Lord Campbell-Savours
Main Page: Lord Campbell-Savours (Labour - Life peer)Housing and Planning Bill
Lord Campbell-Savours Excerpts
Lord Beecham (Lab)
My Lords, I sometimes think that the noble Baroness’s title is not really adequate: “Baroness Gardner of Leaseholds” would have been better than Baroness Gardner of Parks. She is an expert in these matters and deeply committed to improving the situation of leaseholders, and on that she is to be congratulated. It is fair to say that the aspirations in these amendments are to be welcomed. However, I have some difficulties with the drafting.
In Amendment 84E there is a reference to:
“The buyer of a leasehold in a shared residential building”.
However, not every owner is a buyer—they may inherit or be given the property, and so “buyer” is not the right term. That also applies to subsection (4) of the amendment’s proposed new clause. It is also not clear in proposed new subsection (1) how the requirement is to be made. Normally, of course, provision is made within the lease. The implication here is that, somehow, legislation should overtake the provisions in an existing lease, which I think is a somewhat difficult concept. Furthermore, proposed new subsection (3) says that:
“The sums to be deposited and the timetable for their deposit shall be determined by those holding rights in the shared building”,
but it does not indicate how many of the leaseholders would be required—I suspect that a majority is what is intended, as it is in subsection (1) of the new clause proposed in Amendment 84F. That needs to be tidied up.
Having said that, there will be a chance, if I may say so respectfully, to improve the wording of the amendment before we get to Report. I hope that the Government will be sympathetic to this and possibly work with the noble Baroness in coming to an agreed position. She has highlighted a significant issue that is having adverse consequences for many occupiers of leasehold properties; at any rate, those with common parts. Perhaps the Minister will undertake to look at that with her and others to see whether the Government might bring forward an amendment to meet the objectives set out here but, as I said, unfortunately with drafting that may not achieve them.
Lord Campbell-Savours (Lab)
My Lords, I do not like either of these amendments. I want to make it quite clear that I think they are wrong in principle. For a start, Amendment 84E states that the buyer of a leasehold “is required”—in other words, it would be mandatory. There are blocks of flats—particularly where there is self-management, as in the case of my arrangement in Maidenhead—where resident committees agree that a sinking fund is not needed. We simply agree to turn up the money when a large expenditure is required. A couple of years ago, we had to spend £80,000 on a roof repair, but we agreed in advance that we would not levy for it until the expenditure needed to be incurred. It should be left to people in blocks of flats to decide whether there is a sinking fund, because there are varying views. Therefore, I am against that provision.
I am also opposed to Amendment 84F, and I will explain why. It is being suggested here that a majority—51%—of leaseholders could change the terms of the lease. If the terms of a lease were changed in such a way whereby a minority objected, and that objection was so strong that they just become awkward, which is what happens, they would simply default on the payment of their service charges. You cannot divide leaseholders in that way. In the case of the block in Maidenhead, where we have shared freehold interest, every time we enter into major works—indeed, any works—we agree in the resident committee. Because we are also the management company running the organisation, in which I take a very active part, we make sure that everybody agrees. Indeed, we get letters or emails from them confirming that they agree to any change that we wish to make. The reason is very simple. We have people that live both within and without the United Kingdom. In the event that we were to take an action which in any way they found unacceptable, I know that people would say, “Well, I’m sorry. I just do not agree with what you’ve done. I know I was invited. I know it said that in the event that I was unable to be there I would be deemed to be in favour of the proposal”, but irrespective of that they would feel that they were being manipulated into taking a decision to which they object.
Baroness Gardner of Parkes
I would like to respond to the point made. I think it is very interesting.
