Council Tax
Lord Greenhalgh Excerpts(3 years, 4 months ago)
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Lord Young of Cookham
To ask Her Majesty’s Government what plans they have, if any, to introduce higher rate bands for Council Tax.
The Minister of State, Home Office and Ministry of Housing, Communities and Local Government (Lord Greenhalgh) (Con)
I recognise my noble friend’s interest in this issue, but the Government do not have any plans to introduce higher bands for council tax. Many people living in high-value properties are on low incomes and may have lived in their homes for a long time. Higher bands risk penalising such people, including pensioners, who have seen their homes increase in value. They could face a substantial tax rise without having the income to pay the higher bill.
Lord Young of Cookham (Con)
Does my noble friend agree that it would be odd to calculate today’s income tax on what people earned 30 years ago, but this is the basis on which we fund local government? The council tax is out of date, arbitrary and regressive. While the right policy would be revaluation, ducked for too long by successive Governments, would it not be right in the meantime to take the higher band and, without breaking any manifesto commitments, introduce two extra bands to bring in extra revenue from those with more valuable assets?
Lord Greenhalgh (Con)
My noble friend’s suggestion has some merit. Even a limited revaluation would be costly and would yield significant extra revenue only in those parts of the country where house prices are the highest, given that council tax income is not redistributed. It would also leave council tax payers in a rather odd, and arguably less fair, situation where some were paying their tax based on 1991 values while others were doing so based on prices in the present day.
The Lord Bishop of St Albans [V]
According to the citizens advice bureau, council tax is the most common debt problem faced by families in Britain, with 86,000 people in England struggling to keep up with payments. The current system heavily favours the south-east and disproportionately disadvantages the poor. As part of the levelling up agenda, what consideration have Her Majesty’s Government given to a land value tax to address these inequalities?
Lord Greenhalgh (Con)
My Lords, the Government do not have any plans to introduce such a land value tax, but they are committed to supporting those on low incomes, including by increasing the living wage and by spending £111 billion on welfare support for people of working age in 2020-21.
Lord McLoughlin (Con)
My Lords, the council tax was introduced as a result of the abolition of the community charge, which was introduced as a result of the discredited rates system. One reason why the rates system became so discredited was that there was no revaluation. There has been no revaluation of council tax for 30 years. Are we going to find ourselves in the same position in another five years if we do not act soon?
Lord Greenhalgh (Con)
I note my noble friend’s call for a council tax revaluation. As I said in my previous answer, a full revaluation would be costly. The council tax bands are well understood by residents and provide a stable income for councils, so at this stage we have no plans for a full revaluation.
Lord Campbell-Savours (Lab)
My Lords, how is it possible for a £54 million luxury house in London’s Mayfair to have a lower council tax than a former council house on Windebrowe Avenue in Keswick in Cumbria and almost the same council tax as an £80,000 house on Moorclose Road in Workington, both in my former constituency? Is it not the simple truth that the whole council tax system is now discredited? It is unfair, it penalises much of the north, it favours London and much of the south, and it is now in urgent need of reform.
Lord Greenhalgh (Con)
My Lords, I am interested to hear the specific examples given, but we must recognise that, for local authority funding, council tax represents only a proportion of the income received. That is why we try to equalise through measures such as the grant system, which recognises the index of multiple deprivation as one of the reasons in how you provide grant—
Lord Greenhalgh (Con)
Yes, it does. On that basis, grant enables areas with lower council tax bases to receive 16% more in core spending power.
I recognise the point made by the noble Lord about the disparity in valuations between the north and the south, but it is a system that works well to develop the funding that councils need at the moment.
Lord Shipley (LD) [V]
My Lords, I refer the House to my registered interests. What consideration will the Government give to the potential benefit of a proportional property tax, as recommended by the Housing, Communities and Local Government Committee to replace council tax and business rates in its report published earlier this week?
Lord Greenhalgh (Con)
My Lords, we have looked at putting on hold the reform of the local government finance system because of the pandemic, and further reforms will be potentially be brought forward as a result of the spending review. I note the idea that the noble Lord raises.
Lord Leigh of Hurley (Con)
My Lords, I yield to no one in my passionate belief that the state should tax the citizens less, but domestic real estate is by international standards undertaxed. It would not be that expensive to restrict a revaluation to council tax band H properties —perhaps those over a certain current market value. We should then look at empty properties. There are currently 30,000 empty properties in London alone, with a value of £15 billion. They should attract a surtax, along with overseas-owned properties.
Lord Greenhalgh (Con)
My Lords, I note that my noble friend again calls for a new, higher band of property. If that higher band were based on 1991 values, the Valuation Office Agency would need to revalue all properties in the current top band. That would certainly be cheaper than a full revaluation.
Baroness Blake of Leeds (Lab)
I refer noble Lords to my registered interests. The impact of the pandemic has led to the worst recession of any major economy. With the virus still not under control, local councillors will again be forced to raise council tax this year to protect vital local services, just when many families are struggling to make ends meet. Will the Government remove the necessity for planned council tax rises by giving councils the resources they need and stand by their pledge, so far not honoured, to do whatever is necessary to support councils?
Lord Greenhalgh (Con)
My Lords, I do not recognise the picture that the noble Baroness paints. Throughout the pandemic, we have provided considerable additional funding for local authorities. Local authorities received £3.8 billion in social care grant funding through the social care grant and the improved better care fund. We continue to support councils throughout this very difficult period.
Lord Jones of Cheltenham (LD) [V]
Hardly a week goes by without a news story about someone’s new basement causing problems to their neighbours. Should there not be an automatic revaluation when such improvements are carried out and higher bands introduced to cope with massively inflated property values, or do we need a new system altogether, related to the ability to pay?
Lord Greenhalgh (Con)
My Lords, I am delighted that all these ideas are being floated on how we should support and organise the funding of local government. As I said, the Government have put that on hold, and we are looking at bringing forward measures as part of the spending review.
Lord Flight (Con)
My Lords, there is a clear rationale for introducing higher-rate council tax bands. The gap between the top and bottom bands is ludicrously small compared with the value of the premises. I ask the Government to consider reviewing the whole territory of property taxation and introducing a new, fairer tax covering property—commercial and residential.
Lord Greenhalgh (Con)
I thank my noble friend. He joins the chorus of people calling for new bands and a reform of the council tax system, but, as I have said, we do not intend to bring in new bands. Plans around local government finance reform have been put on hold and will be carried forward as part of the spending review.
Lord Clark of Windermere (Lab)
My Lords, does the Minister not realise that the disparities in council tax create a lot of the poverty that he referred to in his earlier statement? Is he aware that the maximum level in Westminster is £1,655? In every district in Cumbria, the average is in excess of £4,000. How can that be fair?
Lord Greenhalgh (Con)
My Lords, I point out that Westminster has a low-tax policy and sets probably the lowest council tax in the country, and it should be commended for being a low-tax authority. Certain authorities know how to squeeze every penny in every pound, and I commend Westminster on being able to do that.
The Lord Speaker (Lord McFall of Alcluith)
My Lords, the time allowed for this Question has elapsed. We now come to the fourth Oral Question.
Leasehold Reform (Ground Rent) Bill [HL]
Lord Greenhalgh ExcerptsTuesday 20th July 2021
(3 years, 4 months ago)
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Lord Greenhalgh
Member’s explanatory statement
This amendment excludes leases of multiple dwellings from the definition of “regulated lease”.
The Minister of State, Home Office and Ministry of Housing, Communities and Local Government (Lord Greenhalgh) (Con)
My Lords, I take this opportunity to thank all noble Lords who have participated so far in the debates on the Bill and who have met me to discuss the policy and principles behind it. These discussions have led directly to the first set of amendments under consideration today. The government amendments in this group provide greater clarity in two key areas—rack rents and intermediate long leases—addressing issues that emerged both at Second Reading and in Committee.
First, government Amendment 1 inserts the word “single” into Clause 1 to put beyond any doubt or ambiguity the fact that the Bill is intended to apply only to a lease of an individual dwelling. My noble friend Lord Hammond has noted, both in this Chamber and in various meetings, that, as drafted, the Bill could perhaps be interpreted as also applying to cases where a lease is made up of multiple dwellings, held collectively.
Where a lease is for multiple dwellings, such as a where a business has a lease for all or part of a building, the intention of the policy is that there should be no restriction on such leaseholders arranging their finances with the superior landlord in a manner that suits the commercial needs of both parties. This amendment clarifies that the Bill is intended not to capture such leases but to protect individual leaseholders.
Noble Lords will have heard me say many times that this is narrowly focused legislation. Ending this legitimate practice is not, and never has been, the intention of this Government. By amending this clause so that it refers to a long lease of a “single” dwelling, we ensure that this legislation does not inadvertently put an end to this business model. The addition of this word provides welcome clarity on this matter, and I hope that the amendment will attract support from across the House.
Government Amendments 2 and 38 concern the exemption from the provisions of the Bill in cases where a leaseholder has taken up a long residential lease without the customary payment of a premium and instead pays a full rent for the term of the lease. As I am sure your Lordships are aware by now, the purpose of the Bill is to protect the large majority of leaseholders who pay a substantial premium on the granting of a lease, often with a mortgage, from further rental charges. Our guiding ambition here has been to put an end to the otherwise continuing unfairness of such leasehold arrangements.
It has been brought to my attention by noble Lords, particularly my noble friend Lord Hammond, that a small number of long residential leases are let where no premium is paid for the granting of the lease and where, instead, a market rent is paid by the leaseholder. I thank once again my noble friend Lord Hammond for drawing our attention to this issue with the drafting of the Bill. It is perhaps no surprise that a former Chancellor should have such attention to detail, and we are grateful to him.
Although such arrangements would still be possible for a lease of 21 years or less, we understand that there are occasions when such arrangements may take place with leases over 21 years—a commonly understood definition of a long lease. I reiterate that it is not the intention for the Bill to apply to long rental leases such as these, so, for the purposes of clarity, the Government have tabled these amendments. They provide that regulated leases will be only those leases granted in exchange for a premium; as a consequence, we have also defined a “premium” in government Amendment 38 as
“any consideration in money or money’s worth for the grant of a lease, other than rent”.
