Rating (Property in Common Occupation) and Council Tax (Empty Dwellings) Bill

Debate between Lord Campbell-Savours and Earl of Lytton

3rd reading (Hansard): House of Lords
Wednesday 18th July 2018 Lords Chamber

[Lord Campbell-Savours (Lab)]

My Lords, I was having a conversation the other day in which a matter arose that we did not consider when we were dealing with the provision at earlier stages. Today we are setting out the council tax premiums payable on empty property. The Explanatory Notes state that:

“Since 2013, local authorities in England have had the power to charge a council tax premium of up to 50% on ‘long-term empty dwellings’—that is, homes that have been unoccupied and substantially unfurnished for two years or more. This premium is in addition to the usual council tax charge that applies to that property”.


It is a power, not a requirement—but that is not strictly true. The assumption that we have all been making is that within the first two years the council tax remains the same as payable at the moment—but that is not strictly true. If you have a single person discount, which is 25%, then the council tax you will pay once your property is empty is not based on the single person discount at all; it is based on dual occupancy.

I will give an example of that, which I have taken from Windsor & Maidenhead. For band G properties the full council tax is £1,767.67 per annum. With the 25% discount it is £1,325.75 per annum. In the current year the total council tax on a band G property is £1,855. After two years, that council tax will double to £3,712, as against £1,325 at the moment. That is nearly a tripling of the council tax payable on that property, because the single person concession is not carried forward. To take the current year, someone in a band G property in Maidenhead will currently pay £1,325, but if they empty it their council tax will immediately increase by a third, to £1,855. That is a 33% increase, because they have emptied the property and, again, because they lose the single person discount.

I raise this because in the Minister’s presentation to the House he mentioned that guidelines would be issued. Can we deal with this issue in guidelines? Can local authorities be advised that when they send out those council tax demands for an empty property subject to a single person discount, the new rate will be based on the council tax payable with the discount, not on the rate payable in the event that the property has been occupied by two persons or more?

[The Earl of Lytton (CB)]

My Lords, I am pleased to follow the noble Lord, Lord Campbell-Savours, although I have different reasons for wanting to know what might be included in the guidance. As we are at this stage of the Bill I reiterate my declarations of interest: I am a vice-president of the Local Government Association and a professional who deals with rating, as well as an owner-occupier of residential property.

My concern goes back to a point I made at Second Reading: namely, that we do not always know the full range of circumstances which lead to long-term vacancy. It is probably generally true to say that owners of residential property do not deliberately leave it vacant long term; it simply deteriorates. But there are reasons why it occurs, notwithstanding what one would reasonably suppose is owners’ innate desire to make best use of the asset. I am thinking of areas subject to some sort of wholesale blight; those might be areas which are destined for redevelopment and which are held in that form. If they are held by a developer, good luck to them, but if you happen to be a private owner of property that is in part of an area which is destined for long-term redevelopment, you are stuck with it, possibly with none of the end benefits.

Could the Minister therefore give us some clarification and reassurance that where there is an impact of some planning or public policy—perhaps including a local authority’s policy for an area—that results in genuine reasons for vacancy, this sort of thing will be covered by the guidance? If it is not, it does not matter how genuinely you are in the market and with what rent or other terms you might wish to let or sell the property; if it is in an area that is subject to serious blight, first, nobody will get a mortgage for it, and secondly, maybe nobody will want to live there. Crime, deprivation and so on are part and parcel of that algorithm. We therefore need to be careful that where there are genuine reasons, not all of which can be imagined at this juncture, provision in the guidance will cover that sort of thing. Can the Minister also say whether the guidance will be subject to wider public consultation than perhaps between just the professions—the sort that I belong to—and local authorities?

Housing and Planning Bill

Debate between Lord Campbell-Savours and Earl of Lytton

Monday 25th April 2016 Lords Chamber

[Lord Campbell-Savours]

Can the noble Earl answer the simple question that I asked? Why should a landowner whose land is worth between £15,000 and £20,000 a hectare suddenly, at the stroke of a pen designating one of these areas, find that his land can be worth anything from £1 million to £7 million per hectare? How can that possibly be justified?

