of such arrangements in the leasehold housing market is likely to be high. As such, although we understand the significance of the date in question as the moment when the policy was first announced, and appreciate the need to provide for a limited number of exceptions, such as National Trust properties, surely the Government realise that the exemptions provided for by new schedule 2 are likely to render the ban meaningless and will mean that new leasehold houses are still built in significant numbers.

I have no doubt that the other place will have much to say about the new provisions, but the Minister owes this House an explanation on precisely why the Government have potentially afforded developers a means to continue building new leasehold houses in significant numbers. I would be grateful if, in providing that explanation, he told the House why on earth leasehold retirement properties have also been exempted, given the almost uniformly detrimental impact of such arrangements on older people living in those properties.

This unambitious piece of legislation is a far cry from what millions of leaseholders were led to believe would be forthcoming given the extravagant promises made by successive Ministers over the past six years. They nevertheless recognise, as we do, that this limited Bill will provide them with some relief from the unjust and discriminatory practices that our archaic leasehold system facilitates. For that reason, they share our desire for it to receive Royal Assent as quickly as possible, but we owe it to them to deliver the most robust piece of legislation that we can deliver. We have a chance today to strengthen the Bill in a number of important respects, to rectify aspects of it that are problematic, and to improve it by incorporating a small number of targeted measures that will immediately empower leaseholders and improve their rights. I urge the House to come together to do so.

[Several hon. Members rose—]

[Mr Deputy Speaker (Mr Nigel Evans)]

Order. I am sure that everybody heard Madam Deputy Speaker’s request for brevity, as a number of Members wish to get in, and we have to accommodate everybody before 6 o’clock.

[Sir Peter Bottomley (Worthing West) (Con)]

I agree with a large part of what the Opposition spokesperson, the hon. Member for Greenwich and Woolwich (Matthew Pennycook) said, and with nearly all of what my hon. Friend the Minister said. Where I disagree with the Opposition spokesperson is that I think the Bill is ambitious in what it is trying to achieve, although we would all like it to go further. It is quite remarkable that this is the first major bit of legislation to help leaseholders since 2002—although we have had the Building Safety Act 2022, the Fire Safety Act 2021 and other things, which did some things towards that.

It is remarkable how few people know much about the role of residential leaseholders. They own nothing but the right to live in a home for a period. I declare that I am a leaseholder. I have a flat in my constituency for which there have been no problems and for which the Bill will do neither harm nor good, and I also have another leasehold property. If I happened to gain from the measures, I would give the benefit to a good cause—I am not here for myself; I am here for those who have been suffering for years.

I wish I could be at the Westminster Hall debate on BBC impartiality, but it conflicts with this debate. It is now 20 years since the peace activist and photographer Tom Hurndall was shot by a sniper in Rafah. The subsequent nine months of inquiry by the Israel Defence Forces were shocking. However, I will leave that to the other debate.

On leasehold reform, I believe that we have opportunities—both in the House of Commons and, perhaps more so in the House of Lords—to make significant progress. My hon. Friend the Minister will point out to me the consultation on permitted development rights that started on 13 February. Towards the end of the consultation document, paragraphs 43,44 and 45 appear under the heading:

“Construction of new dwellinghouses on a freestanding block of flats”.

That is a reference to the inexplicable and disastrous Town and Country Planning (Permitted Development and Miscellaneous Amendments) (England) (Coronavirus) Regulations 2020—SI 2020 No. 632.

Those emergency covid regulations, accompanied by an economic assessment of which, to put it bluntly, I would have been ashamed were I a better economist, allowed owners, landlords and freeholders of certain blocks to put an extra one or two storeys on top without consulting the existing leaseholders at all. How any Government—let alone one I support—could have done that is beyond my comprehension. There had been a consultation some years before, and the general consensus was, “Don’t do it,” so why has it been done? I hope that people will look at the consultation, which is open until April, answer questions 27 and 28, and give explanations of their own experiences.

A developer tried to put extra floors on top of the St Andrews Gardens building in my constituency. That was turned down flat by the local authority, but its decision was overturned on appeal by the Government inspector. The developer then tried again, advertising for sale flats that do not exist, even though nobody wants them as they will cause significant harm.

My new clause 25, which I am indebted to Liam Spender of St David’s Square in E14 for drafting, says that the landlord or developer will have to pay compensation to leaseholders if the effects on them are harmful. The Minister’s legal advisers may say that the clause is not perfectly drafted, although I think it is pretty good. Even if he cannot accept it now, will he go through the replies to the consultation, have a talk with Members of all parties who represent those affected, and consider whether the Government can bring forward in the House of Lords proposals that would undo the effect of 2020/632 and implement some of the preferred responses to the consultation, to which he may not have time to refer in his winding up?

15:59

[Mr Betts]

It is five years since we produced the Select Committee report on leasehold reform. It came after long years of campaigning by the all-party parliamentary group on leasehold and commonhold reform, and I particularly commend the efforts of the Father of the House, the hon. Member for Worthing West (Sir Peter Bottomley), who has just spoken; my hon. Friend the Member for Ellesmere Port and Neston (Justin Madders); and our good friend Jim Fitzpatrick, who is no longer in this House, but who certainly made a major contribution to that. To be fair to the Government, it is good that we have made progress on many of the items in the Select Committee report. The caveat, of course, is that we probably have not gone as far as we would have wanted or as quickly as we would have expected.

When the Committee met, I remember going into a room with about 100 leaseholders from all over the country—the hon. Member for Harrow East (Bob Blackman), who was in his place a few minutes ago, was there as well—and hearing horror stories of people being ripped off in the sale of leasehold homes by developers. They were told that there was no difference between a leasehold property and a freehold property. They were told that by the solicitors who worked for them, because the solicitors were recommended by the developers. That was together with the free carpets in the living room that came as a bribe—that is what it was. Leaseholders were not aware that they would have to pay £300 to get a doorbell fitted if they wanted one because they had to get permission, or £3,000 for a conservatory, or whatever fees the freeholder chose.

Leaseholders were told that they could, within a couple of years, buy the freehold at a fixed price from the same developer. The problem, of course, was that by the time a leaseholder came to inquire about purchasing the freehold, the freehold had been sold to another party. There are lots of examples of that, which is why I have an amendment—new clause 39—that I want to push to a vote, although I hope the Minister will accept it. It is a simple amendment to say that before the sale of a freehold, the right of first refusal has to go to the existing leaseholder. That right already exists for leaseholders in flats, but not for leaseholders in houses. Why is that? That really cannot be justified or even explained.

Will the Minister accept just that one simple amendment? It would give leaseholders that right, and stop freeholders —we know that this happens—who want to evade the legislation, including the improvements the Government are bringing in, passing a property around from one organisation to a subsidiary to a third party, with a view to evading the legislation, so that leaseholders never know where to go to get the relevant freeholder to agree to the sale.

[Matt Rodda]

My hon. Friend is making an excellent speech. Does he agree that part of the problem is that some of the freeholders are based overseas, and it is extremely difficult for leaseholders to track them down? This is an ongoing issue that I hope the Government will look into.

[Mr Betts]

Absolutely. I hope the Minister will have a look at the whole issue of freeholders who will not respond. That certainly applies to many who are overseas, with whom it is very difficult to get in touch.

I will not press new clause 40 to the vote, but the purpose of it is to say to the Minister that the default answer cannot be that the leaseholder can always go to a tribunal. Most leaseholders are simply ordinary residents trying to get on with their lives, who think it ought to be fairly easy to put in a request, get a calculation done and buy their freehold. They are not ready for these organisations, with all their lawyers and surveyors, that want to evade this and try to hide away, in some cases overseas, so that they cannot be contacted.

Can the Minister look at that issue? I know he is aware of it, because we share the same problem with Coppen Estates. There are others that are based overseas, but this one is based in a semi-boarded-up shopfront with a letterbox that never seems to be opened. That is the sort of company we are dealing with. They are small organisations that make a living out of charging ground rents from leaseholders, who cannot exercise their enfranchisement because of the attitude and evasion of the freeholders concerned. I hope that the Minister will have another look at that issue.

The other amendments I have tabled are about having professional qualifications and some form of regulation of property managers. The Government have legislated to say that the managers of social housing will need professional qualifications in future, but what is the difference between a manager of social housing and a property manager of leasehold blocks? In some ways, there may be greater complications in trying to manage a multitude of different leaseholders than people who have secure tenancies in a council or housing association block of flats. What is the difference?

Why will the Government not recognise that there are some good property managers who are well qualified, experienced and can be held to account, but others who are not like that? Indeed, some are put in place for that purpose: they are cheap, they do not have experience or qualifications, and they provide another way of avoiding the restrictions and rules that are rightly put on the management of property. They do not bother with proper service charge information or a proper list of charges for permission fees. I accept that the Government have tried to improve that, but in the end such improvements will only work if the individual or organisation managing the property does so in a proper way. Will the Minister look at those issues? What is the rationale? Why is there resistance to ensuring that people doing a serious and important job as property managers are qualified to do it and properly held to account through regulation?

[George Eustice (Camborne and Redruth) (Con)]

Let me begin by declaring my interest as an adviser to the HSPG group, which among other things is a registered provider of social housing.

I rise to speak to new clause 68, which is based on a specific challenge that I have encountered in my constituency and that affects residents in more than 70 homes spread across three locations in the town of Hayle and the village of Mount Hawke. The experience of those cases exposes a potential gap in the Bill and in policy on the issue of shared ownership. The Bill deals at some length with standard leasehold agreements and the problems of extortionate ground rents, as well as with some of the issues around service charges and management companies with which we are familiar. However, in the early 2000s some agreements were put together that were technically leasehold agreements but that masqueraded as shared ownership agreements, even though those shared ownership agreements do not comply with the standards of modern shared ownership agreements.

The agreements I have encountered contain a number of defects, and I would like the Minister’s view on them. The first is that the freehold on those homes is not held by a registered provider. It was initially owned by the developer who built the sites, but it has changed hands twice. In a way that is familiar to many Members, the freehold has ended up in the hands of an offshore investment vehicle based in the British Virgin Islands, and with a company called Rockwell, which has not been easy for residents to deal with over the years.

The second major defect in the agreements is that there is no provision for staircasing or enfranchisement of the leaseholder’s share of the property. Residents typically own between 58% and 72% of their property, but their stake is fixed and cannot be extended. There is no right to extend under the agreement. The agreements are under a 990-year lease and there is no ability to extend that, although I appreciate it is a long-term lease.

The third defect is that even if residents could enfranchise and extend or staircase their ownership within the agreement, a section 106 covenant means that the properties must be sold to a local connection with a significant discount on market value. The way that has been worded in the agreement means that it is simply not worth the while of residents to increase their share, since there would be no value to the increased share that they would have.

Finally, there was something described as ground rent, although in practice a big chunk of that was effectively a rent on the shared ownership portion. The ground rent was initially around £20 per week, but that was linked to the retail price index on an escalating model. It has now got close to £2,000 per year for those residents, and it is still increasing rapidly.

All of those defects in that leasehold tenure arrangement or shared ownership arrangement—indeed, it appears to be neither one nor the other—mean that all of the properties have been judged unmortgageable by lenders, and that means the residents are trapped. They cannot sell their properties because no one can get a mortgage to buy them. These are people in my constituency who had a local connection. Typically, they are on modest incomes. These agreements and these homes were sold to them as a way to get a foot on the housing ladder, and for those residents it has transpired to be a complete nightmare.

I will say a word about planning and pay tribute to Penwith District Council, as it was then, and Cornwall Council. Planning was granted between 2004 and 2006, and the local planning authorities did their due diligence. They could see that this shared ownership model was defective, and they refused planning permission on all three sites on that basis. The Minister might ask how these homes were then built and sold under the arrangement, but I suspect he can predict the answer, which is that they were approved at appeal by the Planning Inspectorate, an agency within his own Department. The situation that my constituents face has been caused principally by a chronic failure of due diligence by the Planning Inspectorate, as is often the case with such issues.

In conclusion, my new clause 68 seeks to address a gap in the Bill and to give the Government the opportunity to atone for the mistakes of the Planning Inspectorate. It deals explicitly with shared ownership agreements and would create a statutory right to staircase ownership and put a cap on the rent of the freeholders’ portion of the home. I do not intend to press new clause 28 to a Division this evening, but I hope that the Government will consider the matter closely. I would like to meet the Minister or the Secretary of State and share with them and their officials a copy of the shared ownership agreement that my constituents are suffering under so much, with a view to seeing whether the Government might consider further changes at later stages of the Bill’s consideration to address a gap in it. Given that the Planning Inspectorate has been somewhat culpable in creating this problem for my constituents, I hope that the Government will seek to do that.

I support the general thrust of the Bill in all its attempts to deal with management charges, service charges and ground rents, but I hope that the Minister will agree to meet me to discuss some of these remaining issues.

[Barry Gardiner]

It was 1 December 1998. I had been an MP for one year and seven months to the day, and I was chained to the railings of College Green by 200 cheering leaseholders. Thankfully, they were friendly. It was to illustrate that leaseholders felt that they are were prison. Those were the days before social media, and it was a photo op. The BBC ran the headline, “Leaseholders demand more control”. They still do.

Since then, we have had the Commonhold and Leasehold Reform Act 2022, which was an attempt to resolve some of the problems, such as forfeiture of a person’s home for a failure to pay a small service charge, the ground rent grazers charging money for no service and moneys not being held in trust in sinking funds. It is strange that after 25 years, these should be the very areas that yet another Bill on leasehold reform is pretending and failing to solve.

I say “failing”, because that is the reason I rise to support new clause 5, tabled by my hon. Friend the Member for Greenwich and Woolwich (Matthew Pennycook). It is ridiculous that a landlord can take away a person’s home worth hundreds of thousands of pounds for a simple failure to pay a minor service charge amounting to a couple of hundred pounds and where there is a dispute over whether the service was even provided. That is why I tabled new clause 16 about moneys being held in trust, which would implement a provision of the 2002 Act that has never been brought into force. We heard in Committee that the policy had strong support from stakeholders, including spokespeople for the Property Institute and the Leasehold Advisory Service. Even the British Property Federation has campaigned for this provision of the 2002 Act to come into force, yet it is not here in the Bill. Of course, 2002 was a time when nobody had even predicted the new rentier practices that freeholders and developers have since invented to extract money from homeowners for the privilege of living in their own homes: the scandals of leasehold houses; the repeated doublings of ground rents; and the inclusion of commercial areas and shared services in any development to stop any hope of residents exercising their right to manage.

16:15

New clause 17 would ensure that leaseholders in mixed-use buildings could take advantage of the Government’s policies to lift the 25% non-residential premises cap to 50%, and to have mandatory leasebacks on expensive commercial premises. Unless that new clause—or a version of it—is adopted, few leaseholders in mixed-use buildings will be able collectively to enfranchise under the Bill, which would be a travesty. If the Government do not decisively address the structural dependency rules not only for enfranchisement but for right to manage, property developers will simply sidestep the new 50% non-residential premises limit by designing mixed-use blocks with shared services, connecting flats to commercial premises by an umbilical cord to deny leaseholders their rights. Indeed, articles from leading law firms explain how developers can build sites to ensure that blocks can never be eligible for collective enfranchisement and right to manage.

New clause 18 would provide the appropriate tribunal with the discretion to dispense with certain procedural requirements where it is satisfied that is reasonable to do. It is designed to deal with cases where a landlord attempts to frustrate a right to manage claim by procedural means. I am grateful to Mark Loveday of Tanfield Chambers —perhaps the leading authority on service charges and right to manage practice in Britain—for his help in drafting the new clause.

By Mr Loveday’s count, of the Law Commission’s 101 recommendations on right to manage, fewer than five have been specifically adopted by the Government in the Bill. A whole industry has emerged since Labour introduced the 2002 Act, which brought right to manage into existence, whereby freeholders seek to find minor technical errors by leaseholders to scupper genuine—and otherwise valid—right to manage claims. Since right to manage is a no-fault regime, Parliament never intended for it to be an invitation to litigation by deep-pocketed freeholders and their army of lawyers. As Mr Loveday notes, the 2002 Act’s right to manage does have “traps for the unwary”, and

“the single most important problem with the right to manage, namely its procedural complexity”,

with

“these problems…famous among property lawyers”,

having

“notoriously led to litigation on a truly industrial scale.”

I urge the Minister to look again at new clause 18 in the other place and adopt such a pragmatic amendment, which would enable a tribunal to waive minor procedural mistakes by leaseholders where it deems that just and convenient.

Since 2002, we have also had the Grenfell Tower tragedy, which has exposed the rotten culture of residential construction in this country. Members should wonder why it is that over 11,000 tower blocks are reckoned to have fire safety defects, no fire-stopping in building voids, a lack of compartmentation, combustible cladding and inadequate fire doors that leave the residents at the mercy of landlords, who literally go to the other side of the world to avoid having to pay for remediation.

Residents are subject to unfair service charges and find themselves prisoners trapped in their own homes, unable to sell up and move on with their lives. This unjust system leeches off ordinary people and shames us. This is the only remaining country in the world where residential leasehold is the default tenure for apartment living. A person’s home should not be a source of misery to them and one of unjust enrichment to others.

We are talking about the lives of 5 million people who need to be freed from their feudal burden. That brings me to new clause 19, which seeks to restore the intent of the section 20 major works regime in the 2002 Act to what it was prior to the Daejan ruling. The Minister was good enough in Committee to confess that he was unaware of the ruling and said that he would study it with his officials. Yesterday, I received a letter from him on some of the points I raised in Committee. He admitted that since Daejan,

“the vast majority of applications for dispensation are brought by the landlord.”

However, he went on to say:

“regardless of which party makes the application, the landlord will have to persuade the tribunal that dispensation should be granted, and it will be for the leaseholders to evidence that they have suffered prejudice”.

He said:

“I recognise your concerns that leaseholders have to evidence prejudice, but only they are able to do so. Once that threshold has been met, the burden is on the landlord to rebut the impact the prejudice has had on the leaseholders.”

He concluded:

“the consequence is that an application to the tribunal is not merely rubber stamping the landlord’s request.”

I fundamentally disagree.

Sue Bright, professor of land law at Oxford University, has been conducting research into this area, and argues as follows:

“The importance attached to the consultation requirements is evidenced by the fact that if the landlord fails to conduct the statutory consultation it is prevented (in the current form of the consultation provisions) from recovering more than £250 from an individual tenant in relation to those works. Seemingly, this provides a very strong incentive to comply with the requirements but the protection offered was seriously weakened by the Supreme Court decision in Daejan Investment Properties Ltd v Benson. Lord Neuberger said that the consultation requirements are a means to an end rather than an end in themselves. He sees the provisions as playing a supporting role in achieving (only) the end goal of consumer protection secured by section 19 of the Landlord and Tenant Act 1985, that is, protecting tenants from unreasonable service charges. An alternative vision, supported by the dissenting judgment of Lord Wilson, acknowledges that consultation is an important end in itself. This recognises that consultation has an inherent value. Further it is in keeping both with the tenor of the new building safety regime that promotes fuller engagement with leaseholders and residents, and the thrust of contemporary government policy towards providing consumer protection to leaseholders.”

Her findings are grim for supporters of leaseholders and a sense of fair play. She says:

“In all of the fire safety cases reviewed for this article dispensation was granted, at least in part, and, with a few exceptions, the overwhelming majority were granted unconditionally even when the FTT”—

the first-tier tribunal—

“was critical of the way in which the applicant had managed things.”

I also thank Dr Howard Soper, another academic who helped draft the amendment, who was appalled by the number of successful dispensations won by freeholders that he found in his study of first-tier tribunal decisions.

I urge the Minister to think again, because this cuts to one of the most fundamental injustices that we have seen in leasehold apartments in recent years—those individuals trapped in buildings with fire safety defects. This Bill is the first set of reforms to the leasehold tenure in 22 years. The test that I set the then Labour Administration was a simple one. I said:

“What we want is for leaseholders to be able to take control over their own lives without landlords being able to say when you have a new roof, how much you pay for it, who does it, when it’s going to happen. You should be able to decide that for yourself in your own home.”

The proposals in front of us today do not liberate leaseholders. The Secretary of State himself has said:

“I don’t believe leasehold is fair in any way. It is an outdated feudal system that needs to go. And we need to move to a better system and to liberate people from it.”

He was right. This Bill does not do that. It will be left to a future Labour Government.

[Neil O'Brien]

There are a lot of good things in this Bill. I give credit to the Minister and previous Ministers for introducing it, and my hon. Friend the Member for North East Bedfordshire (Richard Fuller), who has played a massive role in bringing it to the House. It effectively bans the sale of new leasehold houses through new clause 42 that we have been discussing, extends leaseholders’ rights in various ways and increases transparency over service charges.

However, there are two big things that still need to be strengthened in the Bill, which we have spoken about in Committee and on Report. The first is to end the fleecehold estate model. New clauses 1, 2, 6 and 7 are relevant to that. I was glad to hear the Minister, who understands this issue, talking about going away and considering this further, but for the benefit of the Whips, what my constituents want is not for the Minister to consider it further but to ride in like a new sheriff on a white horse and sort out the fraudsters, scam artists and various cheats who are making their lives a misery. That is what we want on the Government Benches.

The fleecehold estate scandal is just like the Post Office scandal, except that it affects more people. In considering the Post Office scandal, many people have asked, “How could we not have known about this injustice? It ruined so many people’s lives for so long, yet nothing was done.” It is the same in this situation.

My constituency has lots of these new estates. Often, the first people know of the problem is when they receive a massive bill that they did not know was coming and that was not mentioned in the notes they were given when they bought the house. And, funnily enough, it was not drawn to their attention by the lawyers of the housebuilder, whose services they are often encouraged to use. Some of these bills are a really scary size and often escalate quickly over time. A huge number of people—more and more every day—are now affected. About 20,000 estates are affected, involving between 1 million and 1.5 million homeowners and potentially 3 million or 4 million people. According to the Competition and Markets Authority, over the past five years 80% of the freehold properties built by the 11 biggest builders have used this fleecehold model.

A lot of my residents describe it as being like paying a second council tax, except that if a local councillor is not doing a good job, they can be kicked out, but it is not possible to do that to a fleecehold landlord, no matter how badly they perform. New clause 6 would address that, and I hope that the Government will address it as the Bill progresses.

I think that everyone now knows how the fleecehold scam works. Back in the good old days, the builder would build a new estate, make sure that all the roads and so on were up to spec and pay a section 106 charge. The council would then take it over and run it, and if there was a problem, people could contact their local councillor. Under the fleecehold model, it is not so simple. In effect, there is collusion between the council and the developer. The developer agrees to hand over to a different company—it might own that company itself or hand it over to the residents—the running of many parts of the estate, be it the roads, the verges or other facilities. That means that the developer pays less in section 106, the council does not have to maintain the road and effectively they split the profits while the residents and the new tenants get the new, massive bill.

It is extremely inefficient to run things in that way in the real economy. Usually, the council goes from road to road with its verge-cutting lawnmowers—it uses one simple system. On one fleecehold estate, however, a guy drives down from Oldham, which is more than two hours away, mows a tiny bit of lawn and then leaves. It is economic madness. A lot of the charges that people are hit with involve opaque management fees for nothing. It is inefficient to run things in this way in the real world. There is a ticking time bomb here. In addition to the number of people affected by the fleecehold estates scandal, the second problem is that when things are not adopted, they do not go through a gateway where we can check whether they are up to scratch. I know from the experience of my constituency that a lot of things are done badly and then a huge bill will land on the people on these poor estates to sort out the problems in the future.