I trust that this allays the concerns of the House on the matter of market rents for long leases.
Amendment 3, in the name of the noble and learned Lord, Lord Etherton, would remove new leases where there is a “deemed surrender and regrant” from the provisions of the Bill. I am grateful for his explanation that his amendment is to address concern that landlords may be reluctant to change a lease, even where requested to by a leaseholder, if this would result in a deemed surrender and regrant because this would mean that the peppercorn limit would apply.
The noble and learned Lord has explained that the two common circumstances where a leaseholder may request that a lease is varied are a change to the demise —for example, to include additional land or property—or to change the term. I will address the concerns about the change to the demise first. We agree that such variations would usually take place in a way that results in a deemed surrender and regrant and that the Bill would discourage that because the resulting new lease would need to be for a peppercorn ground rent.
However, the same outcome can also be achieved with the agreement of the leaseholder by the grant of an additional separate lease, meaning that the ground rent can remain on the unaltered existing lease. This might also be done by altering the lease and extending the lease for a single day. This would then be caught by Clause 6, thereby allowing the ground rent for the existing term to be retained. As we have discussed previously, any extension would be at a peppercorn rate. We believe that this is an achievable workaround that means that variations for the leaseholder’s benefit can be introduced without detriment to the landlord’s existing rights.
Lord Lennie (Lab)
My Lords, the amendments in this first group, like most that have been tabled on Report, are technical amendments that do not alter the central provisions of the Bill but none the less aim to improve its application. Amendments 1, 2 and 38, each tabled by the Minister, deal with the definition of “regulated leases”. Specifically, they exclude leases of multiple dwellings, with Amendment 2 adding that a regulated lease is considered such only
“if it is granted for a premium”.
Can the Minister confirm whether there have been any impact assessments or informal consultations on the application of these changes?
Amendment 5, tabled by the noble Earl, Lord Lytton, probes the relationship between the Bill and “large and complex buildings”. He gave a large and complex explanation of his amendment. In there somewhere, I think he said that the commonhold might present a solution to the complex problem raised, but it is probably a little more difficult than that. These Benches fully support the removal of ground rent for all leaseholders, but I hope the Minister can confirm what support and engagement are ongoing with this impacted group.
The noble and learned Lord, Lord Etherton, has probed the provision on “deemed surrender and regrant”. I look forward to further clarification from the Minister on this as well—to tidy up the somewhat contradictory nature of the legislation in Clause 1(4) and Clause 6, as the noble and learned Lord explained.
Lord Greenhalgh (Con)
I thank noble Lords for their ongoing engagement and for the substantive points raised. I want to pick up on the issue raised by the noble Earl, Lord Lytton, of orphan freehold syndrome, in particular with regard to complex leases. I point out that leaseholders can collectively exercise the right to manage; they can appoint a managing agent to discharge the stewardship function that the noble Earl outlined.
The noble Lord, Lord Lennie, asked whether we carried out an impact assessment for the two technical changes, which really preserve what is happening today and were not meant to be captured by the provisions of this narrow Bill. We have not carried out any impact assessments. We are looking to continue a practice that we see as being sensible, on occasion. It was never meant to be captured as part of this Bill, so it is not something that requires a full impact assessment as such.
Once again, I commend Amendments 1, 2 and 38 in my name. These changes address important points raised by noble Lords in previous debates on the Bill. I thank noble Lords for recognising that they do so. I think they will agree that they improve the legislation—indeed, as a direct result of the scrutiny in this House—and that it will not have effects beyond those intended. I have listened carefully to the noble Earl, Lord Lytton, on his two amendments; I remain of the view that Amendment 5 is inconsistent with the intent of the Bill and that the case for Amendment 39 needs further consideration.
Baroness Greengross (CB) [V]
My Lords, can the Minister confirm that the definition of rent in the Bill is not intended to include other fees and charges, such as event fees and indexed service and management charges, which the Law Commission has concluded play a key role in supporting consumer choice in the UK retirement community sector? Do the Government still intend to implement the Law Commission’s recommendations in this area?
Lord Greenhalgh (Con)
My Lords, I can confirm that the definition of rent does not include the items that the noble Baroness, Lady Greengross, mentioned. I cannot state, at this stage, exactly how we will take forward the legislation for the next stage beyond the measures that we have already announced, which are to make enfranchisement easier, to adopt full-throated commonhold—we have already created a commonhold council—and to look at issues around the right to manage, but I am sure that we will be able to give the noble Baroness a response in due course, and that will play a part in the next stage of reform.
Lord Greenhalgh
“(aa) it is granted for a premium,”Member’s explanatory statement
This amendment provides that a lease will only be a regulated lease if it is granted for a premium. “Premium” is defined in Lord Greenhalgh’s first amendment to Clause 22, page 13, line 28.
Lord Greenhalgh
Member’s explanatory statement
This amendment, with Lord Greenhalgh’s second amendment to Clause 22, page 13, line 28, allows the Welsh Ministers to make regulations under Clause 2(6)(b) in relation to premises in Wales.
Lord Greenhalgh (Con)
My Lords, all the amendments in this group relate specifically to Wales. This legislation applies to Wales as well as England, and it is our intention that it works in the best way possible for leaseholders in both England and Wales. We have been working with colleagues in the Welsh Government to understand how the Bill might impact leaseholders in Wales. I take this opportunity to thank Ministers and officials within the Welsh Government for their constructive engagement on the legislation.
Amendments 14 to 24, 45 and 46 make a common-sense change to the legislation that I hope all noble Lords will agree is appropriate. They would see breaches in Wales taken to the relevant residential property tribunal—the leasehold valuation tribunal—instead of the First-tier Tribunal. These are pragmatic amendments, and I hope that they will have support of noble Lords from across the House.
The other amendments in this group confer powers on Welsh Ministers that would, as the legislation is currently drafted, be exercised by the Secretary of State. We have carefully considered which of these powers it would be appropriate to confer and which should be restricted. For instance, we share the concerns that my noble friend Lord Young of Cookham raised at Second Reading about the potential for different commencement dates in England and Wales. This would cause unnecessary confusion for both leaseholders and developers working in both jurisdictions. However, there are areas where we believe that powers should be given to Welsh Ministers to allow them to align these reforms with the housing policy that they are pursuing for Wales.
First, Amendment 4, read with Amendment 40, would give Welsh Ministers the power to update definitions of excepted leases in relation to community housing. This would give the Welsh Government more flexibility and allow them to ensure that this legislation is fit for the purpose of Welsh community housing schemes, including work related to co-operative housing. These amendments recognise the importance of the devolution settlement and are intended to facilitate the Welsh Government in exercising their powers in relation to housing policy.
Secondly, Amendments 11 and 12, read with Amendment 40, would allow Welsh Ministers to increase the size of the penalty in line with changes in the value of money. This would allow them to ensure consistency of approach with other penalties in their competence. For example, they could increase the penalties for breaching the provisions of this Bill in line with increases to other housing-related penalties set by the Welsh Government, even if the UK Government decided not to increase the penalty in England. Conversely, the Welsh Government could decide not to increase penalties even where they were raised in England. However, it is important to note again that any increase, whether in England or in Wales, would only be in line with inflation. It is therefore unlikely that we would see a large gap open up between the levels of penalties in the two jurisdictions.
Amendment 13 would enable the Welsh Government to produce their own guidance for enforcement authorities to achieve the best fit with the Welsh context. This recognises that the Welsh Government’s understanding of the different local authority structures in Wales would ensure the effective implementation of this legislation there. The Welsh Government would also ensure that the guidance is translated into Welsh. We will, of course, work closely with the Welsh Government to ensure consistency across all guidance on enforcement.
I mention at this point that we no longer intend to move Amendments 31 to 34, 36 and 37, related to conferring the powers for Welsh Ministers to make consequential amendments in relation to the Bill. As noble Lords will know, consequential amendments are essential in ensuring consistency across legislation. While we have made every effort to identify where existing legislation needs to be updated in drafting the Bill, we need to ensure that further changes can be made when needed.
Not moving these amendments today does not mean that we are no longer seeking to provide Welsh Ministers with the appropriate powers. However, following discussions late last week with the Welsh Government, we both agree that further engagement is required to ensure that we achieve the right result in setting out how Welsh Ministers and the Secretary of State should exercise their respective powers under Clause 20. To that end, we intend to continue our constructive discussions over the summer and reach an agreeable position to bring forward any appropriate amendments at a later stage. The Welsh Government want to ensure alignment of this legislation, including within the context of their ongoing codification of Welsh law. Our continued joint working should ensure that this can be achieved.
Amendment 35, the final amendment in this group, provides that the default procedure for regulations made under the Bill by Welsh Ministers is the negative procedure.
Taken together, the amendments in this group will ensure that the Bill works in the Welsh context. They recognise the interconnected nature of property law and housing policy and give reasonable powers to Welsh Ministers to adapt this legislation to ensure the best fit for Wales. The amendments that we have not moved will continue to be discussed and do not have a significant impact on the operation of the Bill as currently drafted. I beg to move.
Lord Lennie (Lab)
My Lords, I welcome these technical amendments to recognise the role of the Welsh Government in these matters. While I will not go through each in turn, I would appreciate clarification on a few broad points.
First, the Government stated that provisions are not within the legislative competence of the Senedd Cymru. Can the Minister confirm whether the Government received any advice to the contrary, and whether this was anything to do with the decision to withdraw the amendments that were originally scheduled? Secondly, why were the amendments not included in the initial draft of the Bill? Thirdly and finally, can the Minister detail how the Government have engaged with both the Welsh Government and the wider Senedd during the passage of the Bill?
I am sure the Minister will agree that the principle of devolution has become a cornerstone of our modern democracy; that is exactly why I welcome these amendments. I look forward to clarification on the questions that I have put to the Minister.
Lord Greenhalgh (Con)
My Lords, I will have to write to the noble Lord on exactly what occurred. I know that this issue raised its head only very late last week. I am happy to outline that and put a copy in the Library in response to those questions.
