Leasehold and Freehold Reform Bill

Lord Bailey of Paddington Excerpts

Committee stage
Wednesday 24th April 2024 Lords Chamber

[Baroness Pinnock (LD)]

I thank the noble Lord for expanding on that.

It would be interesting to hear from the Minister whether there are any statistics regarding freeholders using the forfeiture system to address not the issues that are normally referenced—failure to pay ground rent or an accumulation of three years or more of debt—but breaches of the lease. It would be helpful to understand all that.

As the noble Baroness, Lady Taylor, has said, if the payment in lieu is more than £350, or is outstanding for more than three years, the freeholder is entitled to claim repossession—and then all the equity in the property is lost, of course. When I first looked at this, I could not see how it could possibly be right. I remember that, at Second Reading—I was just trying to find it in Hansard—the Minister said that the Government were considering bringing forward an amendment to address this issue. It is unfortunate that that has not been forthcoming in the time that has elapsed between Second Reading and Committee. Perhaps in her reply, the Minister can say whether the Government intend to bring an amendment on Report. It would help us resolve what is, on the face of it, a complete injustice. It would be sufficient if the Minister said that that is going to happen, and maybe those of us who have signed the amendments could have a meeting with her to discuss it, if necessary.

[Lord Bailey of Paddington (Con)]

I support this amendment. Although in his intervention the noble Lord talked about how to control peoples’ behaviour when they have misbehaved and breached their lease, it should be taken into account that the threat of forfeiture is held over leaseholders, in a very draconian fashion, for the smallest infraction. More importantly, it is used to enforce such things as the flagrant and inequitable boosting of service charges. If you are in dispute in this situation, you are told you will end up having to pay court fees. You are told that, if you do not pay—

[Lord Truscott (Non-Afl)]

To clarify, I said specifically that people should not have their leases forfeited as a result of rent arrears. The threat of forfeiture can ensure that lease compliance occurs. If you remove the threat of forfeiture, how do you achieve compliance with other terms of the lease?

[Lord Bailey of Paddington (Con)]

There are ways and means within our court system to reclaim any money that may be owed to the freeholder for service charges, ground rent and so on. Let us be very clear that forfeiture is used as a tool to threaten, bully and cajole leaseholders into compliance. When your freeholder invents a new reason as to why you have to pay more, you are warned that, if you do not do so, you could be taken to court for forfeiture. You are then told by the system that, if you do pay more, it is seen as agreeing with the bill that was presented to you.

[Lord Truscott (Non-Afl)]

I am not talking about freeholders taking action against other leaseholders; I am talking about how one leaseholder may want to enforce a lease against another leaseholder. In that case, you are saying that they would have to go to the High Court to enforce the lease, and that is a very lengthy and protracted process. I am not talking about the relationship with the freeholder or indebtedness; I am talking about how to enforce the lease between leaseholders, and I gave the example of Airbnb using a block of flats.

[Lord Bailey of Paddington (Con)]

It would be extraordinary, though possible, if fellow leaseholders could invoke forfeiture but the freeholder could not. That would be incredible, and I am sure it would have all its own problems.

The point remains that, if you keep some kind of forfeiture, freeholders will want to keep hold of that power, because it is exactly that: an unfettered, threatening power, which leaseholders speak about as though it is mythical, like a dragon that will burn you if you stand up to the freeholder. Words fail me when I try to describe how forfeiture must go. We have had many conversations in which the word “feudal” has been bandied about. This is one occasion where it has real meaning. Forfeiture should and must go.

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

My Lords, first, I declare a number of interests to the House. I am a vice-president of the Local Government Association, the chair of the Heart of Medway Housing Association, a non-executive director at MHS Homes Group, and a leaseholder.

Before the Bill arrived, it promised a lot. As it stands it is doing much less than that, so in a sense it is a fairly timid Bill. However, some of the things it does are actually very useful. I support the amendment of my noble friend Lady Taylor of Stevenage on forfeiture; it needs to be abolished. I have also listened to the noble Lords, Lord Truscott and Lord Bailey, and both make very valid points. The Government should listen and bring an amendment that addresses the points they made. That is not impossible, as far as I can see; it is absolutely right that there should be some remedy to deal with this.

Equally, we cannot have people being bullied into paying the service charge or ground rent; that it totally wrong. There must be remedies to deal with those things: if someone is owed money, they should get it, but forfeiture—losing their entire asset—is ridiculous. I hope that, on both points, which are extremely valid, the Government say to us that they hear what people are saying and that they will look at this issue and come back with amendments.

