King’s Speech

Earl of Lytton Excerpts

Thursday 9th November 2023 Lords Chamber

[The Earl of Lytton (CB)]

My Lords, it is a great privilege to take part in this debate on the first King’s Speech in more than 70 years from a gracious sovereign who as Prince of Wales did so much to bring people together in purposeful collaboration; that will be much of my theme.

Noble Lords will know that I am a chartered surveyor and a member of other property-related bodies. I have three principal points to raise in the debate. Two are related in one sense or another to housing and the third to community. The first is general. I am not normally prone to quoting the Leader of the Opposition, but I did take to a point she made on Tuesday in her opening remarks in this debate, when she said she was an optimist

“and government does not have to be about just managing or looking to see where an issue can be exploited to maximise votes. Government can and should be a force for good: an innovator, an enabler and an investor”.—[Official Report, 7/11/23; col. 12.]

That really caught my attention. Going from that was the sense of needing to seize the moment. We have a new monarch, and in 12 months we will possibly have a new Government. I do not suggest of which persuasion they may be; other noble Lords with more partisan views can work that out for themselves.

I too am an optimist. A welcome reference was made in the gracious Speech to long-leasehold matters, but there is a need to go well beyond make good and mend and the constant patching which has been going on for decades. The whole panoply of self-interest from central government downwards needs to change to something that I might describe as a more settled climate of contentment, with less adversarial conduct and fewer polarised positions—because none of those do any good.

I may be old-fashioned, but I believe in ethics. I am sorry to be mentioning this just before the right reverend Prelate gets up and makes her contribution, but I do not do so in any religious sense; I do so because I believe in the decent treatment and respect of fellow human beings. Residential accommodation should be delivered as a service built on trust and transparency, without avarice or creating trauma, without generating fear or other adverse consequences, and looking towards those desirable commonalities of gains in health and productivity on all sides. This may sound altruistic but I believe it also adds value and security in property terms; it is of benefit all round. I agree with so much of what the Government propose and more, but some of those purposes and rationales are quite unclear to me and risk making matters difficult in new areas.

Any analysis starts with good data, but I am unclear on the sufficiency of what has been undertaken. To give one example, take the long-term effects of a 999-year lease extension in a building that may be obsolete in less than 150 years and what that means further down the road, and whether the transfer of asset by eliminating marriage value for the enfranchisement costs of a block benefits householders or, as I am told, a significant proportion of those who are in fact investors with renters in occupation. Is that what was intended? I simply ask the question; I do not make a value judgment on it. I turn to the proposed future threshold for block enfranchisement of 50%. What are the consequences for investment in mixed-use development, for post-development investment in the block, for block management and for the business tenant element of confidence in somebody who understands their particular aspect? I am not sure the question is one that the Government have asked.

The private rented sector is one in which I am, in a small way, a player. I lament the reputational damage done by those who abuse tenants financially and emotionally and who are careless of the basic fitness of their properties. But where is the support and nurturing of the gold standard of service delivery, in which renters have confidence and are met with openness, collaboration and respect? I beg to differ with the noble Lord, Lord Young of Cookham, when he suggested that perhaps private landlords should be phased out and it should become some sort of institutional thing. I do not agree with him on that; I think a lot of individual private landlords, of which a large percentage own perhaps one or two properties, have valuable and good relationships with their tenant and a personal interest in what goes on. I believe that the renters are my eyes and ears. They are not only people who pay rent but personal friends. I try to do things for them and they try to do things for me, and we are not worried about asking each other for a favour ever now and then. This is absolutely critical. The ethics are personal, corporate, municipal, professional and political, and we must bear that in mind.

If that all sounds odd coming from a professional, I underline for noble Lords that this underpins transactional analysis at all levels, fosters confidence in the marketplace and is a benefit to investors and all those who participate. I believe that a reset and a new vision are needed, and that opportunity now exists.

My second theme refers to building new housing and I will make only one comment here. Before noble Lords proceed down the road of land value capture, which is so often put forward as necessary, I ask them to be aware of just how much is paid to the original landowner as a proportion of gross development value. It is much less than one might think, and before we rush to policy we should make that explicit by doing some research.