We want to ensure that this legislation works for both England and Wales. This group of amendments achieves this by giving certain powers to Welsh Ministers that would otherwise be exercised by the Secretary of State. We have worked closely with the Welsh Government on this issue and I hope that these amendments will have your Lordships’ support.
Lord Lennie (Lab)
My Lords, I will speak primarily to Amendment 26 in my name, which would ensure that the Government bring forward legislation to end ground rent for existing leaseholders. I also add my thanks to the Minister for making himself and his officials available and for seeking to explore whether there is any chance of a solution to this. There was not, although he described this problem as “a top priority for the Government”. That is something that the noble Lord, Lord Young, heard when, in the other House, he was trying to deal with the question of hereditary Peers in this place. He was persuaded not to move an amendment by the then Government and was promised that legislation would be forthcoming. That was 20 years ago.
Millions of people are trapped in these contracts and the Government must end the feudal system for them as well as for new leaseholders. That is the whole purpose of this amendment—to make life equal for all leaseholders. Almost 5 million properties in England are leasehold dwellings—around one in five of all homes —and the House will be aware that many of them, if not all, are seeing their ground rent increase at incredible rates. The noble Lord, Lord Blencathra, memorably described this in Committee as a legal racket. That is what it is: it leaves a loophole available which sees rents increasing without any explanation, for no service whatever to leaseholders. It is creating immense misery and financial difficulties and there is no reason for the Government to maintain the system when they have already acknowledged how outdated ground rent is.
That is why the amendment would ensure that the Government bring forward early legislation within 30 days to end the practice once and for all. The amendment of the noble and learned Lord, Lord Mackay, identifies the same issue and tries to deal with it, but I am afraid I do not believe it goes far enough. Ground rent must be ended for leaseholders, including those in existing arrangements, and for that reason I will be testing the opinion of the House on Amendment 26 at the appropriate time.
I confirm the support of these Benches for Amendment 9 in the name of the noble Lord, Lord Stunell, and I also welcome other amendments he has tabled to probe aspects of these provisions. Amendment 9 raises the crucial point that leaseholders must always be informed of arrangements, and I hope the Minister will accept that point. With that, however, I will leave it to the Minister to respond.
Lord Greenhalgh (Con)
My Lords, several issues have been raised in relation to existing leaseholders in previous debates and engagements, and I thank noble Lords for their close examination and engagement with the Government on these issues. However, as I have stated previously, this Bill is deliberately focused tightly on only new residential long leases.
As noble Lords will know well by now, the Government are approaching their leasehold reform programme in two stages. First, the ground rent Bill before us today is intended to look ahead and transform the economic relationship between leaseholders, freeholders and developers. A comprehensive leasehold reform Bill will follow during the course of this Parliament to end unfair practices in the leasehold market, ensure that consumers are protected from abuse and poor service, and reinvigorate commonhold.
Noble Lords are understandably keen to know precisely when this second and more comprehensive leasehold reform Bill will be introduced. They will of course understand that scheduling of legislation is a complex process, and that consideration must be given to the Government’s wider legislative agenda. It is therefore simply not possible to make such concrete commitments at this stage. However, your Lordships should rest assured that the Government have no intention of going slowly when it comes to leasehold reform, which is one of the Secretary of State’s top priorities.
Amendments 6, 7, 8, 26, and 30 ultimately seek to widen the scope of the Bill so that it applies to existing leaseholders. Amendment 6, moved by my noble and learned friend, Lord Mackay of Clashfern, would allow existing leaseholders to pay a capital sum to reduce their ground rent to a peppercorn. As I have laid out in previous debates on the Bill, while we are sympathetic to the aims of this amendment, the Government do not believe that it is necessary. Existing legislation already allows leaseholders of flats to reduce their ground rent to a peppercorn on extending their lease through the statutory route. Meanwhile, leaseholders of houses can buy the freehold of their property and so eliminate ground rent altogether.
In January of this year, the Government committed to allowing existing leaseholders to buy out their ground rent without the need to extend the term of their lease: for example, where their lease is already long. For the purposes of calculating the premium payable for this, the ground rent will be capped at 0.1% of the property value, making it significantly cheaper for leaseholders with onerous ground rents. We will also introduce an online calculator to simplify the process of enfranchisement and ensure standardisation and fairness. We believe that these measures will achieve broadly the same effect as my noble and learned friend’s amendment, so I cannot accept it today.
Amendment 7, in the name of the noble Baroness, Lady Grender, and the noble Lord, Lord Stunell, would restrict ground rent for existing leaseholders who enter into non-statutory lease extensions to 0.1% of the value of the landlord’s interest in the dwelling. It is important to state for the record that the peppercorn requirement will apply to the newly extended portion of the lease once an extension has been granted under the voluntary route. In addition, for the period of the lease that reflects the term that remained on the original lease, the ground rent cannot be higher than in that lease. There will be no opportunity for a landlord to use the point of lease extension to increase ground rent.
I have discussed Amendment 8 with the noble Baroness, Lady Grender, and the noble Lord, Lord Stunell, and we are of course all of the view that we do not wish to see exploitation of this legislation. However, it cannot be right that we take away the option of a non-statutory lease extension which would enable the leaseholder to pay a lower premium in return for continuing to pay some ground rent on the remaining term of their lease, with limitations as set out in the Bill. Where a leaseholder wishes to follow this route, Clause 6 allows for a monetary ground rent to continue to be paid on the remaining part of a lease—that is, the “pre-commencement lease”. This can be common where the leaseholder wishes to agree this approach with their landlord in return for a reduced premium payment.
The “voluntary” or non-statutory process is a more flexible route to lease extension and can in some cases actually be more cost effective and quicker for both the leaseholder and the freeholder. Naturally, therefore, as I am sure we would all agree, we do not want to remove that option from the Bill. I can reassure the House that as part of taking forward the Law Commission’s recommendations on leasehold enfranchisement we will be considering the matter of non-statutory extensions further, and when the time comes we will again seek input from noble Lords on this important issue.
Amendment 9 is also in the name of the noble Lord, Lord Stunell, and the noble Baroness, Lady Grender. Attempting to amend the Bill as proposed in the amendment will not guarantee the outcome that the noble Baroness, Lady Grender, wishes to see, and the Government continue to consider this issue a matter of implementation detail rather than something to change on the face of the Bill. Amendment 9 would require all landlords to inform leaseholders of the changes introduced by the Bill before entering a formal or informal renegotiation or extension of an existing lease. Where a landlord failed to do so, they would face a penalty of between £500 and £30,000. However, the drafting of this amendment means that it would cover only the period from Royal Assent to the commencement date.
I appreciate that consumer rights and awareness is of particular concern to the noble Baroness, Lady Grender, and indeed the noble Lord, Lord Stunell, and I would be very keen to work with them and others on the issue of implementation. We have concerns that, while we recognise the need to ensure that leaseholders are aware of their rights and are not rushed into a lease extension before this Bill can take effect, we also need to ensure that any penalties are fair, justified and as far as possible are not incurred accidentally. Were the fines set out in the amendment to apply immediately upon Royal Assent, there is limited time to ensure that landlords are aware of the requirements and could end up receiving a fine for extending a lease in line with a request from a leaseholder.
We agree with the principle of this amendment, and I have discussed with the noble Baroness that we would like to work with her on the implementation of the Bill. This will include, for example, provision of comprehensive information to conveyancers, landlord representatives and leaseholder groups to ensure awareness of the new ground rent limits.
I have had constructive conversations with the noble Lord, Lord Stunell, and the noble Baroness, Lady Grender, about how we might get the word out about these upcoming changes. Several solutions were proposed and I was particularly taken by the noble Lord’s suggestion about engagement with the legal profession to ensure that it can best advise its leaseholder clients. I have asked my officials to consider how we might take forward these proposals. This is important not just so that leaseholders are aware of their rights but so that landlords know what is required of them and do not inadvertently receive a large fine. However, we do not believe that financial penalties should apply as proposed by the noble Lord’s amendment, and I hope that he will not move it.
Amendment 30, again in the names of the noble Lord, Lord Stunell, and the noble Baroness, Lady Grender, would put a requirement on landlords to write to their leaseholders to justify the payments by reference to the expenses to be met from the ground rent, or else to confirm that the ground rent is not used to pay any expenses. We agree that transparency is vital in the leasehold sector. However, we do not believe that this is the appropriate way to ensure that existing leaseholders are better informed about ground rents. As noble Lords know, ground rents are charges paid with no clear service in return. Most leaseholders will be aware of this and it is unclear what benefit they would get from receiving a letter from their freeholder or managing agent to that effect.
However, we are working to prepare the sector and leaseholders alike, assessing where better advice and support can be provided through ongoing regular engagement with the sector and our delivery partners. However, I acknowledge the broader concerns raised by the noble Baroness, Lady Grender, and the noble Lord, Lord Stunell, in their Amendments 7, 8, 9 and 30 about pre-commencement leases and the consumer awareness challenges in the run-up to this legislation coming into force. It is a noble intention, and we are agreed that leaseholders should have the right information to hand when making important decisions about whether to extend or vary their lease.
I am grateful to noble Lords for raising their concerns about the implementation of this Bill. I understand that it is noble Lords’ desire, as it is mine, to improve the Bill and see it delivered as smoothly as possible. That is why my officials are working carefully to craft an implementation plan that takes account of these concerns, as outlined by the noble Lord, Lord Stunell, and the noble Baroness, Lady Grender, to do what we can to ensure that leaseholders are aware that this change in the law is coming and that they are equipped with the information they need to make the decision that is right for them.
This is a good opportunity to inform your Lordships that I can today commit to the House that the commencement date for this legislation will be within six months of Royal Assent, an issue which my noble friend Lord Young raised on numerous occasions. This issue was raised multiple times at previous stages and, while writing the date into the Bill would be inappropriate for reasons that I hope noble Lords will understand, I am pleased to make that commitment today.
