Leasehold and Freehold Reform Bill

Baroness Deech Excerpts

Committee stage
Wednesday 24th April 2024 Lords Chamber

[Lord Howard of Rising (Con)]

I speak to Amendments 26 and 27 in my name, focusing on the measures in this Bill relating to marriage value which, as it stands, would allow leaseholders with leases of 80 years or fewer to acquire freeholder rights without paying a fair share of the marriage value to the existing freeholder.

Marriage value, in relation to leasehold enfranchisement, is set out in the Leasehold Reform, Housing and Urban Development Act 1993, and defined as the financial benefit that results from merging the freeholders’ and leaseholders’ interests in a residential property. Under the 1993 Act, and reaffirmed in the Commonhold and Leasehold Reform Act 2002, 50% of the marriage value is payable by the leaseholder to the freeholder when the unexpired term of an existing lease is under 80 years.

Handing over the full benefit of marriage value to leaseholders without due compensation will have wide-ranging effects, but the most damaging and significant is the threat to property rights. Our economy is built on property rights. If the ownership of property is no longer secure, because it can be taken away without compensation, where does that leave us? If the Bill goes through unamended, it will set a dangerous precedent for Governments to transfer wealth arbitrarily. What we are looking at today could be the thin end of the wedge. I am not suggesting that government actions would escalate immediately, but any power given to government will be used to its full extent sooner or later, however benign the original intention. Do not forget that income tax started out as a temporary measure at 2.5p in the pound, and has reached as high as 100%

On top of the principled concerns that I have set out, there are a number of practical ones. The assets set to be transferred as a result of these measures have a value of £7.1 billion, and it is likely that some of that value is being used as security for loans. Do His Majesty’s Government know how much of the affected property is tied up in this way, and do they know how the banking regulatory authority feels about, what would become, unsecured loans, or the possible consequent impact on banks’ capital requirements?

The Government’s impact assessment states there are 4.8 million leasehold properties in England, of which only 385,400 have leases under 80 years. Of those 385,400 leases, the bulk of the value is located in London and the south-east. Despite the Government’s noble ambition to support aspirational home owners, I understand that in London, 60% of leaseholders benefiting from this change in policy would be private investors, of which 10% to 25% are based overseas. At the same time, many of the freeholders whose assets would be removed are charities or pension funds which have invested to cover their long-term liabilities.

There is also a significant impact on the Exchequer. Under the status quo, any financial gain made by freeholders when leases are sold is taxable. If all the financial gain is given to the leaseholder, a good proportion of the tax that would have been due will be sheltered by the exemption of disposal of a principal private residence. The loss to the Exchequer under this consequence alone has been calculated at £l billion.

Finally, there is the problem with human rights legislation. One of the founding principles of the European Convention on Human Rights is the protection of property. The lack of compensation for freeholders under the processes set out in the Bill challenges the expectation that parties should be fairly compensated for losses resulting from expropriation or state control of use. Whatever government lawyers say, there is bound to be a difference of opinion. In fact, the Government’s own legal advice described it as “finely balanced”. Do your Lordships imagine for a moment that this arbitrary transfer of property without proper compensation being paid will not be fought through the courts to the highest level? It will cost the Government a small fortune and freeze the market in leasehold properties, as present leaseholders will be reluctant to sell while there is a chance of greater value in the future.

My amendments are simple. They preserve the existing arrangements only for leases with an unexpired term under 80 years, leaving the 95% of leaseholders who have leases of more than 80 years to benefit from the Government’s proposals, even when their term drops below 80 years. This is a fair balance. I hope my noble friend the Minister will consider my amendments carefully and from a point of principle. I would welcome further discussions to fine-tune the details so that we can ensure that this policy works for everyone. I beg to move.

[Baroness Deech (CB)]

My Lords, I am pleased to lend my support to the noble Lord, Lord Howard, and have put my name to these amendments. I have three short points to make. One is that phasing out in this area must be right. The second is that we should treat retrospective legislation very suspiciously. Thirdly, it cannot be right to deprive people of their property without compensation.

--- Later in debate ---

[Baroness Scott of Bybrook (Con)]

My Lords, I thank my noble friends Lord Howard and Lord Moylan for their amendments in this group. Amendments 26 and 27 would require marriage value or possible hope value to be payable by a leaseholder who has fewer than 80 years remaining on their lease on the passage of the Act.

The Government’s stated objective is to make it cheaper and easier for leaseholders to extend their lease or acquire their freehold. We want them to attain greater security of tenure. The amendments are directly counter to our objective. In particular, they would prevent us from helping the trapped leaseholder—that is, a leaseholder with a short lease who is unable to afford to extend because of the prohibitive marriage value payable, and so is trapped with an asset of diminishing value.

