Leasehold and Freehold Reform Bill

Baroness Pinnock Excerpts

Report stage & 3rd reading
Friday 24th May 2024 Lords Chamber

[Lord Moylan (Con)]

My Lords, I speak in support of the two linked amendments tabled by my noble friend Lord Bailey of Paddington. It is perfectly clear that leasehold is unlikely to be the path of the future. My objections to this Bill, apart from some that are to do with practicality—such as the one I spoke on in the last group, where clarity is still needed from the Government—are about the retrospective meddling with private property rights and existing private contracts.

It is perfectly clear that leasehold has probably had its day and that my noble friend is correct in saying that future buildings—blocks of flats or whatever—should be constituted under some such regime as commonhold, or at least shared freehold with 999-year leases or some other such provision as he has mentioned here in his amendment. I would very much hope that the Government and the Opposition would take this on, and certainly if my noble friend were to divide the House, I would support him in the lobbies on Amendment 8 and the associated consequential amendment.

[Baroness Pinnock (LD)]

My Lords, we have come to the last stages—the last rites—of this important Bill, which we on these Benches support, despite the fact that there are serious omissions to it. It is fascinating to me that it is Members of the Government’s own side who are raising all the issues at this late stage, and perhaps trying to delay the passage of this Bill.

On the amendments proposed by the noble Lord, Lord Bailey of Paddington, we on these Benches support the move to commonhold. It is one of the principles on which the leasehold reform Bill was to be based. It is most unfortunate that, because of the difficulty in overcoming some of the issues in reaching the ability to move to commonhold, this Bill does not include it. However, I am glad that both the Government Benches and the Labour Benches are saying that they support the Bill and want to make further changes, whoever comes into power on 5 July. We on this side are making lots of notes so that we know that, whoever it is, we will hold them to account, to bring these back so that we have a leasehold reform Bill that everyone across the House can support. It should include commonhold.

[Lord Gascoigne (Con)]

My Lords, I thank my noble friend Lord Bailey of Paddington for his amendment, and indeed all noble Lords who spoke in this relatively brief group. We appreciate the benefits that a share of freehold arrangements has over ordinary leasehold arrangements with third-party landlords. That is why we are making it simpler and cheaper for leaseholders of flats to collectively enfranchise and therefore achieve a share of freehold arrangements. Making a share of freehold arrangements compulsory would require us to construct a legal framework on the same scale and complexity as commonhold. That would include not only making the regulations that my noble friend is taking the power for, but much else as well. It is not a quick or easy fix.

The commonhold framework has already been designed as the optimal legal vehicle for the collective ownership of flats. By comparison to moving to commonhold, making share of freehold arrangements compulsory would be, I am afraid to say, an inferior but not an easier outcome. As such, the Government want to see the widespread take-up of commonhold and for it to be the future preferred tenure for the owners of flats, rather than a share of freehold.

We are sympathetic to the sentiments expressed mainly by my noble friend Lord Bailey and the noble Baroness, Lady Fox. I, too, would like to have gone much further in many areas—but I am afraid that wash-up means that we are where we are. With that, I hope that my noble friend Lord Bailey is able to withdraw his amendment.

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[Lord Young of Cookham (Con)]

My Lords, this will give my noble friends Lord Moylan and Lord Howard an opportunity to catch their breath. At the beginning of our proceedings, the noble Lord, Lord Kennedy, picked up the Marshalled List, waved it in a state of mild indignation and demanded to know where was the amendment on forfeiture. My noble friend the Minister said it was not there, but here it is, in my name rather than the Government’s.

The position on forfeiture is very simple. At the moment, a tenant can lose possession of a flat worth £500,000 for a debt of £351, with the landlord keeping the entire difference between the value of the property and the debt. At Second Reading, this was condemned by nearly every speaker who spoke on it. When the Minister wound up, she said:

“We recognise that this is a real and significant problem and that there is huge inequity at stake here”.—[Official Report, 27/3/24; col. 704.]


The issue was raised again in Committee, and again my noble friend the Minister replied:

“We recognise that there is the potential for significant inequity”—


it had been a “huge” inequity; now it is a “significant” one—

“where a landlord stands to gain a windfall when a lease is forfeited. However, I reassure the noble Baroness, Lady Taylor, and the Committee that the Government have been listening to calls for us to act. The Government continue to work through the detail and we will report to the House shortly with more information”.—[Official Report, 24/4/24; col. 1552.]

Now is the opportunity to report to the House with more information.