I want to ensure that people can enjoy their property without being annoyed by parties, noise and other trouble, and that there is a remedy to enforce that if need be. Equally, if someone has a freeholder coming after them, they could actually lose their property, or, worse, the freeholder could use their service charge or ground rent to take them to court. We need to deal with all these things.

I hope that, at the end of what will probably be a fairly short debate, the Government will recognise that there is a problem here and will help us by bringing back an amendment to deal with these issues; or, as the noble Baroness, Lady Pinnock, said, that they will get people together around the table to try to sort this out. The Bill is not doing much, but this is something very positive it could do.

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[The Parliamentary Under-Secretary of State, Department for Levelling Up, Housing & Communities (Baroness Scott of Bybrook) (Con)]

My Lords, I thank the noble Baroness, Lady Taylor, for her amendments in this group, which seek to remove forfeiture from the leasehold and freehold estate.

Amendment 55 seeks to address one of the ways in which leasehold law is tilted in favour of landlords. I know that noble Lords from all sides of the House are sympathetic to this intention, as are Members from the other place, where this same clause has already been debated.

Forfeiture is widely recognised as a draconian and unfair measure which is open to abuse. The main objection to the current law is that, should the landlord forfeit the lease and go on to sell the property, this allows them to make a large windfall gain at the expense of the leaseholder, who loses everything. Abolishing forfeiture would reduce the risk to the leaseholder of losing their home and would prevent abuses.

Abolishing forfeiture without replacing it with an alternative enforcement mechanism would mean that landlords would have recourse only to ordinary civil debt recovery and injunction proceedings, which, as we have heard, can be lengthy and are not always effective. In the absence of forfeiture or an alternative, there is a danger that a greater number of leaseholders may refuse to pay their fair share of the cost of maintaining their block or estate, and we have to take this all into account.

Noble Lords asked how many cases there are. We do not have the exact number, but stakeholders give us estimates of between 90 and 120 cases per year. It is not a big issue, but it is a very important one for those people.

[Lord Bailey of Paddington (Con)]

The number of cases will not indicate the use of forfeiture, because forfeiture is wielded as a fiery dragon. Leaseholders speak about it as the dog that bites. The number of cases may be small, but I would argue that the use of forfeiture is probably far greater.

[Baroness Scott of Bybrook (Con)]

I have said that it is not the right way of doing it, and we want a different way. That is exactly what the Government are looking at.

We have to be clear that the upkeep and safety of buildings is also paramount. Landlords, be they third parties or resident management companies, need effective mechanisms for securing prompt payment to ensure that those properties are insured and maintained in the interests of everybody else in the block.

We recognise that there is the potential for significant inequity at hand 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. In the meantime, I welcome members of the Committee sharing their views on this matter, which the Government will reflect on when formulating their position.

In addition, I thank the noble Baroness, Lady Taylor, for Amendment 95, which seeks to abolish Section 121 of the Law of Property Act 1925 in respect of all rent charges. Let me be clear: the Government are sympathetic to the issue raised by the noble Baroness. We recognise that forfeiture is an extreme measure and should be used only as a last resort. Any changes will require careful consideration of the rights and responsibilities of all interested parties.

Clause 111 already seeks to abolish forfeiture for income-supporting rent charges, which are still in existence, even though the creation of new charges of this nature has been banned since 1977. However, some types of rent charges may still be created, including estate rent charges, which are used for the provision of services on managed estates.

Where they are created, estate management companies need a means to recover sums owed to them. Failure to do so means that costs may fall on other home owners, or the upkeep of an estate will worsen, to the detriment of everyone living on that estate. The problem may be particularly acute for resident-led management companies which do not have alternative sources of funding.

It is important that we fully understand any unintended consequences. This is an issue that we are carefully considering. I hope that, with those assurances, the noble Baroness will withdraw her amendment.

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[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.

[Lord Bailey of Paddington (Con)]

My Lords, I will speak to my Amendments 65A and 65B. The Government should be applauded for their ambitions as laid out in the Bill. Let us hope that we can achieve them all. I put on record that I am pleased with the Government’s direction of travel, because some of my interventions up until now may have seemed slightly belligerent, but can my noble friend the Minister provide some reassurance around the Government’s stated aim of a revolution in the right to manage? That would help to address what, for me, is at the heart of what I consider the leasehold scandal, which is really about control. Leaseholders in England and Wales are unique in the lack of control that they have. Worldwide, leaseholders and those with commonhold and many other types of tenure have much more control. I believe that is something the Bill can address, and the Government have to demonstrate that they want to deliver on it. Indeed, it was our own Secretary of State who said that he wants to see a revolution in the right to manage.