[The Earl of Lytton]

My Lords, I am not sure that I know the answer to that. The point that I was trying to get at in the process of this amendment was the question of who profited from the 500 houses. The short answer is that very large gains are made by dint of the market. The noble Lord may wish to take the view that the market should be overridden—a view that I feel certain many would share on his Benches. It does not happen to be my view and we will have to agree to differ on how this is to be dealt with. I entirely respect his view and I can see the social pinch point here, but I am trying to look at this as an economic model rather than in terms of who gains out of it.

I have gone on long enough about this and it is certainly not my intention to divide the House on it. I therefore beg leave to withdraw the amendment.

Housing and Planning Bill

Debate between Lord Campbell-Savours and Earl of Lytton

Thursday 17th March 2016 Lords Chamber

[Lord Campbell-Savours]

If there are such regulations in place, of which I am totally unaware, how many prosecutions have been brought? I would bet that there has not been one anywhere in the United Kingdom. The reason for that is because there are probably hundreds of thousands, if not millions, of people living in homes where those regulations are being defaulted upon.

[The Earl of Lytton (CB)]

My Lords, there are regulations about all these things. There are fire regulations, regulations on overcrowding, spatial regulations and so on. The difficulty arises if you have a room in the sort of flat that one of my children rented at one stage. Changes can be made without the local planning authority or anyone else knowing about them. In that particular instance, what had been a two-bedroom property with a fairly large kitchen and dining area was converted into a three-bedroom property when part of that area was hived off, thus creating another bedroom. It meant that, in effect, three couples—six people—were sharing one bathroom, which was a trial in its own right. However, the third bedroom which had been hived off the kitchen and dining area had no direct access to the safe environment protected by a fire door, which meant that the people occupying that room were not safe, given that a kitchen is a potent area for fires to start because of cooking, electrical equipment and so on. I felt that the property was at risk and I told my offspring that, if they had to rent in that flat, for heaven’s sake not to rent the room off the kitchen but to take a room off the lobby.

A local authority has no real way of catching up on this kind of thing, particularly if the properties are relatively temporary lets. Often these are places which are let to students for a year or nine months at a time for the academic year. The tenants may not be registered at the property as electors because their university might have registered them, so there is no real audit trail to enable the authority to look into the issues.

I think that there is a real problem here. The noble Baroness, Lady Gardner of Parkes, doughty campaigner as she is for getting these things sorted out—I support her in her intentions behind her amendments—should note that, nevertheless, to use a West Country phrase, we are a bale short of a stack on catching up with these issues in practical terms. That is the conundrum. Also, landlords might not be particularly interested in enforcing such a provision. It might be possible to deal with these issues through a body other than the local authority, but I do not know. However, there is a problem here which is creating situations that are hazardous and prejudicial to some of the people who are occupying these properties. I certainly therefore support the gist of what the noble Baroness has said.

--- Later in debate ---

[The Earl of Lytton]

My Lords, the noble Lord, Lord Young of Cookham, has raised one of the legacy issues derived from the way in which leaseholds are set up. I have a possible reservation about the impact of leaseholders exercising their right to manage, but the point he made highlights a particular mismatch here.

Landlords of landlord-managed blocks tend to have rather blurred lines when it comes to dealing with what exactly constitutes a legitimate service charge item. It is all very well if they are pursuing something that will clearly protect the service charge payers in the block—if it is a block—generally; it is quite different if the landlord is using the service charge to finance his pursuit of a particular tenant on a landlord/tenant issue, as opposed to a service charge issue. That is where the muddle starts to creep in. The way in which the service charge provision and its recoverability are set out in many old leases simply has not kept pace with the passage of time. We are stuck legally where we are because of how these things were done historically, perhaps during the 1950s, 1960s or 1970s, when we did not have the same sort of concentration on ensuring that the rights of tenants, as the payers of service charges, were as adequately protected as they might be under modern drafting.

This does raise an issue, and the only thing on which I would counsel a bit of caution is long leaseholders who have exercised their right to manage. Would they get caught for part of the administrative costs of pursuing a non-paying long leaseholder in a block on a service charge item? Would they then suffer the same fate? Otherwise, it puts them in an exposed position. However, the basic premise raised by the noble Lord, Lord Young, is to me unassailable. Why should the generality of long leasehold service charge payers in a multi-unit building foot the bill for the landlord pursuing a particular tenant on a landlord/tenant issue? On that point, he is absolutely spot on.

