Leasehold and Freehold Reform Bill

Debate between Baroness Taylor of Stevenage and Lord Moylan

Committee stage
Wednesday 24th April 2024 Lords Chamber

[Baroness Taylor of Stevenage (Lab)]

My Lords, our amendment in this group refers to the fact that the Bill currently makes an exception to litigation costs being borne by landlords in the case where right-to-manage claims have been withdrawn or otherwise ceased early and the right-to-management company has acted unreasonably in bringing the right-to-management claim, allowing the landlord to apply to the tribunal for any reasonable costs.

The key arguments for the amendment are that, first, leaseholders should not be put at risk of having to pay costs simply for exercising statutory rights, in this case the right to seek to acquire and exercise rights in relation to the management of premises in which one has a leasehold interest. There is also concern that unscrupulous landlords might use the rights provided for in new Section 87B of the Commonhold and Leasehold Reform Act 2002 as a means of recovering costs from right-to-manage companies that act reasonably and in good faith and, by implication, that it would discourage right-to-manage companies from initiating a claim because of the financial risk it still entails for individual participating leaseholders. Put simply, the fear is that new Section 87B will incentivise unscrupulous landlords to fight claims on the basis that they are defective in the hope of recovering costs by means of it. Our main concern regarding Clause 48 is that the use of the words “reasonable fee” and “reasonable costs” would not allow either of the above situations to occur. I ask the Minister: who will determine the definition of “reasonable”, and how?

I will comment on other amendments. We think that the amendments tabled by the noble Lord, Lord Bailey, are very reasonable, and we support his aims here. In fact, colleagues in the other place submitted similar amendments in Committee.

I also look forward to hearing the noble Lord, Lord Moylan, introduce his amendments, which would incorporate local authorities and their properties, both within the HRA and without, but I ask whether he had discussions about this proposal with the Local Government Association or local authority stockholders. Most good local authority landlords already have substantial arrangements in place for liaison with leaseholders and tenants around the management of property, and there is certainly no issue with improving that through more effective right-to-manage arrangements. However, as much local authority property will be occupied by a mixture of local authority tenants and leaseholders, it would be important to ensure that there were no unintended consequences. I urge that that level of consultation takes place before any proposal such as this proceeds further. The noble Lord, Lord Moylan, will forgive me if he has already done that consultation, but it was not clear from the amendments. With that, I beg to move Amendment 60.

[Lord Moylan (Con)]

My Lords, it is a privilege to speak after the noble Baroness. I will come to answering her question. To give a blunt answer, I have not undertaken the consultation that she refers to, but I will explain when I get to that part of my introduction why I think that this stands on its own.

As I said at Second Reading, I strongly support those parts of the Bill which facilitate the exercise of the right to manage on the part of leaseholders in residential blocks. There are several measures in the Bill which do that. The right to manage is, in some ways, the crucial key to unlocking the levels of dissatisfaction which some leaseholders have with the way in which their blocks are managed. I strongly support it.

There is a particular issue which the Bill does not address. As a consequence of my general support for this—contrary to my remarks in earlier debates— I hope that the Government will give me a softer and more welcoming answer. As a result of my proposal, perhaps my noble friend on the Front Bench will even give me one of those answers which invites me to attend a meeting. In fact, I have had a meeting with my noble friend about this, though she may not recall it. We met last summer to discuss this issue with officials, and she was very sympathetic to it. That gives me additional reasons for thinking that this might be a welcome amendment.

The amendment arises from a particular case, but it raises questions of general importance. I shall refer to the case later, but I want to address the question of general importance first. When the right to manage was introduced through the Commonhold and Leasehold Reform Act 2002, certain exceptions were placed on it. The Government intend to ease some of those restrictions, and I welcome that. One restriction was that the right to manage did not apply where the landlord of the building was a local housing authority.

I have tabled two alternative amendments—this is my point about consultation. Both amendments would reverse that assumption. One would eliminate it entirely. It would bring within the ambit of right to manage all blocks where the local housing authority was the landlord, including those within the housing revenue account. The noble Baroness, Lady Taylor of Stevenage, said that this could raise certain difficulties in cases where a block had so many long lease holders that it could exercise the right to manage but would be left with certain local authority tenants in the block. I have experience of local government, as does the noble Baroness. I recognise that she is correct in saying that there might be certain sensitivities about this. I think it could be managed. Indeed, it would be liberating for all the tenants of the block in many ways. The local authority tenants would also have a say in the management of the block. They would not be excluded from it simply because they were local authority tenants.