First, I should have spoken to Amendment 84F as well as Amendment 84E, because the two are linked on the groupings list, which I had not realised. The situation as described sounds entirely different from my own personal experience. My experience is that people who do not live in these places at all—except maybe for a few weeks in the summer when they come from somewhere overseas—do not respond to any attempt to contact them whatever. If you end up with a sufficient majority of those people, you cannot get anything done. There is no money to put forward even for emergency repairs. In each case you are asked to pay your money in advance, before the work can go ahead. Often legal action has to be taken against someone who says, “No, I’m not paying until I’m sure you’re doing the work”. An instance in hand was that, as the building was old, we wanted to have all new windows at the front. We all paid our money for them. People came and put up the scaffolding and the windows were delivered. The council arrived and said, “Have you got permission for that?” “Oh no, we phoned up and they said you don’t need it.” “Oh yes, you do. This is a conservation area”—the building itself is not worth conserving, but it is a conservation area. So the windows were all taken down, taken away and thrown away. We paid for them but we never got them, which was pretty disastrous for everyone.
Other times when someone needs emergency work done on the boiler or heating systems, again the money is needed up front—and people often have to be taken to court to get it. They might claim that they had not been justifiably contacted, but with the right to manage there could be a contact address or a proxy for every single resident or owner in the block.
I went to a meeting with Peter Bottomley, who is in the other place, and someone stood up from the department there. They said that the department was seriously considering the idea that if you fail to respond in any way you would be deemed to be not opposed to whatever was suggested. I then came back to this House and tabled a Question on that and I was told, no, that was not being thought about. Now again I am told that maybe it is being thought about. I find it extremely confusing, but I am looking for some way whereby you can deal with non-resident, uninterested parties who would allow places to fall apart.
Lord Campbell-Savours
The answer is actually in the original deed. If on acquisition of the property and purchase, the original deed specified that a suitable majority was sufficient to take a decision and the purchasers signed up to that, they are bound by that. The resident association, or the management company if it is run by the resident association, would have that in mind when it took decisions. Both these amendments could be dealt with in terms of the original lease. In the event that a lease change is required, then you would need—to be fair, in my view—a 100% majority turnout, or proxy or whatever, of all the residents to take that decision to introduce these provisions into the lease. If that is done then it is fair, but to impose it on people who may be reluctant to accept it is quite wrong.
Baroness Gardner of Parkes
The second to last point the noble Lord made was that you have to have 100%. The problem is getting the 100%. I have asked Questions in this House—I had the Library look them up and there must be at least six—and each time the Government have answered that it is impossible to get 100%, or that it is very easy to avoid getting 100%. All you need is a landlord who has a different interest to pay one person or own one flat in the block himself and he can prevent any action of any sort to improve or maintain it.
Lord Campbell-Savours
When the noble Baroness purchased her apartment, she would have done well to ask her lawyer to read the lease and explain to her what was in that lease; it would have precluded her doing what she is suggesting now.
Baroness Gardner of Parkes
We have gone into this legally in great detail over many years, but the answer is no, you cannot amend anyone’s lease unless everyone agrees to that. That is why I would be quite happy with the 100% if one could be sure of replies from 100%. However, if the replies do not come one way or another, it is very fair that the action should be deemed to be not opposed. They would be given ample time. They would be able to produce—this happens in Australia and everywhere; it is very simple management—a contact or someone who could attend any meeting as a proxy. They can authorise a party. There is no reason why they should not be able to reply in some way. They either deliberately wish to be obstructive or they are uninterested. Either way, it can have a disastrous effect on everyone else in the block. You need only one person to be obstructive.
In the description I gave, the landlord himself—the head lessee—has now bought one. He is happy to take on every flat that comes up if anyone wants to leave. He is always offering to buy mine. The point is that to get that 100% is acknowledged to be impossible. Certainly it is very difficult. Even when you agree on the works to be done and everyone is prepared to pay their money, there are always a few who have to be taken to court and works never start until all the money is available to pay the contractor. This means that terrible deterioration can happen during that period. Of all the points that are in these two amendments, to me, that concerning the leaseholder who fails to participate in the vote is the most important. In that instance you are being deliberately manipulated or controlled by people who do not have enough interest to bother expressing their views.
Lord Campbell-Savours
Despite the provision that the Minister has referred to, unless you secure the agreement of everyone involved, people often go into arrears and default. That creates problems within an association.