We heard all about this in Committee. I pay particular tribute to Harry Scoffin, the work of the group Free Leaseholders and the residents group HORNET—the Home Owners Rights Network. They all made a powerful case to abolish the fleecehold estates model entirely. As one witness told the Committee:

“This is my property. It is my hard-earned future…normal homebuyers are not qualified to manage estates. If we are given the right to manage, if we are looking at a development of over 100 homes, it is really hard to get in touch with 100 people who will agree and be on the same page. It is not workable.”––[Official Report, Leasehold and Freehold Reform Public Bill Committee, 16 January 2024; c. 54-55, Q133-134.]

I will give a few examples from my constituency. Karen is a brilliant lady who does lots of work for her community. She moved into a new Barratt home because she was bored of doing loads of DIY every weekend on her old home. She now finds herself spending massive amounts of time fighting a fleecehold company called FirstPort, a company so notorious that a national action group has been set up against it—the details can be found on Facebook—whose work I commend.

Karen explains:

“Barratt’s encouraged us to use their nominated conveyance solicitor for which in return we got £500 towards our legal bill. We were fools to do this, but money was tight…FirstPort didn’t do or arrange any grass cutting or anything by way of a service in the first two years.”

At first the bill was £35, and this year it will be £74. Karen continues:

“Our bill for the year includes: Property Damage & Public Liability Insurance…Terrorism Insurance…Grounds Maintenance…General Maintenance…FirstPort’s Management Fees”—

the most expensive item—

“Audit/External Accountant’s Certificate and Fee…General Reserve…Health and Safety Risk Assessment…This comes to £74.64 per house.”

She says:

“In the months of December, January and February each year I must spend more than a couple of days a week working on this. It’s like having a part time job. I didn’t move house to face the possibility of having to be a director of a residents’ ‘Right to Manage’ company. I want adoption…by the local council…as it used to be.”

She is right. Members may be asking, “Why are residents of this estate having to pay terrorism insurance for a fence?” That is a very good question, to which I do not know the answer.

Let me introduce Members to James—a brilliant, hard-working constituent of mine, who has had to do tons of work on the estate where he lives. He says:

“Councils should be adopting new estates”.

He says that he has done

“about 50 days’ work…over the first couple of years. We moved in in 2018 and it wasn’t really sorted until 2021—in fact it is still going on.

Had I not been proactive we would have ended up being short-changed.”

16:30

Residents of Hursley Park in my constituency have had no end of problems with their developer, who is currently refusing even to meet them to discuss some of their problems. Paths have been done on the cheap and have become a quagmire, and benches have not been looked after properly. Fortunately, owing to a legal error on the developer’s part, the residents have managed to gain control of the residents management committee, but after three years of effort they are still trying to get the developer to make good the problems so that they do not face years of bills. They are still fighting. Many of them do not want to run their own estate, and they should not have had to do so.

My last example relates to Farndon Fields—an estate that has been built over the last decade by a multiplicity of developers including Redrow and Avant. Courtyards and shared spaces in the development were not adopted by the council. Astonishingly, each tiny courtyard was run as its own financial entity and was subsequently managed by a company called Chamonix, which turned out to be extraordinarily difficult to contact. Each year the residents were forced to pay “maintenance” charges for a couple of minutes’ work over a whole year. One of my constituents wrote to me:

“On one occasion I was continually asked to pay an invoice which I had previously paid and despite sending proof of payment two or three times, I was told court action would be taken. I replied welcoming this and advising them that I would counterclaim for stress and my time. I then received an apology letter from the financial director…I am now fighting a charge for work…for £367”.

Thankfully, residents managed to wrest back control from the company after a huge amount of effort; that was just as well, because Chamonix has now been bought out by FirstPort, so they have had a lucky bullet.

I could go on and on. From charging residents for “terrorism insurance” for a fence to ripping out newly planted trees to charging residents for work that never happened, the absurdity of the fleecehold scam is apparent to everyone who has encountered it. However, there are a number of ways in which we could solve the problem—and while we need to solve it for existing residents, which will involve some sort of right to manage and a much clearer ability to gain control of one’s own estate, we also need to prevent this model from being used in the future. We could take up the brilliant proposal of my hon. Friend the Member for North East Bedfordshire to prevent management companies from taking on services that are normally provided by local councils. We could also take up the suggestion made by Councillor Shaun Gunner, the leader of the Conservative group on Arun District Council, to change the Government’s guidance on the use of planning conditions, which currently states:

“Conditions cannot require that land is formally given up (or ceded) to other parties”.

We could, perhaps, change the existing guidance to make it difficult for people to go down the fleecehold route. Whatever we do, however, we have to end this scammy model, which is bringing misery to the lives of my constituents.

Another thing that we must do is end forfeiture, as is suggested in new clause 5 and as the Minister has suggested today: I am pleased that he is talking about taking action. Margaret Thatcher told the Conservative party conference in 1982:

“There is no prouder word in our history than ‘freeholder’.”

She was right, and the ideal of property ownership has a long history on this side of the House, but a great many people who are buying freehold properties are actually being conned. It turns out that they do not really own their properties at all, and that if they fall even a little behind on their bills or refuse to pay some scammy fleecehold company a small amount of money, they risk not just being made to repay, and perhaps paying the costs as well, but losing their houses. It is that threat that enables the fleecehold cowboys to get away with it. They are terrorising people by threatening them with the loss of their homes, and we must put a stop to it. As Mrs Thatcher said in her final book,

““Everyone involved in the country’s economic life has to be protected against extortion and corruption.”

That is exactly what fleecehold is, and we have to end it.

The final small thing that we must do in the Bill is to start the “turnaway”—I use that word advisedly—from ground rents. Ground rents are not payments made in return for any service; the historical rationale for their existence is totally obsolete. A 2018 survey found that half the people who faced these escalating bills did not realise that they would be applied when they bought their properties, and they cause huge problems with remortgaging. I understand the problems and challenges of having to move away gradually from this model, but we should start to turn the supertanker now. We are talking about pure economic rents and pure rentiers; it is a totally unfair system. We might have to move slowly, but we have to start the movement away from these ground rent grazers, because this is an unfair system with no rationale.

I know that the Minister understands the issues and I encourage him on all these issues to be brave and sort out the problems. There has been no legislation since 2002. This is our one chance, so let’s really go for it: let us have Conservative principles, and end these massive rip-offs.

[Ms Lyn Brown (West Ham) (Lab)]

I rise to speak to new clause 3 and amendments 12 to 14. A huge number of new builds have been built within my constituency boundaries over the last months, the vast majority of which have been flatted. There have been numerous difficulties over the years, many of which I will not be able to cover today due to the time limit and your exhortation, Mr Deputy Speaker, to stay within seven to eight minutes; as the first woman to speak, I intend to do so.

I will start with Legacy Wharf in Stratford, where leaseholders have been stuck with a succession of management companies that fail them time after time. Under the former management company, shoddy—and probably overpriced—repairs were made by favoured companies at leaseholders’ expense over and over again, rather than any investment in long-term, high-quality maintenance. Residents were hugely suspicious about possible kickbacks from service firms to the management company and the use of companies under the management company’s ownership, rather than it seeking the best price and the best quality of service.

Thankfully, that management company has changed, but many problems remain. Residents have just been handed bills for 18 months of energy use all at once due to the management company’s mistakes. Service charges and insurance bills rocket year after year, with residents wondering what on earth has been done with their money: they have poor landscaping, broken lifts and inadequate fire doors; the security of communal areas is rubbish; residents have lost access to hot water and the boilers have not been serviced for as long as four years. Those are all serious concerns raised about just one building. Ultimately, when accountability is sought, there is absolutely no way to get a prompt response. When there is such as constant deficit of transparency, it inevitably looks like a way to cover up wrongdoing, mismanagement or incompetence.

I strongly welcome the provisions in this Bill on service charge transparency, and I add my support for the amendments tabled in the name of my hon. Friend the Member for Greenwich and Woolwich (Matthew Pennycook). Amendments 12 and 13 would surely provide additional support to my constituents, because they would mean that leaseholders would not have to pay service charges unless basic transparency and accountability were in place. Amendment 14 would enable a maximum cost to be set for the provision of information to leaseholders, preventing the abuse of such costs to effectively obstruct accountability—it ain’t on.

Leaseholders in every part of West Ham have faced massive difficulties getting accountability. I am reminded of events in the Hallsville Quarter development in Canning Town, where residents in several buildings had to leave their homes after a sewage ingress and power cuts. The two management companies responded in totally different ways: Grainger offered £50 a day in subsistence payments, while FirstPort initially offered just £15 a day and only raised it to £25 after enormous pressure. FirstPort had to be chased by me for multiple basic actions, and responded so poorly to residents whose lives had been turned upside down by problems that were absolutely not of their making.

Next, I would like to raise the continuing concerns of the residents of Chobham Manor about their estate charge, which has increased rapidly over recent years. The charge is supposed to help pay for the upkeep of the Queen Elizabeth Olympic Park, but many Chobham residents believe that it bears no relation at all to the amenities available to residents near the park. Despite my support, they have found it almost impossible to scrutinise the budgets they are paying for and to make sure that they ain’t paying through the nose for poor value for money. Chobham Manor residents frankly do not see what they are getting from the park in exchange for this charge, given that they are the only local residents who pay for it. I know that they will be grateful for an explanation of how they might benefit from the changes that the Bill will make.

I also want to mention, yet again, the continuing limbo of many residents of East Village in Stratford. Leaseholders there have lived under serious financial threat for well over four years now. The remediation needed to make their homes safe is still being held up because this Government’s previous legislation left the issue open to litigation. How can my constituents be reassured that this Bill goes further? The Secretary of State himself committed to using his planning powers to call in proposals submitted by irresponsible developers. I have to ask: will he make good on that promise and target those who are continually refusing to act on fire safety and leaving leaseholders on the hook?

In a final case from West Ham, diligent and determined leaseholders have successfully taken managing agents or freeholders to the tribunal for their dire failings. I am sorry to tell the House that these failings were across the board, including rat infestations, lack of insulation causing skyrocketing energy bills, no transparency on the huge service charges, building safety problems and a complete lack of accountability. Surely it should not have come to this.

We should not be depending on individual leaseholders to battle their way through obscure systems for their plight to get the attention it needs. MPs should not have to make dozens of detailed representations over and over again. It could not be clearer who has the power in these disputes, and in so many cases leaseholders are still paying the price for a system that is absolutely broken. Sadly, the legacy of years of failure to act creates understandable scepticism that change will come now, so I want to hear from the Minister today that he believes that the Bill will finally end this injustice.

[Andrew Rosindell (Romford) (Con)]

It is a pleasure to follow the hon. Member for West Ham (Ms Brown). We share a similar part of the world: Essex and the east of London. In Romford, just as in West Ham and the London boroughs to the east of the capital, we have seen a huge increase in the number of flats and high-rise blocks being built over the last 20 years. Havering is a town and country borough and we have not had many flats in the past, but suddenly we are seeing huge numbers of that kind of accommodation being built. This brings huge numbers of problems with it, including what we are debating today.

I thank the Minister for bringing this Bill forward. I hope that it will deal with many of the issues that colleagues across the House have raised today, because they are very real. I sense that there is consensus on both sides of the House that serious action needs to be taken, because this can really destroy people’s lives and ruin them; they have saved to buy a property and they have a leasehold, yet they are fleeced by sharks and managing agents who pile on the costs, and by armies of lawyers who make their lives miserable and threaten them with losing their property all together. This is not right for the people we all represent.

I am now dealing with these cases in Romford on a daily basis. The hon. Lady mentioned many of the problems in West Ham, and I have examples in the Steelway apartments in the centre of Romford. I visited those apartments only a few weeks ago and saw the problems that people there are facing. They are failing to get responses from the management agents and those responsible, they are paying money for no service, and they are being ripped off by management agents who are not doing the job they are paid to do. I went to Rubicon Court, a fairly new development built only a few years ago, and was shocked—absolutely flabbergasted —to see how badly the residents are being looked after. The service they are paying for has completely failed. I saw mould, rats, rubbish and CCTV cameras that do not work. That is not acceptable and, when the Bill is passed into law, I hope the Minister will ensure that it is effective. It is no good passing legislation unless it is effective and comes into force quickly.

16:45

I have concerns about the speed with which this legislation will be enacted. People are suffering and living in terrible conditions, and they are spending huge sums from their savings to deal with these problems. Will the Minister assure the House that there will be an effective way to implement the Bill quickly? Will he also consider the points that many Members have raised about those who could lose their property? What a horrific prospect it is for people who have saved to buy their leasehold that, because of the issues we have discussed, they are bullied and threatened with losing the property they have worked so hard to purchase.

There are so many issues, and I hope the Minister will take on board everything that has been said today. This is a cross-party issue, and we want the best for our constituents who live in these properties and whose lives are made very difficult by the current system. I hope this Bill will improve the lives of all our constituents, and the Minister will have my full support in anything further he can do to ensure that people in Romford, and in every constituency represented here today, are able to live better lives. People should not wake up with the feeling that everything they have saved for their future is being lost because of deficient legislation and a failure to enforce the law.

I have spent a lot of time visiting Romford residents in recent months, and I visited many of these places. I intend to go back because, if there is one thing I have learned about being a Member of Parliament, it is that we are here to serve the people we represent. I am very proud to serve the good people of Romford.

[Janet Daby (Lewisham East) (Lab)]

I can see that, across the Chamber, there is strong concern for leaseholders who are caught up in very difficult situations. I will first speak to new clause 67, which I tabled after a case came to my attention late last year. I will then speak in support of new clause 5 and amendments 4, 5 and 8 tabled by the official Opposition. These amendments relate to issues that have not been properly addressed by the Government, including forfeiture, the right to vary ground rent to a peppercorn, and deferment rates.

My motivation for tabling new clause 67 stems from what has happened to residents of Lee Court, a purpose-built art deco mansion block in my constituency dating back to the early 1930s. Many will remember the cold snap at the start of the year, when temperatures went below zero and Arctic winds swept across the country. Until mid-January, residents of Lee Court had not had any heating all winter. Furthermore, they did not have access to hot water for weeks and, prior to that, hot water provision was very patchy. This has seriously impacted many vulnerable residents, including the elderly, young families, people with medical conditions and many others.

Leaseholders at Lee Court repeatedly raised these issues with Drivers & Norris, the block’s former managing agent, and Grandpex, the building’s freeholder that has ultimate responsibility for the central heating system, yet little progress was made until it came to my attention and the attention of the national media. The residents’ plight included: a neglected communal area; a door leading to the roof that was hanging off its hinges; broken windows; exposed openings for rodents; weeds and plants growing through the drains; roof leaks; damp, mould and rot in communal areas; and the lack of heating and hot water that I have already mentioned.

Even though my constituents have now taken on the building maintenance and appointed a new managing agent, this situation illustrates the difficulty for leaseholders in securing recourse from freeholders who have responsibility for central heating and other maintenance issues. As a result, my new clause 67 seeks to open up a discussion on how to ensure that such situations never happen again to residents. It would require the Secretary of State to commission an independent evaluation on holding freeholders financially liable for long-lasting central communal heating failures, where the freeholder has a responsibility for this upkeep.

It is important for the Government to know that I am not asking for them to impose measures straightaway, but rather that I want them to pay closer attention to the problem at hand via an independent evaluation. There is clearly something wrong when vulnerable residents are left without heating for months on end despite raising their concerns with the managing agent. The only way they seem to be heard is by going to the media, and that is not acceptable. Residents’ health and wellbeing needs were put at risk by the failure to restore Lee Court’s central heating. The Government have a duty to look at how we can rectify this situation, so that it never happens again. Will the Minister say whether he would like to strengthen the voice of leaseholders? Leaseholders would like that—they need it.

More widely, this overdue Bill is welcome, but the Government’s planned reforms do not go far enough. This is why I particularly support new clause 5 which would abolish the right of forfeiture in respect of residential long leases where the leaseholder is in breach of covenant. I have heard the Minister say that the Government are working on this and will be looking at the issue, but the Law Commission proposed a repeal in 2006 and there has been no action to progress this for some 18 years.

Additionally, amendments 4 and 5, on deferment rates, are very important, because during a housing and cost of living crisis, with many families struggling to get by, it is important for leaseholders to acquire their freehold or extend their lease at the lowest possible cost.

Lastly, amendment 8 is important, because we must ensure that all leaseholders, not just those with residential leases of 150 years or over, have the right to vary their lease to replace their rent with a peppercorn rent. That is because the most common forms of lease are those of 90, 99 and 125 years, and so the Bill, as it stands, will mean that leaseholders with the most common forms of lease will not be able to enjoy the right to vary their ground rent to a peppercorn.

In conclusion, in contrast to the Government’s approach, a Labour Government will enact the Law Commission’s recommendations in full. Labour will make commonhold the default tenure for all new properties, in order to reform the leasehold system fundamentally and comprehensively. In my constituency, what has happened to the residents of Lee Court shows that the current leasehold system is not working. I suggest that the Government accept my new clause, as well as the Labour amendments.

[Wendy Morton]

I rise to speak to new clauses 13, 23 and 41, which stand in my name. I wish to place on record my thanks to those right hon. and hon. Members who supported me with my amendments and to the Public Bill Office for assisting with advice on their drafting.

Today’s Bill is important and I think we would all agree that it is long-awaited. I spoke on Second Reading, when I declared that I, like probably many others here, am one of almost 5 million leaseholders in this country. I am also one of the many who has gone through that awfully stressful process of extending a lease—that was prior to my being an MP. What I have learnt since becoming an MP is that the issue of leasehold affects not just London and our great cities, but constituents in places such as Aldridge-Brownhills. It affects people who have bought a house on a leasehold basis and many apartment blocks that were built perhaps 20 or 30 years ago. That is why I have taken such a keen interest in this piece of legislation. Buying a home is the biggest financial commitment that most people will make in their lifetime, but they are probably unaware of some of the complications they may experience later down the line.

I raised many questions on Second Reading and I wrote to the Secretary of State. My hon. Friend the Minister has been very engaged with me, but I gently say to the Department that a bit more engagement with Back-Bench Members would help enormously. That said, I am clear that I want the Bill to succeed, although in common with many other hon. Members I still believe it could and should go further. I will not push my amendments to a vote today, but I want to make a few points in relation to them.

On new clause 13, the prohibition on new leasehold homes within three months of the passage of the Act, I appreciate and welcome what the Minister said from the Dispatch Box. The Government have long been committed to the provisions in that new clause and I have sought clarity about what exactly they intend to do. I have heard welcome news today, but I will continue to press the point about commonhold because that matters. Moving forward, if we are to continue to look at this legislation and get it through this place, we will have to revisit this topic to ensure we get the best for our constituents, whatever type of housing or home they live in.

New clause 23 seeks a report on disadvantage suffered by existing leaseholders. In effect it was the sunset clause I referred to on Second Reading. The extent of the number of leaseholders who started the process of extending their lease during the passage of the Bill and the impact on them is unclear. Many will have been waiting to see the outcome of this legislation. Quite feasibly, that group will include people who have been forced to extend their lease in order to sell their home because, as we know, it is very difficult, if not impossible, to get a mortgage on a short lease. I am certain some leaseholders will not have been able to wait for the Bill to reach Royal Assent. Such leaseholders risk being seriously disadvantaged, so new clause 23 would take steps to assess and remedy any unfairness by considering issues such as marriage value, legal costs and other charges. I do not think we fully appreciate the size of this group compared to the number of people who will extend their leasehold after Royal Assent.

Similarly, new clause 41 seeks to redress the imbalance and unfairness of marriage value for those leaseholders who extended their leases many years ago or prior to the Bill passing through this place. By seeking to produce a report on disadvantage due to payment of marriage value, I hope we can better understand the extent of some of challenges around a system that, as we have heard today, is feudal, difficult to navigate and has disadvantaged many leaseholders over the years. It is important that we do not lose sight of the need to address the issue of marriage value.

The fourth area of concern is ground rent. I did not table an amendment on this issue but I will touch on it again. Many colleagues on both sides of the House have mentioned it. The Minister was clear in his response to me, but we need to continue to push forward for change.

I will support the Bill and I welcome the steps that have been taken. However, from the many examples that colleagues on both sides of the Chamber have highlighted today and the examples we have all seen sent to our inboxes by constituents, particularly around the challenges of service charge, it is clear that we need to go further. I will continue to gently nudge the Minister; he is nodding his head. He does a really good job and I am certain he gets the issue, but let us continue to work together for the benefit of our constituents.

[Mr Deputy Speaker (Mr Nigel Evans)]

I have nine Members trying to catch my eye, so if people speak for about five minutes, that will allow everyone to get in roughly equally. There has been some slippage, I can see that.

17:00

[Sir Stephen Timms (East Ham) (Lab)]

I rise to speak to new clause 24, which is in my name. It was also considered in Committee. I am most grateful to my hon. Friend the Member for Brent North (Barry Gardiner) for moving it there and to the Minister for his response. I am also grateful to the hon. Member for Loughborough (Jane Hunt) and the right hon. Member for West Suffolk (Matt Hancock) who have added their names to the new clause on the Order Paper.

I thank the Minister for his reply in Committee, but I think he missed the crucial central point of the amendment. At the moment, the risks of exposure to asbestos in a workplace are managed by the Control of Asbestos Regulations 2012, which is monitored by the Health and Safety Executive. For every workplace under those regulations, there is a duty holder responsible for monitoring the condition of the asbestos. They are required to keep up-to-date records of the location and condition of all asbestos-containing materials, to provide that information to anybody liable to disturb the materials, and to develop a plan for managing any risks that arise.

Residential blocks with a commercial freeholder will generally also have a duty holder, because the block will have been for them a workplace, so it is covered by the Control of Asbestos Regulations. It is usually the freeholder or their agent who is the duty holder. That duty holder is responsible for all the common areas in the block, such as foyers and staircases.

The effectiveness of this whole regime is debatable. The sixth report in the 2021-22 Session of the Work and Pensions Committee expressed considerable reservations. It is doubtful, I think, that the Health and Safety Executive is doing enough to monitor compliance, and the assumption that leaving asbestos in place is better than removing it is increasingly questionable as the asbestos ages. None the less, there is at least a clear regime for managing the risks.

The concern that motivates this new clause is that, following a transfer of the kind made possible and facilitated by the Bill, there will no longer be a duty holder for the communal areas in such a block. At the moment there is, but the responsibility will be entirely extinguished, as far as I understand it, on transfer. The asbestos is still going to be there, the risks will remain, but nobody will any longer be responsible for managing them. Understandably, no individual resident will take on the responsibility, but there will be no corporate entity to do it either. In fact, it may be worse than that. The residents may well not be aware before the transfer is completed that they are taking on both a financial liability for managing the asbestos in the communal areas, and possibly a risk to life as well. It is important to bear it in mind that we are seeing 5,000 deaths per year at the moment as a result of past exposure to asbestos.

In his response in Committee, the Minister said that the amendment would

“duplicate the existing duty in regulation 4 of the Control of Asbestos Regulations 2012 for landlords to survey the common areas of their property”.—[Official Report, Leasehold and Freehold Reform Bill Public Bill Committee, 30 January 2024; c. 461.]

However, the newly enfranchised property would not fall any longer under regulation 4. There would be no landlord to survey the common areas once the transfer has taken place.

New clause 24 aims to prevent this problem from occurring. It requires landlords to perform a detailed survey of the asbestos present in the building within three months of a transfer taking place and then requires the landlord to remove any asbestos that is there.There is a 150% tax relief for businesses removing asbestos from their premises, so removal will not be costly for landlords. It will save newly enfranchised leaseholders from a large and probably unexpected liability and a potentially lethal long-term risk. I hope that makes the case for this change clear.

I am grateful to the Minister for his assistance with the residents of Barrier Point in my constituency. I think we have a meeting in his office next month. Last night, I had my regular Zoom call with leaseholders from Waterside Park in my constituency. Before Christmas, we thought we had a clear way forward. Barratt, the builders, had signed up and Aviva, the current freeholder, was happy, but last night we learned of the requirement that the Building Safety Regulator to look at any proposal for a minimum of eight weeks, which will substantially delay the work that has been committed to. Will the Minister look at whether it is really necessary for residents who have been waiting so long for these problems to be resolved to wait another eight weeks?