Recognising that this is a slightly daring proposition, I have suggested an alternative which would simply take out of the provision local housing authority-owned blocks where they were owned simply as an investment. I have left it vague as to whether that is a commercial investment or one held in the local authority’s pension fund. These are probing amendments. I should be happy to discuss these issues with my noble friend the Minister.

I come now to a particular case. There are blocks where local authorities have acquired property as an investment. Doing so immediately extinguishes the right of the long lease holders to exercise their right to manage—there are no local authority tenants. I think that is wrong. The case I am thinking of concerns a block acquired by a London local authority from a commercial property investment trust, bought at market value as an investment. The local authority, the new owner, was dissatisfied with the accounts inherited from the previous manager—it had their own manager for the block. As a result, it has not been able to put satisfactory accounts together for the last three years. As a consequence, it has not had the legal standing to issue invoices to its tenants for its service charges. It has been running the building’s operating costs out of the capital sums that had been set aside as a sinking fund to pay for future improvements to the building. It is all very unsatisfactory.

That is a classic situation in which long leaseholders would normally exercise the right to manage but, completely arbitrarily, are precluded from doing so. That is wrong. We should facilitate this.

At the very least, my noble friend should welcome my second amendment, Amendment 62, and say that where a local authority acquires a property for commercial purposes—not for the housing of its tenants but as an investment, either in its own name or as part of its pension fund—the right to manage would be restored. The financial interests of the local authority would be preserved, as they are under the current arrangements. It is simply that the right to manage the building would be taken over by the long leaseholders, as elsewhere, and they would manage it in just the same way as in all the other right-to-manage arrangements we are so much in favour of.

I will stop at that point because I have simply made my case, but this is a strange omission from the current arrangements, and one that we now have an opportunity to correct. I would be very happy to attend the meeting.

Levelling-up and Regeneration Bill

Debate between Baroness Taylor of Stevenage and Lord Moylan

Committee stage
Monday 24th April 2023 Lords Chamber

[Lord Moylan (Con)]

My Lords, I will speak briefly in giving general support to the thrust of the amendments, not only on the grounds advanced by other noble Lords but because they would mitigate something I regard as a positive evil. It has become possible in recent years for major developers proposing major projects to offer to local planning authorities to fund the salary of a planning officer to help deal with their case. When I had responsibility in a London borough for planning policy, I resisted accepting that sort of offer, but perhaps we could afford to do so.

This strikes to some extent at the heart of public confidence in the planning system, which is always a little fragile. Noble Lords who have been involved in it will know that there are always people who suspect that there has been a fix and that something corrupt is going on, but that is not the case in my experience. However, to allow a developer to fund a planning officer only exaggerates that perception and damages public confidence in the planning system. The way out of this, not least in the context of devolution, must be to allow the charges to cover the costs. It also seems appropriate if we want to empower elected officials in local authorities. It is open to the possibility of abuse, as the noble Baroness, Lady Thornhill, said, and a local authority could seek to deter applications by setting punitively high fees, but my noble friend Lord Young of Cookham’s amendment broadly addresses that possibility. It might need a little refinement, but the principle is none the less clear and acceptable. I encourage support for this amendment because we are not taking sufficient notice of the evil I mentioned, which harms the planning system.

[Baroness Taylor of Stevenage (Lab)]

My Lords, Amendment 267 in the names of the noble Lord, Lord Young, and the noble Baroness, Lady Thornhill, was music to my ears; Amendment 287 from the noble Baroness, Lady Pinnock, is very similar. I have never understood why the public purse—the hard-pressed local government public purse at that—has to subsidise the development industry even for the very largest and most profitable developments. We have long spoken about a “polluter pays” principle in discussions on the environment; perhaps it is time we had a “profiter pays” principle in planning.

This issue has long been debated in local government. It is the subject of general incredulity that, at this time of financial crisis for local government, it is still allowed to continue. The Local Government Association has lobbied consistently on this point, stating in its recent response:

“We welcome the proposal to increase planning application fees, as it has for a long time been our position that there is a need for a well-resourced planning system. However, the Government should go further by allowing councils to set planning fees locally.”


I do not think it is a surprise to any noble Lords that local authority planning departments are at full stretch already. The noble Lord, Lord Young, referred to how they will respond to the 47 clauses in this Bill, never mind the issue of street votes—they will have plenty of work to do, that is for sure. It is an area of specialism where there are considerable shortages of professionals. In spite of a great deal of work being done to encourage young people to consider planning as a career and increase the number of routes into the profession, there remain difficulties in recruitment and retention. This is even worse in areas surrounding London, where it is almost impossible for local authorities to compete with the packages offered to planning officers in London.