Viscount Younger of Leckie
That is true, but there are restrictions in place to allow for that. It still works.
Baroness Gardner of Parkes
My Lords, I take the point made by the noble Lord, Lord Beecham, that the wording might be defective. The purpose of Committee stage, however, is that it is the topic that you are really discussing and you can always go back and correct the wording. So that is not really the issue but I appreciate his point, though I thought the Public Bill Office had done jolly well even to get it as clear as it is, because I found it impossible.
The Minister has not looked at the entire situation. He keeps talking about the freeholder and the leaseholder, but what about the head lessee—the person between the freeholder and the leaseholder? This is where most of the problems come in. The head lessee should not even exist because the head lease should have been offered to all the people in the block, but because of that company law loophole it was not. That therefore creates an extra intermediate tier. Where that happens, you are in quite a degree of difficulty. Our freeholder seems quite benign and willing to go along with things, except where he evidently agreed to set up this sister company and floated it off to an outsider as a leaseholder —the head lessee. It becomes very complicated when you get these extra layers in management, and it means that each process has to go to each person.
I cannot remember the detail, but something meant that until we got to the door of the court the head lessee would agree to nothing. We were applying to the court to deal with it without his consent because he refused to respond to any correspondence, making it very difficult for everyone. Right at the last moment, there was a message from his solicitors saying, “We agree”. What was at issue was nothing terribly major, but it was hard to believe that we had to go through those legal procedures to get a simple agreement about something.
Lord Campbell-Savours
May I make a suggestion to the Minister? There is a reform that would be helpful. Some freeholders require 50% of the residents to agree to the formation of a residents’ association that they are prepared to recognise, but unless they get 50% the freeholder will not recognise it. I would like to see, in law, some requirement for a lesser percentage. Particularly in blocks of flats in London, where you have large numbers of residents living abroad—despite the amendment moved by the noble Lord, Lord Young of Cookham—the fact is that you cannot get their addresses and therefore you are often limited in the number of people you have access to in order to meet that 50% threshold. Perhaps the Minister might ask officials to look at that. A nice little amendment to that effect on Report would be very helpful.
Lord Kennedy of Southwark
My Lords, I will be relatively brief. Amendment 89 seeks to empower the Secretary of State by regulation to enable a local planning authority to direct the use of underused public land to support development and regeneration. The amendment seeks to make speedier use of public land that is not in use or underused. We have all talked about the housing crisis in many debates in this House, particularly during the course of the Bill. We all know we need to build more houses. Although we may disagree on what sorts of houses we need to build and how to build them, we all accept we need to build more.
The amendment requires local planning authorities to designate land for housing co-ops—something I am very supportive of, and I know that Members on the Government Benches have also expressed support for housing co-operatives in the past. I declare that I am a member of the Co-operative Party, which puts forward policies for a variety of solutions to the problems we face. I beg to move.
Lord Campbell-Savours
My Lords, I need to make it clear that Amendment 89 is not Labour Party policy; it is my view and I believe it is supported by millions of people in the country. Despite my repeated interventions, this is the only amendment I have moved in my name and I therefore need to take a little more time in dealing with it. I think you will find that my previous interventions have been very brief.
Amendment 89 offers us the opportunity to debate the cost of land—the real cost before the profiteers move in. It concerns the impact of land cost on the property market, speculation in land by the land banks and property speculators and hoarders, house price inflation and capital gains tax on developing land. It is about the compulsory purchase of agricultural land for housing development.
I recognise that exception is already made in law for exceptional rural housing development. However, while on occasion that land is offered free or at marginal cost by landowners, it is often offered in return for planning permission on land which is sold at market prices. I argue for the need to go much further, and have done so in interventions on a number of occasions during the course of the Bill.
When we want to build an airport, roadway, motorway, bypass, bridge, railway line, reservoir or development in the public interest, under present arrangements we use powers under various pieces of legislation, in particular the land compensation Acts. Compulsory purchase orders are issued, signed off by the Secretary of State, and the land is acquired at its then market rate, plus an uplift. The uplift can include an occupant’s loss payment, a basic loss, an allowance for the replacement of land to include fees and taxes paid, disturbance costs and an allowance to cover the cost of land unreasonably affected by adjacent development. These additional costs are usually but not always marginal compared to the costs of the original CPO land in question.