Of course, I hope we might have an element of surprise in our proceedings and the Minister will get up and say that this amendment can be accepted, but I fear that the script in his folder begins “resist”. I put a direct question to my noble friend: exactly what progress has his department been able to make on this subject? It was raised at Second Reading in the other place many months ago, where the Minister recognised that this was an inequity, so they have had four or five months in which to address the problem. I want to know whether sufficient progress has been made for the Government, of whatever complexion, to provide me at the beginning of the next Parliament with a Private Member’s Bill that will simply put right this inequity of forfeiture. Actually, I had a Private Member’s Bill on this subject some time ago, so there is a template on which to build. If my noble friend cannot accept the amendment, can he give an undertaking that the necessary measures have been drafted and that they will be available to any Member who is successful in the ballot at the beginning of the next Parliament so that we can introduce this measure by a Private Member’s Bill if we cannot do it today? I beg to move.

[Baroness Pinnock (LD)]

My Lords, the noble Lord, Lord Kennedy, also drew attention to the lack of a clause in the Bill to reduce ground rents to a peppercorn, as promised several times by the Secretary of State in the other place. There is one, as there is one on forfeiture, that I have tabled, because I feel it is an important issue to include in the Bill. I tabled Amendment 45, which would enable a transition, over five years, of ground rent to a peppercorn. There is no justification for ground rents. It is a cost to leaseholders for no service provided as a consequence. I hope, because it is clearly government policy and it is clearly supported by those on the Opposition Benches and certainly by ours, that the Minister can stand up and have at least one amendment today that he does not have the word “resist” against.

[Lord Bailey of Paddington (Con)]

My Lords, I will speak to Amendments 51 and 52. I will not rehearse the arguments that I made in Committee, but I still have a major concern around the removal of any criminal sanction against bad landlords for service charge abuse. I want to be quite clear that this is not a crusade against landlords; landlords are often small family businesses, which are very good and want to help their tenants. However, a significant number of landlords have their leaseholders by the short and curlies, to coin a term that was sent to me by a suffering leaseholder. He was trying to get across just how powerless leaseholders are in this situation.

At a time when we have the likes of Alan Bates and sub-postmasters actively considering bringing private criminal charges against the Post Office, why would we remove that tactic from another set of people in our society who are roundly abused all the time? It is very simple: all this, for me, is about control. We need to give people who have paid this money control over their own future and their own money.

On Amendment 52, if a landlord does not pay back their overcharging within two months, they should face interest charges. This is to incentivise a landlord who has lost in an open, professional tribunal, who then drags their feet and forces leaseholders to launch other legal proceedings to reclaim money that they are rightfully owed. Again, this comes down to letting the little man or woman in the street have some control over their future. Perhaps my noble friend the Minister will comment on why the Government would not support these two reasonable, necessary measures, and send a signal to the country that the law is on the side of the small person who has ploughed all their savings into their home and who has no recourse.

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It has been really enjoyable to be on the same side as the Liberal Democrats, the Labour Party and many people in the Conservative Party who all want to resolve this question. I hold those who will become the new Government to account for making sure that we get over the blips of this particularly limited Bill and resolve it. Because this will be the last time I speak, I say an enormous thank you to the tenacity and resilience of the leaseholder campaigners who have really put a huge amount in. They are not official lobbyists; they are not professionals. They are ordinary British citizens who made that terrible mistake of buying a flat or a house, not realising what leasehold would really mean for them. In many instances, this was financial penury and a lack of control, accountability and autonomy over their lives. I hope that the amendment from the noble Lord, Lord Bailey, lives to see another day and that the accountable person issues will be sorted out. This will all be resolved by commonhold in the future—whoever brings it in.

[Baroness Pinnock (LD)]

My Lords, we on these Benches totally support Amendments 62 and 63 in the name of the noble Lord, Lord Best, and moved and spoken to by the noble Lord, Lord Young of Cookham. The most unfortunate part of doing this Bill in wash-up is that we have lost the opportunity to address some of the omissions in and failures of the Building Safety Act. Many leaseholders who are stuck in their properties with high and escalating insurance rates and service charges that are growing inexorably and still have a fire safety issue. These two will be issues that will I ensure are addressed by the next Government, whoever they are.

I thank those on the Front Bench for the helpful comments and the co-operation they have provided during this Bill. Most of us are of one mind: it is such a shame that this Bill is being lost without the changes that many of us would want to have put into it; but with that, I end my contribution for today.

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

My Lords, I will, very briefly, just add our support for Amendments 62, 63 and 67. The noble Lord, Lord Bailey, presents a way forward for addressing those issues as well. I wish we could be doing them, and I think it is disappointing we are not, but I will leave it there.