More broadly on consumer awareness, the Government are pleased to hear the recent update published by the CMA on 23 June, whereby settlements secured with a leading housing developer and an investor in the leasehold sector have committed them to changes that will benefit thousands of leaseholders by refunding homeowners who saw their ground rents double, and allow leaseholders to buy the freehold of their properties at a discount. One of those companies has also committed to extending the timeframe that prospective buyers are given to exchange contracts after reserving a property, and to providing people with more up-front information about the annual costs of buying a home.
I am sure that noble Lords will also be pleased to hear that that includes ensuring that all marketing materials provided to consumers before the signing of a reservation agreement clearly and prominently state a greater level of information of benefit to the leaseholder—for example, the tenure of the property, the ground rent payable and any circumstances that may potentially lead to an increase in service charges. These landmark commitments will ensure greater transparency for leaseholders, thereby helping future buyers to make informed decisions without feeling pressured by time constraints. The CMA has made excellent progress, and that is just the start. We support the ongoing investigation and believe it will send a clear signal to others in this sector to follow this lead or face legal action.
Finally, Amendment 26, tabled by the noble Lord, Lord Lennie, would require the Government to produce draft legislation within 30 days to reduce ground rents to a peppercorn in existing long residential leases. I have listened carefully and appreciate the noble Lord’s sense of urgency in wanting to address issues faced by existing leaseholders. I can reassure the House that the Government are working at pace to bring these reforms forward. However, I must once again state that arbitrary deadlines are not useful in this context. It is, frankly, not possible to publish a Bill to the timescale proposed by that amendment. The reforms we are planning are a once-in-a-generation shake-up of the leasehold system, with the effects being felt for years to come.
I have outlined some of the changes, including on enfranchisement, transparency, a commitment on commencement and the ongoing work of the Competition and Markets Authority. I hope that the information I have given satisfies noble Lords that we take the issues facing existing leaseholders very seriously and that we are working at pace to deliver the improvements that all noble Lords here today want to see. As they will no doubt appreciate, this ambitious reform programme is complex and has many interdependencies. Therefore, while being mindful of the need for progress, it is important to take the time required to get it right. It is for these reasons that the Government cannot accept these amendments and I urge that they be withdrawn or not moved.
Lord Mackay of Clashfern (Con)
My Lords, I am greatly obliged to the Minister for his answers and, so far as I am concerned, the commitment to bring the legislation into effect is an important one that we were given some time ago. So far as my amendment is concerned, I am keen that the new proposals come forward quickly but their nature is such that it would be impossible to formulate them in a clear timescale of the kind suggested. However, that is for others say. I beg leave to withdraw my amendment.
Lord Greenhalgh
Member’s explanatory statement
This amendment increases the maximum penalty that an enforcement authority may impose.
Lord Greenhalgh (Con)
My Lords, in constructing a penalty regime for any landlords who breach the provisions of this legislation, we wanted to set the penalty at a level that was proportionate but acted as a deterrent. As the average ground rent is around £250 per year, we felt that £500 would be a reasonable and proportionate minimum penalty. Once again, I remind noble Lords that this would be paid in addition to repaying the prohibited rent with any interest due, and that £500 is a minimum penalty amount. Breaches across multiple leases could also be penalised, resulting in heavy fines.
However, both at Second Reading and in Committee, noble Lords felt that the balance between proportionality and deterrence was not quite right. The noble Baronesses, Lady Grender and Lady Jones of Moulsecoomb, and the noble Lord, Lord Naseby, were among those who made very strong arguments that the proposed regime was set at too low a level to act as a serious enough deterrent to freeholders, particularly larger freeholders with high annual turnover. In addition, while local authorities should not design their enforcement strategy to function as a revenue stream, we have been clear that we believe that any penalty recovered through the enforcement process should cover the cost of that enforcement.
I have listened carefully to the arguments made in Committee in favour of higher financial penalties and considered the impact that changing these amounts would have. We have concluded that the maximum should be raised to £30,000 which, as some noble Lords may know, is in line with this Government’s Tenant Fees Act 2019. However, we intend to keep the minimum penalty at £500, in recognition that this is proportionate where, for example, a small freeholder charges a non-peppercorn rent.
For those noble Lords who think we are a soft touch, I note that this is the first example of a minimum penalty in leasehold law. This amendment will significantly strengthen the enforcement regime and further deter freeholders from attempting to breach this legislation. I beg to move.
Lord Stunell (LD)
My Lords, I enthusiastically welcome this amendment from the Government. I am very pleased that the Minister has seen the strength of the arguments put forward by noble Lords from all around the House on this issue. It is not just that the original figure would not have been a significant deterrent for those determined to carry on with bad practice. Worse than that, it was not going to be sufficient to fund or permit trading standards to carry out their enforcement duties. The enforcing body around the country is short of funds and staff, and a new burden placed on it to enforce this provision without the means to do so was a recipe for failure. I am delighted that the Minister has seen the compelling strength of the view that my noble friend Lady Grender and others advanced passionately and congratulate him on persuading his colleagues around government of the need to move forward on this as he has.
Lord Lennie (Lab)
My Lords, the sole amendment in this group increases the maximum penalty to £30,000 per lease, in line with other housing legislation—namely, the Tenant Fees Act. I am pleased that the Minister has brought forward this change following concerns raised in Committee, but I trust that the sum of £30,000 has not been decided purely based on precedent —not just because there is not a direct precedent to compare it to. The use of £30,000 penalties in this legislation will apply to freeholders, many of which are incredibly wealthy businesses. Does the Minister believe that £30,000 will be sufficient deterrent in such cases? As I said, I am concerned that this figure has been chosen because of the so-called precedent. Can the Minister dissuade us of that notion by confirming that an impact assessment has been carried out and, if so, tell us when it will be published?
We welcome an increase in the maximum penalty, but I am not entirely confident that it will be sufficient deterrent. I look forward to the Minister’s assurances.
Lord Greenhalgh (Con)
My Lords, I point out that the maximum penalty would apply per lease and, for highly complex buildings, that soon multiplies to a substantial amount of money, so we believe that we have got the balance right in meeting the need for deterrence while recognising that some freeholders are not in the class of those that own considerable amounts of property. The amendment should be broadly welcomed and will strengthen the enforcement regime as a result, responding directly to the points made at various stages of the Bill. I believe it significantly strengthens the legislation.
Lord Greenhalgh
“(9) The relevant authority may by regulations amend this section so as to change the minimum amount or the maximum amount.”Member’s explanatory statement
This amendment, with Lord Greenhalgh’s second amendment to Clause 22, page 13, line 28, enables the Welsh Ministers (instead of the Secretary of State) to make regulations changing the amount of the minimum and maximum penalties for breaches of Clause 3 in relation to leases of premises in Wales.
Lord Greenhalgh
(b) the Welsh Ministers about the exercise of its functions under this Act in relation to a lease of premises in Wales.”Member’s explanatory statement
This amendment requires enforcement authorities to have regard to guidance issued by the Secretary of State in relation to enforcement action in England and by the Welsh Ministers in relation to enforcement action in Wales.
Lord Greenhalgh
Member’s explanatory statement
This amendment, with Lord Greenhalgh’s amendment to Clause 17, page 11, line 17, requires applications for the recovery of prohibited rent paid under a lease of premises in Wales to be made to a leasehold valuation tribunal (instead of the First-tier Tribunal).
Lord Greenhalgh
Member’s explanatory statement
This amendment and Lord Greenhalgh’s amendment to Clause 14, page 10, line 5 are consequential on Lord Greenhalgh’s amendments to Clause 13, and enable a leasehold valuation tribunal to order interest to be paid on amounts of prohibited rent that it orders to be repaid to the tenant under that Clause.
Lord Greenhalgh
Member’s explanatory statement
This amendment, with Lord Greenhalgh’s amendment to Clause 17, page 11, line 17, requires applications as to the effect of Clause 7 on the terms of a lease of premises in Wales to be made to a leasehold valuation tribunal (instead of the First-tier Tribunal).
Lord Greenhalgh
Member’s explanatory statement
This amendment is consequential on Lord Greenhalgh’s amendments to Clause 13.
Lord Greenhalgh
“(1) For the purposes of sections 13 to 16 and the Schedule, the “appropriate tribunal” is— (a) in relation to a lease of premises in England, the First- tier Tribunal;(b) in relation to a lease of premises in Wales, a leasehold valuation tribunal.”Member’s explanatory statement
This amendment defines the “appropriate tribunal” for the purposes of Lord Greenhalgh’s amendments to Clauses 13 to 16 and the Schedule.
Lord Greenhalgh
Member’s explanatory statement
This amendment corrects the drafting of Clause 17(b) to reflect the fact that the right to apply to a tribunal for a declaration as to the effect of the Bill on the terms of a lease does not extend to a tenant’s guarantor.
Lord Greenhalgh (Con)
My Lords, I will speak very briefly on government Amendment 25, which is a minor technical change to correct a small drafting error.
Clause 17 defines “tenant” for the purposes of Clauses 10, 13 and 16. Clause 16(1)(b) enables an enforcement authority to assist a tenant in an application as to the effect of Clause 7—that is, in regard to the effect of a term reserving a prohibited rent on the terms of a regulated lease. This amendment rectifies a discrepancy in the Bill, in that the assistance provided under Clause 16 would not extend to the tenant’s guarantor, as a guarantor does not have the right to apply for a direction as to the effect of Clause 7. This amendment ensures that there is no discrepancy between the clauses of the Bill. I beg to move.
Lord Lennie (Lab)
My Lords, obviously we welcome this amendment to the drafting error in the original Bill. Can the Minister explain briefly what the consequences would have been if it had not been identified? I mean briefly; I do not want a whole essay on the subject. Is there a risk that similar errors could be identified in other legislation which relates to guarantors?
Lord Greenhalgh (Con)
I thank the noble Lord for testing my knowledge of the consequences of a small technical amendment. I am just glad that we picked it up; I will have to write to the noble Lord on what the consequences would have been had we not done so. This happens from time to time. I am fairly new to the House but, when we find these errors, there are plenty of opportunities to correct them before the Bill receives Royal Assent.
Lord Lennie (Lab)
My Lords, I will speak to Amendments 28 and 29, in my name, and welcome Amendment 27, moved by the noble Baroness, Lady Pinnock, and also in the name of the noble Lord, Lord Stunell.
