Leasehold and Freehold Reform Bill

Debate between Lord Bailey of Paddington and Lord Gascoigne

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

[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.

[Lord Bailey of Paddington (Con)]

My Lords, the House knows two things about me—that I am new and procedure is not my thing and that I am prone to a belligerent outburst. My noble friend Lord Young kindly pointed out to me that forfeiture comes later on in this process so I would like to hear what the noble Lord has to say about that in response and I reverse my earlier comment.

A share of the freehold is the quickest, most elegant way to get to the halfway house before we go to commonhold, which is why I am so passionate about it. It goes to my theme on all of this Bill—where the small man or woman in the street is concerned, it is about control, and this would hand back control very quickly. I beg leave to withdraw my amendment.

--- Later in debate ---

[Lord Bailey of Paddington (Con)]

My Amendment 50 seeks to bring down the onerous 50% participation threshold to 35%, so that many more leaseholders can take back control of their homes, their money and their lives. As my noble friend Lord Moylan said, it would remove much of the suspicion around whether your freeholder is fleecing you, for want of a better word. I believe the Government support a revolution in the right to manage, so I will be interested in the comments from my noble friend the Minister as to why this cannot be supported. This would be a great step for people in many communities where buying property is a lifelong dream that they could then achieve. It leaves that footprint firmly in their community, and gives them more control of the investment they have actually made.

[Lord Gascoigne (Con)]

I thank my noble friend Lord Moylan for Amendment 49 on the right to manage and local authorities. In taking forward this Bill, we have prioritised the most impactful of the Law Commission’s recommendations on enfranchisement and the right to manage. That includes allowing more leaseholders in mixed-use buildings to collectively acquire the freehold of their building, or to exercise their right to manage their building, by increasing the non-residential limit from 25% to 50% non-residential floorspace. The Law Commission did not make any recommendations on local authority householders, but we recognise that the right to manage is not available to leaseholders with local authority landlords where there are no secure tenants in the block. We will continue to review changes to improve the right to manage. I hope that, following these reassurances, my noble friend will withdraw his amendment.

Leasehold and Freehold Reform Bill

Debate between Lord Bailey of Paddington and Lord Gascoigne

Committee stage
Monday 29th April 2024 Lords Chamber

[Lord Gascoigne (Con)]

I thank my noble friend Lord Bailey of Paddington for Amendment 76A, which seeks to retain the existing enforcement provisions concerning a landlord’s failure to provide information to leaseholders. I am grateful to other noble Lords who took part in this very brief discussion.

I fully agree with my noble friend that it is important to have effective enforcement measures in place where a landlord fails to provide relevant information to leaseholders. The existing measures, including the statutory offence under existing Section 25 of the Landlord and Tenant Act 1985, have historically proven to be ineffective. Local housing authorities, as the enforcement body, are reluctant to bring prosecutions against landlords, and the cost and complexity of doing so are a significant barrier to leaseholders bringing a private prosecution. That is why we are omitting Section 25 and replacing it with the more effective and proportionate proposals set out in Clause 56 of the Bill. Therefore, I am afraid that we cannot accept the amendment. Not only does it require—

[Lord Bailey of Paddington (Con)]

In regard to the cost of leaseholders bringing a case, people are now using modern technology, such as crowdsourcing, to raise the funds to take on a landlord. When you have a persistently rogue landlord, this could be your last roll of the dice. It is not an entirely strong argument to talk about leaseholders not having the means; that is often the case, and what most of the discussion has been based on. For leaseholders in these very extreme cases—and they are extreme—this is a last resort, and that is why the word “backstop” was used, but people can club together to deal with these situations.

[Lord Gascoigne (Con)]

I am very grateful to my noble friend. I will address the rest of the issues, and hopefully I will pick up some the points he made. Like others, I am grateful for the passion with which the noble Lord speaks about this issue and his own experience of it.

I am afraid we cannot accept this amendment. Not only does it require us to return to the previous arrangements; I would respectfully say that it is not workable. This is because a local housing authority cannot take action against itself; they are one body. That said, I can assure my noble friend and others in the Chamber that there are very strong merits in his argument about the appropriate tribunal not being able to make an order for damages where the landlord is a non-compliant local authority. As has been said, it is not right that local authorities should be exempt from the same standards expected of other landlords. Both the department and the Minister are carefully considering this issue.

I will respond to a couple of points raised by noble Lords, including my noble friend. He raised the issue of damages; we believe that £5,000 strikes the right balance between a deterrent and an effective incentive. I believe it is higher than the existing provisions that a court can award on a summary conviction. The noble Baronesses, Lady Taylor and Lady Thornhill, asked about the hiatus, or interim, period; I assure noble Lords that it will not change until the new regime is ready. Therefore, with these reassurances, I ask my noble friend to withdraw his amendment.

[Lord Bailey of Paddington (Con)]

I beg leave to withdraw the amendment.

--- Later in debate ---

[Lord Gascoigne (Con)]

My Lords, I thank the noble Baroness, Lady Fox of Buckley, for her Amendment 84, which seeks to ensure that potential property purchasers understand the ongoing obligations of a leasehold property they are thinking of purchasing. I share the noble Baroness’s concern that purchasers should know about service charges and ground rent before they move into their home. Speaking personally, I completely understand the stress and frustration when you receive a bill that you knew nothing about.

The National Trading Standards Estate and Letting Agency Team has developed guidance for property agents on what constitutes material information when marketing a property. This information should be included within property listings to meet their obligations under the Consumer Protection from Unfair Trading Regulations 2008. The guidance specifies that tenure and the length of the lease are material and therefore should be included in the property listing. Ongoing charges, such as service charges and ground rent, are also considered material, as they will impact on the decision to purchase. This means that purchasers get information on the lease and expected level of ongoing financial obligations when they see the property particulars, so before they have even viewed the property, let alone made an offer. In addition, the measures that we are including in this Bill to require leasehold sales information to be provided to potential sellers mean that conveyancers acting on behalf of sellers will be able to quickly get the detailed information they need to provide to potential purchasers. This would include information about service charges and ground rent, as well as other information to help a purchaser make a decision, such as previous accounts.

The Government support significant provision of advice for leaseholders through the Leasehold Advisory Service, an arm’s-length body providing free, high-quality advice to leaseholders and other tenures by legally trained advisers. The Government have also published a How to Lease guide aimed at those thinking of purchasing a leasehold property, to help them to understand their rights and responsibilities, providing suggested questions to ask and suggesting how to get help if things go wrong. This guide will be updated to reflect the provisions in this Bill.

[Lord Bailey of Paddington (Con)]

Is my noble friend the Minister comfortable that that information is freely distributed? It would take only a very cursory conversation with leaseholders to find out that they know nothing of most of leasehold law—anything from ground rent to the fact that your service charge can be changed from underneath you. That means that the information that is there has clearly not been absorbed. What attempt will be made to make that information universal? People are talking about changing what leasehold is called, but this is the first time that I have heard that. I think it is a good idea—but all that information is good for nought if people are not compulsorily seeing it before they sign to buy the property.

[Lord Gascoigne (Con)]

My noble friend asks for clarity. I can completely understand some of the circumstances that people face; that is something on which we share the concerns of the noble Baroness in what she is trying to do, and it is something that we will continue to look at—ways of ensuring that people are aware of the information when they are purchasing a property. We will continue to look forward to engaging with all noble Lords in this House. With that reassurance in mind, I hope that the noble Baroness, Lady Fox, will agree with me that this proposed new clause is not necessary, and I respectfully ask that it is withdrawn.