This is exacerbated by the pressure of work; I know that many noble Lords in the Chamber will have sat through contentious planning application hearings, and I do not think any of us would be surprised to learn that our officers subject themselves to considerable stress. Therefore, it is only right that the industry makes a fair contribution to the cost of processing applications where it will reap substantial developer profit. This will enable local authorities to ensure that their planning teams are resourced adequately.

We also strongly support Amendment 283 in the name of my noble friend Lady Young, and so ably moved by the noble Baroness, Lady Parminter. She is absolutely right that statutory consultees, often hard-pressed themselves, should be able to recover the costs from applicants. I understand that of the £50 million bill for this, cited by the noble Baroness, Lady Parminter, 60% was incurred by Natural England and the Environment Agency as the two statutory consultees dealing with the greatest number of planning consultations. It was as far back as 2018 that the top five statutory consultees came together to form a working group to identify potential alternative funding mechanisms to address the increasingly critical and unsustainable position. They made recommendations to DLUHC in March 2019. This work highlighted the need for a change in primary legislation to provide a broad enabling power under which statutory planning consultees could pass on the costs incurred in providing statutory advice to applicants, either as part of the existing planning fees or as an additional separate charge.

We welcome the inclusion of a power in the LURB to enable statutory consultees to recover costs incurred in providing advice on nationally significant infrastructure projects. That alone, though, makes only a modest contribution to addressing the challenge of establishing the sustainable funding model. I believe for Natural England, approximately 70% of the statutory consultation work will continue to be reliant on grant in aid. Will the Government introduce a power that will help us? If not, the Government are, in effect, committing to rely on the Exchequer as the primary means of funding the essential role that statutory consultees play in support of the operation of the planning system.

There is also the danger that we will create an inconsistent funding model between NSIP cases and non-NSIP cases that are of a comparable size or impact, such as large-scale housing developments. That could result in the need to prioritise resources for NSIP work over non-NSIP work, create inconsistency in service levels and potentially disadvantage large housing developments, which would be the exact opposite direction to the way we want to go. I hope that the strength of my noble friend Lady Young’s amendment will be taken into account.

Consideration should also be given to other statutory agencies. We have seen similar pressures on colleagues in the National Health Service, for example, where they have to comment on planning applications. There is also pressure on the resources of county councils to respond to matters relating to highways, flood risk, education and adult and children’s care provision—to name just a few—which is required on almost every major application and some smaller applications. It is simply not right that those costs should fall on public agencies whose funding is limited. If they were adequately recompensed, their ability to respond to applications in a timely manner might be improved.

Government Amendment 285C is similar to that proposed by my noble friend Lady Young—I hope we can at least agree on that—but, as the noble Lord, Lord Young, pointed out, this may not refer to charging for local authorities. We would want to see both local authorities and statutory consultees able to charge something like the recovery of the costs they incur in relation to the planning system.

Levelling-up and Regeneration Bill

Debate between Baroness Taylor of Stevenage and Lord Moylan

Committee stage
Wednesday 22nd March 2023 Lords Chamber

[Baroness Taylor of Stevenage (Lab)]

My Lords, in an earlier debate on these topics on Monday, we heard the noble Lord, Lord Foster, discussing Southwold, where I spent many happy hours on holiday as a child and which now has, if I remember my figures from Monday rightly, only 500 permanent homes out of 1,400 homes. In that same debate the noble Earl, Lord Lytton, referred, as he did again today, to the fact that have not just a numbers problem but a distribution problem around the country because of the lack of available data.

We are all aware of the considerable issues presented in parts of our country related to second homes and short-term lets. That situation was clearly articulated by my noble friend Lady Hayman in our debate on Monday, when she articulated that communities are hollowed out because of the second homes left empty for large parts of the year, which means that all the community facilities that permanent residents need struggle to be viable. In addition, we see local house prices forced out of affordability for local people as second homes and holiday lets contribute to the housing pressures.