Amendment 28 is intended to raise four issues, which I have focused on at previous stages of the Bill: lease forfeiture, transfer fees, redress schemes and enfranchisement. This amendment is intended to probe, and, while I will not introduce each issue again, I hope that the Minister can provide clarification in the following areas. On lease forfeiture, can the Minister confirm that legislation will be forthcoming to prevent possession being taken over small debts? On transfer fees, has the Minister made an estimate of how many freeholders are placing charges on the sale of properties? On redress schemes, will the Minister consider a trial for the most serious of leasehold abuses? Finally, on enfranchisement, what assessment have the Government made of the obstacles currently in place?
The intention of Amendment 29 is to raise the need for the Government to champion commonhold arrangements. The House will be aware that the Mayor of London is committed to furthering commonhold, and his manifesto pledged to trial the arrangements in London. Can the Minister confirm what support will be offered to the mayor as part of these pilots? Will he make a statement on the Government’s policy on commonhold?
Finally, I turn to Amendment 27, which calls for a review of the relationship between the Bill and those facing bills for “fire remediation work”. Unfortunately, the Government have again ignored those people during the drafting of this legislation. This Government’s continued mismanagement of the remediation work is one of their most shameful aspects. I hope that the Minister will use this opportunity to finally change track and at last deal with the issues of remediation costs being charged to leaseholders for building safety faults. Rather than another betrayal of their promises to leaseholders, we need legal protections to ensure that millions of pounds of building safety remediation costs are not passed on to innocent home owners and tenants.
Lord Greenhalgh (Con)
My Lords, this group of amendments calls for a variety of impact assessments to be produced. It is, of course, very important that we understand the impact that this legislation will have. That is why we have already produced an impact assessment, which I would encourage all noble Lords to read.
Amendments 27 and 28 would both require impact assessments relating to how this legislation would impact on issues facing existing leaseholders. As throughout the passage of the Bill, I understand noble Lords’ desire to assist existing leaseholders. Noble Lords will be well aware by this point that this is just the first of a two-part legislative programme, with further leasehold reform due later in this Parliament.
We have considered the impact of the Bill on existing leaseholders, and this is informing the process of policy development, ahead of future legislation. This is within the broader context of the important work being done by the Competition and Markets Authority to address unfair terms and mis-selling. As discussed previously, we are committed to measures to help existing leaseholders through significant changes to the enfranchisement valuation calculation, making it cheaper for many leaseholders to extend their lease, buy their freehold or buy out their ground rents.
Noble Lords can rest assured that my officials have been listening very carefully to all of the points that have been raised during the debates on the Bill. However, producing detailed impact assessments is likely only to distract from the important work that is being done on leasehold reform.
The noble Baroness, Lady Pinnock, again raised historic fire and building safety remediation costs. I was struck by the very high bill of around £204,000 per leaseholder that was quoted. This may be a building in Manchester, but I would be very keen to know further details and to understand the approach that has been taken. Very often, when I have inquired and understood the situation, I have found that the most proportionate response is not necessarily considered by the building owner—but I would be very interested to look into that case in more detail.
In response to the noble Lord, Lord Stunell, I say that we are very aware of the polluter pays Bill and the work that is being led by Steve Day of RAQ. We are looking at it very carefully to see whether it could further enhance the proposed Building Safety Bill. Of course, we have already looked at strengthening redress by extending the statutory limitation period in the Defective Premises Act 1972 from six to 15 years, applied retrospectively. This could provide further support to ensure that it is the polluter who pays. We are looking at that very carefully, as I said.
Also in response to the noble Lord, Lord Stunell, on the Building Safety Bill, I say that the first £1 billion of this has of course been in play and spent. In fact, the fund is very much overcommitted. Further details around the further £3.5 billion will be published in September, but works are not being delayed because of that. I am happy to provide assurance that the further expenditure will therefore be outlined at that stage.
Lord Greenhalgh
(b) Senedd Cymru, if the regulations are made by the Welsh Ministers,”Member’s explanatory statement
This amendment provides that the default procedure for regulations made under the Bill by the Welsh Ministers is the negative procedure.
Lord Greenhalgh
““premium” means any consideration in money or money’s worth for the grant of a lease, other than rent;”Member’s explanatory statement
See the explanatory statement for Lord Greenhalgh’s second amendment to Clause 1, page 1, line 5.
Lord Greenhalgh
““relevant authority” means—(a) in relation to a lease of premises in England, the Secretary of State;(b) in relation to a lease of premises in Wales, the Welsh Ministers;”Member’s explanatory statement
This amendment defines “relevant authority” for the purpose of Lord Greenhalgh’s amendments to Clause 2, page 2, line 21 and Clause 9, page 7, lines 37 and 39.
Lord Greenhalgh
“(2A) A sum expressed to be payable in respect of rates, council tax, services, repairs, maintenance, insurance or other ancillary matters is not rent for the purposes of this Act merely because it is reserved as rent in the lease.”Member’s explanatory statement
This amendment clarifies that service charges and similar payments are not to be treated as rent only because they are reserved as rent in the lease.
Lord Greenhalgh (Con)
My Lords, before coming to the detail of this amendment, I want to stress the importance of the broad definition of “rent” as it appears in the Bill. Your Lordships are aware of the Government’s position. We believe it is vital for the effectiveness of the Bill that the definition of ground rent is drawn up in such a way as to head off the potential for avoidance measures by the small proportion of landlords who are intent on abusing the leasehold sector for their own financial gain. Any attempts to change this approach would do little more than provide a fixed obstacle around which a nimble landlord may divert with relative ease, certainty and confidence.
Alternative versions for the definition of a rent that stray away from this approach have been considered but they all reached the same conclusion and were found to be lacking. It is precisely because of the broad definition of rent in the Bill that any landlords and their investors seeking to charge what is in essence a ground rent by any other name will need to think very carefully if they believe the definition provided in the Bill offers an easy workaround—it does not. That is to say, if a landlord were to attempt to charge a ground rent by any other name and that charge provided no meaningful benefit or service to the leaseholder, that charge may be considered within the nature of a rent for the purposes of the Bill, and a tribunal or enforcement authority could consider the case for enforcement against that landlord.
I believe that Amendment 41 will provide further clarity regarding the meaning of a “rent” for the purposes of the Bill. Noble Lords will recall that there was a good deal of debate over that definition in the Bill in Committee. My noble friend Lord Young made reference to the Law Society and raised his concerns that the wide definition of rent contained in the Bill could give rise to unnecessary litigation as the lawfulness of certain charges being able to continue as being “reserved as rent” was not wholly clear.
I have listened carefully to the arguments made by my noble friend and others and am not unsympathetic to the views expressed that tighter wording of what is considered a rent would provide even greater clarity for both leaseholders and landlords. The amendment therefore provides that valid charges, even if they are “reserved as rent” in a lease, are not intended to be captured by the provisions in the Bill just because they are “reserved as rent” within a lease.
It is not our intention for valid charges, such as the charging of insurance or service charges, to be adversely affected by the Bill. Neither is it the purpose of the Bill to address the practice of reserving as a rent charges that are not in fact rent. The amendment simply clarifies that, just because a charge is reserved as a rent, it does not automatically follow that it is a prohibited rent for the purposes of the Bill.
I reassure noble Lords that the amendment does not give a green light for landlords seeking to avoid the measures of the Bill to merely reserve any charge as a “rent”. As I have described, the definition of a rent is drawn deliberately as widely as possible and will capture any charge that is in fact in the nature of a rent, whatever it is called. I beg to move.
Lord Stunell (LD)
My Lords, I always welcome efforts by Ministers to clarify the law, although I sometimes struggle to understand exactly how the law has been clarified. It has been suggested that this is, if you like, a step of relaxation or at least inclusion that will permit landlords to get away with—I think that is the technical term—bad practice. I am sure the Minister will reassure me that that is absolutely not the case and, far from opening a door, it is trying to make sure that the door is firmly shut.
I fear that the technicalities of this will be worked out in the law courts over time, whatever provision the Minister puts in the Bill or takes out of it. I wish him luck and I hope he has succeeded in what he hopes to succeed in. I guess we shall find out, when we do the evaluation in a year or two, how accurate that is.
Lord Lennie (Lab)
My Lords, the Minister will be glad to hear that this amendment is another technical change that we on these Benches fully support. However, has the department identified whether the same drafting issue is present in any earlier legislation?
Lord Greenhalgh (Con)
My Lords, we could not have had more different responses to the government’s amendment. I would like to assure the noble Lord, Lord Stunell, that this is indeed a clarification around enabling landlords to continue to pass legitimate valid charges. It will not promote the practice of continuing ground rents by another name, and I made that point very clearly in outlining this in my speech. I am sorry it was quite technical; obviously, people with legal eyes helped me to formulate the syntax but I give that assurance. But the noble Lord is right: only time will tell how the legislation will work in practice.
In response to the noble Lord, Lord Lennie, I have never heard anything quite so overwhelmingly positive about an amendment that I have moved—perhaps we are reaching a new era in understanding. I am not aware of this being relevant in any other part of our approach to the reform agenda that we are putting forward. However, leaseholder legislation covers many decades. Despite having studied some land law in the 1980s, I am not in a position to give a very detailed legal answer on that point.
Lord Lennie (Lab)
My Lords, I welcome the amendment of my noble friend Lord Berkeley, which returns the House’s attention to the application of ground rents charged by the Crown, such as the Duchy of Cornwall. It is a bad day to be away from the Scilly Isles, but there you go. My noble friend is probing the issue again, after clearly incomplete answers in Committee. I look forward to the Minister’s response.
Since the Minister was also unable to provide answers to my questions during Committee, I hope he will be able to do so on this occasion. They are these. First, can he confirm how many Crown properties this relates to? Secondly, do the Government intend to engage the residents of these homes?