[Nickie Aiken (Cities of London and Westminster) (Con)]

I fully support the Government’s wish to overhaul the antiquated and feudal leasehold system in this country and address the imbalance of power between freeholders and leaseholders. I thank the Minister for his ongoing discussions with me about a number of issues I have with the Bill, and for attending the leasehold roundtable that I held recently with my constituents.

I would like the Government to abolish the system completely, but I understand that that will not happen with this Bill. I have therefore tabled an amendment and three new clauses that would improve the Bill further. New clause 12 would reduce the participation threshold required to claim the right to manage from 50% to 35%. That is a massive issue in Cities of London and Westminster. More than 1,300 properties in the City of London and an eye-watering 12,100 in Westminster have owners living abroad or are owned by companies using central London’s golden postcodes as a place to park their cash. That reduces the ability of leaseholders in those blocks to secure the 50% of signatures required to achieve the right to manage, as it is incredibly difficult to contact those overseas leaseholders for a meaningful discussion.

Let me give an example of that type of dilemma in my constituency. Residents in The Quadrangle in the Hyde Park Estate say that leaseholders in their block will struggle to meet the 50% participation threshold. They estimate that at least 40% of leaseholders in their block do not live in the building and are uncontactable. Accepting new clause 12 and lowering the threshold to 35% would give many more leaseholders living in similar blocks the chance to manage their buildings.

I commend the work that has been done on the Bill to support blocks that have shared commercial and residential usage. The Bill proposes to increase the proportion of commercial or non-residential space permitted in an individual block for a right to manage application from 25% to 50%, but I believe we can go even further. I have heard from many residents whose blocks will fail to qualify even after the threshold rises to 50%. For example, residents of 8 Artillery Row in Victoria believe that increasing the threshold to 50% does not go far enough, as the residential element of their block is lower than 50%. That is why amendment 17 is needed, as it would allow residents in a block with up to 75% commercial premises to apply for the right to manage.

New clause 14 is similarly designed to allow more leaseholders to strive for the right to manage, especially those in mixed-use buildings. Simply sharing a broom cupboard with a commercial property can disqualify them from claiming the right to manage. At Cambridge Court in Marylebone, for example, leaseholders striving to manage their block would benefit from the Government’s proposals to increase the non-residential threshold allowed in a building, but they are concerned that their ability to qualify for the right to manage would be undermined by the existence of a single shared car parking space in their building. My new clause 14 would amend the Commonhold and Leasehold Reform Act 2002 by adopting recommendation 5 from the Law Commission’s “Right to Manage” report, which is to allow leaseholders in mixed-use buildings with shared services or underground car parks to exercise the right to manage.

Finally, my new clause 15 would correct the unintended consequences of the Building Safety Act 2022. That Act has interfered with the long-standing section 24 regime, which was a vital right for leaseholders. It introduced an accountable person mechanism that expressly banned section 24 managers from being the accountable person. Consequently, specially trained and vetted professional property managers willing to take on difficult sites have been barred from being the accountable person. That makes absolutely no sense, and it stripped leaseholders of an existing right. That could not have been the Government’s intention when they introduced the 2022 Act, which was intended to provide leaseholders with additional statutory protections. So many leaseholders in my constituency and across the country would benefit from applying for a section 24 manager, but they cannot risk it if they are in blocks of 18 metres or higher because of the accountable person regime issue arising from the Building Safety Act. It is imperative that our buildings are safe, that leaseholders are safe, and that the burden does not fall heavily on leaseholders.

I will not press my amendments to a vote, but I hope that the Government will consider what I have spoken about and work with me to introduce the measures in the other place. This is a watershed moment for the Government to prove that they understand the terrible treatment that leaseholders have faced and continue to face by incompetent freeholders, and to address the imbalance between freeholder and leaseholder. I hope that the Bill will deliver real change.

[Helen Morgan (North Shropshire) (LD)]

I rise to speak to new clause 1, which was tabled in my name, and in support of a number of new clauses and amendments tabled by right hon. and hon. Members from both sides of the House.

I tabled new clause 1 because, as was said by the hon. Member for Harborough (Neil O’Brien), who is no longer in his place, fleecehold is a scam. It attempts to deal with the issue whereby a freeholder is trapped in a situation where they pay estate management charges for the areas around their development, be they roads, play areas or open spaces. Critically, the new clause also deals with the shared assets that might be in use to service their homes, such as ground source heat pumps, septic tanks or sewage pumps. I am sure that there are many instances in which the management company does a great job and charges reasonable fees for its work, but my inbox—like those of many hon. Members—contains horrifying examples of the management company, which is usually directly owned by or related to the developer in North Shropshire, failing to do a good job, or to do any sort of job at all.

There is a freeholder in my constituency, for example, who must obtain an information pack from their estate management company in order to sell their house. Despite repeated requests, my constituent has not received that information pack, so their sale has been significantly delayed and is at risk of falling through altogether. The management company is apparently just a shell—it does not respond to correspondence, hold annual general meetings or provide accounts—so the affected residents are powerless and cannot take control of the company and appoint a reliable professional to provide the services that they so desperately need. New clause 1 would allow them, where the management company has gone AWOL and will not respond to anything that they request of it, to take control of the company and do those things themselves.

The new clause also extends to assets, which may be more of a rural problem when it comes to shared estate charges. In one example in my constituency, a developer installed a ground source heat pump to provide all the heating and hot water for a barn conversion development that involved several houses in the same set of barns.

That developer has two separate companies: one is the management company through which he charges the owners of those houses for their electricity bill, and another, totally separate company that was nothing to do with the sale process, which is where he placed the heat pump. As such, he is able to cream off all the renewable heat incentive income for himself; he provides accounts to residents through the management company, but does not provide them with any information about the fundamental asset that is servicing their home. Those residents are unable to benefit from the renewable heat incentive that accrues from that asset, and do not know whether it is being properly maintained and serviced. They are unable to do so themselves—they have no rights in relation to that heat pump.

17:15

That is quite a complex situation, in which I suspect fraud may also be involved, but there are other examples where residents are unable to get their street lights fixed or their potholes sorted out, or where drainage is a huge problem, and they cannot get any kind of response from the management company responsible. New clause 1 would allow residents to take over their estate management companies in such instances, which would hopefully provide management companies with a significant disincentive to fail to provide the services that they are presumably making quite a lot of money out of. Crucially, new clause 1 would also enable those trapped in existing arrangements to exit them.

As other Members have mentioned, once people with a full-time job have bought a home, they do not have time to endlessly chase up their management company and take them to court and tribunals over services that that company has failed to provide. One of the residents I have been dealing with said to me, “I just don’t have the time to deal with this. I’m a full-time truck driver.” The idea behind new clause 1 is to make it easier for those people to take control of those companies and take control of their own lives.

As has already been pointed out, it is very worrying that these arrangements have been allowed to proliferate across the country. Many residents are now paying both council tax and service charges for street lighting, grass cutting and drain clearing that would normally be provided by a local authority. Those people are literally paying more for the same service; that is indefensible, and millions of people are trapped in those arrangements. Amendment 18, tabled by the hon. Member for North East Bedfordshire (Richard Fuller), attempts to address that issue by preventing such charges from forming part of the estate management charge. That would certainly disincentivise developers from using that model, but although it is beyond the scope of the Bill, I urge the Government to prevent those awful arrangements from happening in the first place. It is much better for a road to be adopted and maintained by the local authority so that everybody is paying for the same services on the same level playing field.

Where people have a shared asset and are trapped by an estate management company, if their developer has failed to pay a section 106 fee, they are also on the hook for that money. I have residents in my constituency who have a charge of £30,000 over their shared area for a section 106 fee that was not paid, and other residents paying £1 million between 14 people to bring a sewage pump up to standard because it is an environmental health hazard. If those problems had not been allowed to occur in the first place—if the local authority had had to require a financial bond to be placed so that, if the development was not up to scratch when it was finished, the local authority had the money to bring it up to scratch and adopt it—those residents would not be in that awful situation. I really encourage the Government to take that away and think about how we can protect people in the future.

[Sir Peter Bottomley]

I draw to the hon. Lady’s attention and that of the Minister the article by Patrick Hosking in The Times today, which deals with estate management companies and estate management charges. I hope that the Government will read what he has written and see what they can do to make things better.

[Helen Morgan]

I thank the hon. Gentleman very much for his intervention.

I will conclude by saying that I support the amendments that would require professionalisation of the industry— that would be very sensible and consistent with other legislation that the House has passed. I also support new clause 5 and amendments 4 and 8, tabled by the shadow Minister, the hon. Member for Greenwich and Woolwich (Matthew Pennycook); new clause 39, tabled by the Chair of the Select Committee, the hon. Member for Sheffield South East (Mr Betts); and new clause 25, tabled by the Father of the House, the hon. Member for Worthing West (Sir Peter Bottomley). The Bill goes some way towards providing the protection that we need, but it needs to go much further to protect freeholders from rogue developers and estate management companies. I urge the Government to take that away and do more.

[Mr Deputy Speaker (Mr Nigel Evans)]

To protect the last six speakers and protect ministerial time as well, there is now a five-minute limit on speeches, which will give the Front Benchers sufficient time to respond.

[Rachel Maclean (Redditch) (Con)]

It was a great pleasure to serve on the Public Bill Committee on this Bill. We had a great debate, and there was actually a lot of agreement across the Committee Room. These are deeply Conservative reforms, championed by none other than Mrs Thatcher, starting in 1965, which she continued to do throughout opposition and during her premiership.

I gently say to Opposition Members, of whatever party, that they must not fall into the trap of making this a political football. They must engage with the seriousness and complexity of these reforms, in part because, as we have heard, they did very little to advance these very significant reforms during their own time in office. I suspect that they backed away from it because of the very significant legal challenges they would have faced, as we ourselves will no doubt face. Pretending they do not exist is not a serious position. I say to the Minister and the Secretary of State, who are aware of my comments, that we must not buckle, but must continue to take this forward.

It is great to see the package of amendments laid by the Government, particularly new clause 42, which is a ban on leasehold houses. I want the Minister to think carefully about how he will address the inevitable imbalance in the creation of a two-tier system, in which some people will have the freehold of their house, but some will not. There is an additional imbalance between flats in our urban areas and new freehold houses. That point was very well made by James Vitali in a Policy Exchange report. I am slightly worried about the omission from this of retirement properties, so perhaps the Minister could return to that.

In Committee, I spoke about the need to truly move towards a commonhold system. I think the Opposition’s new clause 11 is something of that nature. I very much hope that, as the Bill goes through completing its stages, the Government—here or in the other place—can look at that suggestion. I think we do need to set out the future legislative scaffolding for our fifth term in office, and to build on the work we have done so that we can finally get rid of this leasehold system.

Other Members have mentioned a lot of the points I would have made about shared services. My hon. Friend the Member for Cities of London and Westminster (Nickie Aiken) raised that, and it is one of my concerns. My hon. Friend the Member for Harborough (Neil O’Brien) has done a fantastic job in talking about the lack of adoption by local authorities. There is also new clause 7, which I know is again an Opposition amendment, and new clauses 1 and 2. This problem is not going to go away. It is a blight on many homeowners in Redditch, and it also goes to the heart of our planning system. We really do need to look at that; we cannot pretend that it is going to solve itself.

I thank the Minister for writing to me about one of my concerns, which is litigation costs. I think new clause 3 looks at that. He has reassured me that what is in this Bill will go the distance in ensuring that leaseholders are not subject to unjust litigation costs by their landlord. That is one of the cases highlighted by Liam Spender and many others. These are hugely complex issues, but we must tackle them.

I want to see ground rents reduced to a peppercorn. It is pure extortion, and a feudal relic from medieval times when people were serfs and worked the land. We should not have this in 2024, or in any year. I refuse to believe that there is not a way, through the wit of man and the considerable intelligence of Ministers on the Front Bench, to solve the issue, perhaps where some financial assets are held in pension funds. I do not buy the pretence of that incredible con artist Mr Steve Whybrow and his outfit that somehow we are robbing pensioners. I would urge anybody with an interest in this debate to look at the genuine pensioners who are fighting for the right to have pure enjoyment of their own properties, which they richly deserve after a lifetime of working.

I will make my final remarks on forfeiture: it must go. The forfeiture of a long lease cannot be right. It cannot be right that a freeholder can hold this nuclear bomb over somebody such as Dennis Jackson, a pensioner, of Plantation Wharf. He disputed a £6,000 service charge, which led to an £80,000 legal bill, and he had his £800,000 flat forfeited during a 10-minute hearing at Wandsworth court. I thank LEASE for all the work it has done to help him. That just simply cannot be right, and we must address it. I want to see us finally finishing the job that Mrs Thatcher started when she was Opposition Housing spokesman in 1965. We must finish that job, and I thank the Minister for all the work he has done so far.

[Stella Creasy]

I feel for the Minister today, because he must be kicking himself. This is probably one of the few debates I have heard in this place recently where I have not heard a bad idea. As constituency MPs, we see time and again the problems caused by retaining this feudal system of leasehold, and I suspect that the Minister, who has been looking at this issue for some time, is kicking himself because what he would really like to do is abolish the whole thing. Indeed, today we have heard support from across the House to do just that. In the short time available, let me say again to him that he would have our support to move to commonhold. He talked about how commonhold was probably the better model, and for those of us living in the vortex of gentrification, where thousands of flats have been built in our community, this is an incredibly pressing issue. We know that the casework we have seen over the past few years will expand as a result of leasehold continuing. That is why I wish to see the Government change their mind, perhaps in the other place, about getting rid of leasehold altogether, and why I have been pressing my local authority to listen to concerns of local residents who are stuck with leasehold, and change our local plan to make commonhold the default. I hope that they have heard this debate and will rethink their opposition to that.

I support the amendments in the name of my hon. Friend the Member for Greenwich and Woolwich (Matthew Pennycook), and wish to draw the Minister’s attention to two new clauses that I have tabled on issues with the existing system and the problems that leaseholders face. With 12,000 leaseholders in Walthamstow, I know that these issues will come up time and again.

New clause 2 is about the fact that although we have leasehold legislation, it does not tally with our consumer legislation. Leaseholders pay a service charge. They have a contract with freehold management companies to oversee problems in their properties, but few residents feel empowered to access rights that exist under the Consumer Rights Act 2015 to have a reasonable service within a reasonable timeframe for repairs. Today, colleagues across the House have given countless examples of that, so let me add my own, which is where my proposed new clause has come from. I am sorry that my hon. Friend the Member for Lewisham East (Janet Daby) is not here. She talks about Leigh Court and new clause 67, but residents in Essex Brewery in Walthamstow have been without hot water and heating since before Christmas. Indeed, they are still without hot water and heating, with little sight of any change.

Essex Brewery was built just five years ago. It has become apparent that the build by Crest Nicholson was poor at best, and a downright con at worst. Until January this year, Crest Nicholson was on the management committee and made more than £100 million in profit in the year that Essex Brewery was built. It has made half that this year—possibly less—because of widespread concerns about the condition of the builds it has made. What does someone do when they have bought possibly their first home, whether through shared ownership or leasehold, as hundreds did in that development, and they find that the pipes that bring in the hot water are faulty? I am sorry to say that those resident have little redress, because the management company, Kinleigh Folkard and Hayward—another multimillion pound organisation—left them without any explanation of why it would not repair the hot water until after Christmas. What a Christmas present that was. The Grinch had strong competition.

That was another layer of bureaucracy. KFH was appointed by the Essex Brewery management company, which was established by the freeholder, Helpfavour, to meet those obligations. KFH told the residents that because their insurance policy said that as long as they had water at all, the property was habitable and it was not going to do anything about it. That has left hundreds of residents, many of them vulnerable, for months on end without any hot water or heating in the current weather. Residents have had to boil kettles to get hot water to cleanse their babies, or pay bills that they cannot afford for extra heating through portable heaters. For those who have shared ownership it is even more complicated. Metropolitan Thames Valley states that it owns 24 of those properties and that it is prohibited by law from fixing the problem. New clause 2 is about matching consumer legislation with leasehold legislation, and giving residents the right of redress, not saying, “You’ve either got to buy out the leaseholders if you want some property control, or you are stuck with them and waiting to see.” I hope KFH hears this debate and is ashamed of its behaviour.

Amendment 1 is about leasehold tribunals. I know the Minister spoke of precedent setting, but residents across the country would tell him otherwise. I beg him to look at the Warner properties in Walthamstow, and at Y&Y management, which repeatedly rips off constituents across the country. The hon. Member for Harborough (Neil O'Brien) is not here, but he asked why people have to pay terrorism insurance. In Walthamstow that was the Warner estate company, which said that because the plane bomber lived in our constituency, 3,000 households had to buy terrorism insurance. Such cases come up time and again with leasehold and they do not get fixed in the tribunal. Amendment 1 would give precedent.

[Vicky Ford]

For some of my Chelmsford constituents, these provisions cannot come soon enough. One constituent told me how he bought his leasehold flat seven years ago, but now he and his wife want to move to a bigger home to start a family and progress their lives. For the past three years, they have been unable to sell their flat. They have tried listing the property with many different estate agents and had many offers, but no buyer can get a mortgage on the property due to a clause in the lease that means the ground rent can be doubled every 15 years. According to my constituent, nobody in this block of 20 flats has been able to sell a property since 2018. They feel stuck.

17:31

Another constituent in another block of flats says that her family of three and a dog have been trying to move out of their one-bedroom flat for more than two years. Because the ground rent exceeds the £250 arbitrary threshold set for properties outside of London, buyers cannot get a mortgage, because if a leaseholder were to default on the ground rent, the landlord would have the right to repossess. The family have tried deeds of variation, indemnity policies and multiple mortgage lenders, all to no avail. Mortgage companies value the flat at literally zero.

For most people, buying one’s own home is meant to give security and stability, choice and freedom, but for these leaseholders, life is more like being locked in a time warp. They are trapped in a prison of their own property, unable to move on. I therefore welcome the measures in the Bill and the amendments that the Government have tabled today. I have listened carefully to what my hon. Friend the Member for Walsall North (Eddie Hughes) and others have said about forfeiture and what the Minister said about caps on ground rent. The Minister needs to go further on this issue.

Another group of leaseholders are struggling live in Kings Tower, a 12-storey building with a small amount of combustible insulation on the spandrel panels on the outside of the building. It might need remedial work to remove and replace it. I think it is shocking that seven years after Grenfell Tower, a huge company—Barratt—and the property management company, Estates and Management Ltd, have still not carried out this remediation work.

One of the leaseholders, Richard, emailed me today. He said that back in 2009, the service charge was just £800 a year. This year, he thinks he will have to pay £4,000. Richard and other leaseholders were first told of the potential issue in August 2020. He says that since then, they have been unable to fulfil any form of normal life, due to these additional fire safety issues and the cost. He says:

“I genuinely feel ill to think of what our service charge demand is going to be in March this year”.

As well as increases in insurance, Barratt and E&M Ltd are blaming the increase on the costs needed to register the building under the new regulations of the Building Safety Act 2022. I thank the Minister for his letter to me on this subject. Even though paragraph 9 of schedule 8 was meant to protect leaseholders from the costs of legal and other professional services, it is clear that my constituents and many others feel that they are being gouged for excessive costs.

Finally, some freeholders also face issues. There are some truly stunning residential developments in Chelmsford, where the parks and public areas are beautifully maintained by estate management companies, but that is not universal. I note that FirstPort has been named by my neighbour, my right hon. Friend the Member for Witham (Priti Patel), as a company that is particularly difficult to deal with, even for a Member of Parliament, and I agree with her. It is so hard for freeholders to hold management companies to account and to ensure that maintenance is done well and that the costs charged are reasonable. I am therefore glad that this Bill will also include measures to give freeholders access to support via redress schemes and to require estate management companies to be transparent. When more leaseholders become freeholders—as I truly hope they will thanks to the changes brought in by this Bill—we need to ensure that these terrible practices are not just passed on to freeholders, but that freeholders also have these rights and the ability for redress.

[Priti Patel]

The amendments tabled by the Government —new clauses 30 to 32 in particular—will offer my constituents some hope and a quicker means of redress on many of the points raised in the House’s discussions. I will press the Minister on some concerns raised by my leaseholder constituents and by all colleagues on the whole issue of remediation of defects, and transparency and accountability.

At one development in my constituency that opened in 2019—now a significant period of time ago—the residents experience a shocking case of misery and distress. The problems include water ingress, damp and mould, with children getting sick as a result, which is unforgiveable. There are also: damaged sprinkler systems; defective and non-compliant fire doors, which is unthinkable in this day and age; inadequate insulation—we have heard about water pipes and the lack of heating and cold water; roofing issues; damaged gates; and poor grounds maintenance. On top of that, when someone raises a complaint, guess what happens? Nobody does anything about it. However, whenever constituents get a letter, it is about their service fees increasing—it happens all the time. That is not acceptable.

The residents seek redress, but it just does not happen. Not only are they frustrated but we see a clear issue with buck passing; that is shameful and must be addressed. This property was a permitted development, and we should pause for thought on that. I am pro such developments—we need more of them—but we must ensure that charlatans do not come along and exploit people who are desperate to buy their first home, with all sorts of things happening in the building. I have had reports from residents who have purchased their property more recently, and guess what? They were not informed of all the defects and the problems going on. That is simply scandalous.

I want to mention again FirstPort—this should be a topic of wider debate in the House—and management companies. I am meeting FirstPort at the weekend. Again, why do these companies feel that they can be let off the hook? They will not engage effectively. In one case, leaseholders of a site in Stanway were not notified of a change in management company for about half a year. Every single colleague in the House will have cases of that nature.

FirstPort has refused requests to hold annual general meetings and has been lacking in visibility. If I may, I will praise Councillor Kevin Bentley, my county council leader, who is a divisional member for the area in question and has secured a public meeting for the weekend. It will be the first point when we have been able to get in the room with these people to seek redress. Contractors come in, and people are charged for monitoring works that never take place—it goes on and on.

I am grateful to the Minister for how he opened the debate, and spoke frankly about the issues and concerns. I have a suggestion to put to him. Yesterday it was announced that the Competition and Markets Authority will look into the practice of house builders and whether there has been collusion in pricing and the development of schemes. May I suggest that it might be worth looking into management companies? Many of those house builders come part and parcel with the management companies. The house builders do the negotiations with the management companies, and there is a lack of transparency. Should we be looking at more open book contracting around management companies, with details of how they are brought on board by the developers published, so that there is greater transparency for the purchasers? That is really important. As the Minister’s Department has already enlisted the CMA, he may wish to ask it to look at that important area as well. I hope that he can respond to some of those points when he sums up.

All hon. Members are grateful for the chance to raise these points, which speak to the totality of what we are seeing—a sense of a lack of fairness for many of our constituents, which the Government are clearly pressing in the right direction and seeking redress.

[David Simmonds (Ruislip, Northwood and Pinner) (Con)]

I very much welcome the Bill, which addresses the frustrations expressed by a great many leaseholders in my constituency. I thank Suzy Killip from the Pembroke Park Residents Association and Jo Tapper at The Sigers, both of whom have faced significant challenges while representing their communities and taking forward issues arising from the management and lack of services often provided to them under their lease arrangements.

I would particularly like to thank Ministers, because this legislation takes into account the way that the market has changed. Many years ago I started my career as a financial adviser, dealing with people taking out mortgages. One stark change is the extent to which leaseholds are seen as an opportunity to extract money from people as investments to be traded by freeholders, on the basis of extracting the maximum possible amount rather than ensuring good quality of services. I was involved in cases as a local authority councillor, where part of the planning agreement was that roads, parks and open spaces would be brought up to an appropriate standard to be adopted by the local authority. Once the development was completed, an opportunity was spotted by the developer and, therefore, people who had moved in on the understanding that the local authority would take over—because the roads were built to adoptable standard, for example—found that it did not happen because it was seen as an investment opportunity. That is very much in line with the rip-offs referred to by Members across the House.

