Leasehold and Freehold Reform Bill

Lord Bishop of Manchester Excerpts

2nd reading
Wednesday 27th March 2024 Lords Chamber

[The Lord Bishop of Manchester]

My Lords, I begin by declaring my interests. I am no longer a church commissioner, as my time finished at the end of last year, but I am paid and—if the Lord spares me—will be pensioned by the Church Commissioners in due course. The commissioners are freeholders, not least of the Hyde Park Estate, which has been in continuous Church ownership and care since around the 11th century, when it belonged to the monks of Westminster Abbey. I guess, if I am going to echo a word that we have used several times today, that makes it genuinely feudal. I also own one leasehold flat in the West Midlands, as set out in the Members’ register.

I support this Bill. It addresses many deep injustices which other noble Lords have addressed and hence I do not wish to repeat. I am also grateful to the noble Baroness the Minister for meeting me and colleagues from the charity sector a few days ago. I am grateful for the comment from the noble Lord, Lord Best, about regulation and the comments from the noble Lord, Lord Young of Cookham, on forfeiture and buildings with fire, safety and other defects. I am also grateful to the noble Earl, Lord Lytton, who is such a doughty campaigner on these matters. It remains a huge scandal that so many people remain trapped owning apartments that are unsaleable.

However, there are three areas that I would like to see explored at later stages; I shall try to be brief for now. The first is about marriage value. Noble Lords might expect a Bishop to support marriage and I will not disappoint. I am grateful to the noble Lord, Lord Moylan, for raising this subject, not least in referring to pension funds, and again to the noble Earl, Lord Lytton, and, most recently, the noble Lord, Lord Howard of Rising. My concerns are with particular reference to charities which own freehold as part of their permanent endowment. We have already heard that some 80% of marriage value in UK relates to properties in and around central London. As several noble Lords, including the noble Earl, Lord Lytton, have stated, many leaseholders in such blocks are corporate and often overseas entities. They are not the people this Bill aims to protect or benefit, nor should it. The Church Commissioners’ Hyde Park properties have an average sale value of £1 million. Those who own them are not, by and large, London’s poor.

The Bill, as drafted, will take money presently used for charity purposes and give it to the wealthy—robbing the poor to pay the rich: a reverse Robin Hood. Lest I be seen as being parti pris, let me offer a non-Church example. John Lyon’s Charity exists to fund children and young people’s services, particularly in nine north and west London boroughs. It is the largest independent funder of children and young people’s services in Greater London and, in 2022-23, it reached the milestone of having awarded over £200 million in grants since 1991. That is over 4,500 grants to over 1,700 organisations. The loss of marriage value could cost it around £3 million per year, money which would go to owners of apartments valued in the millions. John Lyon’s is not the kind of rogue landlord that leaseholders need protecting from.

It is a widely accepted principle of charity law, accepted even when right-to-buy legislation was extended from council housing to many housing association tenants, that charity assets should not be transferred to individuals or bodies that would not qualify as their beneficiaries. This Bill seems to fly in the face of that principle. Is it possible to exempt charities? It appears that the National Trust already has such an exemption and one not restricted to those parts of its estate that are inalienable under Act of Parliament. The principle of exemption is not at stake; what we need to talk about is its extent. Will Ministers look at whether that exemption, or one similar to it, afforded to the National Trust could be extended to encompass other charities? Should that prove impossible, will they put forward a full compensation scheme for when a charity loses marriage value?

My remaining two points relate specifically to mixed blocks in town and city centres. Typically, you will get a ground floor of retail, then there will be some floors of offices and then the residential floors on top. These points might well have been addressed by us moving away from leasehold entirely but, while it remains, they need to be addressed if our town and city centres are to be the vibrant hubs that we need.

First, how are we to prevent groups of enfranchised leaseholders, particularly if many of them are overseas companies, from neglecting the community facilities—ground-floor shops, and sometimes even schools? I have heard it said by one of my colleagues that, on one estate, we could end up with a whole load of vaping or mobile phone shops. We would lose all the shops that really matter to those who live perhaps not in that block but locally. Can the Government offer amendments that will enshrine ways to protect the non-residential parts of blocks, particularly those areas devoted to community and retail uses, or can we limit those entitled to vote on decisions about their properties to actual individual residents in person, rather than remote and often disinterested corporate entities, which would see shops as a way in which to get a rental income, not a service to a community in which they play no part?

Finally, I am concerned that the reduction of threshold for enfranchisement could lead to less building of homes in town and city centres—or we could end up with too few homes and too much office space. I am aware that I am taking a different view from that of the noble Lord, Lord Truscott, a few minutes ago, so perhaps we need to establish the facts. Have His Majesty’s Government undertaken an impact assessment on future home building and, if not, will they do so, and report to your Lordships’ House during the passage of this Bill?

I believe that this is a good Bill, but one capable of improvement, and I look forward to continuing to engage with it through its later stages.