My final quick point comes out of my vice-presidency of the National Association of Local Councils and relates to the proposals following the Manchester Arena attack. Parish and town councils welcome these but, as providers of venues, they urgently need an impact assessment of how this will work for them, guidance, financial assistance and other resources, and a better communications campaign. I hope the Government are listening to all those requests.

Queen’s Speech

Earl of Lytton Excerpts

Thursday 9th January 2020 Lords Chamber

[The Earl of Lytton (CB)]

My Lords, in her very expansive opening remarks the Minister referred to the Government’s agenda including such issues as housing demand, tenancy reform and the Hackitt report. I wish to address the residential development and construction issues that lie behind housing supply, matters affecting conduct and standards in property and construction normally to be expected in a mature democratic society and with which I am professionally involved.

There are some excellent developers, but debate after report after Parliamentary Question have highlighted aspects of housing delivery where monopolistic and bad practices have eroded trust and good governance and are failing basic standards of delivery to society. Long highlighted have been the poor standard of some modern housing construction and dysfunctional and fragmented construction practices. While the tragedy of Grenfell Tower highlighted retrofits and ACM cladding systems, there have been other construction failures. As with ACM systems, while the freeholders, who may themselves be blameless, ponder how they came to be holding such a toxic parcel when the music finally stopped, the occupiers of these same buildings are locked into their leasehold purchases by the uncertainty of indirect liabilities through service charges. The previous Government are to be commended on their creation of a fund to address this, but the problem at the sharp end, in this and analogous situations, has not yet gone away.

Last September, a modern four-storey block of flats in south London burnt down. It should not have done, but modern homes are still being built with such poor workmanship that their overall performance is little better than that of decades earlier. I have visited new housing where the insulation simply got forgotten, where the details of as-built construction were not recorded or where so many changes of management had taken place during construction that there was no continuity of supervision and definitely no one taking responsibility.

Help to Buy has hugely bolstered the profits of many housebuilders, with one reputedly making over £70,000 gross profit on every home it builds. Part of my work is to act for owners of potential housing land. I have several instances of corrupt and sometimes illegal activities aimed at concocting price reductions. Doubtless, the same approach is used against local authorities. Some immensely powerful organisations run rings around strapped planning departments on viability tests, and on site allocations they can secure improbably large developments in remote locations with no natural advantages or synergy with any existing settlement. As a councillor of my acquaintance might have put it, they are committing the new residents to burning massive amounts of fossil fuels just to get to a place of employment. At the same time, they crowd out SME constructors, which cannot compete with the demands of complex planning and infrastructure.

There are some real scams going on. There are escalator ground rents, where year-on-year ground rent increases are an investor’s dream but a homeowner’s nightmare when it comes to selling and no mortgage lender will touch it. I am glad that the Government are acting on this, but what about rent charges? Here, freehold purchasers find themselves committed to funding a management company that has been crafted to take on all sorts of common or uncommon liabilities which the housebuilder could not be bothered to sort out or the local authority would not risk adopting. The implications hide in obscure legal drafting masked by “free” conveyancing and early years funding, but ultimately are hobbled by long-term contracts with management companies interested only in maximum profit. Parallel developer support to local charities and community projects do not cancel out these evils.

Housebuilding is not the only sector at fault. Some seem to think that the rule of law does not apply to them, or that regulatory standards are optional. They believe that legal agreements do not matter, or that compromising on design or performance in use is victimless. Such failings ultimately cheat the community and purchasers for whom a house is their largest ever commitment. They hide behind special purpose vehicles, disinformation, the principle of caveat emptor, obscure process and so-called construction warranties, when in every other walk of life there are end-to-end product and service delivery liabilities. Moreover, the risk of challenge or enforcement is extremely low.

This looks like sharp practice, and it is time the Government went much further in addressing it. Strict product liability across the board with an enforceable code of ethical conduct and insistence on high standards of design, construction and performance are a minimum. This must lead to better corporate social responsibility and result in—one would hope—transactional confidence, transparency and trust, which is the lifeblood of commerce. Government support to the sector is huge, so they can demand better and they need to organise a spring clean.