I put on record my colleagues Nickie Aiken and Barry Gardiner, who brought a very similar amendment in the other place. Amendment 65A seeks to ensure that leaseholders in mixed-use property who would otherwise qualify for the right to manage because 50% or more of the floorspace is residential, but because of a technicality—a boiler or an underground car park—are prevented from having that management given to them, still have that right. The current test means that you have to demonstrate that your building is self-contained or that the residential part is partly self-contained, but the layout of the building might suggest that it is not self-contained due to an underground car park or boiler room, when actually it is.

The Law Commission saw these two tests as too strict. It suggested that a third test could be set whereby, if it could be demonstrated that people are reasonably capable of managing the residential area fully independently, they should be given access to this power. As I have stated in most of the debate, the thing that most drives me is the potential for the abuse of service charging. Giving residents control over their assets is clearly the answer to that.

The amendment does not mean that leaseholders can take over the management of shops, hotels or commercial premises. That is not the idea of the amendment. The right to manage applies exclusively to the residential parts, such as corridors and lift lobbies —parts of the building used only by residents. The amendment does not seek to change that position.

At Second Reading, I made the point that even the leading freeholder lobby group pointed out that free- holders own, at best, only 2.5% of the capital interest in the buildings they have the freehold of. That leads me to my other amendment, Amendment 65B. We must lower the threshold at which a group of people can take over the management of that lease. It is currently at 50%. I suggest that it should be at around 35%—again, to help the Government achieve their stated aim of a revolution in right to manage.

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The Government accept the Law Commission’s recommendation to hold the participation requirement for the right to manage at one-half, following comprehensive consultation. I hope, hearing that, that my noble friend agrees that it means that a minority of leaseholders cannot unfairly take control of a building, potentially to the detriment of other leaseholders in the building.

[Lord Bailey of Paddington (Con)]

I have heard what my noble friend the Minister has had to say and I am minded to do as she asks—if I could get one of those meetings that she has to offer. I am sure then that we could come to an accommodation.

[Baroness Scott of Bybrook (Con)]

I will be very happy to spend a week in here so that noble Lords can come in and out and speak to me as they like—and I would love to meet my noble friend to talk about this further. He talked also about transparency and it not being terribly necessary. The problem is that, if you do not have transparency, sometimes you do not know you are being ripped off, because you do not have the required information—so I think transparency is actually really important.

[Lord Bailey of Paddington (Con)]

My Lords, it was not that I do not like transparency. I agree with my noble friend that transparency is very useful so you know whether you are being ripped off. I was making an appeal for the ability to intervene in the process of being ripped off. I have been on the other end of this situation, where people have quite happily told us what they are overcharging us for, but we had no mechanism to interfere in that. That is what I was more concerned with.

[Baroness Scott of Bybrook (Con)]

I thank my noble friend for that but, for the reasons I have put forward, I kindly ask him not to press his amendments.

Leasehold and Freehold Reform Bill

Lord Bailey of Paddington Excerpts

Committee stage
Monday 22nd April 2024 Lords Chamber

[Baroness Taylor of Stevenage (Lab)]

My Lords, just before I move my amendment, I should say that I omitted to thank the Minister for her collaborative approach to the Bill in advance of it coming before the Committee. I now do so and rectify that omission. I also thank the Law Commission, as she did, and the many groups that have a leasehold interest and met us in recent weeks. I hope the Committee will forgive me for not mentioning that earlier on.

Amendment 12 requires the Secretary of State to publish a report outlining legislative options to provide leaseholders in flats with a share of the freehold. I shall resist the temptation to go over the ground again of why the Government did not include flats in their ban on new leases, although it would be helpful to know from the Minister what level of consideration was given to enacting the recommendations of the Law Commission in full in regard to this matter, particularly as it was the stated intention of the Secretary of State—that is what he wanted to do. There has been a commitment to this ban on leasehold at least since 2017. One would think that there has been plenty of time to get the work done. Indeed, the Law Commission has done much of the heavy lifting on what would be needed.