I commend Ministers on taking a balanced approach on the need to recognise a link between the arrangements in the Bill and our housing supply. The UK has the oldest housing stock in Europe. The ability of freeholders of larger developments to regenerate sites where properties that have been rented are falling vacant over a period of time could be inhibited if there is a proliferation of small freeholds on those types of sites. If we are to ensure that the quality of our housing, in particular energy efficiency, is brought up to a good standard, it must still be possible for larger sites to be regenerated. We must not inhibit that completely while addressing a different concern about the rights and freedoms of leaseholders.

I mentioned some constituents earlier; the situation in particular at Pembroke Park is a good example of why the reforms in this legislation are so important. The development was constructed on a former military site by Taylor Wimpey, and handed over to be managed by A2Dominion housing association, with a mix of social housing tenants and private leaseholders. There are umpteen issues still more than a decade after the completion of that site, and issues simply getting A2Dominion to respond to problems including insulation that was never installed in buildings to the building regulations standard, a complete failure to ensure that proper ventilation was installed in the buildings, and drains that are completely inadequate. There has been progress, but I would add A2Dominion to the list of companies raised by other Members.

I commend A2Dominion’s relatively new chief executive, Ian Wardle, on the progress that he is making, but it remains a huge challenge to my constituents, and a huge frustration, that as opaque charges rise and rise, the actions of that organisation make it incredibly difficult even to understand whether the basic legal protections that they enjoy under existing legislation are being observed, including how insurance costs are apportioned across a very large property portfolio.

I strongly support the points made around forfeiture provisions. A number of constituents have come to me with significant challenges and justifiable concerns about the rising service charges on their properties. It is completely unacceptable that they would forfeit a significant amount of value that they have paid for and earned—potentially to fall to the developer. That is another opportunity for the shamelessly greedy to rip off our constituents. I am very glad that this legislation and the comments made by Members across the House today will represent a significant step towards ending that practice.

[Richard Fuller]

Thousands of homeowners in my constituency and millions across the country who face estate management charges will have their rights substantially increased thanks to the provisions in this Bill. I am extremely grateful to the Prime Minister, the Secretary of State, the Minister and his predecessor, my hon. Friend the Member for Redditch (Rachel Maclean), for including estate management charges in this Bill.

17:45

That is extraordinarily timely, given the findings released this week by the Competition and Markets Authority. In its final report, it states:

“As a result of the emergence of the private management model, and the market power conferred on some management companies, households are facing financial and emotional detriment, and, if the status quo is maintained, this is likely to worsen over time.”

It proposes that the Governments of the UK and the devolved authorities look at two areas of measures. The first is to

“provide greater protection to households living under private management arrangements.”

That is what this Bill seeks to do. I know that the Minister has some cards up his sleeve—on forfeiture, right to manage and probably a host of other things—and I hope that he will shake some of them loose as the Bill moves up to the upper House.

Secondly, the Competition and Markets Authority makes two recommendations to prevent the proliferation of private management arrangements for new housing estates. The first is to

“implement common adoptable standards for public amenities on new housing estates”,

and the second is to

“implement mandatory adoption of public amenities on new housing estates”.

That sounds good, but it also sounds a long time away. We know that this issue is growing rapidly, so my amendment 18 seeks to stop it in its tracks by saying that homeowners may not have passed on to them charges for any service or provision that is usually the recourse of the local authority.

I cannot for the life of me understand why the Opposition are not supporting this amendment. I know that it is a bit of a club and not very nuanced, but it gets to the heart of the matter. Could the Minister therefore reassure the Opposition, as well as me and other Back Benchers, that he will look at what the Bill can do to make progress on some of the measures mentioned by the Competition and Markets Authority? I know that he wants to do that; I just hope that he can go as far as he can.

I will now turn to the proposed treatment of marriage value. There is a concern, which has been stressed a number of times, that the decisions we are making through this Bill are based on limited information on important economic effects. One example is the ability given to the Secretary of State to decide options for the future of ground rent. That was raised in responses to the recent consultation. Another is how the Government might determine the appropriate rates for the deferment and capitalisation rates, and there are a range of unquantified effects in the Bill’s impact assessment.

In Committee, I tried to learn a bit more about whether marriage value is a real thing. It is a real thing: it was enshrined in legislation in 2002 and, prior to that, in 1993. The Bill does not abolish marriage value; it transfers it. In fact, it is not possible to abolish marriage value; in maths, it is an optional value—it has real value. This is a decision not to abolish something, but to take it from one group of stakeholders and give it to another. It is a £7 billion transfer of wealth from one group to another, and under the provisions of the Bill it would be retrospective on contracts already entered into. That is a perfectly legitimate public policy position if we wish to take it, but I say to the Minister that as currently proposed it is fraught with legal risk and legal jeopardy.

My amendment would provide a safer passage for this Bill on its way to becoming law. It would ensure that any lease below 80 years at the time the Act is passed would continue to have marriage value, but any lease that goes below 80 years after the Act has passed would not. I ask the Minister to consider that as the Bill moves to its next stage.

[Lee Rowley]

With the leave of the House, let me start by thanking all Members for their contributions to the debate. The breadth of discussion across the House has shown that while we can discuss precisely how far we should go, there is a general consensus that progress needs to be made, and I think all Members will accept that it has been and is being made in the Bill.

My hon. Friend the Member for Worthing West (Sir Peter Bottomley) tabled new clause 25, and he is right to say that it deals with an important issue. As he said, a consultation is open, and we will review the responses very seriously. I urge anyone whose views are as strong as those expressed by my hon. Friend to contribute to the consultation, so that we can consider the issue in the round.

The hon. Member for Sheffield South East (Mr Betts) spoke passionately about his new clauses 39 and 40, and I understood the points that he was making. I hope that some of the changes introduced in the Bill will make the acquisition of freeholds much easier. We have discussed regularly the need for a disincentive for freeholders not to respond or to “go slow”, which should mean that the right to first refusal falls away to the extent that it is no longer necessary.

I was sorry to hear about the problems experienced by the constituents of my right hon. Friend the Member for Camborne and Redruth (George Eustice). He was kind enough to mention them to me earlier, but I would be happy to meet him as he requested, because I recognise that the specific matter that he raised is important to his constituents, and we need to look into it in more detail.

The hon. Member for Brent North (Barry Gardiner), who served on the Bill Committee, made many useful points. I cannot do justice to all of them, but I am happy to continue the discussion about Daejan Holdings and building safety to ensure that, if there is an issue that the Government have not worked through fully, we understand the details better.

The hon. Member for West Ham (Ms Brown), my hon. Friend the Member for Romford (Andrew Rosindell), my right hon. Friend the Member for Chelmsford (Vicky Ford) and my hon. Friend the Member for Ruislip, Northwood and Pinner (David Simmonds) highlighted the huge inequity that is affecting individuals in individual blocks in their constituencies. That inequity is exactly the reason why we must make progress, and I hope that the Bill is a good proposition for that to happen.

The hon. Member for Lewisham East (Janet Daby) was kind enough to give me more details about the background to her new clause in a separate discussion. What I have heard about from her, and also from the hon. Member for Walthamstow (Stella Creasy)—who is not in the Chamber, but who has a similar concern—is absolutely unacceptable. I entirely appreciate the individual concerns that are felt, and I am keen to continue our discussion so that we can learn from it for the broader good of the building safety sector in general.

My right hon. Friend the Member for Aldridge-Brownhills (Wendy Morton) tabled an important new clause about leasehold houses. I am glad she recognised that the Government have now introduced measures to deal with the issue that she raised. She also raised two important points about reports, and I am keen to meet her so that we can discuss those further and, in particular, discuss the impact involved.

I can tell the right hon. Member for East Ham (Sir Stephen Timms) that we are looking into the issue of the Building Safety Regulator, and I will be happy to talk to him about that when we meet to discuss Barrier Point. Since his speech I have checked the position on asbestos. We do not believe that that right is extinguished, but if we are not correct I would be keen to talk to him further to ensure that we understand exactly how that regime will work in practice, and to try to assuage his concerns.

My hon. Friend the Member for Cities of London and Westminster (Nickie Aiken) exhorted us to move at this watershed moment. I am keen to talk to her further about the participation thresholds. She has made a powerful case, both to me in the House today and more broadly, about the importance of ensuring that this is workable, particularly in the circumstances that are faced in the centre of London.

While I entirely understand the point made by the hon. Member for North Shropshire (Helen Morgan) about some of these changes, I worry about her new clause, and I ask her not to push it to a vote. While her intentions are clearly noble, the new clause would put us into a position in which assets were being expropriated for the purpose of something that could be as insufficient as notice of an annual general meeting. I hope that she will reflect on that during the time we have left before the votes.

My right hon. Friend the Member for Witham (Priti Patel) made a strong point about the need to consider estate management further, and I have given a commitment to do so. FirstPort was raised by a number of Members, including my right hon. Friend. It may interest the House to know that my hon. Friend the Member for Harborough (Neil O’Brien) will lead a Westminster Hall debate on that tomorrow—so same time, same place, same discussion, but an opportunity to consider further the people and organisations that are not doing the right thing in this regard.

My hon. Friend the Member for North East Bedfordshire (Richard Fuller) has been an absolutely doughty champion of progress on estate management, and he is absolutely right to do that. His speech demonstrates again the strength of feeling about this issue and, as I said at the Dispatch Box a moment ago, we are considering it further and recognise the importance of doing that.

I turn to the contribution from the hon. Member for Greenwich and Woolwich (Matthew Pennycook), who speaks for the Opposition. He has tabled a new clause on forfeiture. I hope that the Government have indicated very clearly that we recognise the significant problems in this area and are working through the detail. Although I understand what he is trying to do with amendments 4 and 8, we think it is proportionate to retain the current position that we have set out from the Front Bench, for the same reasons as in Committee.

My hon. Friends the Members for Redditch (Rachel Maclean) and for Harborough made a very clear case about the importance of those on the Government Benches leaning into reform. In the time I have left, knowing that other parties and other traditions represented in this House will make similar cases—it is a shared endeavour in this area—I want again to make the Conservative case for leasehold reform. Building on our proud heritage of reform, it is a Conservative Government who are bringing forward the most transformational proposals for improving the lives of millions of leaseholders. It is a Conservative Government who are building the case for change to deal with the iniquities present on new estates, and who are committed to setting ordinary families free from unnecessary burdens. It is a Conservative Government who have brought forward one of the most comprehensive changes to property in a generation.

Why have we come forward with these proposals? It is precisely because it is a Conservative thing to do. We are cautious about interfering in the markets, for fear of unintended consequences or the creation of barriers. We know that no Government can ever fix every problem, but when we are convinced about the case for reform, we will fight for it with every sinew. At the heart of being a Conservative is the desire to smash monopolies and remove bad practice. We will celebrate where things work well, but we will joyfully remove distortions that are exploited by chancers and rogues. We will constrain rent seekers and middlemen, who add little to the basic economic exchange of goods and services that is at the heart of our economy.

Fundamentally, we are committed to making our markets more perfect and, as a consequence, to setting people free to make their own choices, live their lives and build their own future. Leasehold has been exploited for far too long by those who have no interest in the good functioning of capitalism. The lack of transparency, clarity and redress in freehold estate charges causes frustration up and down the land, and it does nothing for the efficient functioning of markets. That is why we are reforming.

Adam Smith talked of ground rents as monopolistic in 1776, Hayek reminded us in 1944 of the importance of making competition work and of not accepting institutions as they stand and, as my hon. Friend the Member for Harborough indicated, Margaret Thatcher asserted in 1982 that there is no prouder word in our history as Conservatives than “freeholder”. That is the centuries-long call as to why we have to make further improvements to our property system. With this Bill, in the true spirit of thousands of Conservative reforms that have made this country better, we are sending a clear signal that change for the better is coming and will benefit millions of people for the long term. That is only possible because of all the hard work of all the officials, all the people in the Law Commission and my opposite number, the hon. Member for Greenwich and Woolwich, who has been extremely constructive on this Bill.

I give huge thanks to Professor Nick Hopkins; Tom Nicholls and Chris Pulman at the Law Commission; officials in the Department, led by Robin Froggatt-Smith; my private office, including Grace Doody; and Members from across the House for their valuable input. Although I have just made the Conservative case for reform, we know that this is a shared endeavour among us all, which is why there is an unusual amount of unanimity in this place. It demonstrates the importance of our continuing to make progress on this issue.

As the Bill moves to the other place, I hope that those sat in the other place take note of the consensus and keenness here to ensure that progress is made. I hope they also take note of the importance of ensuring that the Bill continues and of the very many great reforms that are in it already. This demonstrates that together, as a broad group all across this House, we are committed to ensuring that leasehold reform happens, that leaseholders get a better deal and that the estate managers, estate management and freehold estates get clearer transparency, clearer information and a clear understanding of how they can live their lives and set themselves free in the future.

18:00

Debate interrupted (Programme Order, 11 December 2023).

The Deputy Speaker put forthwith the Question already proposed from the Chair (Standing Order No. 83E), That the clause be read a Second time.

Question agreed to.

New clause 26 accordingly read a Second time, and added to the Bill.

The Deputy Speaker then put forthwith the Questions necessary for the disposal of the business to be concluded at that time (Standing Order No. 83E).

New Clause 27

Part 4: Crown application

“(1) Sections 66 to 69 (sales information requests) bind the Crown.

(2) The other provisions of this Part—

(a) apply in relation to estate management carried out by, or on behalf of, a government department and otherwise bind the Crown in relation to such estate management, and

(b) bind the Crown in relation to other estate management only if carried out by, or on behalf of, a person other than the Crown.”—(Lee Rowley.)

This new clause, to be inserted in place of clause 70, expands the extent to which Part 4 binds the Crown. Clauses 66 to 69 bind the Crown in all respects. The Crown is also bound as respects the other provisions of the Part where estate management is carried out by a government department or a person other than the Crown.

Brought up, and added to the Bill.

New Clause 28

Redress schemes: no Crown status

“A person exercising functions under a redress scheme (other than the Secretary of State) is not to be regarded as the servant or agent of the Crown or as enjoying any status, privilege or immunity of the Crown or as exempt from any tax, duty, rate, levy or other charge whatsoever, whether general or local, and any property held by a such a person is not to be regarded as property of, or held on behalf of, the Crown.”—(Lee Rowley.)

This new clause, to be inserted after clause 75, would clarify that people exercising functions under a redress scheme do not have Crown status.

Brought up, and added to the Bill.

New Clause 29

Part 5: amendments to other Acts

“Schedule (Part 5: amendments to other Acts) makes amendments to other Acts in connection with this Part.”—(Lee Rowley.)

This new clause, to be inserted after clause 80, would introduce NS1.

Brought up, and added to the Bill.

New Clause 30

Steps relating to remediation of defects

“(1) The BSA 2022 is amended as follows.

(2) In the heading of section 120 (meaning of “relevant defect”), at the end insert “and “relevant steps””.

(3) In section 120, after subsection (4) insert—

“(4A) “Relevant steps”, in relation to a relevant defect, means steps which have as their purpose—

(a) preventing or reducing the likelihood of a fire or collapse of the building (or any part of it) occurring as a result of the relevant defect,

(b) reducing the severity of any such incident, or

(c) preventing or reducing harm to people in or about the building that could result from such an incident.”

(4) In Schedule 8 (remediation costs under qualifying leases etc), in paragraph 1(1)—

(a) omit the definitions of “building safety risk” and “relevant risk”;

(b) for the definition of “relevant measure” substitute—

““relevant measure” , in relation to a relevant defect, means—

(a) a measure taken to remedy the relevant defect, or

(b) a relevant step taken in relation to the relevant defect;

“relevant step” : see section 120;”.”—(Lee Rowley.)

This new clause is to be inserted as the first clause of a new Part. It amends provisions of the Building Safety Act 2022 which are about remediation of building defects. A definition of “relevant steps” is added, meaning steps which are essentially preventative or mitigating (such as installing a fire alarm) rather than remedying the defect.

Brought up, and added to the Bill.

New Clause 31

Remediation orders

“(1) Section 123 of the BSA 2022 (remediation orders) is amended in accordance with subsections (2) to (4).

(2) In subsection (2), for “remedy specified relevant defects in a specified relevant building by a specified time” substitute “do one or both of the following by a specified time—

(a) remedy specified relevant defects in a specified relevant building;

(b) take specified relevant steps in relation to a specified relevant defect in a specified relevant building.”

(3) For subsection (6) substitute—

“(6) In this section—

“relevant building” : see section 117;

“relevant defect” : see section 120;

“relevant steps” : see section 120;

“specified” means specified in the order.”

(4) After subsection (7) insert—

“(8) In proceedings for a remediation order, a direction given by the First-tier Tribunal requiring a relevant landlord to provide or produce an expert report is to be regarded as a decision for the purposes of subsection (7).

(9) In subsection (8), “expert report” means an expert report or survey relating to—

(a) relevant defects, or potential relevant defects, in a relevant building;

(b) relevant steps taken or that might be taken in relation to a relevant defect in a relevant building.”

(5) The amendments made by this section apply in relation to proceedings for a remediation order as mentioned in section 123 of the BSA 2022 which are pending on the day on which those amendments come into force (as well as proceedings for such an order which are commenced on or after that day).”—(Lee Rowley.)

This new clause amends provisions of the Building Safety Act 2022 which are about remediation orders, to make it clear that: (i) a remediation order can require a landlord to take relevant steps (see NC30), and (ii) the First-tier Tribunal may order, and enforce, the production of an expert report.

Brought up, and added to the Bill.

New Clause 32

Remediation contribution orders

“(1) Section 124 of the BSA 2022 (remediation contribution orders) is amended in accordance with subsections (2) to (6).

(2) In subsection (2), after “remedying” insert “, or otherwise in connection with,”.

(3) After subsection (2) insert—

“(2A) The following descriptions of costs, among others, fall within subsection (2)—

(a) costs incurred or to be incurred in taking relevant steps in relation to a relevant defect in the relevant building;

(b) costs incurred or to be incurred in obtaining an expert report relating to the relevant building;

(c) temporary accommodation costs incurred or to be incurred in connection with a decant from the relevant building (or from part of it) that took place or is to take place—

(i) to avoid an imminent threat to life or of personal injury arising from a relevant defect in the building,

(ii) (in the case of a decant from a dwelling) because works relating to the building created or are expected to create circumstances in which those occupying the dwelling cannot reasonably be expected to live, or

(iii) for any other reason connected with relevant defects in the building, or works relating to the building, that is prescribed by regulations made by the Secretary of State.

(2B) The Secretary of State may make regulations for the purposes of this section specifying descriptions of costs which are, or are not, to be regarded as falling within subsection (2).”

(4) In subsection (3), after “specified” insert “as a person required to make payments”.

(5) In subsection (4)—

(a) in paragraph (a), omit from “or payments” to the end;

(b) after paragraph (a) insert—

“(aa) if it does not require the making of payments of a specified amount, determine that a specified body corporate or partnership is liable for the reasonable costs of specified things done or to be done;”.

(6) In subsection (5)—

(a) after the definition of “developer” insert—

““expert report” has the meaning given by section 123(9);”;

(b) after the definition of “relevant defect” insert—

““relevant steps” : see section 120;”;

(c) after the definition of “specified” insert—

““temporary accommodation costs” , in relation to a decant from a relevant building, means—

(a) the costs of the temporary accommodation, and

(b) other costs resulting from the decant, including removal costs, storage costs and reasonable travel costs;

“works” means works—

(a) to remedy a relevant defect in a relevant building, or

(b) in connection with the taking of relevant steps in relation to such a defect.”

(7) The amendments made by this section apply—

(a) in relation to proceedings for a remediation contribution order under section 124 of the BSA 2022 which are pending on the day on which those amendments come into force (as well as proceedings for such an order which are commenced on or after that day);

(b) in relation to costs incurred before as well as after those amendments come into force.”—(Lee Rowley.)

This new clause amends provisions of the Building Safety Act 2022 which are about remediation contribution orders, to make it clear that a remediation contribution order may require payment in respect of the costs of taking relevant steps (see NC30), the costs of an expert report, and the costs of a temporary decant of tenants.

Brought up, and added to the Bill.

New Clause 33

Recovery of legal costs etc through service charge

“(1) Schedule 8 to the BSA 2022 (remediation costs under qualifying leases etc) is amended in accordance with subsections (2) and (3).

(2) After paragraph 9(1) insert—

“(1A) Sub-paragraph (1) does not apply to the extent that the service charge is payable to a management company in respect of legal or other professional services provided to the company in connection with an application or possible application by the company for or relating to a remediation contribution order under section 124.”

(3) After paragraph 9(2) insert—

“(3) In sub-paragraph (1A) “management company” means—

(a) a resident management company, or

(b) an RTM company within the meaning of Chapter 1 of Part 2 of the Commonhold and Leasehold Reform Act 2002 (right to manage).

(4) “Resident management company” means a body corporate which is party to a lease of a building where—

(a) the body corporate is limited by guarantee and the members of that body are tenants under leases of dwellings in the building (“leaseholders”), or

(b) the majority of the shares of the body corporate are held by leaseholders.”

(4) The amendments made by this section do not apply in relation to legal or other professional services provided before this section comes into force.”—(Lee Rowley.)

This new clause amends provision in the Building Safety Act 2022 which prevents legal costs etc relating to liability for building defects being passed onto leaseholders via the service charge. The change allows the recovery of such costs via the service charge if they are incurred by a resident management company in connection with obtaining a remediation contribution order.

Brought up, and added to the Bill.

New Clause 34

Repeal of section 125 of the BSA 2022

“(1) Omit section 125 of the BSA 2022 (meeting remediation costs of insolvent landlord).

(2) In consequence of that repeal—

(a) in section 116(1), for “125” substitute “124”;

(b) omit section 116(2)(e);

(c) in section 117(1), for “125” substitute “124”;

(d) in section 119(1), for “125” substitute “124”;

(e) in section 119A(9), for “125” substitute “124”;

(f) in section 120(1), for “125” substitute “124”;

(g) in section 121(1), for “125” substitute “124”;

(h) in section 164(1)(c), for “125” substitute “124”.”—(Lee Rowley.)

This new clause repeals section 125 of the Building Safety Act 2022, which contains provision about meeting the remediation costs of insolvent landlords.

Brought up, and added to the Bill.

New Clause 35

Higher-risk and relevant buildings: notifications in connection with insolvency

“Before section 126 of the BSA 2022 (and the italic heading before it) insert—

“Insolvency of certain persons with an interest in higher-risk and relevant buildings

125A Notifications by insolvency practitioners

(1) This section applies if an insolvency practitioner is appointed in relation to a responsible person for a higher-risk building or a relevant building.

(2) For the purposes of this section, a person is “a responsible person” for a building if—

(a) in the case of a higher-risk building, the person is an accountable person for the building (see section 72 for the meaning of “accountable person” for a higher-risk building);

(b) in the case of a relevant building that is not a higher-risk building, the person would be an accountable person for the building if section 72 were read as applying to such a building (and as if the reference in that section to a residential unit were a reference to a dwelling).

(3) The insolvency practitioner must give the information in subsection (6) (“the required information”) to—

(a) the local authority for the area in which the building for which the person is a responsible person is situated, or (if applicable) each local authority in whose area a building for which the person is a responsible person is situated, and

(b) the fire and rescue authority for the area in which the building for which the person is a responsible person is situated, or (if applicable) each fire and rescue authority in whose area a building for which the person is a responsible person is situated.