[Lord Campbell-Savours]

My Lords, I would like to bring a little experience to this debate. I was involved in an enfranchisement over getting a share of a freehold from leasehold. Although it was an enfranchisement, if I remember rightly, the costs were not payable by the tenant in the enfranchisement proceeding before the tribunal. Notwithstanding that, it is interesting to know what can happen in these tribunals. In the tribunal in which my residents’ association was involved, we were paying £3,000 a day for a lawyer. I remember sitting there one day during the inquiry. There had been a gentle chat in the morning and at lunchtime the chairman of the tribunal looked up at the clock and said, “I think we’ve had an interesting day and I suggest that we adjourn until tomorrow morning”. In the event that the bill had been payable, the residents would have had to share out the £1,500 costs. In fact it was not payable, because, as I said, it was an enfranchisement. In circumstances where the liability did fall on the tenants, the bill would have fallen on the residents. Ministers have to have in mind the fact that complications such as those can arise in a tribunal, where the chairman might not be fully aware of the costs of the lawyers representing the residents.

Housing and Planning Bill

Debate between Lord Campbell-Savours and Earl of Lytton

Thursday 3rd March 2016 Lords Chamber

[Lord Campbell-Savours]

I shall very briefly intervene on this occasion just to say that I only wish that Amendment 89L in my name, a very controversial amendment that comes much later in our proceedings, could have been taken at this stage. It would have provided a very different approach to dealing with this matter. But of course we will not come to my amendment for another three weeks, I understand; it is at the very end, by which time everyone will have made their mind up.

I think that if we are to go down this route, Amendment 41A in the names of the noble Lords, Lord Best, Lord Kerslake, Lord Cameron and Lord Beecham, is the perfect solution. In my view, it deals with the problem of excess profit-taking; it provides for the discount system and, if you are acting honourably, you are not penalised in any way. That is the compromise that Ministers should seriously consider. I know that promises were made in the manifesto, but that amendment does not compromise the commitments that were given. It still provides for the 20% discount system which the British people were promised was on offer. I hope that the amendment is very seriously considered.

[The Earl of Lytton (CB)]

My Lords, I have sat on my hands for a considerable while since we started in Committee this morning. I speak to an intriguing amendment, Amendment 41A. Before doing that, I will try to peel back some of the skins of the increasingly complex onion that we appear to be dealing with.

The first thing to realise is that the housing market is potentially a very volatile animal, and has an enormous number of different subset markets—as we have heard, different parts of the country operate in very different situations. I know that your Lordships’ Select Committee on National Policy for the Built Environment heard evidence that, in certain parts of the country—not the north-east or the north-west— the market simply has not returned to anywhere near pre-peak levels of value. However, I leave that to one side.

Earlier, the Minister cited a gap in the market. I question which market we are referring to. Apart from believing that the gap is vanishingly small—we have heard some reasons why other products would effectively fill it anyway; and apart from the means being adopted to plug it in the Bill being vanishingly transient; and, furthermore that the limited category of people whom this type of starter home would actually benefit is, to my way of thinking, irrelevantly small in the overall scale of things, I have to wonder where we are trying to get to.

We need to be clear about whether society will provide lasting sectoral benefit to that proportion of the population that any social society is bound to try to assist. In that, I include people who may have been property owners at some stage, have fallen on hard times and, for whatever reason, have to depend on the state. When you are dealing with free markets, that sort of thing happens. There will always be a proportion of people—I do not pass judgment on how significant or insignificant—who cannot afford to buy and almost certainly cannot afford to pay a market rent. Are we going to assist those people, or to provide an increasing focus on a windfall gain for the few, without reference to the needs or actual means of the few who will benefit? I question what we are doing here.