Our later amendments seek to determine the Government’s appetite to move in due course to a more widespread system of commonhold as the default tenure. The successful adoption and implementation of this in other jurisdictions has been well debated and discussed in your Lordships’ House. It is certainly the clear intent of my party to move as quickly as possible to that tenure. However, that would be a policy decision, as distinct from the implementation of the Law Commission’s recommendations, and would necessarily have to follow the legal scheme that those recommendations would introduce. As that is not proposed in the Bill but follows the Secretary of State’s intent to do away with the archaic system of leasehold altogether, there is a strong case to make a start with a transitional regime.

The introduction of a mandatory share of freehold in all new blocks of flats, as proposed in our amendment and that of the noble Lord, Lord Bailey of Paddington, alongside the requirement to establish and operate an RMC—a right to manage company—with each leaseholder given a share, would be a sensible staging post on a path towards a commonhold future. It would make conversion to commonhold at a later date a far simpler process. We urge the Government to accept these amendments as they would ensure that we have started on the path to confining leasehold to the dustbin of history, which is where we believe it belongs, and would make it clear that the Bill is not ruling in one set of homes and home owners to the ban and ruling out another. That other is affecting by far the greatest number of leaseholders, with 70% of leaseholders occupying flats. To be clear, this is not an alternative to leasehold. If such a measure were brought into force, any leaseholder resident in a new block of flats would own both the lease and a share of the freehold. It would ensure, in effect, that all new blocks of flats were collectively enfranchised by default, without the need for leaseholders in them to go through the process of acquiring the freehold.

The advantage of having a default share in the freehold is that it would give the leaseholder a direct say on what happens in their building, as is the case with those who have already been collectively enfranchised. It would also provide additional valuable rights, such as the right to a long lease extension on the basis of a peppercorn rent; in other words, the rights that will be accorded to existing leaseholders but without the cost of paying a premium to the freeholder that is still required to exercise that modified right.

We know that flat owners having a share of the freehold can cause tensions; for example, in agreeing how to proceed on crucial decisions, such as whether to cover the cost of major works through service charges. That is why it is essential that proper management arrangements are in place as a matter of course, to reduce the likelihood of damaging disputes between neighbours. That is why we propose mandatory RMCs on new blocks of flats as a corollary to the new clause.

Labour is unequivocal about the fact that commonhold is a preferable tenure to leasehold, in that it gives the benefits of freehold ownership to the owners of flats without the burdensome shortcomings of leasehold ownership. As we have heard, the Law Commission made 121 recommendations on commonhold, designed to provide a legal scheme that would enable commonhold to work more flexibly, and in all contexts. It is vital that if commonhold is to be the default tenure, it is enacted fully and properly, with full account of the Law Commission recommendations.

We have not sought to persuade the Government to incorporate any subset of the Law Commission commonhold recommendations into the Bill, but we need to reform the legal regime for commonhold in one go. Labour is committed to doing so if the British people give us the opportunity to serve after the next general election. In the meantime, it would be good to give current leaseholders a share in the management of their properties. I beg to move.

[Lord Bailey of Paddington (Con)]

My Lords, it is a pleasure to follow the noble Baroness, Lady Taylor of Stevenage. I do not want to rehearse the reasons why I think that a mandatory share of the freehold is necessary, in the way that the noble Baroness laid out. I want to speak more to the contact that I have had with so many different groups and individuals who feel that they are trapped in their leasehold.

The number one thing that comes up is, of course, service charge abuse. Which? did a study in 2011 which suggested that 700 million service charges had been overcharged. The market for that has grown now to 6.7 billion, so we can only assume that this overcharging has grown along with it.

The challenge becomes: how do we make this market fair? How do we make sure that these abuses are washed away? That is to give the people paying the bills control, and not to lock them into the monopoly that leaseholders are currently locked into. Ultimately, the answer would be commonhold, but while commonhold is not on the table, we need to look at a share of the freehold. It should be mandatory, and it should happen straightaway. The noble Baroness laid out very eloquently the benefits that this would give to leaseholders.

We must understand that leaseholders do not want a landlord; that is why they have left the private rented sector—to avoid landlords. These amendments should stand. They really give leaseholders what they want. I have tabled an amendment which asks the Government to retain the power to bring forward a share of the freehold on new flats. That is the most important thing going on here.

[Baroness Pinnock (LD)]

My Lords, we on these Benches far prefer a move to commonhold. The journey towards commonhold is a solution to the leasehold/freehold issue.