(4) If the insolvency practitioner is appointed in relation to an accountable person for a higher-risk building, the practitioner must also give the required information to the regulator.

(5) The required information must be provided within the period of 14 days beginning with the day on which the insolvency practitioner is appointed.

(6) The information is as follows—

(a) the name and address of the person in relation to whom the insolvency practitioner is appointed;

(b) the address of each higher-risk building or relevant building for which the person is a responsible person (but see subsection (7));

(c) an official copy of the register of title and title plan relating to each registered estate or interest the person holds in such a building, if any (but see subsection (7));

(d) the nature of the practitioner’s appointment;

(e) the practitioner’s name, address, telephone number and email address (if any);

(f) so much of the information set out in the table in rule 1.6 of the Insolvency (England and Wales) Rules 2016 (S.I. 2016/1024) as is known to the practitioner.

(7) A local authority or fire and rescue authority need only be notified about buildings, or registered estates or interests in buildings, in their area.

(8) In this section “insolvency practitioner” means—

(a) an administrator;

(b) an administrative receiver;

(c) a receiver appointed by the courts or by a mortgagee;

(d) a liquidator;

(e) a trustee in bankruptcy.

(9) In this section—

“fire and rescue authority” has the meaning given by section 30;

“higher-risk building” has the same meaning as in Part 4 (see section 65);

“local authority” has the meaning given by section 30;

“register of title” means the register kept under section 1 of the Land Registration Act 2002;

“the regulator” has the meaning given by section 2;

“relevant building” has the meaning given by section 117;

“title plan” means a plan based on the Ordnance Survey map and referred to in the register of title.””—(Lee Rowley.)

This new clause amends the Building Safety Act 2022 to impose a new duty on insolvency practitioners to notify the local authority and others in the case of insolvency of certain persons who have repairing obligations relating to certain kinds of buildings.

Brought up, and added to the Bill.

New Clause 42

Ban on grant or assignment of certain long residential leases of houses

“(1) A person may not grant or enter into an agreement to grant a long residential lease of a house on or after the day on which this section comes into force, unless it is a permitted lease (see section (Permitted leases)).

(2) A person may not assign or enter into an agreement to assign the whole or a part of a lease which was granted on or after the day on which this section comes into force if—

(a) at the time of the assignment the lease is a long residential lease of a house, but

(b) at the time of the grant the lease was not a long residential lease of a house.

(3) This section does not affect—

(a) the validity of a lease granted, or an assignment entered into, in breach of this section, and does not affect the powers of a person to grant or assign such a lease (whether under section 23(1) of the Land Registration Act 2002 or otherwise);

(b) any contractual rights of a party to an agreement entered into in breach of this section.”—(Lee Rowley.)

This new clause, to be inserted as the first clause of a new Part before Part 1, would ban the grant, and certain assignments, of long residential leases of houses, other than permitted leases.

Brought up, and added to the Bill.

New Clause 43

Long residential leases of houses

“(1) A lease is a “long residential lease of a house” if conditions A to C are met in relation to the lease.

(2) Condition A: the lease has a long term (see sections (Leases which have a long term) and (Series of leases whose terms would extend beyond 21 years)).

(3) Condition B: the lease demises one house (see section (Houses)), with or without appurtenant property, and nothing else.

(4) Condition C: the lease is a residential lease (see section (Residential leases)).”—(Lee Rowley.)

This new clause, to be inserted after NC42, would define “long residential lease of a house” for the purposes of the new Part before Part 1.

Brought up, and added to the Bill.

New Clause 44

Leases which have a long term

“(1) A lease has a “long term” in any of cases A to D.

(2) Case A: the lease is granted for a term certain exceeding 21 years.

(3) Case B: section 149(6) of the Law of Property Act 1925 applies to the lease (lease granted for life or until marriage or civil partnership) and the lease accordingly takes effect with a term fixed by law.

(4) Case C: the lease is granted with a covenant or obligation for perpetual renewal and accordingly takes effect with a term fixed by law - unless it is a sub-lease with a term fixed by law of 21 years or shorter.

(5) Case D: the lease is capable of forming part of a series of leases whose terms would extend beyond 21 years (see section (Series of leases whose term would extend beyond 21 years)).

(6) In determining whether a lease has a long term, it is irrelevant if the lease is, or may become, terminable by notice, re-entry or forfeiture.”—(Lee Rowley.)

This new clause, to be inserted after NC43, would define when a lease has a “long term” for the purposes of the new Part before Part 1.

Brought up, and added to the Bill.

New Clause 45

Series of leases whose term would extend beyond 21 years

“(1) A lease (“the original lease”) is “capable of forming part of a series of leases whose terms would extend beyond 21 years” if conditions A to C are met at the time when the original lease is granted.

(2) Condition A: the original lease does not have a long term under section (Leases which have a long term)(2), (3) or (4).

(3) Condition B: provision for the grant of another lease of the same house (the “new lease”) is included in—

(a) the original lease, or

(b) any related arrangements.

(4) Condition C: the total duration of—

(a) the term of the original lease,

(b) the term of the new lease (if granted), and

(c) the term or terms of any subsequent leases (if granted),

would exceed 21 years.

(5) In a case where the provision for the grant of the new lease, or for the grant of any subsequent lease, allows for the possibility of the term of the lease being one of a number of differing durations, the reference in condition C to the term of the lease is to the longest of those possible durations.

(6) A lease is a “lease of the same house” if the lease demises one house, being the house comprised in the original lease, with or without any appurtenant property, and nothing else.

(7) Arrangements are “related arrangements” if they are entered into in connection with the grant of the original lease (whether or not they are entered into in writing).

(8) A lease is a “subsequent lease” if—

(a) it is not the new lease,

(b) it is a lease of the same house, and

(c) provision for the grant of the lease—

(i) is included in the original lease or any related arrangements,

(ii) would be included in the new lease (if granted), or

(iii) would be included in any other lease that (if granted) would itself be a subsequent lease.”—(Lee Rowley.)

This new clause, to be inserted after NC44, would define when a lease is “capable of forming part of a series of leases whose terms would extend beyond 21 years” for the purposes of subsection (5) of NC44.

Brought up, and added to the Bill.

New Clause 46

Houses

“(1) A “house” is a separate set of premises (on one or more floors) which—

(a) forms the whole, or part, of a building, and

(b) is constructed or adapted for use for the purposes of a dwelling.

(2) But where the separate set of premises forms part of a building, it is not a house if the whole of or a material part of the set of premises lies above or below some other part of the building.”—(Lee Rowley.)

This new clause, to be inserted after NC45, would define a “house” for the purposes of the new Part before Part 1.

Brought up, and added to the Bill.

New Clause 47

Residential leases

“A lease is a “residential lease” if it is a lease of a house and the terms of the lease do not prevent the house from being occupied under that lease as a separate dwelling.”—(Lee Rowley.)

This new clause, to be inserted after NC46, would define a “residential lease” for the purposes of the new Part before Part 1.

Brought up, and added to the Bill.

New Clause 48

Permitted leases

“A lease is a “permitted lease” if—

(a) it is a long residential lease of a house, and

(b) it falls into one or more of the categories set out in Schedule (Categories of permitted lease).”—(Lee Rowley.)

This new clause, to be inserted after NC47, would define “permitted lease” for the purposes of the new Part before Part 1.

Brought up, and added to the Bill.

New Clause 49

Permitted leases: certification by the appropriate tribunal

“(1) The appropriate tribunal must, on an application by a person, issue a certificate (a “permitted lease certificate”) in relation to a new long residential lease of a house, where the tribunal is satisfied that the lease is or will be a permitted lease falling within Part 1 of Schedule (Categories of permitted lease).

(2) An application under this section may be made and determined whether or not the application includes a draft of the instrument creating the new lease.

(3) The appropriate tribunal may issue a permitted lease certificate on such terms and conditions as it considers appropriate, but the certificate must—

(a) identify the house or the land on which the house will be built, and

(b) state the category or categories set out in Part 1 of Schedule (Categories of permitted lease) into which the lease will fall.

(4) If an application under this section relates to two or more leases, the appropriate tribunal may issue just one certificate relating to some or all of those leases.”—(Lee Rowley.)

This new clause, to be inserted after NC48, would require the appropriate tribunal to issue a permitted lease certificate on an application if the tribunal is satisfied that a lease falls within certain categories of permitted lease.

Brought up, and added to the Bill.

New Clause 50

Permitted leases: marketing restrictions

“(1) This section applies in relation to the marketing of a house where—

(a) the house is to be comprised in a new lease, and

(b) the lease will be a long residential lease of the house.

(2) A person (“a promoter”) may not make any material marketing the house to be comprised in the lease available to any person, unless the permitted lease information relating to the lease is included in or provided with that material.

(3) The “permitted lease information”, in relation to a lease, means—

(a) if the lease falls or will fall into one or more of the categories set out in Part 1 of Schedule (Categories of permitted lease), a copy of the permitted lease certificate together with a statement identifying that category or those categories,

(b) if to the best of the knowledge and belief of the promoter at the time the material is made available the lease falls or will fall into one or more of the categories set out in Part 2 of Schedule (Categories of permitted lease), a statement identifying that category or those categories, or

(c) if both paragraphs (a) and (b) apply to the lease, the information required under both those paragraphs.

(4) “Marketing” includes any form of advertising or promotion.”—(Lee Rowley.)

This new clause, to be inserted after NC49, would impose restrictions on the marketing of long residential leases of houses.

Brought up, and added to the Bill.

New Clause 51

Permitted leases: transaction warning conditions

“(1) A person may not, on or after the day on which section (Ban on grant or assignment of certain long residential leases of houses) comes into force —

(a) enter into an agreement to grant a permitted lease unless the transaction warning conditions are met in relation to the agreement, or

(b) subject to subsection (5), grant a permitted lease unless the transaction warning conditions are met in relation to the lease.

(2) The “transaction warning conditions” are as follows—

(a) at least 7 days before the relevant date the grantor must give a warning notice relating to the permitted lease—

(i) to the proposed tenant, or

(ii) where there is more than one proposed tenant, to each of them;

(b) a notice of receipt of the warning notice must be given to the grantor—

(i) by the proposed tenant, or

(ii) where there is more than one proposed tenant, jointly by all of the proposed tenants;

(c) a reference to the warning notice and the notice of receipt must be included in or endorsed on the relevant instrument in the specified manner.

(3) A “warning notice” is a notice provided in a specified form and manner and containing—

(a) sufficient information to identify the house to be comprised in the lease,

(b) if the lease falls within Part 1 of Schedule (Categories of permitted lease), a copy of the permitted lease certificate,

(c) if the lease falls into one or more of the categories set out in Part 2 of Schedule (Categories of permitted lease), a statement identifying that category or those categories,

(d) if both paragraphs (b) and (c) apply to the lease, the information required under both those paragraphs, and

(e) such other information as may be specified.

(4) A “notice of receipt” is a notice provided in a specified form and manner and containing such information as may be specified.

(5) A person does not breach subsection (1) in relation to the grant of a lease if—

(a) the person previously entered into an agreement to grant that lease,

(b) the transaction warning conditions were met in relation to that agreement, and

(c) a reference to the warning notice and the notice of receipt relating to that agreement is included in or endorsed on the instrument creating the lease.

(6) This section does not apply to the grant of a permitted lease which falls within paragraph 5 of Schedule (Categories of permitted lease) (leases agreed before commencement).

(7) This section does not affect—

(a) the validity of a lease granted in breach of subsection (1), and does not affect the powers of a person to grant such a lease (whether under section 23(1) of the Land Registration Act 2002 or otherwise);

(b) any contractual rights of a party to an agreement entered into in breach of subsection (1).

(8) In this section—

“grantor” , in relation to a lease, means the person proposing to grant the lease (whether or not that person holds the freehold or leasehold title out of which the lease will be granted);

“proposed tenant” , in relation to a lease, means the proposed tenant of the house to be comprised in the lease;

“relevant date” means—

(a) in the case of an agreement to grant a lease, the day on which the agreement is entered into, and

(b) in the case of a grant of a lease, the day on which the lease is granted;

“relevant instrument” means—

(a) in the case of an agreement to grant a lease, that agreement, and

(b) in the case of a grant of a lease, the instrument creating that lease;

“specified” means specified or described in regulations made—

(a) in relation to a lease of a house in England, by the Secretary of State;

(b) in relation to a lease of a house in Wales, by the Welsh Ministers.

(9) A statutory instrument containing regulations under this section is subject to the negative procedure.”—(Lee Rowley.)

This new clause, to be inserted after NC50, would require certain warnings to be given to the prospective tenant under a permitted lease before it is granted or an agreement to grant the lease is entered into.

Brought up, and added to the Bill.

New Clause 52

Prescribed statements in new long leases

“(1) This section applies to a lease of land which—

(a) has a long term, and

(b) is granted on or after the day on which section (Ban on grant or assignment of certain long residential leases of houses) comes into force.

(2) If the lease is not a long residential lease of a house, the lease must include a statement to that effect.

(3) If the lease is a permitted lease, the lease must include a statement to that effect.

(4) A statement under subsection (2) or (3) must comply with such requirements as may be prescribed by land registration rules under the Land Registration Act 2002.

(5) This section does not apply to—

(a) a lease with a long term only by virtue of falling within section (Leases which have a long term)(5);

(b) a lease which takes effect as a deemed surrender and regrant of a lease.”—(Lee Rowley.)

This new clause, to be inserted after NC51, would require certain leases to contain statements that they are either not long residential leases of houses or that they are permitted leases.

Brought up, and added to the Bill.

New Clause 53

Restriction on title

“(1) Subsection (3) applies where—

(a) the Chief Land Registrar approves an application for registration of a lease (the “registered lease”),

(b) section (Prescribed statements in new long leases) applies to the registered lease, but

(c) the registered lease does not contain a statement made in accordance with subsection (2) or (3) of that section.

(2) An “application for registration of a lease” is an application for—

(a) registration of a disposition of registered land, if that disposition is the grant of a lease, or

(b) registration of a lease within section 4(1)(c) of the Land Registration Act 2002.

(3) The Chief Land Registrar must enter in the register a restriction that no registrable disposition, other than the grant of a legal charge, of the registered lease is to be registered.

(4) The restriction under subsection (3) may be removed if the registered lease is varied to include a statement made in accordance with section (Prescribed statements in new long leases)(2) or (3).

(5) Subsection (6) applies where—

(a) a restriction has been entered in the register in accordance with subsection (3) in relation to a registered lease, and

(b) the Chief Land Registrar approves an application for registration of a deed of variation relating to the lease by virtue of which a new lease takes effect as a deemed surrender and regrant of the lease.

(6) The Chief Land Registrar must enter in the register a restriction that no registrable disposition, other than the grant of a legal charge, of the new lease is to be registered.

(7) The restriction under subsection (6) may be removed if the Chief Land Registrar is satisfied that the new lease—

(a) is not a long residential lease of a house, or

(b) is a permitted lease.

(8) An expression used in this section and in the Land Registration Act 2002 has the same meaning in this section as in that Act.”—(Lee Rowley.)

This new clause, to be inserted after NC52, would require the Land Registry to enter restrictions on the disposition of land where requirements in NC52 are not met.

Brought up, and added to the Bill.

New Clause 54

Redress: right to acquire a freehold or superior leasehold estate

“(1) This section applies where a long residential lease of a house is granted or assigned in breach of section (Ban on grant or assignment of certain long residential leases of houses).

(2) The rights holder in relation to the lease has the right to acquire (for no consideration)—

(a) the freehold estate in the land comprised in the lease, and

(b) any superior leasehold estate or estates in that land.

(3) References in the rest of this section, and in sections (Redress: application of the right to acquire) to (Redress regulations: exercising and giving effect to the right to acquire), to the right to acquire are to be construed in accordance with subsection (2).

(4) The right to acquire the freehold or leasehold estate is exercisable against the person holding that estate for the time being (the “landlord”).

(5) The “rights holder”, in relation to a lease, means—

(a) in a case where a mortgagee or chargee has for the time being the right to deal with the house comprised in the lease, that person, or

(b) in any other case the tenant for the time being under the lease.

(6) In this section,

“superior leasehold estate” , in relation to a long residential lease of a house, means a leasehold estate that is superior to the long residential lease.”—(Lee Rowley.)

This new clause, to be inserted after NC53, would give a tenant under a lease granted or assigned in breach of NC42, or where relevant their mortgagee or chargee, the right to acquire the freehold and any superior lease of the land.

Brought up, and added to the Bill.

New Clause 55

Redress: application of the right to acquire

“(1) Section (Redress: right to acquire a freehold or superior leasehold estate) ceases to apply in relation to a long residential lease of a house if—

(a) the term of the lease expires (but see subsection (2)), or

(b) the lease otherwise ceases to exist.

(2) Where the term of the lease expires, section (Redress: right to acquire a freehold or superior leasehold estate) continues to apply for as long as the lease is continued under a relevant enactment.

(3) Section (Redress: right to acquire a freehold or superior leasehold estate) ceases to apply in relation to a long residential lease of a house if the tenant for the time being under the lease acquires the freehold estate and any superior leasehold estate or estates in the land comprised in the lease (whether or not by exercising the right to acquire).

(4) In subsection (2) “relevant enactment” means—

(a) Part 1 of the Landlord and Tenant Act 1954, or

(b) Schedule 10 to the Local Government and Housing Act 1989.”—(Lee Rowley.)

This new clause, to be inserted after NC54, would make provision for when the right to redress in NC54 ceases to apply.

Brought up, and added to the Bill.

New Clause 56

Redress: general provision

“(1) A lease to which section (Redress: right to acquire a freehold or superior leasehold estate) applies is not as a result of any right to acquire—

(a) registrable under the Land Charges Act 1972, or

(b) to be taken to be an estate contract within the meaning of that Act.

(2) An agreement relating to a long residential lease of a house (whether or not contained in the instrument creating the lease or made before the grant of the lease) is of no effect to the extent that it makes provision—

(a) excluding or modifying the right to acquire, or

(b) providing for the surrender or termination of the lease, or for the imposition of any penalty, in the event of the rights holder taking steps to exercise the right to acquire.

(3) Subsection (2) does not prevent a tenant under a long residential lease of a house from—

(a) surrendering the lease,

(b) terminating the lease, or

(c) entering into an agreement to acquire the freehold estate in the land comprised in the lease, or any superior leasehold estate or estates in that land, other than by way of exercising the right to acquire.

(4) The right to acquire in relation to a long residential lease of a house is not capable of subsisting apart from the lease.

(5) In this section, “rights holder” has the meaning given by section (Redress: right to acquire a freehold or superior leasehold estate).”—(Lee Rowley.)

This new clause, to be inserted after NC55, would make general provision in relation to the right to redress in NC54.

Brought up, and added to the Bill.

New Clause 57

Redress regulations: exercising and giving effect to the right to acquire

“(1) The Secretary of State may by regulations (“redress regulations”) make provision for and in connection with the exercise of the rights holder’s right to acquire in relation to a long residential lease of a house.

(2) Redress regulations may, in particular, include provision for or in connection with—

(a) the period within which the right to acquire must be exercised;

(b) the giving of notice by the rights holder to the landlord or any other specified person for the purpose of exercising the right to acquire (including the form and manner in which, and the period within which, any such notice must be given);

(c) registration under the Land Charges Act 1972 or the Land Registration Act 2002 of any notice given by virtue of paragraph (b);

(d) the giving of notice by the landlord to the rights holder or any other specified person for the purpose of accepting or rejecting the rights holder’s right to acquire (including the form and manner in which, and the period within which, any such notice must be given);

(e) the making by the appropriate tribunal or a court of an order on an application by a specified person determining whether or not, in the absence of agreement between the rights holder and the landlord, the rights holder has the right to acquire (including provision for the order to be made subject to such terms and conditions as the tribunal or court considers appropriate, including terms about costs);

(f) further steps that must be taken by the rights holder (including the provision of specified information or specified documents), and any conditions that must be met in relation to the taking of those further steps (including conditions about timing), in order to exercise the right to acquire;

(g) requirements that must be met in relation to a conveyance executed to give effect to the right to acquire (a “relevant conveyance”), including requirements for the conveyance to include specified provisions in respect of specified easements or rights over property, rights of way or covenants (positive or restrictive);

(h) any other requirements that must be met in relation to a relevant conveyance, including a requirement that the conveyance is granted free of specified incumbrances, and subject to such burdens as may be specified;

(i) the effect of the execution of a relevant conveyance, including provision for the conveyance to have the effect of discharging the house comprised in the lease from any specified incumbrance (including a charge);

(j) any statement which must be included in a relevant conveyance, including a statement identifying the conveyance as executed for the purposes of this Part, and any requirements that must be met in relation to such a statement (including any requirements prescribed by land registration rules under the Land Registration Act 2002);

(k) the making by the appropriate tribunal or a court of an order (a “relevant order”) on an application by a specified person for the purpose of giving effect to the right to acquire (whether or not in connection with an application to the appropriate tribunal or a court for a determination as described in paragraph (e));

(l) the modification of the right to acquire in relation to any appurtenant property comprised in the lease (including for the rights holder to continue to hold a lease of such property, or conferring on them a right to use the property);

(m) the circumstances in which the rights holder exercising the right to acquire is to be treated as a purchaser for value of the legal estate of the land comprised in the lease;

(n) the circumstances in which a mortgagee or chargee is to be treated for the purposes of section (Redress: right to acquire a freehold or superior leasehold estate)(5)(a) as having the right to deal with the house comprised in the lease;

(o) in a case where the rights holder is a tenant for the time being under the lease—

(i) the circumstances in which a representative of the rights holder has the right to acquire instead of that tenant, and

(ii) the exercise by such a representative of any powers or duties of a rights holder conferred or imposed by this Part or under redress regulations;

(p) the liability for specified costs in connection with the exercise of the right to acquire (including provision as to how to calculate such costs or for the amount of any costs payable to be determined, in the absence of agreement, by the appropriate tribunal or a court);

(q) proceedings for the recovery by specified persons from the landlord who granted the lease of compensation for any loss or damage resulting from the breach of section (Ban on grant or assignment of certain long residential leases of houses), including provision as to how to calculate the value of such loss or damage, and conferring powers on the appropriate tribunal or a court in connection with the recovery of such compensation (including provision as to costs).

(3) Provision under subsection (2)(k) may, in particular, include provision—

(a) for the making of a relevant order where the landlord cannot be found or identified, including where the rights holder has been unable to give notice for the purpose of exercising the right to acquire;

(b) for a relevant order to determine the content of a relevant conveyance and who may execute it, and to be made subject to such further terms and conditions as the appropriate tribunal or court considers appropriate, including terms about costs.

(4) Redress regulations may include provision about cases where the rights holder’s right to acquire in relation to a lease is exercisable in relation to more than one landlord, including (but not limited to) provision—

(a) for or in connection with functions to be carried out by one landlord (the “reversioner”) on behalf of the other landlords;

(b) for the landlord holding the freehold estate to be the reversioner;

(c) for another landlord to be the reversioner in specified circumstances;

(d) for or in connection with the appointment or removal of a reversioner by order of the appropriate tribunal or a court, on an application by a specified person;

(e) for things done by the reversioner to be binding on the other landlords and on their interests in the land comprised in the lease;

(f) for or in connection with the provision of information, documents or other assistance by other landlords to the reversioner for the purpose of enabling the reversioner to carry out functions under redress regulations;

(g) for the indemnification of the reversioner against any liability incurred by the reversioner in consequence of failure by other landlords to comply with any requirement imposed on them by redress regulations;

(h) excluding the reversioner from liability to any of the other landlords in specified circumstances;

(i) for or in connection with the making of an order by the appropriate tribunal or a court, on an application by the reversioner, directing how the right to acquire may be given effect if any of the other landlords cannot be found or identified, or in case of a dispute between the reversioner and any other landlord.

