Leasehold and Freehold Reform Bill

Debate between Lord Best and Baroness Thornhill

Committee stage
Wednesday 24th April 2024 Lords Chamber

[Lord Best (CB)]

My Lords, I support Amendments 23 and 24 in the name of the noble Baroness, Lady Andrews. I can imagine the anguish that must be felt by leaseholders in blocks of flats who are facing the disruption of one or even two new storeys being built on the roof of their flats. With freeholders now having permitted development rights for upward extensions, residents face the disruption, noise and hassle of builders, lorries, cranes, skips, scaffolding and so on for months—and now they face the prospect of being unable to buy the freehold of the block because development, or the possibility of upward development, adds to the value of the block and can make enfranchisement prohibitively expensive. The extra value of adding new storeys, or the compensation demanded for not developing where there is potential to add them, generates additional freeholder profits but makes enfranchisement unaffordable, yet the Leasehold and Freehold Reform Bill is all about giving leaseholders a better deal and easier access to enfranchisement.

I note that the previous Secretary of State promised to fix this specific problem through a clause in the Bill enabling leaseholders in a block to agree together that no upward extension should take place. In this way, they remove the extra value for the freeholder. It seems that in the drafting of the Bill the promised new clause, originally an option proposed by the Law Commission, has got lost. So, on behalf of the 2 million-plus lease- holders who could be affected, I strongly support the amendments from the noble Baroness, Lady Andrews, which would fulfil the Government’s earlier promise.

[Baroness Thornhill (LD)]

My Lords, I suppose I could say “#UsToo”. I support these amendments, which are simple in purpose, in the name of the noble Baroness, Lady Andrews, who summed them up thoroughly, clearly and personally. As things stand under PDR, a freeholder can add two storeys to their existing building as a matter of right, with no planning permission needed: as I look round Watford, I can see evidence of that with my own eyes. But I also know that that can have very serious consequences. As well as the inconvenience of the building work going on for as long as it takes, you also discover that the top-floor flat that you paid a premium for is now worth less as you are a middle-floor flat. Then there is the pressure on communal space and amenities, including the dreaded bin store and the state thereof.

Adding two more storeys to a presumably well-planned block of flats, for a set number of residents, is not consequence-free. But the consequences are absolutely trivial compared with the knock-on effects of such development on the Government’s own stated aim, which is to encourage more leaseholders to buy their freehold. This is an additional and often insurmountable obstacle. It significantly raises the cost of enfranchisement, as has been said. The value of the block will have gone up. The leaseholders are now required to pay more for their freehold. In many parts of the country, this takes it way out of reach, as in the noble Baroness’s case.

The noble Baroness, Lady Andrews, very thoroughly cited a positive trail of support: all the right noises from the Secretary of State in 2021, the Government’s complete recognition of the dilemma and a real promise of the ability to look into some restriction.

It is clear that there is a policy conflict here: the need for more homes, which we all agree on, versus the enfranchisement of leaseholders. As things stand, the homes policy is top trumps. Can the Minister advise on whether there will be a review of PDRs in general, including focusing on unintended consequences such as this and whether there is a way to sort this out in the leaseholder’s favour in the Bill? At the moment, it feels as if the freeholders are still very much holding all the aces and current residents have no voice at all in this significant change to their environment and, possibly, their life chances and finances.