I understand why the noble Baroness, Lady Taylor of Stevenage, and the noble Lord, Lord Bailey, have proposed a share of freehold as a route towards commonhold as being the ideal solution, as recommended by the detailed report from the Law Commission in 2020. However, it is only a small step, and it is an option that is already being exercised by some flat owners.

It seems to me that the disadvantage of share of freehold is that, in practice, it will be possible only for blocks of flats with a small number of units. Where there is a large number of units in a single block, it would be very difficult to have a share of freehold for some but not others. It will be interesting to hear what the Minister and the noble Baroness, Lady Taylor of Stevenage, think.

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[Baroness Scott of Bybrook (Con)]

I reiterate that the Government remain absolutely committed to widespread take-up of commonhold for flats. We have reviewed the Law Commissioners’ recommendations to reinvigorate commonhold as a workable alternative to leasehold, and I can assure noble Lords that we will set out next steps in due course.

Amendment 15B from my noble friend Lord Bailey of Paddington would require mandatory share-of-freehold arrangements to be made for block of flats in instances where flats are subject to long leases or collective enfranchisement. I thank him for this amendment and for his interest in this specific instance. We are aware of the interest in this and appreciate the desire to ensure that more leaseholders can obtain control or ownership of their building. Although we understand the benefits that share-of-freehold arrangements can have over ordinary leasehold arrangements with third-party landlords, we are also conscious that mandating share-of-freehold sales on new builds would require a complex legal framework to be constructed and to accommodate the mandate. As I have said, we do not believe that mandating share of freehold would be a quick or easy fix for leaseholders. The Government consider that the best option, as I have also said before, is to continue to work towards the widespread use of commonhold in future, rather than mandating share of freehold.

My noble friend Lord Bailey of Paddington was particularly keen on service charges. The Government will bring forward, through this Bill, a number of measures to require landlords to provide further information to leaseholders on a very proactive basis and to increase the transparency of their service charges and administration charges, as well as providing more information to leaseholders on a reactive basis. Those measures include the introduction of a standardised service charge demand form to standardise the information that freeholders are required to provide to leaseholders. We will mandate the provision of an annual report that sets out key information of importance to leaseholders. We will compel landlords to provide more relevant information to leaseholders on request. We will ensure that service charge accounts are provided within six months of the end of the previous accounting period that they cover, regardless of the lease terms, and this will be subject to a number of exemptions. We will require freeholders to proactively disclose—

[Lord Bailey of Paddington (Con)]

Can my noble friend the Minister let me know how many of the 121 recommendations that the Law Commission made around commonhold will be adopted?

[Baroness Scott of Bybrook (Con)]

All I can say to my noble friend is that that is exactly what the Government are working on and that further details will come forward in due course.

A number of things in this Bill will affect the transparency and accountability of freeholders to leaseholders, particularly on service charges, which is the one thing that my noble friend brought up. For these reasons, I hope that the noble Baroness and my noble friend will not press their amendments.

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[Baroness Scott of Bybrook (Con)]

My response to the noble Earl, Lord Devon, was a response on commonhold. My response to the noble Baroness, Lady Fox, was more about the fact that her amendment would just ban the sale of leasehold, which I suggest would give an uncertainty to the market.

[Lord Bailey of Paddington (Con)]

Maybe my noble friend the Minister can give us some detail on the Government’s new-found support for commonhold. It would be easier not to move my amendment if I had some idea of the progress of the Government’s thinking, the timetable and how they intend to increase the adoption of commonhold, because that would make my amendment largely unnecessary.

[Baroness Scott of Bybrook (Con)]

I thank my noble friend for that. As I have said, we are working on it, we are working on further changes and we will come back in due course.

Leasehold and Freehold Reform Bill

Lord Bailey of Paddington Excerpts

2nd reading
Wednesday 27th March 2024 Lords Chamber

[Lord Bailey of Paddington (Con)]

My Lords, it is a great pleasure to follow the noble Baroness, Lady Twycross, with whom I have worked for many years in City Hall. This is my first time contributing to a debate, so if I get a few things wrong, please handle with care.

I have personal experience of being a leaseholder, and I know how the system can be abused to rob you of your dignity and deny you control of your own finances. Today I speak on behalf of millions of leaseholders who want to be released from this feudal system—I share enthusiasm for the term—that renders them “captive consumers”, according to the Competition and Markets Authority.