(5) Redress regulations may—

(a) apply or incorporate (with or without modifications) any provision made by or under any relevant enactment;

(b) amend or repeal any provision made by an Act.

(6) A statutory instrument containing redress regulations is subject to the negative procedure.

(7) In this section—

“incumbrances” has the same meaning as in section 9 of the LRA 1967;

“landlord” has the meaning given by section (Redress: right to acquire a freehold or superior leasehold estate);

“relevant enactment” means—

(a) the LRA 1967;

(b) the LRHUDA 1993;

(c) the Tribunals, Courts and Enforcement Act 2007;

“representative” , in relation to a rights holder, means the personal representative, trustee in bankruptcy, trustee in sequestration, receiver, liquidator or person otherwise acting in a representative capacity in relation to that person;

“rights holder” has the meaning given by section (Redress: right to acquire a freehold or superior leasehold estate);

“specified” means specified or described in redress regulations.” —(Lee Rowley.)

This new clause, to be inserted after NC56, would allow the Secretary of State to make regulations giving effect to the right to acquire under NC54.

Brought up, and added to the Bill.

New Clause 58

Enforcement by trading standards authorities

“(1) It is the duty of every local weights and measures authority in England or Wales (an “enforcement authority”) to enforce the leasehold house restrictions in its area.

(2) In this section and in sections (Financial penalties) to (Further powers and duties of enforcement authorities) the “leasehold house restrictions” means—

(a) section (Ban on grant or assignment of certain long residential leases of houses)(1) so far as it relates to an agreement to grant a lease,

(b) section (Ban on grant or assignment of certain long residential leases of houses)(1) so far as it relates to the grant of a lease,

(c) section (Ban on grant or assignment of certain long residential leases of houses)(2) so far as it relates to an agreement to assign a lease,

(d) section (Ban on grant or assignment of certain long residential leases of houses)(2) so far as it relates to the assignment of a lease,

(e) section (Permitted leases: marketing restrictions)(2) (marketing restrictions on permitted leases),

(f) section (Permitted leases: transaction warning conditions)(1)(a) (conditions on agreement to grant permitted lease), and

(g) section (Permitted leases: transaction warning conditions)(1)(b) (conditions on grant of permitted lease).

(3) For the purposes of this section and sections (Financial penalties) to (Further powers and duties of enforcement authorities), a breach of a leasehold house restriction is taken to occur in the area in which the house in question is located (and if the house is located in more than one area, the breach is taken to have occurred in each of those areas).

(4) The duty in subsection (1) is subject to sections (Financial penalties: cross-border enforcement)(4) (enforcement by another enforcement authority) and (Enforcement by lead enforcement authority) (enforcement by the lead enforcement authority).”—(Lee Rowley.)

This new clause, to be inserted after NC57, provides for local weights and measures authorities to enforce the specified provisions restricting the grant or assignment of, or agreement to grant or assign, long residential leases of houses (referred to in the enforcement provisions as “the leasehold house restrictions”).

Brought up, and added to the Bill.

New Clause 59

Financial penalties

“(1) An enforcement authority may impose a financial penalty on a person if the authority is satisfied beyond reasonable doubt that the person has breached a leasehold house restriction.

(2) The amount of a penalty for a breach is to be such amount as the authority determines but—

(a) is not to be less than £500, and

(b) is not to be more than £30,000.

(3) Conduct within any one of the following paragraphs is to be regarded as a single breach of one leasehold house restriction—

(a) entering into an agreement to grant a lease in breach of section (Ban on grant or assignment of certain long residential leases of houses)(1) and subsequently granting the lease in breach of that provision;

(b) entering into an agreement to assign a lease in breach of section (Ban on grant or assignment of certain long residential leases of houses)(2) and subsequently assigning the lease in breach of that provision;

(c) entering into an agreement to grant a lease in breach of section (Permitted leases: transaction warning conditions)(1)(a) and subsequently granting the lease in breach of section (Permitted leases: transaction warning conditions)(1)(b).

Subsection (5) is to be read in accordance with this subsection.

(4) A person who makes marketing material available in relation to the same lease on more than one occasion in breach of section (Permitted leases: marketing restrictions)(2) is to be regarded as committing only one breach of that provision.

(5) The following are to be regarded as separate breaches—

(a) breaches by the same person of the same leasehold house restriction in relation to different leases, and

(b) breaches by the same person of different leasehold house restrictions in relation to the same lease,

and accordingly an enforcement authority may impose a separate penalty in relation to each breach (or may impose a single penalty of an amount equal to the total of the amounts of the penalties that could have been separately imposed).

(6) The Secretary of State may by regulations amend an amount for the time being specified in subsection (2) to reflect a change in the value of money.

(7) A statutory instrument containing regulations under subsection (6) is subject to the negative procedure.

(8) Schedule (Leasehold houses: financial penalties) contains further provision about financial penalties under this section.”—(Lee Rowley.)

This new clause, to be inserted after NC58, gives local weights and measures authorities powers to impose financial penalties for breach of the leasehold house restrictions.

Brought up, and added to the Bill.

New Clause 60

Financial penalties: cross-border enforcement

“(1) An enforcement authority may impose a penalty under section (Financial penalties) in respect of a breach of a leasehold house restriction which occurs outside that authority’s area (as well as in respect of a breach which occurs within that area).

(2) If an enforcement authority (“LA1”) proposes to impose a penalty in respect of a breach which occurred in the area of a different enforcement authority (“LA2”), LA1 must notify LA2 that it proposes to do so.

(3) If LA1 notifies LA2 under subsection (2) but does not impose the penalty, LA1 must notify LA2 of that fact.

(4) If an enforcement authority receives a notification under subsection (2), the authority is relieved of its duty under section (Enforcement by trading standards authorities)(1) in relation to the breach unless the authority receives a notification under subsection (3).

(5) If an enforcement authority (“LA1”) imposes a penalty in respect of a breach which occurred in the area of a different enforcement authority (“LA2”), LA1 must notify LA2 of that fact.”—(Lee Rowley.)

This new clause, to be inserted after NC59, makes provision in connection with enforcement of the leasehold house restrictions across local authority boundaries.

Brought up, and added to the Bill.

New Clause 61

Lead enforcement authority

“(1) In this section and in sections (General duties of lead enforcement authority) to (Further powers and duties of enforcement authorities) “lead enforcement authority” means—

(a) the Secretary of State, or

(b) a person whom the Secretary of State has arranged to be the lead enforcement authority in accordance with subsection (2).

(2) The Secretary of State may make arrangements for a local weights and measures authority in England or Wales to be the lead enforcement authority instead of the Secretary of State.

(3) The arrangements—

(a) may include provision for payments by the Secretary of State;

(b) may include provision about bringing the arrangements to an end.

(4) The Secretary of State may by regulations make transitional or saving provision which applies when there is a change in the lead enforcement authority.

(5) The regulations may relate to a specific change in the lead enforcement authority or to changes that might arise from time to time.

(6) A statutory instrument containing regulations under subsection (4) is subject to the negative procedure.”—(Lee Rowley.)

This new clause, to be inserted after NC60, requires the Secretary of State, or a local weights and measures authority with which the Secretary of State makes arrangements, to be the lead enforcement authority in relation to the leasehold house restrictions.

Brought up, and added to the Bill.

New Clause 62

General duties of lead enforcement authority

“(1) It is the duty of the lead enforcement authority to oversee the operation of the relevant provisions of this Part in England and Wales.

(2) The “relevant provisions of this Part” means the provisions of this Part except sections (Prescribed statements in new long leases) and (Restriction on title) (statements in leases and restriction on title).

(3) It is the duty of the lead enforcement authority to issue guidance to enforcement authorities about their enforcement of the leasehold house restrictions (and if the lead enforcement authority is not the Secretary of State, the Secretary of State may give directions as to the content of the guidance).

(4) It is the duty of the lead enforcement authority to provide information and advice to the public in England and Wales about the operation of the relevant provisions of this Part, in such form and manner as it considers appropriate.

(5) The lead enforcement authority may disclose information to an enforcement authority for the purposes of enabling that authority to determine whether there has been a breach of a leasehold house restriction.

(6) If the lead enforcement authority is not the Secretary of State, the lead enforcement authority must keep under review and from time to time advise the Secretary of State about—

(a) the operation of the relevant provisions of this Part, and

(b) social and commercial developments relating to the grant or assignment of long residential leases of houses in England and Wales.”—(Lee Rowley.)

This new clause, to be inserted after NC61, gives the lead enforcement authority (see NC61) general functions in relation to the enforcement of the leasehold house restrictions.

Brought up, and added to the Bill.

New Clause 63

Enforcement by lead enforcement authority

“(1) The lead enforcement authority may—

(a) take steps to enforce the leasehold house restrictions if it considers it is necessary or expedient to do so;

(b) for that purpose, exercise any powers that an enforcement authority may exercise for the purpose of the enforcement of the leasehold house restrictions.

(2) If the lead enforcement authority proposes to take steps in respect of a breach (or suspected breach) of a leasehold house restriction, it must notify the enforcement authority for the area in which the breach occurred (or may have occurred) that it proposes to do so.

(3) If the lead enforcement authority notifies an enforcement authority under subsection (2) but does not take the proposed steps, the lead enforcement authority must notify the enforcement authority of that fact.

(4) If an enforcement authority receives a notification under subsection (2), the authority is relieved of its duty under section (Enforcement by trading standards authorities)(1) in relation to the breach unless the authority receives a notification under subsection (3).

(5) But the lead enforcement authority may require the enforcement authority to assist the lead enforcement authority in taking steps to enforce the leasehold house restriction referred to in subsection (2).”—(Lee Rowley.)

This new clause, to be inserted after NC62, provides that the lead enforcement authority is able to enforce the leasehold house restrictions itself if necessary or expedient.

Brought up, and added to the Bill.

New Clause 64

Further powers and duties of enforcement authorities

“(1) An enforcement authority must notify the lead enforcement authority if the enforcement authority believes that a breach of a leasehold house restriction has occurred in its area.

(2) An enforcement authority must report to the lead enforcement authority, whenever the lead enforcement authority requires and in such form and with such particulars as it requires, on that enforcement authority’s enforcement of the leasehold house restrictions.

(3) An enforcement authority must have regard to the guidance issued under section (General duties of lead enforcement authority)(3).

(4) For the investigatory powers available to an enforcement authority for the purposes of enforcing a leasehold house restriction, see Schedule 5 to the Consumer Rights Act 2015 (investigatory powers of enforcers etc).

(5) In paragraph 10 of Schedule 5 to the Consumer Rights Act 2015 (duties and powers to which Schedule 5 applies), at the appropriate places insert—

(a) “section (Enforcement by trading standards authorities) of the Leasehold and Freehold Reform Act 2024;”;

(b) “section (Enforcement by lead enforcement authority) of the Leasehold and Freehold Reform Act 2024”.

(6) See also paragraph 44 of Schedule 5 to the Consumer Rights Act 2015 (exercise of functions outside enforcer’s area).”—(Lee Rowley.)

This new clause, to be inserted after NC63, makes further provision about the enforcement of the leasehold house restrictions, including by providing for the investigatory powers in the Consumer Rights Act 2015 to be available to local weights and measures authorities enforcing the regime.

Brought up, and added to the Bill.

New Clause 65

Power to amend: permitted leases and definitions

“(1) The Secretary of State may by regulations—

(a) amend the following definitions—

(i) “long residential lease of a house” in section (Long residential leases of houses);

(ii) a lease which has a “long term” in section (Leases which have a long term);

(iii) “house” in section (Houses);

(b) amend Schedule (Categories of permitted lease).

(2) A statutory instrument containing (whether alone or with other provision)—

(a) regulations under subsection (1)(a), or

(b) regulations under subsection (1)(b) which add a category of lease to Schedule (Categories of permitted lease) or omit a category of lease from that Schedule,

is subject to the affirmative procedure.

(3) Any other statutory instrument containing regulations under subsection (1)(b) is subject to the negative procedure.

(4) See also the powers to make regulations under paragraphs 2(1)(b), 3(1)(b), 6(2) and 7(1)(b) of Schedule (Categories of permitted lease).

(5) The provision that may be made by regulations under this section by virtue of section 86(1) (consequential etc provision) includes provision amending or repealing any provision of this Part.”—(Lee Rowley.)

This new clause, to be inserted after NC64, would allow the Secretary of State to make regulations to amend certain definitions and categories of permitted lease in the new Part before Part 1.

Brought up, and added to the Bill.

New Clause 66

Interpretation of Part A1

“(1) In this Part—

“appropriate tribunal” means—

(a) in relation to a lease of a house in England, the First-tier Tribunal or, where determined by or under Tribunal Procedure Rules, the Upper Tribunal; and

(b) in relation to a lease of a house in Wales, a leasehold valuation tribunal;

“appurtenant property” , in relation to a house, means any garage, outhouse, garden, yard or appurtenances belonging to, or usually enjoyed with, the house;

“enforcement authority” means a local weights and measures authority in England or Wales;

“house” : see section (Houses);

“lead enforcement authority” has the meaning given by section (Lead enforcement authority);

“lease” —

(a) means a lease at law or in equity (and references to the grant or assignment of a lease are to be construed accordingly);

(b) includes a sub-lease;

(c) does not include a mortgage term;

“leasehold house restrictions” has the meaning given by section (Enforcement by trading standards authorities)(2);

“long residential lease of a house” : see section (Long residential leases of houses);

“long term” , in relation to a lease: see section (Leases which have a long term);

“notify” means notify in writing, and “notification” is to be construed accordingly;

“permitted lease” : see section (Permitted leases);

“permitted lease certificate” means a certificate issued by the appropriate tribunal under section (Permitted leases: certification by the appropriate tribunal);

“residential lease” : see section (Residential leases).

(2) In this Part, references to the grant of a lease in relation to a lease which takes effect as a deemed surrender and regrant of a lease are to the regrant of the lease.”—(Lee Rowley.)

This new clause, to be inserted after NC65, would contain interpretation provision for the new Part before Part 1.

Brought up, and added to the Bill.

New Clause 1

Estate management services

“(1) Within three months of the passage of this Act, the Secretary of State must by regulation provide for residents of managed dwellings to take ownership, at nominal cost, of—

(a) an estate management company, or

(b) the assets of an estate management company, or other company or business connected with the development or management of the dwellings, which are used to provide services to managed dwellings

if the estate management company or connected company or business does not—

(i) provide the residents of the managed dwellings with a copy of its budget for the forthcoming year and accounts for the past year;

(ii) give sufficient notice to enable residents to attend its annual meeting;

(iii) acknowledge correspondence sent by registered post to its registered office within a reasonable length of time.

(2) Regulations under subsection (1) may amend primary legislation.”—(Helen Morgan.)

Brought up.

Question put, That the clause be added to the Bill.

18:01

Division 80

Ayes: 14

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Liberal Democrat: 8
Plaid Cymru: 2
Conservative: 1
Independent: 1
Alliance: 1
Green Party: 1

Noes: 304

---

Conservative: 297
Democratic Unionist Party: 6
Independent: 1

New Clause 5

Abolition of forfeiture of a long lease

“(1) This section applies to any right of forfeiture or re-entry in relation to a dwelling held on a long lease which arises either—

(a) under the terms of that lease; or

(b) under or in consequence of section 146(1) of the Law of Property Act 1925.

(2) The rights referred to in subsection (1) are abolished.

(3) In this section—

“dwelling” means a building or part of a building occupied or intended to be occupied as a separate dwelling, together with any yard, garden, or outhouses and appurtenances belonging to it or usually enjoyed with it;

“lease” means a lease at law or in equity and includes a sub-lease, but does not include a mortgage term;

“long lease” has the meaning given by sections 76 and 77 of the Commonhold and Leasehold Reform Act 2002.”—(Matthew Pennycook.)Brought up.

Question put,The clause be added to the Bill.

18:16

Division 81

Ayes: 169

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Labour: 151
Liberal Democrat: 10
Independent: 5
Plaid Cymru: 2
Alliance: 1
Green Party: 1

Noes: 306

---

Conservative: 296
Democratic Unionist Party: 6
Independent: 1

New Clause 39

Rights of first refusal on disposal of freehold homes

“(1) Within three months of the passage of this Act, the Secretary of State must by regulations provide for the rights of first refusal granted to qualifying tenants of flats by Part 1 of the Landlord and Tenant Act 1987 to be extended to tenants of freehold houses.

(2) Regulations under subsection (1)—

(a) may amend primary legislation;

(b) are subject to the affirmative procedure (but see subsection (3)).

(3) If before approving a draft of regulations under subsection (1) both Houses of Parliament have agreed amendments to that draft, the Secretary of State must make the regulations in the form of the draft as so amended.”—(Mr Betts.)

Brought up.

Question put, That the clause be added to the Bill.

18:29

Division 82

Ayes: 179

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Labour: 150
Liberal Democrat: 10
Democratic Unionist Party: 6
Independent: 5
Conservative: 2
Plaid Cymru: 2
Alliance: 1
Green Party: 1

Noes: 294

---

Conservative: 293
Independent: 1

Clause 8

Lease extensions under the LRA 1967 on payment of premium at peppercorn rent

Amendments made: 24, page 11, line 9, leave out from “rent” to end of line 11 and insert—

“(2A) But if the existing tenancy is a shared ownership lease, the rent payable for the house and premises under the new tenancy is as follows (and subsection (2) does not apply)—

(a) if the existing tenancy provides for rent to be payable in respect of the landlord’s share in the house and premises, subsection (1) applies to the terms of the new tenancy relating to that rent;

(b) whether or not the existing tenancy provides for rent to be payable in respect of the tenant’s share in the house and premises, the new tenancy must provide that, as from the date it is granted, a peppercorn rent is payable in respect of the tenant’s share;

and a reference in any enactment (whenever passed or made) to rent payable in accordance with subsection (2) includes a reference to the rent payable in accordance with this subsection.

(2B) For the purposes of subsection (2A), if the existing tenancy does not reserve separate rents in respect of the tenant’s share in the house and premises and the landlord’s share in the house and premises, any rent reserved is to be treated as reserved in respect of the landlord’s share.

(2C) In this section “peppercorn rent” has the same meaning as in the Leasehold Reform (Ground Rent) Act 2022 — see section 4(3) of that Act.”;”.

This provides that, where a shared ownership lease is extended under the LRA 1967, only the rent payable in respect of the tenant’s share will be a peppercorn rent (and the rent payable in respect of the landlord’s share will be on the same terms as in the existing tenancy).

Amendment 25, page 11, line 25, at end insert—

“(4A) In section 31(2)(a) (ecclesiastical property), omit “or rent”.”—(Lee Rowley.)

This amendment would make provision that is consequential on the rest of clause 8.

Clause 9

LRA 1967: determining price payable for freehold or lease extension

Amendment made: 26, page 11, line 36, leave out subsection (2).—(Lee Rowley.)

This amendment is consequential on Amendment 60.

Clause 10

LRHUDA 1993: determining price payable for collective enfranchisement or new lease

Amendments made: 27, page 12, line 16, after “freehold” insert “and other interests”.

This amendment would clarify that the valuation mechanism in clause 11 and Schedule 2 extends to the acquisition of other interests in a collective enfranchisement, not just the freehold.

Amendment 28, page 12, line 19, after “lease)” insert “—.

This amendment is consequential on Amendment 29.

Amendment 29, page 12, line 23, at end insert—

“(b) after subsection (1) insert—

“(1A) But if the existing lease is a shared ownership lease, the rent payable under the new lease of the flat is as follows (and subsection (1) does not apply for the purpose of specifying the rent under the new lease)—

(a) whether or not the existing lease provides for rent to be payable in respect of the tenant’s share in the flat, the new lease must provide for a peppercorn rent to be payable in respect of the tenant’s share;

(b) if the existing lease provides for rent to be payable in respect of the landlord’s share in the flat, section 57(1) applies to the terms of the new lease relating to that rent;

and a reference in any enactment (whenever passed or made) to rent payable in accordance with subsection (1) includes a reference to the rent payable in accordance with this subsection.

(1B) For the purposes of subsection (1A), if the existing lease does not reserve separate rents in respect of the tenant’s share in the flat and the landlord’s share in the flat, any rent reserved is to be treated as reserved in respect of the landlord’s share.””—(Lee Rowley.)

This provides that, where a shared ownership lease is extended under the LRHUDA 1993, only the rent payable in respect of the tenant’s share will be a peppercorn rent (and the rent payable in respect of the landlord’s share will be on the same terms as in the existing tenancy).

Clause 11

Enfranchisement or extension: new method for calculating price payable

Amendment made: 30, page 13, line 5, after “on” insert “sections 9 and 10,”.—(Lee Rowley.)

This amendment would clarify that the amendments in Schedule 5 are consequential on clauses 9 and 10 as well as clause 11 and Schedules 2 to 4.

Clause 12

Costs of enfranchisement and extension under the LRA 1967

Amendments made: 31, page 16, leave out line 18.

This is consequential on Amendment 63.

Amendment 32, page 17, leave out line 12.

This is consequential on Amendment 63.

Amendment 33, page 17, leave out line 37.

This is consequential on Amendment 63.

Amendment 34, page 18, line 14, at end insert—

“(za) in section 9(5)(c) (landlord’s lien as vendor), for “him” substitute “the tenant”;

(zb) in section 14(3)(c) (conditions for grant of extended lease), for “him” substitute “the tenant”;”.—(Lee Rowley.)

This amendment would make provision that is consequential on amendments to the LRA 1967 in clause 12(2)(c) and (4)(b).

Clause 20

LRA 1967: preservation of existing law for certain enfranchisements

Amendments made: 35, page 38, line 33, at beginning insert “(1)”.

This is consequential on Amendment 36 (which adds new subsections to the new section 7A inserted into the LRA 1967).

Amendment 36, page 39, line 2, at end insert—

“(2) If—

(a) a person makes a claim to acquire a freehold under the preserved law, and

(b) as a result of that claim, further notices by that person are void by virtue of a statutory bar under the preserved law,

only further notices making claims under the preserved law are void by virtue of that statutory bar.

(3) In subsection (2)—

“preserved law” means this Part as it has effect (by virtue of subsection (1)) without the amendments made by the Leasehold and Freehold Reform Act 2024;

“statutory bar” means—

(a) section 9(3)(b), or

(b) an order under section 20(6) or paragraph 4(3) of Schedule 3.”—(Lee Rowley.)

This deals with cases where a tenant makes a “preserved law claim” (under the LRA 1967 as unamended by the Bill), and it results in the tenant being prevented from making a further claim for a certain period. Only a further preserved law claim is prevented.

Clause 35

Limits on rights of landlords to claim litigation costs from tenants

Amendments made: 37, page 61, line 38, at end insert—

“(8A) A reference in this section to proceedings concerning a lease includes—

(a) proceedings concerning any matter arising out of—

(i) the existence of the lease,

(ii) any term of the lease, or

(iii) any agreement or arrangement entered into in connection with the lease;

(b) proceedings concerning any enactment relevant to—

(i) the lease, or

(ii) any agreement or arrangement entered into in connection with the lease;

(c) proceedings that otherwise have a connection with the lease.”

This amendment would clarify which proceedings concern a lease for the purpose of the new section 20CA of the Landlord and Tenant Act 1985.

Amendment 38, page 63, line 38, at end insert—

“(8) The reference in the definition of “relevant proceedings” to proceedings concerning a lease includes—

(a) proceedings concerning any matter arising out of—

(i) the existence of the lease,

(ii) any term of the lease, or

(iii) any agreement or arrangement entered into in connection with the lease;

(b) proceedings concerning any enactment relevant to—

(i) the lease, or

(ii) any agreement or arrangement entered into in connection with the lease;

(c) proceedings that otherwise have a connection with the lease.”—(Lee Rowley.)

