Housing and Planning Bill
Debate between Earl of Lytton and Baroness Andrews
Baroness Andrews (Lab)
My Lords, how lovely it is to see the noble Baroness, Lady Hanham, back in her place. It is really great to see her.
I was indeed one of the Ministers who, on a previous occasion, had to deal with the subject matter of Amendment 102. It is a difficult issue and I congratulate the noble Baroness, Lady Gardner, on her resilience in raising it. It is extremely important, not least as regards those blocks of flats where the owners have either bought their flats outright or have bought them under the right-to-buy scheme and then suddenly, to their total surprise, find themselves landed with enormous bills. It was not unusual for there to be a charge of £30,000—for example, for putting in a lift. It was an extremely difficult issue and the noble Baroness is absolutely right that we wrestled with it and discussed it with all manner of agencies, leasehold organisations and so on. It was very difficult to find an equitable and affordable solution. The fact that it is still hanging around is a tragedy and I hope that the Minister and her team can show us some ingenuity. The proposition in Amendment 102 is very sensible. If people anticipated these sorts of bills, they might well be able to afford them.
With Amendment 101, again, the noble Baroness is absolutely right. This is an absurd situation and the problem is growing. Most people living in leasehold blocks do not know that this is the situation and are therefore completely baffled as to why it is impossible to get anything done. So, if we are to have regard to the reality of the housing situation in London, this is something that has to be addressed. It may not be possible to do so in this Bill but maybe there are other Bills in the pipeline, and maybe it will be possible for the department to come back with something creative on both these issues. I hope so.
The Earl of Lytton (CB)
My Lords, I support this group of amendments and, in so doing, I declare my interests as a vice-president of the Local Government Association and, more particularly, as a landlord from time to time, with members of my family, of both shorthold and long leasehold tenants.
Dealing with the first point in Amendment 101, I say from my experience as a practising chartered surveyor that this is a potent area for problems, and I will give perhaps a couple of examples. The first is that for many of these blocks of flats, both large and small, there are a significant number of absentee long leaseholders, so that the occupants of the building are under assured shorthold tenancies or similar short-term occupations. The occupants, because of the nature of their short-term interest, do not really care too much about what happens to the fabric of the building—that is outside the scope of what is of interest to them. The superior landlord, the long leaseholder, is very often absent and equally disengaged from the process. Therefore, there tends to be, as I have come across before, a small proportion of those who are long leaseholders and residents who find themselves unable to do the things that the noble Baroness, Lady Gardner, has alluded to.
It gets worse, because of course the right to manage is just that, and it is circumscribed in that way. But what if the process of management means making alterations to a heating system that require you to knock a hole through the outside wall, which is part of the freehold, and which therefore go beyond the strict terms of “management”? As the noble Baroness said, if you have a truculent freeholder, that is a potent source of problems in terms of getting essential works done and making sure that the premises as a whole remain fit for purpose.
I have witnessed over many years the number of measures to try to strengthen the position of long leaseholders in terms of their collective rights of enfranchisement, their individual rights to extend a lease and their right to the collective management of their block. That is all mired in this split between the ownership—ownership of the fabric of the building—and the rights of the leaseholder, meaning the rights of use and perhaps extending to internal, non-structural partitions such as the floorboards, the ceiling boards, the internal plaster finishes of the walls and perhaps the odd window and door. When you are dealing with the management of a property, you have to take a holistic view if you are going to get it right, because all these things are part and parcel of that. As we have tried to dissect “leasehold” from “freehold”, we have run into a whole series of problems of our own making. It would be nice to say that we would come up with a different type of tenure altogether but I know that that has been tried and it seems to have run on to the rocks. At any rate, I encourage the Government to take a close look at Amendment 101 because this issue is causing grinding irritation to the reasonable aspirations to manage a building.
On Amendment 102—the sinking fund for repairs—I fully understand what the noble Baronesses, Lady Gardner and Lady Maddock, said. A roof may need to be renewed every 50 or 60 years, or, if it is a flat roof, every 25 years; a heating system may need to be renewed every 25 years; and there are other things that may have longer discounted life expectancies of one sort or another. If you have buildings with differential tenure, it is axiomatic that the freeholder, or the person responsible for the management and collecting of money to carry out certain work, may have a series of different objectives. If they are assured shorthold tenancies where the tenants are not responsible for contributing to a sinking fund of some sort, that is one thing, but there may be other types of occupier on less than long leasehold who would be so responsible. As the noble Baroness pointed out, when the buyer of a long leasehold is in this situation, it is essential to know that robust processes are in place for procuring that management and that it does not turn up, as I have seen so many times, all in one go. This could be toxic in terms of the transaction of properties because, if there is a rolled-up liability for large capital sums on repairs, a savvy purchaser of a long leasehold interest will certainly be well advised, as I have often been asked, to look into what lurks in the future expenditure, if that information can be found. Very often, one cannot easily find that information because it is with some other body such as the freeholder’s managing agent.