We do not believe that the leaseholder should have to pay marriage value. For the freeholder, the marriage value that is payable under the current law is a windfall created by the freehold and leasehold interests being married earlier than they otherwise would have been—namely, at the end of the lease. It is a sum that the freeholder would not receive if the lease ran its course. Parliament has previously determined that the value should be split equally and the leaseholder should pay half of it to the freeholder on enfranchisement, but we do not believe that freeholders should continue to receive that windfall.

The leaseholder needs to enfranchise, because by its very nature a lease is a wasting asset. Without either extending their lease or buying their freehold, they will suffer financial loss as the lease runs down or lose possession when it has fully run down. Nor has the lease- holder meaningfully chosen to enter such an arrangement, since leasehold is very often the only available form of tenure outside the rented sector at certain price points or in certain locations. The lease- holder’s need to enfranchise is born out of their insecurity of tenure; that is, out of the inherent injustice of the leasehold system. Our objective is to enable them to obtain greater security and to address that inherent injustice. By not having to pay marriage value to the freeholder, the leaseholder’s ability to obtain security of tenure is much improved.

A third party who bought the landowner’s interest would not pay marriage value, and we do not think it is right that the leaseholder should pay more than that same interest. Requiring leaseholders to pay more than a third party—or, in other words, enabling the freeholder to profit from the sale to a leaseholder by comparison to a third party—is to punish the leaseholder for their need to enfranchise, and therefore to affirm the very injustice we are trying to address.

The noble Earl, Lord Lytton, and many other noble Lords brought up compensation. Under our valuation scheme, the freeholder is compensated as if the lease simply ran its course. We believe that this is adequate compensation; it is sufficient to reflect their legitimate property interests.

Amendments 26 and 27 would also further complicate an already complex system. They would create a new two-tier system, with different rules for leases that were under 80 years at the time of the Act and those that fell under 80 years thereafter. This is undesirable, as it runs contrary to our stated aim to simplify this complex tenure.

Before I move on to Amendment 29, I will answer one or two specifics. First, the issue of human rights has been brought up by a number of noble Lords. The Government consider that all provisions in the Bill are compatible with the relevant convention rights and that in the case of the provisions engaging Article 8 and A1P1 any interference is justified and proportionate. There is a GOV.UK page where noble Lords can read further information on that should they wish.

The noble Baroness, Lady Deech, also brought up phasing, which is important. Following Royal Assent, we will allow time for a smooth transition to a new system, while making sure that leaseholders and freehold home owners on private and mixed-tenure estates— which is an issue—can benefit from it as soon as reasonably possible. We will also support leaseholders, freeholders, landlords and agents to adjust to and understand the new rules. We will work with delivery partners to make sure that the necessary support is in place, including through the publication of appropriate guidance.

[Baroness Deech (CB)]

I am grateful to the Minister for those comments. It reminds me that in the case of the 1925 legislation, the centenary of which approaches us, there were six different statutes with a long lead-in time. Apparently, many solicitors gave up practice entirely because they could not cope with the new law, so it is good to know this will be gently introduced.

On human rights, I am all in favour of the European convention; I would not want to drop it. I just find it rather dismaying that if the possible claimant were a hedge fund manager or a rich freeholder then we should not worry about them. The point about the European Convention on Human Rights is, whether you like the claimant or not, the thing must be taken as a whole; we cannot pick and choose. I would like some disassociation from the notion that hedge fund managers and rich freeholders should not have their rights considered under that convention.

Hate Crimes

Baroness Deech Excerpts

Wednesday 21st February 2024 Lords Chamber

[Baroness Penn (Con)]

I know of many efforts across the country, locally and nationally, to bring leaders of different faiths together and make statements of unity. That is something the Government continue to support.

[Baroness Deech (CB)]

My Lords, the noble Lord, Lord Mann, issued a report on anti-Semitism not long ago which made very useful recommendations, including teaching about anti-Semitism and Jewish history in school. Would that not be a far better approach than focusing entirely on Holocaust education, which places everything in the past, far away, nothing to do with us today?

[Baroness Penn (Con)]

My Lords, one of the most recent announcements from the Government in this area is indeed additional funding through the Department for Education to schools to increase education around this area. That is something the DfE is taking forward.

Green Spaces

Baroness Deech Excerpts

Thursday 1st February 2024 Lords Chamber

[Baroness Penn (Con)]

It will depend on the particular arrangements for each park or playground, but local authorities are responsible for around 85% of urban parks in England. On which department is responsible, it is my department, the Department for Levelling Up, Housing and Communities.