Lord Greenhalgh (Con)
I now turn to Amendments 42 and 43, brought to your Lordships’ House by the noble Lord, Lord Berkeley. I understand that it is his wish for the Duchy of Cornwall to be considered as private land and not Crown land under this Bill. Irrespective of the definition, both Crown land and private land are captured by the Bill. This Bill will therefore apply to the Crown Estate, of which the Bill stipulates the Duchy of Cornwall is part. As I am sure noble Lords are all aware, the Duchy of Cornwall is a private estate which has a Crown exemption. However, the purpose of this Bill is not to decide how these estates are defined; rather it is to get a better deal for future leaseholders to prevent them being exploited by ground rent in the leasehold market.
The Duke of Cornwall’s estates will be treated as any other private landlord under the provisions of this Bill and will no longer be able to collect ground rent in future leases. I will clarify again that this Bill is narrowly focused on ground rents and not all leasehold matters. That is why, in response to the noble Lord, Lord Berkeley, we have not yet written to the Duchy of Cornwall about the issues around enfranchisement and other matters, but we will be doing so as part of the second stage of the legislation. I will obviously keep noble Lords informed if we get a response, but the noble Lord, Lord Berkeley, seems rather sceptical of that. Nevertheless, we have made that commitment and will write at that stage.
The Government have committed to an ambitious, large-scale reform programme, and we will deal with all these other issues not related to ground rents in the near future. I am very sorry that, on two occasions now, I have not been able to give a precise response to the noble Lord, Lord Lennie, but I will make sure that we get the information to him at the earliest opportunity, in writing, and lay a copy in the Library—I believe that is precisely what you have to do in these circumstances.
The Government will consider the concern of the noble Lord, Lord Berkeley, regarding the Crown Estate exemptions from the parliamentary undertaking on enfranchisement rights for leaseholders in the next stage of the leasehold reform programme. I can also reassure the noble Lord that the Government will consider his concern in tandem with the Law Commission’s recommendations on the issue of enfranchisement rights for leaseholders. On that basis, I ask the noble Lord to withdraw the amendment.
Lord Berkeley (Lab)
My Lords, I am very grateful for the Minister’s response and I will read it with great interest. He has tried to answer most of my questions, even if he has not yet got my noble friend’s numbers. We will look forward to seeing them in the Library. It is very important that what he has said may well set a precedent for the next Bill. That is why we will need to read what he has said with great interest. In the meantime, I beg leave to withdraw the amendment.
Lord Stunell (LD)
My Lords, I speak only briefly to say that the noble Lord, Lord Lennie, has raised an important issue that was debated in Committee, to some extent, when I heard voices calling in both directions. The overwhelming requirement of this legislation is that it leaves certainty in the market about the position of leaseholders. However partial or slow it may be, or however much you might criticise it overall, the noble Lord, Lord Lennie, has advanced a very strong case that this should apply to all leasehold contracts from a set date and not with a phased introduction.
I would be interested to know if there is a reason for this staggered introduction and, if so, what it is. A number of major landlords run very large businesses on the leaseholding of retirement homes, not all of which have always proceeded entirely ethically. There have been some well-evidenced scandals, one of which I played a part in unravelling when I was at the other end of this building. I hope the Minister has not been too influenced on this provision by any pressure he may have received from landlords about some complexity, difficulty or whatever with an earlier introduction. I would be interested to hear the Minister’s justification for the subsection that the noble Lord, Lord Lennie, is proposing to delete.
Lord Greenhalgh (Con)
My Lords, in considering Amendment 44 in the name of the noble Lord, Lord Lennie, it is important to once again lay out the rationale for the transition period for the retirement sector. In October 2018, the Government launched a consultation on reforms to the leasehold system, which attracted over 1,200 responses. In our response to the consultation, published in June 2019, we announced that we would
“proceed with the proposal to exempt retirement properties”
from the peppercorn ground rents policy. This decision was made on the basis that developers of retirement properties incur additional costs, as a result of the communal spaces that are characteristics of these kinds of developments.
However, having reviewed this in further detail, we concluded that arguments in favour of an exception did not outweigh the desirability of ensuring that those who purchase retirement homes are able to benefit from the same reform as other future leaseholders. Therefore, we decided to capture retirement properties in the Bill, so that those who live in retirement housing are protected from exploitation in the same way as other leaseholders. We announced this in January this year, and it is effectively a change in the Government’s position. I am sure all noble Lords agree that, as a basic matter of fairness, those buying retirement properties should also benefit from these reforms.
As a result of this change, we have consulted closely with the retirement sector and continue to do so. As such, we have decided to grant a transition period in recognition. As a result of their initial exemption, this new transition period will allow developers of retirement properties time to adapt to the forthcoming changes. We believe this transition period has been fairly granted, in balancing the needs of developers and fairness to leaseholders. It will be sufficient to allow the retirement sector to adapt to the changes. The Government do not wish to extend the period at the expense of leaseholders. I give that undertaking; we believe we have got it right.
As it stands, the commencement date for retirement properties is no earlier than 1 April 2023. We have no reason to believe that the commencement date will be any later than this. Given the sector was first informed in January this year, this commencement date has given them over two years’ notice.
This issue has been carefully considered and we believe we have struck the right balance for both lease- holders and developers. Indeed, in Committee, we had a competing amendment from the noble Lord, Lord Best, which would have extended this transition period. I am sure noble Lords agree that our proposals are a pragmatic and fair compromise between these two positions. I beg to move that the noble Lord withdraws Amendment 44.
Lord Lennie (Lab)
I will briefly comment on the position that has been arrived at on retirement properties. Initially, there was to be an exception for retirement properties; then it was decided that there would not be. That was from 1 April this year, giving two years’ notice. The main argument of the noble Lord, Lord Best, was that this would cause price rises, as it would falsely inflate the market from people not receiving ground rent and prices would therefore go up. That may have had some justification, but was not part of the Government’s assessment of what would happen to retirement properties. I am happy to withdraw the amendment, but we need to look closely at the impact this has on retirement property leaseholders.
Lord Greenhalgh
Member’s explanatory statement
This amendment, with Lord Greenhalgh’s amendment to Clause 17, page 11, line 17, requires an appeal against action taken by an enforcement authority in relation to a lease of premises in Wales to be made to a leasehold valuation tribunal (instead of the First-tier Tribunal).
Business and Planning Act 2020 (Pavement Licences) (Coronavirus) (Amendment) Regulations 2021
Lord Greenhalgh Excerpts(3 years, 4 months ago)
Lords ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Lord Greenhalgh
That the draft Regulations laid before the House on 8 June be approved.
Relevant document: 6th Report from the Secondary Legislation Scrutiny Committee. Considered in Grand Committee on 8 July.
The Minister of State, Home Office and Ministry of Housing, Communities and Local Government (Lord Greenhalgh) (Con)
I beg to move.
Amendment to the Motion
Baroness Blake of Leeds (Lab)
My Lords, I pay tribute to my noble friend Lord Faulkner for bringing this really important issue into the Chamber. His very well-informed and passionate speech does not need too much adding to.
I want to bring in a slightly different dimension. My noble friend and the noble Baroness, Lady Northover, both referenced the speeches in Grand Committee, which were really well put together; I recommend that everyone have a look at them in Hansard. We should also look at what we have learned over the last 18 months of the devastating impact of the coronavirus. We have been on an incredibly steep learning curve in understanding how the virus has impacted on the people who live in our communities. We have a duty, surely, to look at all the evidence before us.
Covid-19 is often described as a cruel virus and it has exposed health inequalities in the most vicious way. Surely we must learn from the knowledge that those suffering from underlying health conditions have been disproportionately affected by the virus. Smoking is a major contributory factor to those health conditions. Do we not have a responsibility to do everything in our power to reduce exposure to the impact of smoke inhalation? I am referring to both the customers and the staff in the premises we are talking about.
I would also like to emphasise the points that the noble Lord, Lord Young, made in Grand Committee about the lack of evidence and the lack of consultation with local authorities, which would have demonstrated that there has just not been the evidence that we should be concerned about the impact on the businesses we are talking about.
We have an opportunity to make an improvement to the provisions in the Building and Planning Act 2020. Of course, the irony is that the Act was brought in specifically to deal with the impact of coronavirus. I hope we will recognise the public health improvement outlined in my noble friend Lord Faulkner’s amendment and that we will all come together to show our support accordingly.
Lord Greenhalgh (Con)
I thank the noble Lord, Lord Faulkner, for tabling this amendment and I thank noble Lords for an interesting debate on this matter. I will take this opportunity to respond to the noble Lord’s amendment. In Grand Committee I was not able to answer fully all the questions noble Lords raised on smoking issues relating to the temporary—I emphasise that—pavement licence extension regulations. I welcome the opportunity to address these issues in greater detail.
In Grand Committee, the noble Lords, Lord Faulkner, Lord Bradshaw and Lord Shipley, and the noble Baroness Lady Wheatcroft, all challenged me on the passing of these regulations and the potential passive smoking impacts. The impacts of passive smoking are very much a key concern and a top priority for this Government, which is why we should look to tackle this issue strategically. We will be a publishing a new tobacco control plan later this year, setting out our ambitious plans for England to be smoke free by 2030. The tobacco control plan will consider areas of regulation to strengthen in support of this aim.
In the very short term, it is right that we act to support hard-hit hospitality businesses to boost their capacity and continue their recovery. For this 12-month extension of the pavement licence provisions, the Government consider local and business-led discretion over implementing smoke-free policies to be the most appropriate approach. Businesses are able to introduce their own smoke-free policies if they wish to go further than the regulations require.
As the noble Lord, Lord Faulkner, mentioned, local authorities are also able to set their own local smoking conditions where appropriate and where local decision-makers believe it is reasonable to do so. A number of local authorities have already implemented such local smoking ban conditions within outdoor seating; these include the city of Manchester, as mentioned by a number of noble Lords, Newcastle, North Tyneside, Durham and Northumberland. This makes it clear that local conditions can be implemented where it is appropriate and desired locally.
I also remind noble Lords that the pavement licence guidance sets out ways in which the requirement for provision for seated and non-seated smokers could be met, such as displaying clear no smoking signs, the removal of ashtrays from smoke-free areas, and a minimum two-metre distance between smoking and non-smoking areas wherever possible.