In introducing Amendment 41A, the noble Lord, Lord Best, identified that the discount and loan assistance taken together is a huge transfer of asset. It is much bigger than the headline 20% figure that we are led to believe applies under starter homes. As the noble Lord, Lord Young, observed on Tuesday, developers are keen on this. Yes, indeed— they would be. Who would not be as an alternative to the affordable housing regime under Section 106, with the uncertain outcomes and unpredictability that that involves? I am not in the least surprised about that. Purchasers of starter homes would also be keen. Who would not be, offered a windfall gain for the asking? I wonder whether we should be devoting quite so much time and effort to this ephemeral social benefit.

When dealing with the question of housing and the impecunious, I am reminded of a gentleman who once said to me, in connection with council house sales, “If I had that sort of cash, I would put it to a better use than buying this place”. I hope that we do not build the sort of place that he was referring to, but I wonder whether, in circumstances of strapped resources in the public domain, we should be funding the ephemeral and assisting those who have access to a deposit that enables them to gain this discount in the first place. There is certainly no gain to the social budget on the sale of a starter home. The mortgage gets paid off, presumably, and the balance of it goes off down the road with someone to their next home. Or, if they have succeeded in being parted from their money, it goes to someone else—some financier who may have come in on the back of this scheme. It was mentioned earlier today that there is absolutely no end to the ingenuity of financiers of all sorts, regular and irregular, who would jump on this bandwagon and might usefully talk people round into doing business with them on the basis that they would share in some of the largesse being provided by society at large.

I believe that doing more here includes retaining a significant element of social benefit of some sort, and it is a matter for debate how much that should be, for society at large—unless of course you believe that the market will do everything, which of course it will not and cannot. History shows us that it does not.

Water Bill

Debate between Lord Campbell-Savours and Earl of Lytton

Tuesday 11th February 2014 Lords Chamber

[Lord Campbell-Savours]

My Lords, I will speak to Amendment 160, in the name of my noble friends Lord Whitty and Lord Grantchester. I intend to speak on a number of amendments so I must declare an interest. I have a leasehold interest, with my wife, in a band G home on the Thames built on the flood plain. My flat is not threatened by flooding. My home has therefore never been evacuated and I have never made an insurance claim on a property I own. Nevertheless, I feel that I have an interest to declare while speaking on an issue that affects tens of thousands of home owners who similarly live in the vicinity of the Thames, many of whom are now being evacuated.

I start by congratulating the Government on introducing this scheme, which I understand was the subject of some very difficult negotiations with the insurance industry. I want to refer to a particular group of home owners, of which I am not one, who come under council tax band H. Council tax band H is pretty expensive property, as we know, and the flooding over the past few days has probably affected thousands of these properties up and down the River Thames between Chertsey and just south of Maidenhead, near Windsor. These home owners will be very worried about what is going to happen. They are excluded from this scheme. Not only do they have the problem of how to resolve their immediate difficulty of dealing with the flooding and the consequences for their homes, but they will also be worried about the longer term financial implications, in the event that their premiums are substantially increased—which they will be. I know that from my own experience in the Lake District, which I mentioned during my previous intervention. For most of my life, I lived there in the town of Keswick, which was subject to flooding. Many people there found it impossible to get insurance from insurance companies following the floods that took place some years ago.

There is going to be a real problem for these people. Many in the Thames Valley are not included in this scheme because their properties fall into band H. It is not that the Government need to interfere with this scheme. I understand its merits and it has been very sensitively negotiated. We very much support it. However, heads have got to be banged together to find a way of resolving the problem of many of these people who live in band H property.

People may ask what I am doing defending people living in band H properties from the Labour Benches. The reason is simple: many people who live in band H properties did not buy them as band H properties. They bought them when they were much cheaper, and when their incomes may well have been quite modest. Property price inflation in London and in the south of England has placed many people in this position. Even the way that the mansion tax is being construed may affect people who have quite small incomes. I am in favour of the mansion tax, but maybe the way that it is to be calibrated raises the same questions. People on low incomes who find themselves living in expensive properties—I am not one of them, as I said—have to be considered in these matters. I hope that the Government, even as late as this in the Bill, might on Third Reading at least make some statement as to what provision might be made for them, notwithstanding what the Bill provides on Flood Re.