An amendment creating new use classes for second homes or holiday lets was rejected in the other place. Although amendments on the same subject were withdrawn on Monday, I hope that we come back to this, as suggested by the noble Lord, Lord Best, because it is critical that we tackle this issue. In the House of Commons, the Government claimed that these were not necessary as neighbourhood plans could create principal residence policies. However, I wonder whether the full extent of this issue and its impact, particularly on rural and coastal communities, has been properly assessed and understood. The amendment in the name of the noble Lord, Lord Moylan, would enable the collection of data relating to this problem which might help to develop the picture further. However, we should encourage the Government, through the Minister, to consider this matter as urgent; it may already be too late for some of the communities worst affected. Surely we will not abandon these communities to the opportunities they offer for a small number of people to make a fast buck.

On the amendments tabled to Clause 210, which were clearly articulated by the noble Lord, Lord Moylan, we too are interested to hear the Government’s thoughts on the registration of short-term rental properties. It was interesting to hear about the work of the Built Environment Select Committee in that respect.

In the Commons, Ministers referred previously to the ongoing consultation on this matter—indeed, the noble Lord, Lord Moylan, referred to it again this afternoon. What is the outcome of that consultation—it has not been published yet—and what conclusions will the Government draw from it? I believe that the noble Lord, Lord Young, referred to this in an earlier debate on this topic.

I was very interested in the comments on the work of the Built Environment Select Committee, and it is fascinating to hear that this issue sits with the DCMS rather than DLUHC. I hope the Minister will respond to that. It is disappointing to hear that a Minister thinks that the whole Bill has already been enacted. In view of the fact that none of these issues has been dealt with, I think we are glad that it has not been so far, and I am sure that noble Lords here will improve the Bill as we go along.

[Lord Moylan (Con)]

May I just briefly say, as a matter of courtesy, that the reply to the letter that I referred to came from a Minister in the other place? I just thought, in all fairness, that I should make that very clear.

[Baroness Taylor of Stevenage (Lab)]

I am grateful to the noble Lord for that clarification.

The noble Lord, Lord Moylan, set out the four questions asked by his amendments, and they are all very important questions on which I hope we will hear further from the Minister, particularly Amendment 446, which addresses how this is going to be paid for. That is one of a number of questions on fees and costs that appear about many other clauses of the Bill, so I hope we will have responses to those questions.

The amendments from the noble Lord, Lord Foster, largely relate to ensuring that the safety of short-term let properties is not left to chance. It is particularly important that properties left empty for periods of the year are subject to detailed regulation on safety matters. This would also encourage absentee landlords to ensure that their responsibilities are met. Recently, we have seen increasing pressure on social landlords to address safety provision—in fact, there are very stringent new requirements on them—so it is clearly an issue that the Secretary of State takes seriously. We should not have what would amount to an exemption for the owners of short-term let properties in this respect. I hope that may be addressed.

The noble Lord, Lord Foster, also referred to the difficulty of enforcing licensing restrictions without data from booking platforms. Although I agree with him that booking platforms may be unwilling to release that data, it is really important and, without it, enforcement is difficult to address. Local authorities would struggle without effective data collection methods to enforce some of the matters raised in this debate.

The noble Earl, Lord Lytton, referred to the perverse incentives that exist between council tax and business rates. This is really important to data gathering: there is no incentive for councils, because if they collect business rates, they have to send it all off to our good friends at the Treasury, whereas if they collect council tax, they keep it to deliver services to their communities, so there is not much incentive for them to get matters straight here.

My noble friend Lord Berkeley referred to the importance of being reassured of the safety of the building, regardless of the length of time of the let. If you stay somewhere, even if just overnight, you want to be assured that the building is subject to the same safety regulations as would apply anywhere else you stayed.

Turning to the comments of the noble Lord, Lord Shipley, I am very sorry that the noble Baroness, Lady Thornhill, is not in her place today and I hope he will send her our very best wishes for a speedy recovery. He spoke about evidence to the Built Environment Select Committee from south Devon. I heard a great deal on this from my former colleague on the District Councils Network, Judy Pearce, who is the leader of South Hams Council and has been a powerful advocate of a great deal more action on second homes. The suggestion of pilot schemes—or taking advice from Wales, as I am sure my noble friend Lady Wilcox would say—is always a very good idea.

On 21 March, it was reported that changes aimed at restricting the way that homes can be turned into Airbnbs were being introduced, as the Secretary of State for DLUHC was going to bring them in. He acknowledged a problem with holiday lets preventing young people accessing jobs and homes. Can the Minister give us further information on whether that will come into the Bill as government amendments and when we will see government amendments to this effect?

Those are our comments on the amendments submitted. We support the amendments on registration and we certainly support the amendments on safety.