The noble Lord, Lord Faulkner, referenced international comparisons. I emphasise that the UK is a world leader in tobacco control, and it is important that we share our learnings on the journey towards a smoke-free 2030. We must also learn from the successes of other countries. We will be closely monitoring the outcome of the Canadian approach. International studies of smoke-free parks and beaches, including in New Zealand and Canada, have found evidence through litter collections of continued smoking, suggesting that successfully enforcing any restrictions will involve considerable resource, including training people, such as park staff, in enforcing new policies.
I hope noble Lords will recognise that there is a real commitment in government to a smoke-free United Kingdom, but at this stage we are looking for an extension for a year. This is a temporary pavement licence extension of provisions that have worked incredibly well, as many noble Lords commented in Grand Committee. I emphasise that this Government are committed to reducing the smoking impacts of outdoor eating and drinking, both in terms of these regulations and, importantly, in future policy. Therefore, I ask the noble Lord, Lord Faulkner, to withdraw his amendment.
Lord Faulkner of Worcester (Lab)
My Lords, I shall be very brief. I thank the noble Baroness, Lady Northover, and my noble friend Lady Blake for their splendid speeches and strong support for my amendment.
The noble Baroness, Lady Northover, reminded us of the transformation that smoke-free legislation has brought about in our society. There is no need for us to go into detail about that now because that is no longer an issue between the parties or, indeed, with the British people; it is accepted. That is one of the reasons why I find it so inexplicable that the Government did not take advantage of the pavement licences provision to extend that smoke-free regime to cover the outside areas. As the noble Baroness, Lady Northover, said, the pavement outside a pub or a café is essentially an extension of the indoor rooms of those premises, and the people who go there, particularly those with children, are entitled to enjoy a smoke-free environment.
My noble friend Lady Blake referred—very tellingly, I think—to the impact of smoking on people with severe health conditions, perhaps brought on by Covid. Limiting the exposure of those people to second-hand smoke is particularly important and we should be doing all in our power, including making pavement licence areas smoke free, to achieve this.
I thank the Minister for his speech and the considered way in which he has approached this issue, and I recognise that he has repeated the Government’s commitment to a smoke-free Britain by 2030. That is good news. But I ask him and other noble Lords to reflect on whether the adoption of smoking as part of the pavement licence helps that process or makes it more difficult. I think most people would argue that it is making it more difficult. It is an unnecessary obstacle.
I am pleased that the Minister also referred to passive smoking concerns and the fact that the Government now accept them. Again, this is another reason why pavement licences should be smoke free.
Interestingly, the Minister did not answer the point made by the noble Baroness, Lady Northover, about consultation with the Department of Health over these regulations. We did not get an answer to that question a year ago or last week in Grand Committee, and we have not had one today. It is fair to say that the Department of Health takes a rather different view of these matters from that of the Ministry of Housing, Communities and Local Government.
The Minister also did not refer to the extraordinary letter that the Secretary of State in his department wrote to Manchester City Council last August attempting to talk it out of its proposals with a series of arguments that, as the noble Lord, Lord Young of Cookham, demonstrated last week in Grand Committee, were completely spurious.
The House should have an opportunity to express a view on the regulations and on my amendment. I therefore wish to test the opinion of the House.
Business and Planning Act 2020 (Pavement Licences) (Coronavirus) (Amendment) Regulations 2021
Lord Greenhalgh Excerpts(3 years, 4 months ago)
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Lord Greenhalgh
That the Grand Committee do consider the Business and Planning Act 2020 (Pavement Licences) (Coronavirus) (Amendment) Regulations 2021.
Relevant document: 6th Report from the Secondary Legislation Scrutiny Committee
The Minister of State, Home Office and Ministry of Housing, Communities and Local Government (Lord Greenhalgh) (Con)
My Lords, the regulations we are considering today were laid in draft before this House on 8 June. If approved and made, they will extend the temporary pavement licence provisions for 12 months to 30 September 2022 and will come into effect the day after they are made.
The temporary pavement licence provisions create a faster, cheaper and more streamlined consenting regime for the placement of removeable furniture, including tables and chairs, on pavements outside premises such as cafes, bars, restaurants and pubs. These measures have been popular and very successful in supporting businesses, making it easier for pubs, restaurants and cafes to facilitate al fresco dining with outside seating. It is vital that we continue to support the hospitality sector by extending these provisions for 12 months, as it has been one of the hardest hit as a result of the coronavirus.
The sole purpose of the regulations is to change the four references to the expiry date in the legislation from 30 September 2021 to 30 September 2022. The regulations do not change any other part of the pavement licence provisions, so the process for applying for a licence during the extended period will not change. Subject to the regulations being approved and made, businesses will be able to apply for a licence under the process set out in the pavement licence provisions in the Business and Planning Act for the extended period until 30 September 2022.
The regulations do not automatically extend licences that have been granted under the current provisions, so businesses will need to apply for a new licence if they wish to have one in place during the extended period. Local authorities are encouraged by guidance to take a pragmatic approach in applying the extended provisions, so that it is as convenient as possible for businesses to apply for a licence during the extended period. As the process for applying for a licence under the extended period will remain unchanged, I will briefly remind noble Lords of that process.
All licences are subject to a 10-working-day determination period, including a five-working day public consultation period, excluding public holidays, starting the day after the application is sent electronically to the authority. If the local authority does not determine the application before the end of the determination period, the licence will be deemed to have been granted for a year—or, if sooner, until 30 September 2022—and the business can place the proposed furniture, such as tables and chairs, within the area set out in the application for the purpose or purposes proposed.
Licence application fees will be set locally but are capped at a maximum of £100. Again, these fees are unchanged from what they are for licence applications under the current temporary provisions in the Business and Planning Act 2020. All licences will be subject to a national no-obstruction condition and smoke-free seating condition as well as any local conditions set by local authorities.
The grant of a pavement licence only covers the placing of furniture on the highway. A pavement licence does not negate the need to obtain approvals under other regulatory frameworks such as alcohol licensing. The Government have also laid a separate statutory instrument to extend the temporary alcohol licensing amendments.
Once a licence is granted, or deemed to be granted, the applicant will also benefit from deemed planning permission to use the highway land for anything done pursuant to the licence while the licence is valid—for example, using furniture to sell or serve food or drink supplied from, or in connection with relevant use of, premises.
The pavement licence regime in the Business and Planning Act did not replace the regime in Part VIIA of the Highways Act 1980; rather, it sat alongside it. This remains the case during the period of validity of the 2020 Act provisions as extended by this statutory instrument. Applicants may apply for a licence under Part VIIA as an alternative if they wish to do so for any reason.
These regulations will enable food and drink hospitality businesses to continue to obtain a licence to place furniture on the highway outside their premises quickly and cheaply. As I previously stated, this extension is considered necessary and vital, as it will provide businesses with much needed certainty to help them to recover economically and will support them in planning for the extended period. To explain just how hard the sector has been hit, evidence from trade organisations and other sources has indicated significant financial losses and wider economic pressures faced by the hospitality industry. The Office for National Statistics reported in July that more than half of businesses in the accommodation and food services industry had experienced a fall in turnover, compared with normal expectations for this time of year—more than any other industry.
I firmly believe these regulations will bring essential economic support out of the pandemic for many food and drink businesses, by enabling extended outdoor capacity for serving food and drink. To support local authorities and businesses with the implementation of the regulations, we will publish an updated version of the pavement licence guidance when the regulations are made. If these regulations are not introduced, there is a real risk that we will undermine the steps that food and drink hospitality businesses have taken to recover from the economic impacts they have suffered as a result of coronavirus.
All of us in government have enjoyed pubs, cafes and restaurants being open again, following coronavirus lockdown restrictions. The temporary pavement licence measures are just some of several measures that the Government have introduced to support hospitality businesses to reopen safely, enabling businesses across the country to serve their local communities. Since introducing a simplified route for pubs, restaurants and cafes to obtain a temporary pavement licence, we have heard of many examples of local businesses being able to increase their outdoor capacity quickly and at low costs. The draft regulations that we are debating today will allow al fresco dining and drinking to remain a reality for these businesses and provide much needed certainty for another year. I commend this instrument to the Committee, and I beg to move.
Lord Greenhalgh (Con)
I thank all noble Lords for their contributions, which have given us a very interesting debate on these draft regulations. I was particularly impressed by the distinguished former leader of the city of Leeds trying to introduce café culture in the 1990s, well ahead of its time. The way we consume alcohol in this country, standing at a bar or outside, is very different to the café culture we see on the continent of Europe. It is good that we have seen an increase in the latter approach to our leisure activities as a result of the pandemic, as the noble Baroness, Lady Wheatcroft, referred to.
We have been discussing an essential extension of the temporary pavement licence provisions in the Business and Planning Act 2020 for 12 months to 30 September 2022. As previously outlined, the regulations continue our support for the hospitality sector’s economic recovery and are vital to provide certainty for businesses in planning for al fresco dining for the next year. I am grateful to noble Lords for raising a number of important points on how this will operate and will try to respond to as many as I can.
First, I want to make it clear to the noble Baroness, Lady Blake, that there has been no change in policy. We have not made a decision on the future of the temporary provisions; it would be premature to make any commitments on potential changes to the policy in future. However, I reassure noble Lords that we will continue to engage with stakeholders. We are committed to ensuring that the needs of all highway users are taken into account.
I turn to the issues raised by the noble Lords, Lord Faulkner of Worcester and Lord Bradshaw, and the noble Baroness, Lady Wheatcroft, about smoking and the fact that there is not effectively a ban on it. The temporary pavement licence legislation includes a “smoke-free” seating condition—that concession was mentioned by my noble friend Lord Young—and there must be reasonable provision for seating where smoking is not permitted. This condition seeks to ensure customers have greater choice, so that smokers and non-smokers are able to sit outside.
I appreciate the suggestion of the noble Lord, Lord Shipley. I recognise that things would be different were there to be a change on a permanent basis as opposed to this simple extension of the current provisions.