This is about whether or not we are a property-owning democracy. In 2019, some 13.9 million people voted for a Conservative manifesto that pledged leasehold reform. A further 10 million people voted for a Labour party that promised the same. Since 1966, all parties have promised leasehold and commonhold reform in election manifestos. Once we understand how important this has been to most people in this country, it is astonishing that we have not yet been able to deliver the changes that many, if not all, leaseholders want.

Freeholders have no incentive to get the best financial value for upkeep, insurance or repairs, because they are not picking up the tab. This arrangement is ripe for abuse. Some 95% of flats are leasehold; this legal structure is a forced condition of sale for an increasing number of first-time buyers and elderly downsizers.

Many people in the leasehold world propagate a number of myths to make sure that we continue to hold on to this old-fashioned and—I will say it again—feudal regime. They say that leasehold reform is an affront to property rights, but leaseholders have already paid a premium for their home. According to a leading freehold lobby group, the Residential Freehold Association, professional freeholders typically own only a very small economic interest, defined as just 2.5% of the capital involved in most cases. The association says freehold reform is unprecedented abuse of existing contracts. Freehold lobby groups are ignoring all the times in the past when Parliament has stepped in to rebalance rights and obligations on property for the greater good. This is not a recent leaseholder thing; there are laws dating back to the 19th century that have sought to bring greater equality to existing contracts. Indeed, in the 1980s and 1990s, Margaret Thatcher and John Major gave flat leaseholders the right to acquire their freehold.

Leasehold reform removes professional landlords and puts a burden of management on residents who do not have the time or skill to take care. This is simply a straw man to prevent bill-paying leaseholders taking rightful control of their home, their money and their lives. I am a Londoner and know the valuable role that the great estates play, not only serving leaseholders but the wider community, in placemaking.

However, let us not pretend that all freeholders are benevolent actors or high-performing service providers, such as Cadogan Estates, the de Walden Estate or even the Canary Wharf Group. Your average freeholder appoints a managing agent who does the day-to-day management. That agent could easily be appointed by leaseholders, as flat owners already do in many places across the world. It has already been said in this debate that a property is best managed by those who live there and know what is going on. We could concentrate on some of the bad behaviours by freeholders, such as artificially inflated and undocumented service charges, major works projects that are handed to a friendly contractor and then billed at double, sometimes triple, the going rate when you get a second opinion on what the cost should really be. We have some of the highest housing costs in the whole of Europe, and I submit that leasehold is part of the problem. Last year, Hamptons found that leaseholders in England’s flats were paying a punishing £7.6 billion in service charges, which had jumped 50% in five years.

There are many parts of the Bill that should be commended and that I wholeheartedly back, and I have heard many other noble Lords back the measures in it. However, there are some things on which we need to go further. I personally think the ultimate solution is commonhold, and it is a shame that it is not being proposed here.

Things like 990-year leases as an extension as a norm are of course a good measure. Stopping the punitive legal costs regime, which allows freeholders to dump all their legal and professional costs on to leaseholders whether they win or lose a case, feels like feudalism to me—so I will use that word again.

All of these points lead to the question: how do we beef up the Bill? The Bill, in my opinion, does not go far enough in liberating leaseholders. For those who think the provision of information will deal with the abusive practices, I say: think again. The Government are basically saying to leaseholders, “You must become serial litigators, you will have to take on the big guys” —in the same way that the sub-postmasters had to take on the Post Office. As Conservatives, we should be fighting any unchallenged power anywhere in our system. We must always support the little man. The best version of Conservatism is supporting the little man to take care of his own affairs, and that has to be done.

For me personally, the most egregious thing is forfeiture. This is a gangster-like power, routinely used to abuse and extort money from hapless leaseholders under the threat of losing their home and all of their equity. There is no doubt that, even though there are only a few cases of this every year, just the idea that it can be done is terror enough. I come from a group of people for whom buying your own home is freedom, and that freedom is curtailed by the mere existence of forfeiture.

I could go on at length about all of the things that should be added to the Bill, but I will say this: we must turbocharge the right to manage and enfranchisement. More needs to be said about that, and I personally will be tabling amendments to make sure that it is done.

To conclude, to accept these few amendments, and many of the amendments that have been talked about in the House today, will make the Bill what has been promised. The Tony Blair Government promised to do this and did not. This Government can do it and fulfil something that the people of this country deeply need to happen. I say again: are we a freedom-loving, property-owning democracy or not? The passage of the Bill and the provisions it actually brings into law will make the difference in that statement.