[The Earl of Lytton]

My Lords, it is probably appropriate that I follow the noble Lord, Lord Campbell-Savours. I have to admit that I live in a band H property, but it is not in London and I am glad to say that it is built on a hill. My Amendments 160ZA and 161D are in this group. I shall be brief, because there is another larger issue that I want to address.

I tabled Amendment 160ZA to see whether I could flush out the rationale behind the exclusion of certain categories of property from FR, but also because there seemed to be a reluctance to consider both sides of the coin in terms of what is in and what is out of the safety net. What is in identifies and underlines what is out. It cannot be otherwise. The fact of exclusion does not mean that other insurers will not provide some cover, but it does, as the noble Lord, Lord Campbell-Savours, said, have consequences. I have certainly received correspondence suggesting some very significant rises in free market premiums based not so much on the immediate severe risk but on that broader category of material risk that will be flagged up and will lie between those that have no risk whatsoever and those that are protected by the FR safety net. It is in the public interest that any scheme report under Amendment 160 should look beyond the narrow scope of FR inclusions and also look at wider exclusions.

Local Audit and Accountability Bill [HL]

Debate between Lord Campbell-Savours and Earl of Lytton

Wednesday 24th July 2013 Lords Chamber

[Lord Campbell-Savours]

My Lords, I will briefly intervene to follow up some of the comments of the noble Lord, Lord Tope. From 1986 onwards, I argued in the Commons for revision of the law governing the provision of information to the public. It was during a very interesting period following the arguments in the mid-1980s over Tony Wright and the reform of the Official Secrets Act.

One of the reasons we argued for freedom of information was that we believed that it would change the conduct within local authorities. My noble friend’s amendment would extend those rights of access to a group of organisations that effectively are carrying out the functions of local authorities. In saying, “change the conduct”, I refer back to the comments of the noble Lord, Lord Tope, on the additional cost. However, no-one has been able to quantify the benefits financially to local authorities of being more transparent in their operations. I frequently used freedom of information requests to press local authorities and other public bodies on the way that they conduct themselves. After a series of freedom of information requests, one sometimes notices a change in the way that a local authority conducts its affairs. Very often, it means greater efficiency, the saving of public money and a happier general public paying their council taxes.

When the Minister winds up, I do not think that he should see the issue simply in terms of costs; he should think about the actual benefit to the taxpayer of a system that is far more transparent in its operations.

[The Earl of Lytton]

My Lords, I had intended to add my name to the amendments tabled by the noble Lord, Lord Wills. I regret that probably I advised the clerks too late for that to happen. I start, therefore, by apologising to the noble Lord.

As did the noble Lord, Lord Tope, I declare my interests as a newly polished and appointed vice-president of the Local Government Association and a possibly somewhat more tarnished president of the National Association of Local Councils. The issue is one of not adding unnecessarily to costs, as the noble Lord pointed out. Part of me says that whenever locally—or at whatever level—a greater throughput of taxpayers or public money is being used, it is right that the level of scrutiny is proportionate. The reference to “significant private companies” is perhaps slightly less than I would have liked. I would have liked the figure itself to have been objectively significant rather than the company providing the service being significant. I am not sure that I know what a significant company is in this context, whereas I am clear as to what a significant figure might be.

However, it is right that auditors should have a degree of discretion in looking at this. As I said at an earlier stage in the Bill, we may be looking at quite small organisations that, for whatever reason—perhaps because of some project they are undertaking—may be responsible for deploying fairly significant sums. It is right that those should be subject to scrutiny. There is no place here for opacity in the way in which figures are presented. Therefore I very much support the principle of this amendment.

I will digress, if I may, onto the freedom of information issue. I am aware that one of the get-outs in relation to providing freedom of information data is when the request is considered to be vexatious. The standard of “vexatious” as a term of art seems to be a matter of self-assessment to a degree by the body that is providing that information; at least, that is how it seems to me. The noble Baroness opposite is shaking her head slightly; if I have got it wrong, I apologise. However, it seems to me that that is capable of a degree of latitude. I certainly have seen evidence of “vexatious” used as a reason for not providing information—although not in the context of local government—and the term ought to be made a little clearer. In general terms, I support what the noble Lord, Lord Wills, has put forward and am grateful to him for continuing to bring it to the attention of the House.