This amendment would clarify which proceedings concern a lease for the purpose of the new paragraph 5B of Schedule 11 to the Commonhold and Leasehold Reform Act 2002.

Clause 36

Right of tenants to claim litigation costs from landlords

Amendments made: 39, page 65, line 15, at end insert—

“(6A) A reference in this section to proceedings concerning a lease includes—

(a) proceedings concerning any matter arising out of—

(i) the existence of the lease,

(ii) any term of the lease, or

(iii) any agreement or arrangement entered into in connection with the lease;

(b) proceedings concerning any enactment relevant to—

(i) the lease, or

(ii) any agreement or arrangement entered into in connection with the lease;

(c) proceedings that otherwise have a connection with the lease.”

This amendment would clarify which proceedings concern a lease for the purpose of the new section 30J of the Landlord and Tenant Act 1985.

Amendment 40, page 65, line 25, leave out subsection (2).—(Lee Rowley.)

This amendment is consequential on NC26.

Clause 40

Leasehold sales information requests

Amendment made: 41, page 72, line 13, leave out subsection (2).—(Lee Rowley.)

This amendment is consequential on NC26.

Clause 70

Part 4: application to government departments

Amendment made: 42, page 93, line 27, leave out clause 70.—(Lee Rowley.)

This amendment is consequential on NC27.

Clause 75

Approval and designation of redress schemes

Amendments made: 43, page 98, line 5, leave out from “for” to “to” on line 7 and insert

“the appointment of an individual”.

This amendment would allow regulations about approval or designation conditions for redress schemes to make wider provision about the appointment of an individual responsible for overseeing and monitoring the investigation and determination of complaints under a redress scheme than is currently permitted under clause 75(3)(a).

Amendment 44, page 98, line 9, at end insert—

“(aa) about the terms and conditions of that individual and the termination of their appointment;”

This amendment would require regulations about approval or designation conditions for redress schemes to include provision about the terms and conditions of the individual responsible for overseeing and monitoring the investigation and determination of complaints under a redress scheme, and the termination of their appointment.

Amendment 45, page 98, line 20, leave out

“under other schemes for providing redress”

and insert

“in relation to other kinds of complaint”.

This amendment would widen the power to require co-operation by redress schemes in clause 75(3)(e) so it is not limited to co-operation with redress schemes but also co-operation in relation to other kinds of complaint.

Amendment 46, page 98, line 31, after first “of” insert

“, and the investigation and determination of complaints under,”.

This amendment would clarify that regulations about approval or designation conditions for redress schemes must provide for fee income to be sufficient to meet the costs of investigation and determination of complaints under voluntary aspects of a redress scheme (where those aspects exist).

Amendment 47, page 99, line 40, after “scheme” insert

“and the investigation and determination of complaints under those aspects of the scheme”.

This amendment would allow regulations under clause 75(6) to make provision requiring fees payable by a compulsory member of a redress scheme to be referable to costs incurred, or to be incurred, in the investigation and determination of complaints under the compulsory aspects of the scheme (as well as their administration).

Amendment 48, page 99, line 42, leave out from “may” to end of line 43 and insert “—

(a) confer functions (including functions involving the exercise of discretion) on the lead enforcement authority, or authorise or require a scheme to do so;

(b) provide for the delegation of such functions by the lead enforcement authority, or authorise or require a scheme to provide for that.”—(Lee Rowley.)

This amendment would allow regulations under clause 75 to confer functions on the lead enforcement authority (whether or not they involve a discretion) and make provision for the delegation of such functions.

Clause 87

Extent

Amendment made: 85, page 109, line 12, at end insert “, subject to subsection (2).

(2) Section (Further powers and duties of enforcement authorities)(5) extends to England and Wales, Scotland and Northern Ireland.”—(Lee Rowley.)

This amendment amends the extent clause of the Bill in connection with amendments made by NC64.

Clause 88

Commencement

Amendment made: 49, page 109, line 15, leave out subsection (2) and insert—

“(2) The following provisions come into force at the end of the period of two months beginning with the day on which this Act is passed—

(a) section 83 (regulation of remedies for rentcharge arrears);

(b) section (Recovery of legal costs etc through service charge) (recovery of legal costs etc through service charge);

(c) section (Repeal of section 125 of the BSA 2022) (repeal of section 125 of the BSA 2022);

(d) section (Higher-risk and relevant buildings: notifications in connection with insolvency) (higher-risk and relevant buildings: notifications in connection with insolvency).”—(Lee Rowley.)

This amendment revises the commencement clause of the Bill so as to ensure that specified proposed new clauses concerning building safety and the insolvency of persons who have repairing obligations relating to certain kinds of buildings come into force two months after the Bill receives Royal Assent.

New Schedule 1

Part 5: amendments to other Acts

“Local Government Act 1974

1 (1) The Local Government Act 1974 is amended in accordance with paragraphs 2 to 5.

2 (1) Section 33 (consultation between Local Commissioner and other Commissioners and Ombudsmen) is amended as follows.

(2) In subsection (1)—

(a) before paragraph (ba) insert—

“(bzc) under a leasehold and estate management redress scheme,”;

(b) in the words after paragraph (c)—

(i) for “or Ombudsman” substitute “, Ombudsman or head of leasehold and estate management redress”;

(ii) before “the Public Services Ombudsman (Wales) Act 2005” insert “the leasehold and estate management redress scheme,”.

(3) In subsection (2)—

(a) before “the Public Services Ombudsman for Wales” insert “the head of leasehold and estate management redress,”;

(b) for “Commissioner or that Ombudsman” substitute “person”.

(4) Before subsection (4) insert—

“(3C) If at any stage in the course of an investigation under a leasehold and estate management redress scheme, the head of leasehold and estate management redress forms the opinion that the complaint relates partly to a matter which could be the subject of an investigation under this Part of this Act, the head of leasehold and estate management redress must consult with the appropriate Local Commissioner about the complaint and, if the head of leasehold and estate management redress considers it necessary, inform the person initiating the complaint of the steps necessary to initiate a complaint under this Part of this Act.”

(5) In subsection (4)—

(a) for “or (3B)” substitute “, (3B) or (3C)”;

(b) for “or the new homes ombudsman scheme” substitute “, the new homes ombudsman scheme or a leasehold and estate management redress scheme”.

3 (1) Section 33ZA (collaborative working between Local Commissioners and others) is amended as follows.

(2) In subsection (1)—

(a) in paragraph (c), omit the final “or”;

(b) at the end of paragraph (d), insert “or

(e) an individual who investigates complaints under a leasehold and estate management redress scheme,”.

(3) In subsection (1A) for “or (d)” substitute “, (d) or (e)”.

(4) After subsection (1A) insert—

“(1B) For the purposes of subsections (1) and (1A) a matter is “within the jurisdiction” of an individual who investigates complaints under a leasehold and estate management redress scheme if it is a matter which could be the subject of an investigation under that scheme.”

(5) In subsection (3)—

(a) in paragraph (c), omit the final “or”;

(b) at the end of paragraph (d), insert “or

(e) an individual who investigates complaints under a leasehold and estate management redress scheme,”;

(c) in the words after paragraph (d), for “or (d)” substitute “, (d) or (e)”.

4 In section 33ZB (arrangements for provision of administrative and other services), in subsection (4)—

(a) in paragraph (e), omit the final “and”;

(b) at the end of paragraph (f), insert “, and

(g) the administrator of a leasehold and estate management redress scheme.”

5 In section 34 (interpretation) in subsection (1), at the appropriate places insert—

““leasehold and estate management redress scheme” means a redress scheme within the meaning of section 72(4) of the Leasehold and Freehold Reform Act 2024 (leasehold and estate management: redress schemes);”

““head of leasehold and estate management redress” , in relation to a leasehold and estate management redress scheme, means the person responsible for overseeing and monitoring the investigation and determination of complaints under the scheme;”

Housing Act 1996

6 (1) Paragraph 10A of Schedule 2 to the Housing Act 1996 (housing complaints: collaborative working with Local Commissioners) is amended as follows.

(2) In sub-paragraph (1)—

(a) for “or the new homes ombudsman” substitute “, the new homes ombudsman or an individual who investigates complaints under a leasehold and estate management redress scheme”;

(b) for the words from “that Commissioner” to the end substitute “any one or more of them”.

(3) After sub-paragraph (1) insert—

“(1A) For the purposes of sub-paragraph (1) a matter is “within the jurisdiction” of an individual who investigates complaints under a leasehold and estate management redress scheme if it is a matter which could be the subject of an investigation under that scheme.”

(4) In sub-paragraph (3)—

(a) for “or the new homes ombudsman” substitute “, the new homes ombudsman or an individual who investigates complaints under a leasehold and estate management redress scheme (or two or more of them)”;

(b) for the words from “that Commissioner” to the end substitute “them”.

(5) In sub-paragraph (4) for “a Local Commissioner, the new homes ombudsman (or both)” substitute “one or more persons”.

(6) After sub-paragraph (5) insert—

“(6) In this paragraph “leasehold and estate management redress scheme” means a redress scheme within the meaning of section 72(4) of the Leasehold and Freehold Reform Act 2024.”

Building Safety Act 2022

7 In paragraph 3(5) of Schedule 3 to the BSA 2022—

(a) in paragraph (c), omit the final “or”;

(b) at the end of paragraph (d) insert “, or—

(e) a redress scheme within the meaning of section 72(4) of the Leasehold and Freehold Reform Act 2024 (leasehold and estate management: redress schemes).”—(Lee Rowley.)

This new schedule, to be inserted after Schedule 9, would make amendments to other Acts in connection with Part 5.

Brought up, and added to the Bill.

New Schedule 2

Categories of permitted lease

“Part 1

Categories of permitted lease for Tribunal certification

Leases granted out of historic leasehold estates

1 A lease granted out of a leasehold estate (the “superior leasehold estate”) where—

(a) the superior leasehold estate was granted before 22 December 2017, or

(b) the superior leasehold estate was granted on or after 22 December 2017 in pursuance of an agreement entered into before that date.

Community housing leases

2 (1) A lease that—

(a) is a community housing lease, and

(b) meets any further conditions which may be specified in regulations made by the Secretary of State.

(2) A lease is a community housing lease if—

(a) the landlord under the lease is a community land trust within the meaning of section 2(7A) of the LR(GR)A 2022 (excepted leases), or

(b) it is a lease of a house which is, or is in, a building within paragraph 2B of Schedule 14 to the Housing Act 2004 (buildings controlled or managed by co-operative societies), disregarding sub-paragraph (3)(b) of that paragraph.

(3) A statutory instrument containing regulations made under sub-paragraph (1)(b) is subject to the negative procedure.

Retirement housing leases

3 (1) A lease that—

(a) is a retirement housing lease, and

(b) meets any further conditions which may be specified in regulations made by the Secretary of State.

(2) A lease is a retirement housing lease if conditions A to C are met—

(a) Condition A: the lease is granted to a tenant who is at least 55 years old at the date of the grant,

(b) Condition B: the lease includes a covenant not to assign, underlet or part with possession of the house or any part of it, unless at least one of the proposed assignees or tenants is at least 55 years old at the date of the assignment, underletting or transfer, and

(c) Condition C: the house comprised in the lease is part of a retirement development or scheme in which the leases of all of the houses in that development or scheme meet conditions A and B.

(3) A statutory instrument containing regulations made under sub-paragraph (1)(b) is subject to the negative procedure.

Leases of certain National Trust property

4 A lease of a house specified in—

(a) Part 1 of Schedule 1 to the National Trust Act 1907 (properties to be held and preserved for the benefit of the nation), or

(b) section 8 of the National Trust Act 1939 (mansion and lands to be inalienable by National Trust).

Part 2

Categories of permitted lease for self-certification

Leases agreed before commencement

5 A lease granted in pursuance of an agreement entered into before the day on which section (Ban on grant or assignment of certain long residential leases of houses) comes into force.

Shared ownership leases

6 (1) A lease that—

(a) is a shared ownership lease, and

(b) meets conditions A to D.

(2) But conditions C and D do not need to be met if the shared ownership lease is of a description specified for this purpose in regulations made by the Secretary of State.

(3) A shared ownership lease means a lease of a house—

(a) granted on payment of a premium calculated by reference to a percentage of the value of the house or of the cost of providing it, or

(b) under which the tenant (or the tenant’s personal representatives) will or may be entitled to a sum calculated by reference, directly or indirectly, to the value of the house.

(4) Condition A: the lease allows for the tenant to increase the tenant’s share in the house by increments of 25% or less (whether or not the lease also provides for increments of more than 25%).

(5) Condition B: the lease provides—

(a) for the price payable for an increase in the tenant’s share in the house to be proportionate to the market value of the house at the time the share is to be increased, and

(b) if the tenant’s share is increased, for the rent payable by the tenant in respect of the landlord’s share in the house to be reduced by an amount reflecting the increase in the tenant’s share.

(6) Condition C: the lease allows for the tenant’s share in the house to reach 100%.

(7) Condition D: if and when the tenant’s share in the house is 100%, the tenancy provides that the terms of the lease which make the lease a shared ownership lease cease to have effect, without the payment of any further consideration.

(8) A statutory instrument containing regulations made under sub-paragraph (2) is subject to the negative procedure.

Home finance plan leases

7 (1) A lease that —

(a) is a home finance plan lease, and

(b) meets any further conditions which may be specified in regulations made by the Secretary of State.

(2) A lease is a home finance plan lease if—

(a) it is granted pursuant to an arrangement which is a regulated home reversion plan within the meaning of Article 63B of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (S.I. 2001/544), or

(b) it is granted by a finance provider to a home buyer, pursuant to a rent to buy arrangement.

(3) A “rent to buy arrangement” is an arrangement in relation to which the following conditions are met—

(a) a person (the “finance provider”) buys a qualifying interest, or an undivided share of a qualifying interest, in land, and

(b) the arrangement provides for the obligation of another person (the “home buyer”) to buy the interest bought by the finance provider over the course of, or at the end of, a specified period.

(4) A “qualifying interest in land” means an estate in fee simple absolute or a term of years absolute, whether subsisting at law or in equity.

(5) A statutory instrument containing regulations made under sub-paragraph (1)(b) is subject to the negative procedure.

Extended leases

8 (1) An extended lease, which is a lease that falls within any of cases A to C.

(2) Case A: a lease of a house granted under Part 1 of the LRA 1967 (tenant of leasehold house entitled to extended lease) in substitution for a lease of a house granted before this Part comes into force.

(3) Case B: a lease of a house granted in consideration of the surrender in whole or part of a lease of that house granted before this Part comes into force.

(4) Case C: a lease of a house which takes effect as a deemed surrender and regrant of a lease of a house granted before this Part comes into force.

Agricultural leases

9 An agricultural lease, which is a lease where the house is comprised in—

(a) an agricultural holding within the meaning of the Agricultural Holdings Act 1986 which is held under a tenancy to which that Act applies, or

(b) a farm business tenancy within the meaning of the Agricultural Tenancies Act 1995.”—(Lee Rowley.)

This new Schedule, to be inserted before Schedule 1, sets out the categories of permitted lease for the purposes of the new Part before Part 1 (see the explanatory statements to NC42 and NC48).

Brought up, and added to the Bill.

New Schedule 3

Leasehold houses: financial penalties

“Notice of intent

1 (1) Before imposing a financial penalty on a person under section (Financial penalties), an enforcement authority must give the person notice of its proposal to do so (a “notice of intent”).

(2) A notice of intent must set out—

(a) the date on which it is given,

(b) the amount of the proposed penalty,

(c) the reasons for proposing to impose the penalty, and

(d) information about the right to make representations under paragraph 3.

Time limits for notice of intent

2 (1) A notice of intent may not be given to a person in respect of a breach of a leasehold house restriction after the earlier of the following—

(a) the end of the period of 6 years beginning with the day the breach occurs, and

(b) the end of the period of 6 months beginning with the day on which evidence comes to the knowledge of the enforcement authority which the authority considers sufficient to justify giving the notice.

(2) For the purposes of sub-paragraph (1)(a)—

(a) a breach of section (Ban on grant or assignment of certain long residential leases of houses)(1) or (Permitted leases: transaction warning conditions)(1) occurs on the day the lease is granted or (as the case may be) the agreement is entered into (or, in the case of a breach of either of those provisions consisting of entering into an agreement to grant a lease and subsequently granting it, the day on which the agreement is entered into);

(b) a breach of section (Ban on grant or assignment of certain long residential leases of houses)(2) occurs on the day of the assignment or (as the case may be) the agreement is entered into (or, in the case of a breach of that provision consisting of entering into an agreement to assign a lease and subsequently assigning it, the day on which the agreement is entered into);

(c) a breach of section (Permitted leases: marketing restrictions)(2) occurs on the day the marketing material is made available (or, in the case of marketing material made available in relation to the same lease on more than one occasion, the first day on which such material is made available).

Right to make written representations

3 A person who is given a notice of intent may, within the period of 28 days beginning with the day on which the notice is given, make written representations about the proposal.

Final notice

4 (1) After the period allowed for representations has expired, the enforcement authority must—

(a) decide whether to impose a penalty on the person, and

(b) if it decides to do so, decide the amount of the penalty.

(2) If the enforcement authority decides to impose a penalty, it must do so by giving the person a notice (a “final notice”).

(3) A final notice must require the penalty to be paid before the end of the period of 28 days beginning with the day after that on which the notice is given.

(4) A final notice must set out—

(a) the date on which it is given,

(b) the amount of the penalty,

(c) the reasons for imposing the penalty,

(d) information about how to pay the penalty,

(e) the period for payment of the penalty,

(f) information about rights of appeal, and

(g) the consequences of failure to comply with the notice.

Withdrawal or amendment of notice

5 An enforcement authority may at any time—

(a) withdraw a notice of intent or final notice, or

(b) reduce an amount specified in a notice of intent or final notice,

by giving a notice to that effect to the person to whom the notice of intent or final notice is given.

Appeals

6 (1) A person who is given a final notice may appeal to the appropriate tribunal against—

(a) the decision to impose the penalty, or

(b) the amount of the penalty.

(2) An appeal must be brought before the end of the period of 28 days beginning with the day after that on which the final notice is given.

(3) If an appeal is brought under this paragraph, the final notice is suspended so far as it relates to the matter which is the subject of the appeal until the appeal is finally determined or withdrawn.

(4) An appeal under this paragraph—

(a) is to be a re-hearing of the enforcement authority’s decision, but

(b) may be determined having regard to evidence which was not available to the authority when giving the notice.

(5) On an appeal under this paragraph the appropriate tribunal may quash, confirm or vary the notice.

(6) If the appropriate tribunal varies the amount of the penalty imposed by the notice, the new amount must be an amount that the enforcement authority had power to impose.

Recovery of penalty

7 (1) A penalty is recoverable by the enforcement authority that imposed it, if the county court so orders, as if it were payable under an order of that court.

(2) In proceedings before the county court for the recovery of a penalty, a certificate that—

(a) is signed by the chief finance officer of the authority that imposed the penalty, and

(b) states that the amount due has not been received by a date specified in the certificate,

is evidence of that fact.

(3) A certificate to that effect and purporting to be so signed is to be treated as being so signed unless the contrary is proved.

(4) In this paragraph “chief finance officer” has the same meaning as in section 5 of the Local Government and Housing Act 1989.

Proceeds of penalties

8 An enforcement authority may apply the proceeds of a penalty towards meeting the costs and expenses (whether administrative or legal) incurred in, or associated with, carrying out its enforcement functions under this Part.

9 Any proceeds of a penalty which are not applied in accordance with paragraph 8 must be paid—

(a) if the penalty was imposed in relation to a lease of a house in England, to the Secretary of State;

(b) if the penalty was imposed in relation to a lease of a house in Wales, to the Welsh Ministers.

Manner of giving notices

10 (1) The Secretary of State may by regulations make provision about—

(a) how any notice under this Schedule is to be given to a person;

(b) when such a notice is to be treated as being given.

(2) A statutory instrument containing regulations under this paragraph is subject to the negative procedure.

Interpretation

11 In this Schedule—

“enforcement authority” has the meaning given by section (Interpretation of Part A1);

“leasehold house restriction” has the meaning given by section (Enforcement by trading standards authorities)(2);

“notice” means notice in writing;

“penalty” means a financial penalty under section (Financial penalties).”—(Lee Rowley.)

This new Schedule, to be inserted after NS2, makes provision about financial penalties which local weights and measures authorities may impose for breaches of certain provisions restricting the grant or assignment of long residential leases of houses.

Brought up, and added to the Bill.

Schedule 1

Eligibility for enfranchisement and extension: specific cases

Amendments made: 50, page 112, leave out line 16.

This is consequential on Amendment 63.

Amendment 51, page 116, leave out line 31.—(Lee Rowley.)

This is consequential on Amendment 63.

Schedule 2

Determining and sharing the market value

Amendments made: 52, page 125, line 27, after “rent” insert

“(and any other rent payable under a shared ownership lease in respect of the landlord’s share)”.

This is consequential on Amendments 24 and 29.

Amendment 53, page 134, line 27, leave out “4(3)” and insert “22(2) and (3)”.—(Lee Rowley.)

This amendment would correct an incorrect cross-reference.

Amendment proposed: 4, page 136, line 40, at end insert—

“(9) In setting the deferment rate the Secretary of State must have regard to the desirability of encouraging leaseholders to acquire their freehold at the lowest possible cost.”—(Matthew Pennycook.)

This amendment would ensure that when determining the applicable deferment rate, the Secretary of State would have to have regard to the desirability of encouraging leaseholders to acquire their freehold at the lowest possible cost.

Question put, That the amendment be made.

18:42

Division 83

Ayes: 171

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Labour: 152
Liberal Democrat: 10
Independent: 5
Plaid Cymru: 2
Alliance: 1
Green Party: 1

Noes: 300

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Conservative: 292
Democratic Unionist Party: 5

Amendments made: 54, page 139, line 31, after “transaction” insert—

“(taking into account, where paragraph 31(1)(c) applies, any reduction under paragraph 12A of Schedule 1 to the LRA 1967 or paragraph 12 of Schedule 11 to the LRHUDA 1993 in the rent of a lease of which the eligible person is a tenant)”

This ensures that any reduction of rent payable by a person as a tenant where there is commutation of rent is taken into account when determining the person’s loss for the purpose of sharing the consideration payable on an enfranchisement or extension.

Amendment 55, page 144, line 16, leave out “4(3)” and insert “22(2) and (3)”.—(Lee Rowley.)

This amendment would correct an incorrect cross-reference.

Schedule 5

Amendments consequential on section 11 and Schedules 2 to 4

Amendments made: 56, page 149, leave out lines 12 to 21

This amendment is consequential on Amendment 60.

Amendment 57, page 151, line 42, leave out sub-paragraph (5) and insert—

“(5) In paragraph 7(1)—

(a) omit paragraph (b);

(b) in paragraph (c), for “price payable for” substitute “share of the purchase price, as determined under Part 6 of Schedule 2 to the Leasehold and Freehold Reform Act 2024, that is payable to the owner of”;

(c) in paragraph (d), for “the price payable for” substitute “each share of the purchase price, as determined under Part 6 of Schedule 2 to the Leasehold and Freehold Reform Act 2024, that is payable to the owner of”;

(d) at the end of paragraph (d), insert “; and

(e) if the sum payable for the redemption of a rentcharge under section 11 or the discharge of a charge under section 12 cannot be ascertained because the share of the purchase price payable to the relevant landlord has not been agreed or determined under Part 6 of Schedule 2 to the Leasehold and Freehold Reform Act 2024, the tenant may pay the whole of the price payable into the tribunal.””

This amendment would make provision that is consequential on Part 6 of Schedule 2.