The process applies where agricultural, pastoral or arable land is the subject of compulsory purchase. By my reading, the justification for the CPO is set out in Section 226 of the Land Compensation Act 1965, as amended by Section 99 of the 2004 Act where it states that a local authority must not seek a CPO unless it feels that the development of the land will,
“promote improvement of the economic well-being of the area … and promote the improvement of the social well-being of the area”.
Denning, in his judgment in Prest v Secretary of State for Wales, opined on the justification for compulsory purchase, saying that,
“Parliament only grants it, or should only grant it, when it is necessary in the public interest”.
He then went on to set out the safeguards.
Viscount Younger of Leckie
It is fair to say that we continue to work hard to press Network Rail to pick up that specific point. I believe that we have made more progress than ever before in addressing those issues. It is important that we look at all areas of land that are not being used, and that is exactly what this planning process aims to do.
I shall now, if I may, make some progress and turn to Amendment 89L and compulsory acquisition. The noble Lord, Lord Campbell-Savours, has argued—and I accept his passion on this subject—that the imperative for house building is so great that land acquired for that purpose should be acquired as cheaply as possible. There is no doubt that more houses should be built, and that cheap land would help towards that end: he makes a very fair point.
The need for housing is not, however, the only imperative in play when land is acquired by compulsion. The acquiring authority is acting in the public interest, but in return the claimants, whose land and property is being taken from them, must be treated fairly. It may help the Committee if I briefly outline the principles of compensation for land taken by compulsion.
The compensation code is underpinned by the principle of equivalence. This means that the owner should be paid neither less nor more than his loss. The code provides that land shall be purchased at its open market value, disregarding the effect of the scheme underlying the compulsory purchase. The land is valued in a construct called the “no-scheme world”, whereby any increase or decrease in value which is due to the scheme is disregarded. Land will always have its existing use value, but market value also takes into account the effect of any planning permissions that have already been granted, and also the prospect of future planning permissions. This is generally known, as I am sure the noble Lord will know, as “hope value”. In the context of compensation for compulsory purchase, all this is assessed according to the planning assumptions in the Land Compensation Act 1961, which require the valuer to assume the scheme underlying the acquisition is cancelled. Your Lordships’ House may recall that these were reformed in the Localism Act 2011.
In some situations there will be no hope value, because the individual claimant could not have obtained planning permission for some more valuable use. For example, the land might be in an isolated rural location where permission for development would have been unlikely to be granted in the absence of a comprehensive scheme requiring compulsory purchase powers. In other situations, perhaps where land is acquired near an existing settlement, there will be pre-existing prospects for development on the land—in other words, development potential which existed prior to the scheme—and the strength of those prospects will be reflected in the market value of the land.
Lord Campbell-Savours
Why should hope value be transformed into reality on the basis of a planner’s pen? The planner decides, “I recommend to my local authority that that land should be used for housing”, and in an instant transforms the value of that land from £20,000 a hectare to maybe £5 million a hectare. Why? How can we possibly justify that?
Viscount Younger of Leckie
I think that I explained that earlier, by saying that we needed to look at both sides, and to use the principle of fairness. The fact of the matter is that unless we intervene and there is a status approach, the value of land is what it is. I believe that the existing regulations are fair. Land will always have its existing value, but the hope value needs to be taken account of as well.
As I said, in some situations there will be no hope value, because the individual claimant could not have obtained planning permission for some more valuable use. For instance, the land might be in an isolated rural location where permission for development would have been unlikely to be granted. Therefore, compensation under the code is paid at the open market value of the land in the “no-scheme world”. This provides a fair level of compensation. I hope that these explanations have reassured noble Lords. I have spent a bit of time expanding on the arguments raised, particularly by the noble Lord, Lord Campbell-Savours, and I hope that noble Lords will feel able not to press their amendments.