[Baroness Deech (CB)]

My Lords, why are the Government intent on wrecking the only available green space near Parliament, Victoria Tower Gardens, which serves an underprivileged population? They are doing it contrary to the 1900 Act, which preserved it as an open space, in order to build an ugly memorial and an inadequate learning centre that is too small and not wanted by Holocaust survivors.

[Baroness Penn (Con)]

My Lords, on the legal point, I believe the department is bringing forward legislation to address that. I am sure there will be further discussion of the points the noble Baroness makes when we discuss that Bill.

Holocaust Memorial

Baroness Deech Excerpts

Thursday 22nd June 2023 Lords Chamber

[Baroness Scott of Bybrook (Con)]

My Lords, the memorial is a manifesto commitment which has cross-party support and has been endorsed by all living Prime Ministers. The Chief Rabbi, who sits on the UK Holocaust Memorial Foundation comittee, is fully behind the Government’s proposals, as are leading representatives of the Jewish community, other faith and community leaders, survivors, refugees and the wider public. Their voices were heard at the planning inquiry, emphasising the importance of the memorial and learning centre as a way of providing Holocaust victims and the remaining survivors the prominence in this city that they deserve.

[Baroness Deech (CB)]

My Lords—

[Lord Pickles (Con)]

My Lords—

[The Earl of Courtown (Con)]

My Lords, could we hear from the noble Baroness, Lady Deech, and then the noble Lord, Lord Pickles?

[Baroness Deech (CB)]

My Lords, I declare an interest as honorary president of the National Jewish Assembly. I support the noble Lord, Lord Lee, in drawing attention to the almost total lack of consultation on the memorial. All efforts to open dialogue and to have discussions and round tables have been met with silence, and sometimes abuse. Victoria Tower Gardens is a green enclave, and the dangers of digging down two storeys with piledrivers, which could cause unimaginable damage, have not been taken on board when there are decent alternative sites with as much dignity and more space. I speak for a number of Holocaust survivors in this.

[Baroness Scott of Bybrook (Con)]

I know how strongly the noble Baroness feels about this issue, and I respect everything she has to say. We have had meetings and we are willing to have more; she only has to get in touch with me. However, the planning inquiry in October 2022 enabled all interested parties to express their views on the proposed Holocaust memorial and learning centre, and a full list of witnesses is available in the planning inspector’s report on GOV.UK. Officials regularly meet organisations representing survivors of the Holocaust and Nazi persecution and those representing the survivors of subsequent genocides to discuss the latest developments, and we will continue to do so.

International Holocaust Memorial Day

Baroness Deech Excerpts

Thursday 19th January 2023 Lords Chamber

[Baroness Deech (CB)]

My Lords, around the world there are over 300—some say thousands—of Holocaust memorials, and in the UK at least six. All the while, anti-Semitism is growing rapidly and fearfully, not least amongst the young—for example, the National Union of Students. Yet these students have had compulsory Holocaust education at school. It seems to have taught them nothing, except that one can attack Jews most hurtfully by using Nazi symbols. This is why: it is taught as an event of the past—over there, all done with, nothing to do with us. The dotted line is not drawn between remembering the Holocaust—which we have done in many recordings by survivors and in museums—and the anti-Semitism of today. As the late Lord Sacks said, first it was our religion they hated, then our race, and today our nation state, Israel. Israel is the focus of today’s anti-Semitism. One cannot separate Holocaust remembrance from anti-Semitism, because that is to deny the centrality of the Jewish experience and the unique nature of the Jew-hatred that drove it. Also, it is because in part there might have been many fewer deaths if the allies had not been so reluctant to take refugees and had not kept Palestine closed to them.

Holocaust remembrance has to mean three things. First, the fate of the Jews has to be set in context, as Lord Sacks explained. Jewish history, culture and traditions have to be taught, the Jewish contribution to the world before the Holocaust, the hatred inculcated by teaching and preaching over the centuries, and the revival afterwards, including Israel and the attachment of the Jews to their land from biblical times onwards. The noble Lord, Lord Mann, set this out in his report on anti-Semitism. He said that schools must teach contemporary anti-Semitism coming from the left, the right and from Islamists.