Amendment 58, page 153, line 32, at end insert—

‘5A In Schedule 8 to the LRHUDA 1993 (discharge of mortgages etc)—

(a) in paragraph 1, for the definition of ‘the consideration payable’ substitute—

““the consideration payable” means the share payable to the landlord, as determined under Part 6 of Schedule 2 to the Leasehold and Freehold Reform Act 2024, of the purchase price for the acquisition of the relevant interest;”

(b) in paragraph 4, after sub-paragraph (3) insert—

“(4) If the amount to be applied for the redemption of a mortgage under paragraph 2, or that may be paid into the tribunal under sub-paragraph (1), cannot be ascertained because the share of the purchase price payable to the relevant landlord has not been agreed or determined under Part 6 of Schedule 2 to the Leasehold and Freehold Reform Act 2024, the nominee purchaser may pay the whole of the price payable into the tribunal.”’

This amendment would make provision that is consequential on Part 6 of Schedule 2.

Amendment 59, page 154, line 20, at end insert

“and any sums payable to that other landlord under section 56(3)”

This amendment would ensure that, in the new provision in Schedule 5 for requiring a tenant to pay amounts into the tribunal (for onward distribution to multiple landlords in a collective enfranchisement), the sums that can be paid in include other amounts payable under section 56(3) of the LRHUDA 1993.

Amendment 60, page 155, line 11, at end insert—

“Other consequential amendments to the LRA 1967

8 The LRA 1967 is amended in accordance with paragraphs 9 to 14.

9 In section 8(1) (obligation to enfranchise), after “price” insert “payable in accordance with section 9”.

10 Omit section 9A (compensation payable in cases where right to enfranchisement arises by virtue of section 1A or 1B).

11 In section 19(10)(b) (price subject to local management scheme), for “under” substitute “in accordance with”.

12 In section 23(5)(b) (terms of extended tenancy), omit “section 9(1) and (1A) above,”.

13 In section 24(1) (application of price), for “under section 9 above” substitute “in accordance with section 9”.

14 In section 31 (ecclesiastical property)—

(a) in subsection (2)(a), after “payable” insert “in accordance with section 9 or 14A”;

(b) in subsection (3), for “under section 9 above” substitute “in accordance with section 9 or 14A”;

(c) in subsection (4)(c), for “under section 9 above” substitute “in accordance with section 9 or 14A”.

Other consequential amendments to the LRHUDA 1993

15 The LRHUDA 1993 is amended in accordance with paragraphs 16 to 30.

16 In section 13(3) (initial notice), for paragraph (d) substitute—

“(d) specify the proposed purchase price payable in accordance with section 32(1);”.

17 In section 18(2) (duty to disclose agreements)—

(a) in paragraph (a), for the words from “to the reversioner” to “ for the purposes of Schedule 6” substitute “is determined in accordance with section 32(1)”;

(b) in the words after paragraph (b), for the words from “to the reversioner” to “relevant landlord” substitute “in addition to the price so determined”.

18 In section 27 (vesting orders under section 26: supplementary provision)—

(a) in subsection (3), omit “in respect of each of those interests”;

(b) in subsection (5)—

(i) in the words before paragraph (a), omit “in respect of any interest”;

(ii) in paragraph (a), for the words from “in respect of that interest” to “subsection (1)(b)” substitute “in accordance with section 32(1) if the interests referred to in subsection (1) were being acquired in pursuance of a notice under section 13”;

(iii) in paragraph (b), for “that interest” substitute “the transferor’s interest”;

(c) in subsection (6)—

(i) omit “in respect of that interest”;

(ii) omit “for the acquisition of that interest”.

19 In section 32 (determination of price)—

(a) in subsection (2), for “any such interest” substitute “the freehold or any other interest to be acquired by the nominee purchaser in accordance with this Chapter”;

(b) for subsection (5) substitute—

“(5) The nominee purchaser is to be treated for all purposes as a purchaser for valuable consideration in money or money’s worth of the freehold or other interest, even if the price payable by the nominee purchaser in accordance with section 32(1), or the share of the purchase price payable to the owner of the interest under Part 6 of Schedule 2 to the Leasehold and Freehold Reform Act 2024, is zero or only a nominal amount.”

20 In section 39(1) (right to acquire new lease), for “a premium” substitute “the price”.

21 In section 42(3)(c) (notice to acquire new lease)—

(a) for “premium” substitute “price”;

(b) omit the words from “and, where” to the end.

22 In section 48(7) (applications where terms in dispute etc), for the words from “the premium” to “Schedule 13” substitute “the price payable in accordance with section 56(1)”.

23 In section 51 (vesting orders under section 50: supplementary provision)—

(a) in subsection (5)—

(i) in paragraph (a), for “premium which is payable under Schedule 13” substitute “price which is payable in accordance with section 56(1)”;

(ii) at the end of paragraph (a) insert “and”;

(iii) omit paragraph (b);

(b) in subsection (6), for the words from “premium” to the end substitute “price payable”.

24 In section 56 (obligation to grant new lease)—

(a) omit subsection (2);

(b) in subsection (3), for the words from “amount of any such premium” to “Schedule 13” substitute “price payable”;

(c) in subsection (4), for “7(2)” substitute “7(2A)”.

25 Omit section 66 (amendments to the LRA 1967).

26 In section 70(12) (estate management schemes)—

(a) in paragraph (b), for “under section 9” substitute “in accordance with section 9”;

(b) in paragraph (c), for “under Schedule 6 to this Act” substitute “in accordance with section 32(1)”.

27 In section 73(10) (applications for estate management schemes), for the words from the beginning to “it shall” substitute “For the purposes of Schedule 2 to the Leasehold and Freehold Reform Act 2024 as it applies in relation to an acquisition mentioned in section 69(1)(a) or (b), it is to”.

28 (1) Schedule 2 (special categories of landlords) is amended as follows.

(2) In paragraph 1 (interpretation), omit sub-paragraph (2).

(3) In paragraph 5 (trustees)—

(a) in sub-paragraph (1), for the words from “sum” to “Chapter I” substitute “share payable to the landlord, as determined under Part 6 of Schedule 2 to the Leasehold and Freehold Reform Act 2024, of the purchase price in respect of the acquisition of the interest,”;

(b) in sub-paragraph (2)(a), for “premium” substitute “share of the price payable”.

(4) In paragraph 7 (universities and colleges)—

(a) in sub-paragraph (1), for the words from “sum” to “Chapter I” substitute “share payable to the landlord, as determined under Part 6 of Schedule 2 to the Leasehold and Freehold Reform Act 2024, of the purchase price in respect of the acquisition of the interest”;

(b) in sub-paragraph (2)(a), for “premium” substitute “share of the price payable”.

(5) In paragraph 8 (ecclesiastical landlords)—

(a) in sub-paragraph (2)(a), omit “or premium”;

(b) in sub-paragraph (3)(a)—

(i) in the words before paragraph (i), after “by way of” insert “a share of”;

(ii) in paragraph (i), for “for any interest in the property on its acquisition” substitute “in respect of the acquisition of any interest in the property”;

(iii) in paragraph (ii), for “a premium” substitute “the price payable”;

(c) in sub-paragraph (4)(b)—

(i) in the words before paragraph (i), after “by way of” insert “a share of”;

(ii) in paragraph (i), for “for any interest in property on its acquisition” substitute “in respect of the acquisition of any interest in property”;

(iii) in paragraph (ii), for “a premium” substitute “the price payable”.

29 (1) Schedule 5 (vesting orders under sections 24 and 25) is amended as follows.

(2) In paragraph 2(1) (execution of conveyance), omit “in respect of each of those interests”.

(3) In paragraph 3(1) (the appropriate sum)—

(a) in the words before paragraph (a), omit “in respect of any interest”;

(b) in paragraph (a), for “Schedule 6 in respect of that interest” substitute “section 32(1)”;

(c) in paragraph (b), for “that interest” substitute “the transferor’s interest”.

(4) In paragraph 4 (effect of payment of appropriate sum)—

(a) omit “in respect of that interest”;

(b) omit “for the acquisition of that interest”.

30 Omit Schedule 15 (section 9 of the LRA 1967 as amended by section 66).” —(Lee Rowley.)

This amendment would make further amendments to the LRA 1967 and the LRHUDA 1993 that are consequential on clauses 9 to 11 and Schedules 2 to 4 (as well as other provision in Schedule 5).

Schedule 6

Leasehold enfranchisement and extension: miscellaneous amendments

Amendments made: 61, page 155, line 15, at end insert—

‘Repeal of section 18 of the LRHUDA 1993

A1 (1) The LRHUDA 1993 is amended as follows.

(2) Omit section 18 (collective enfranchisement: requirement to disclose agreements affecting specified premises).

(3) In consequence—

(a) in section 32 (determination of price for collective enfranchisement), omit subsection (2)(b) and the “and” preceding it;

(b) in section 91 (jurisdiction of tribunals), omit subsection (2)(c).’

This amendment would repeal section 18 of the LRHUDA 1993, which requires a nominee purchaser to disclose agreements affecting property specified in an initial notice for collective enfranchisement.

Amendment 62, page 156, leave out lines 27 to 30 and insert—

‘Consequential amendments to the LRA 1967

4 (1) The LRA 1967 is amended as follows.

(2) In section 16 (rights after extension)—

(a) in subsection (1), omit the words before paragraph (a);

(b) omit subsection (5).

(3) In section 23(5)(b) (terms of extended tenancy), for “section 16(1) to (6)” substitute “section 16(1B)”.’

This amendment would insert a further consequential amendment to the LRA 1967 in light of the repeal of most of section 16 of that Act.

Amendment 63, page 156, line 33, at end insert—

“Orders and regulations under the LRA 1967

5A (1) The LRA 1967 is amended as follows.

(2) After section 36 insert—

“Orders and regulations

36A Orders and regulations

(1) A power to make an order or regulations under any provision of this Part includes power to make—

(a) consequential, supplementary, incidental, transitional or saving provision;

(b) different provision for different purposes.

(2) In this section “order” does not include an order of a court or tribunal.”

(3) In paragraph 5(2) of Schedule 4A (regulations relating to exclusion of certain shared ownership leases), for paragraphs (a) and (b) substitute—

“(a) make different provision for different areas;”.”

This inserts a new section into the LRA 1967 to make clear that the powers to make orders and regulations under that Act include power to make the usual additional kinds of provision. It also removes the existing provision dealing with those matters currently contained in Schedule 4A.

Amendment 64, page 156, line 35, leave out from beginning to “paragraph” in line 36 and insert—

“6 “(1) Schedule 1 to the LRA 1967 (enfranchisement and extension by sub-tenants) is amended as follows.

(2) In paragraph 11—

(a) after sub-paragraph (1) insert—

“(1A) Any surrender or provision for the surrender, in accordance with this paragraph, of a tenancy comprising property other than the house and premises, is to be limited to the house and premises.”;

(b) omit sub-paragraphs (2) to (5).

(3) After”

This amendment would make provision that is consequential on the existing provision in paragraph 6 of Schedule 6.

Amendment 65, page 157, line 3, at end insert—

‘(1A) But if the tenancy in possession is a shared ownership lease—

(a) this paragraph does not apply if, at the relevant time, none of the relevant rent payable under the tenancy in possession is payable in respect of the tenant’s share in the house and premises;

(b) if the tenancy in possession does not reserve separate rents in respect of the tenant’s share in the house and premises and the landlord’s share in the house and premises, any rent reserved is to be treated as reserved in respect of the landlord’s share.’

This provides that rent under leases that are superior to a shared ownership lease can be commuted only if some or all the rent payable under the shared ownership lease is payable in respect of the tenant’s share.

Amendment 66, page 158, line 30, at end insert—

‘(1A) But if the existing lease is a shared ownership lease—

(a) this paragraph does not apply if, at the relevant date, none of the relevant rent payable under the existing lease is payable in respect of the tenant’s share in the flat;

(b) if the existing lease does not reserve separate rents in respect of the tenant’s share in the flat and the landlord’s share in the flat, any rent reserved is to be treated as reserved in respect of the landlord’s share.’

This provides that rent under leases that are superior to a shared ownership lease can be commuted only if some or all the rent payable under the shared ownership lease is payable in respect of the tenant’s share.

Amendment 67, page 167, line 14, leave out “interest” and insert “share”.—(Lee Rowley.)

This corrects an error in this definition, which should be a definition of “landlord’s share”.

Schedule 7

Right to vary lease to replace rent with peppercorn rent

Amendment proposed: 8, in schedule 7, page 168, line 15, leave out sub-sub-paragraph (a).—(Matthew Pennycook.)

This amendment would ensure that all leaseholders, not just those with residential leases of 150 years or over, have the right to vary their lease to replace rent with peppercorn rent.

Question put, That the amendment be made.

18:56

Division 84

Ayes: 170

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Labour: 151
Liberal Democrat: 10
Independent: 5
Plaid Cymru: 2
Alliance: 1
Green Party: 1

Noes: 299

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Conservative: 291
Democratic Unionist Party: 5
Independent: 1

Schedule 7

Right to vary lease to replace rent with peppercorn rent

Amendments made: 68, page 168, line 25, leave out from “only” to “a” in line 30 and insert “—

(i) because a requirement in section 1 of the LRA 1967 for the tenancy to be at a low rent is not met,

(ii) because a requirement in section 1(1)(a)(i) or (ii) of the LRA 1967 for the house and premises or the tenancy to be above a certain value is not met, or

(iii) by virtue of”.

This changes the language used to refer to provisions of the LRA 1967 about rents and values of houses so that it is consistent with other provisions of the Bill.

Amendment 69, page 169, line 7, at end insert—

“(7) If the qualifying lease is a shared ownership lease, the right to a peppercorn rent applies only in relation to rent payable in respect of the tenant’s share in the demised premises (and, accordingly, any rent which is payable in respect of the landlord’s share in the demised premises is not affected by this Schedule).

(8) For that purpose, if the qualifying lease does not reserve separate rents in respect of the tenant’s share in the demised premises and the landlord’s share in the demised premises, any rent reserved is to be treated as reserved in respect of the landlord’s share.

(9) In this paragraph—

(a) ‘shared ownership lease’ means a lease of premises—

(i) granted on payment of a premium calculated by reference to a percentage of the value of the premises or of the cost of providing them, or

(ii) under which the tenant (or the tenant’s personal representatives) will or may be entitled to a sum calculated by reference, directly or indirectly, to the value of the premises;

(b) in relation to a shared ownership lease—

(i) ‘tenant’s share’ means the tenant’s initial share in the premises demised by the lease, plus any additional share or shares in those demised premises which the tenant has acquired;

(ii) ‘landlord’s share’ means the share in the premises demised by the lease which is not comprised in the tenant’s share.”

This provides that, where the rent under a shared ownership lease is reduced under Schedule 7 to the Bill, only the rent payable in respect of the tenant’s share will be reduced to a peppercorn rent.

Amendment 70, page 173, line 16, after “payable” insert

“(whether or not any shares of the premium that may be payable under paragraph 8(8A) have been determined)”.

This makes clear that it is not necessary for shares of the premium (where there are intermediate landlords) to have been calculated for the rent variation notice to be enforceable.

Amendment 71, page 174, line 36, at end insert—

“(8A) Each eligible landlord is entitled to be paid a share of the required premium (see paragraph 7).

(8B) An eligible landlord’s share of the required premium is to be determined using this formula—

where the loss suffered by an eligible landlord is the loss which that landlord suffers as a result of the relevant reduction in the rent of the lease by virtue of which they are an eligible landlord (taking into account any relevant reduction in the rent of a lease of which they are the tenant).”

This would enable the premium payable for a rent reduction to be divided among the various landlords where there are leases that are superior to the lease in respect of which the rent variation notice is given.

Amendment 72, page 174, line 37, at end insert—

“‘eligible landlord’ means the landlord of a lease whose rent is subject to a relevant reduction;’”.

This is consequential on Amendment 71.

Amendment 73, page 175, line 11, at end insert—

“Jurisdiction of the appropriate tribunal in relation to paragraph 8

(1) The appropriate tribunal may determine any matter arising under paragraph 8 (reduction of rent under intermediate leases on grant of a new lease), including what rent under an intermediate lease is apportioned to the qualifying property (see paragraph 2(6)).

(2) In relation to paragraph 8—

(a) if the landlord under a qualifying intermediate lease cannot be found or their identity cannot be ascertained, the appropriate tribunal may make such order as it thinks fit, including—

(i) an order dispensing with the requirement to give notice under paragraph 8(3) to that landlord, or

(ii) an order that such a notice has effect and has been property served even though it has not been served on that landlord;

(b) make an order appointing a person to vary a lease in accordance with paragraph 8 on behalf of the landlord or tenant;

(c) if the appropriate tribunal makes a determination that a notice under paragraph 8(3) was of no effect, it may—

(i) determine whether another landlord or tenant could have given such a notice, and

(ii) if it determines that they could have done so, order that paragraph 8 is to apply as if they had done so.

(3) The variation of a lease on behalf of a party in consequence of an order under sub-paragraph (2)(b) has the same force and effect (for all purposes) as if it had been executed by that party.”

This gives the appropriate tribunal jurisdiction in relation to disputes and other matters arising in relation to paragraph 8.

Amendment 74, page 177, line 2, leave out “10 or”.

This amendment is consequential on an amendment made in Committee to remove what was paragraph 10 of Schedule 7.

Amendment 75, page 177, line 6, leave out “the LRA 1967 or”.

This amendment is consequential on Amendment 74.

Amendment 76, page 180, line 3, at end insert—

“Actions of immediate landlord binding on other landlords

16A (1) This paragraph applies if there are one or more qualifying intermediate leases of property to which a rent variation notice relates.

(2) The following are binding on the other landlords and on their interests in the property to which the rent variation notice relates or any other property—

(a) any notice given under this Schedule by the immediate landlord to the tenant,

(b) any agreement for the purposes of this Schedule between the immediate landlord and the tenant, and

(c) any determination of the appropriate tribunal under this Schedule in proceedings between the immediate landlord and the tenant.

(3) The immediate landlord is not liable to any of the other landlords for any loss or damage caused by any act or omission in the exercise or intended exercise of the authority given by sub-paragraph (2) if the immediate landlord acts in good faith and with reasonable care and diligence.

(4) In this paragraph—

‘immediate landlord’ means the immediate landlord under the lease to which the rent variation notice relates (and to which the rent variation notice must be given);

‘other landlord’ means the landlord under a qualifying intermediate lease of property to which the rent variation notice relates;

‘qualifying intermediate lease’ has the meaning given in paragraph 8.

Duty of immediate landlord to conduct commutation claim on behalf of affected other landlords

16B (1) This paragraph applies if—

(a) there are one or more qualifying intermediate leases of property to which a rent variation notice relates, and

(b) notice is given under paragraph 8(3).

(2) The immediate landlord must conduct the response to the tenant’s claim for a rent reduction on their own behalf and on behalf of the affected other landlords, including by—

(a) agreeing the terms of variation of the qualifying lease,

(b) agreeing the amount of the required premium,

(c) receiving the whole of the required premium and (where it is so received) holding the required premium for themselves and the affected other landlords pending determination of the shares of the required premium in accordance with paragraph 8(8A), and

(d) conducting all proceedings arising out of the rent variation notice (whether the proceedings are for resisting or giving effect to the claim).

(3) If the immediate landlord receives the whole of the required premium, the immediate landlord’s written receipt for payment of that premium is a complete discharge to the tenant.

(4) Sub-paragraphs (2)(c) and (3) do not apply if the price payable is required to be paid into the tribunal by virtue of sub-paragraph (6)(c).

(5) The immediate landlord is not liable to any of the affected other landlords for any loss or damage caused by any act or omission in compliance or intended compliance with the duty under sub-paragraph (2) if the immediate landlord acts in good faith and with reasonable care and diligence.

(6) Any affected other landlord may—

(a) apply to the appropriate tribunal for directions as to the manner in which the immediate landlord is to exercise the authority given by sub-paragraph (2);

(b) be separately represented in any proceedings in which the amount of the required premium is being determined;

(c) by giving notice to the tenant and the immediate landlord, require the tenant to pay into the tribunal the whole of the required premium.

(7) Each of the affected other landlords must make such contribution as is just to costs and expenses which are properly incurred by the immediate landlord in connection with the claim by the tenant under this Schedule but which are not recoverable or recovered from the tenant.

(8) The appropriate tribunal—

(a) may determine any matter arising in relation to the amount of any costs payable by virtue of sub-paragraph (7), and

(b) where it has determined such an amount of costs, may make an order requiring a person to pay those costs.

(9) The court or the appropriate tribunal may order any affected other landlord to pay to the immediate landlord the costs, or a contribution to the costs, incurred by the immediate landlord in obtaining from the appropriate tribunal money that has been paid into it in compliance with a requirement imposed under sub-paragraph (6)(c) if—

(a) that affected other landlord imposed the requirement, and

(b) the immediate landlord shows that it was unreasonable for that affected other landlord to impose the requirement.

(10) The court or the appropriate tribunal may order the immediate landlord to pay to any affected other landlord the costs, or a contribution to the costs, incurred by that affected other landlord in obtaining from the appropriate tribunal money that has been paid into it in compliance with a requirement imposed under sub-paragraph (6)(c) if—

(a) that affected other landlord imposed the requirement, and

(b) that affected other landlord shows that the requirement was imposed because of unreasonable conduct by the immediate landlord.

(11) In this paragraph—

‘affected other landlord’ means the landlord under a qualifying intermediate lease of which the rent is to be reduced in accordance with paragraph 8 (whether by virtue of paragraph 8(3) or (4));

‘immediate landlord’ means the immediate landlord under the lease to which the rent variation notice relates (and to which the rent variation notice must be given);

‘qualifying intermediate lease’ has the meaning given in paragraph 8;

‘required premium’ means the required premium payable under paragraph 7.”

This makes provision for dealing with claims for rent reductions under Schedule 7 if there are multiple landlords because of the existence of leases that are superior to the lease in respect of which the rent variation notice is given.

Amendment 77, page 180, line 21, second column, leave out from “any” to “has” in line 22 and insert “price payable”.

This amendment is consequential on Amendment 60.

Amendment 78, page 181, line 19, leave out “flat premises” and insert “a flat”.

This amendment would align the terminology used in the table with the terminology used in the LRHUDA 1993.

Amendment 79, page 182, line 20, leave out “10 or 16” and insert “17”.

This amendment is consequential on an amendment made in Committee to remove what was paragraph 10 of Schedule 7.

Amendment 80, page 182, line 22, leave out “the LRA 1967 or”.

This amendment is consequential on Amendment 79.

Amendment 81, page 182, line 26, leave out

“Regulations under this paragraph are”,

and insert

“A statutory instrument containing regulations under this paragraph is”.—(Lee Rowley.)

This amendment would clarify that the statutory instrument containing the regulations is subject to the negative procedure.

Schedule 8

Part 3: consequential amendments

Amendment made: 82, Schedule 8, page 186, line 35, leave out paragraph (e).—(Lee Rowley.)

This amendment is consequential on NC26.

Title

Amendments made: 84, line 1, leave out “Amend” and insert

“Prohibit the grant or assignment of certain new long residential leases of houses, to amend”.

This amendment is consequential on the new Part to be inserted before Part 1 (see NC42).

Amendment 23, line 6, leave out “and to regulate rentcharges” and insert

“, to regulate rentcharges and to amend the Building Safety Act 2022 in connection with the remediation of building defects and the insolvency of persons who have repairing obligations relating to certain kinds of buildings”. —(Lee Rowley.)

This amendment is consequential on the new Part of the Bill proposed to be formed by NC30 to NC35.

Third Reading

King’s and Prince of Wales’s consent signified.

19:07

Proceedings interrupted (Programme Order, 11 December 2023).

Question put forthwith (Standing Order No. 83E), That the Bill be now read the Third time.

Question agreed to.

Bill accordingly read the Third time and passed.