Secondly, anti-Semitism is not over and done with. Generalities about hatred and intolerance miss the point. Too many politicians strike a pose by a memorial and declare themselves to be without a racist bone in their bodies. As the American Dara Horn said, they love dead Jews—not so much the living. Building memorials is superfluous: they portray Jews only as dead and victims, and that is not the image we want at the centre of our political life. When designed by financiers and politicians rather than scholars, as is the case with the new plan for Westminster, they are used for political ends, mistakenly presenting British values as the antidote to Jew-hatred and genocide. To claim that the vision of the Palace of Westminster as one emerges from a Holocaust memorial is some sort of epiphany and redemption only engenders complacency. A memorial in Victoria Tower Gardens would be environmentally damaging and would break the promise of 100 years to keep it open. The design is second-hand and meaningless, and the contents have been described by Sir Richard Evans as a national embarrassment. It will be ineffective and essentially not about the Holocaust, not a memorial, and not fitting for my relatives who died. The Jewish community needs to be fully consulted over any plans to build new memorials, and debate should not be closed down as it has been; objectors should not insultingly be labelled as anti-Semitic. The recommendations of the 2015 Prime Minister’s commission on anti-Semitism need to be revived, with its emphasis on a campus and a professorship.

Thirdly, the lesson to be learned from the Holocaust is that Jews could not survive without a state of their own as a refuge. Now that we have that safe haven, it has to be kept safe. Politicians need to combat anti-Semitism here and now, and, however uncomfortable it is, they must stand up for the 7 million Jews in Israel under existential threat from their neighbours. It is only Jewish self-defence and self-determination that will ensure “never again”.

Elections: Multiple Voting

Baroness Deech Excerpts

Tuesday 14th June 2022 Lords Chamber

[Lord Greenhalgh (Con)]

I am sure that noble Lords will always return to fight these battles again and again. Obviously, we have set out our legislative priorities and we have introduced already some measures that will improve the electoral process.

[Baroness Deech (CB)]

My Lords, I feel quite envious when I hear of people who have two votes. By what logic do noble Lords here in the House of Lords have no vote at all?

[Lord Greenhalgh (Con)]

To be honest with your Lordships, when I joined this House, I was not entirely aware of that particular provision—it is a disappointment. However, obviously that is the long-standing convention. Of course, we can still vote twice in local elections if we are lucky enough to have two homes.

Planning Process: Probity

Baroness Deech Excerpts

Tuesday 16th June 2020 Lords Chamber

[Lord Greenhalgh]

My Lords, probity in the planning system is absolutely critical to its function. We are also aware of the delays in making decisions on the part of the Planning Inspectorate. The Secretary of State and Ministers have insisted on the Planning Inspectorate responding to the current environment and delivering decisions from mid-June by virtual means.

[Baroness Deech (CB) [V]]

Is the Minister aware of another example of what appears to be a breach of the guidance on planning propriety, and less than impartial behaviour by the department? There have been a number of meetings between Ministers and representatives of the UK Holocaust Memorial Foundation, who are in effect appealing to the Minister to permit this controversial project. On 29 October, Mr Jenrick met with the co-chair of the foundation and its QC. The very next day, the foundation, without consulting Westminster City Council, wrote to the department to ask that the project be called in—and, within a week, it was. Was there, at this meeting, any discussion of the application being called in for the Secretary of State’s own determination?

[Lord Greenhalgh]

I do not feel that it is appropriate to comment on a live planning application. I am sure that the Secretary of State followed the MHCLG guidance on propriety matters in planning absolutely to the letter and disclosed all that he needed to, in this application and in all the others that he determined.

UK Holocaust Memorial

Baroness Deech Excerpts

Monday 20th January 2020 Lords Chamber

[Viscount Younger of Leckie]

I take note of what the noble Lord says, but there can be no more powerful symbol of our commitment to remembering the Holocaust than placing a memorial in Victoria Tower Gardens. As I said earlier, the Holocaust is one of the darkest chapters in human history, which saw the systematic state-sponsored killing of human beings. To pick up on what the noble Lord said, there will be a focus in the memorial centre on the Jewish population, obviously, but particularly on other atrocities, including in Cambodia, Rwanda and Bosnia.

[Baroness Deech (CB)]

My Lords, does the Minister agree that the Question fails to recognise the intrinsic difference of the Jewish genocide in its length and comprehensive nature and the fact that anti-Semitism is still going on today not so far from here? It also reveals that we do not really know what is to be achieved by a Holocaust memorial. There are hundreds of them, but they have not proved effective in stopping anti-Semitism and we do not really know what this one will achieve.

[Viscount Younger of Leckie]

I take issue with the noble Baroness—a lot of work has gone into this centre so far. The Holocaust memorial will stand as a reminder that the central role of democracy is to encourage tolerance of ethnic, religious and racial differences and to foster religious freedom, individual rights and civil responsibility. The learning centre is a stark reminder, next to Parliament, of the work that needs to be done to be sure that these dreadful atrocities do not happen again.