In response to my noble friend Lord Young, on his comment about the letter from the Secretary of State to Manchester City Council, it is of course right—as mentioned in the debate—that local authorities have condition-setting powers. I know as a councillor of 16 years that they have and always have had such local discretion. They can set those conditions where appropriate, and some local authorities have used this power, including in this instance Manchester City Council. I reassure my noble friend that all correspondence from the department on this matter will remain in line with what has been agreed in the legislation.
The noble Earl, Lord Clancarty, and my noble friend Lady McIntosh of Pickering rightly raised accessibility and ensuring that pavements remain accessible to everyone. It is important that, while supporting the hospitality industry, we achieve that objective. The pavement licence guidance makes it clear that in most circumstances 1.5 metres of clear space should be regarded as the minimum acceptable distance between the obstacle and the edge of the footway. In response to the noble Earl, I point out that we have worked with the RNIB and Guide Dogs UK to update the pavement licence guidance, which will be published alongside the extension regulations. This update will include a section to emphasise to local authorities that, as Covid restrictions are eased, extra care should be taken to ensure that national and local requirements around accessibility are still being met.
In answer to the noble Earl, Lord Clancarty, and the noble Baroness, Lady Blake of Leeds, we have undertaken work with stakeholders to understand the impact of an extension across a range of authorities and different groups, such as the RNIB and Guide Dogs UK, taking into account the impact the provisions have had over the past year.
My noble friend Lady Gardner of Parkes and the noble Baronesses, Lady Wheatcroft and Lady Blake, all mentioned local authority resourcing. In response to the noble Baroness, Lady Wheatcroft, I was interested to hear about the granting of a licence and then using it as a way essentially to charge for other council services unnecessarily. In my experience, that would not normally be done by local authorities. Effectively, most of their moneys are raised either through tax or direct grant, and they would not normally seek to generate income. However, I would be very happy to understand the specific instances that she referred to. It would be concerning if it happens, but it seems very much out of character.
On local authority resources, we are aware that these provisions have a significant impact: not equally, but on some local authorities. If we compare parts of suburban London to the City of Westminster, we are talking about a completely different quantity of licences that will be granted. It is therefore absolutely right that we undertake a full new burdens assessment, and we will fund any new burdens as a consequence of the temporary pavement licence measures in line with the new burdens doctrine.
In response to my noble friend Lady McIntosh on what happens to the consultation timeframe when the regulations cease, I can reassure her that we will revert to a minimum of 28 days’ consultation as set out in Part VIIA of the Highways Act from the 10 days in the temporary regulations.
I was interested to hear about the ban on firepits and gas heaters raised by my noble friend Lady Wheatcroft—I call her my noble friend because that is what I consider her to be. I understand those concerns, but this is not a matter for these regulations. I think it is something that we see on the continent of Europe, and with our climate, would be particularly helpful.
In conclusion, we are extending the temporary pavement licence regulations because we believe it is necessary to support food and drink hospitality businesses by expanding their outdoor capacity, so continuing to support their economic recovery out of the pandemic. This is particularly important when we consider just how badly affected by the pandemic this sector has been—there is no doubt about that.
These temporary pavement licence measures have already been very successful in supporting the hospitality sector so far, as a number of noble Lords have commented. Extending the provisions will enable this success to continue and will provide much-needed certainty in the sector’s planning for the coming year. I commend these regulations to the Committee.
Mortgages: EWS1 Form
Lord Greenhalgh Excerpts(3 years, 4 months ago)
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Lord Kennedy of Southwark (Lab Co-op)
My Lords, I beg leave to ask the Question standing in my name on the Order Paper. In doing so, I refer the House to my relevant interests as set out in the register.
The Minister of State, Home Office and Ministry of Housing, Communities and Local Government (Lord Greenhalgh) (Con)
We will continue to challenge industry on inappropriate use of EWS1 forms. We have asked lenders to publish data, so that home owners can see how the guidance is being applied, as well as the impact of the process on mortgage applications. Data from one major lender suggests that an EWS1 form already exists for 50% of mortgage applications where one is requested. We are working with industry to ensure this picture improves.
Lord Kennedy of Southwark (Lab Co-op)
My Lords, the problem is that mortgage providers are insisting on a form that is not necessary, against the guidance from the Royal Institution of Chartered Surveyors. People cannot sell their homes because of the actions of overzealous financial institutions, and buyers cannot get mortgages. Can the Minister say more? Has he spoken to UK Finance to sort this issue out? Sadly, for me, this is another example of woeful failure by the Government—all promise and no delivery. Again and again, home buyers have been let down. Issues of fire safety, building safety, poor construction and financial failure are not going away. The Minister will be brought back here, again and again, until the Government finally take some action.
Lord Greenhalgh (Con)
My Lords, we have had repeated engagement with both UK Finance and also the Building Societies Association on this matter. We are seeing a picture that is troublesome but is continuing to improve, bit by bit. We have taken a number of measures to ensure that we encourage lenders to take a more proportionate approach.
Lord Young of Cookham (Con)
Has my noble friend read Inside Housing for April? It reports that buildings are being issued with a succession of different EWS ratings after a sale has taken place. How can inspectors sign off forms, expressed to be valid for five years, but change them later to the disadvantage of the purchaser?
Lord Greenhalgh (Con)
My noble friend raises an important issue about the inconsistency of the application of EWS1 forms by professionals. I point out that we are working with the British Standards Institution to produce a publicly available specification, known as PAS 9980, which is a code of practice designed to ensure greater consistency in these assessments.
Baroness Finlay of Llandaff (CB)
What discussions have the Minister or his officials had with the Financial Conduct Authority regarding lenders’ obligations to treat customers fairly in relation to cladding? In particular, what steps have the Government taken to ensure that leaseholders confronted with an adverse EWS1 rating, emerging during the time of a fixed-rate mortgage, are able to roll over to a new fixed rate, rather than being forced into a standard variable rate at the end of their fixed term?
Lord Greenhalgh (Con)
My Lords, I point out that the EWS1 form is not a safety certificate and nor is it a statutory or government document; it has been developed by the Royal Institution of Chartered Surveyors along with others. But we continue to have dialogue with the banks and building societies to ensure that they act in a proportionate and sensible way, and we continue to raise issues from time to time, as needed, with the Financial Conduct Authority.
Baroness Jones of Moulsecoomb (GP)
I declare an interest as a former councillor in Southwark. The Minister is using lots of words such as “challenging this”, “working with so and so” and “taking a number of measures”, but have the Government actually made a simple statement, saying to the mortgage or finance companies that this is not necessary before giving money to people who want to move house?
Lord Greenhalgh (Con)
My Lords, we have been working very hard to ensure that there is clear guidance about when such a form is necessary. In certain instances, there is deemed to be sufficient life-safety risk that an EWS1 form is required. The issue at hand is to ensure that lenders take a proportionate approach, and that is best achieved through dialogue.
Baroness Ludford (LD)
My Lords, this whole issue is an appalling scandal affecting several million innocent victims, for which developers, building owners and government are responsible, not them. More than 600,000 people in England are currently living in high-rise buildings with dangerous cladding, and there are more than 2 million mortgage prisoners, unable to move because of cladding issues. Why are the Government continuing to inflict massive distress and anxiety through the financially crippling costs of remediation works, which these leaseholders should not have to pay? Why are the Government refusing to offer up-front funding for those leaseholders, off-setting it by future recovery from those who are actually at fault?
Lord Greenhalgh (Con)
My Lords, I think we are straying a little away from the original Question, which was about external wall systems and the need for a certificate to ensure that lenders have the information they need to lend. As I said in answer to the previous question, for 50% of those who make mortgage applications, an EWS1 form is in place, and we continue to take a number of measures and steps to make the provision of an EWS1 form easier.
Lord Flight (Con)
My Lords, EWS1 requirements have become an overreaction to the Grenfell Tower tragedy, particularly their application to multi-occupancy blocks and buildings below 18 metres. Fear of being sued has limited the availability of required professional assessors, the amount of insurance the insurance industry is willing to provide to the professionals involved, and financial organisations’ willingness to lend. It has ultimately killed the market in leases. Will the Government consider effectively reducing and rationalising the requirements of EWS1 and providing insurance cover for the professionals involved?
Lord Greenhalgh (Con)
My noble friend will be pleased to know that we have announced our intention to provide a scheme that enables professionals who carry out EWS1 to have sufficient professional indemnity insurance cover. We are also engaging with the Building Societies Association, UK Finance and the major banks so that they look at other forms: for instance, an updated fire risk assessment or, for buildings constructed after 2018—post Grenfell—sign-off from a building control inspector. There are lenders that have led the way on this by taking a more proportionate approach in not always requiring an EWS1 certificate.
Baroness Fox of Buckley (Non-Afl)
My Lords, the Minister keeps saying that updated guidance from the Royal Institution of Chartered Surveyors means that leaseholders will no longer need a form to sell their homes, but they do. He says that the EWS1 is not a government formal legal requirement, but mortgage lenders continue to insist on the form. In the end, the only reason all this has happened is because of government policies. When will the Government take responsibility for the leaseholders trapped in homes they cannot sell or remortgage? Has the Minister noticed that the media are now running with this story? Because of grassroots cladding and leaseholders’ groups, there is huge public interest: beyond Inside Housing, we have had Radio 4 and Channel 4, and all sorts of newspapers. We even had Rebecca Long Bailey on GB News—
Baroness Fox of Buckley (Non-Afl)
Sorry. You get the gist: you have a problem.
Lord Greenhalgh (Con)
My Lords, we recognise that there is a problem and we are taking the steps required to ensure that where an EWS1 form is requested, it is easier to get the professional to carry it out, but also encouraging the banks to look at other documentation as an alternative—a proxy—to show that the buildings are safe. It is important that we go ahead and identify those buildings whose external wall systems require remediation.
Lord Etherton (CB) [V]
In November last year, the Government issued a statement recognising that the number of fire engineers qualified to provide these certificates, at 300 people, was woefully inadequate. They said that they would provide finance to fund 2,000 further qualified people within six months and ensure adequate sources of professional indemnity insurance. How many additional people have been funded by the Government to provide the certificate required, and precisely what further insurance has now been, or will be, made available in the market or elsewhere for these other people?
Lord Greenhalgh (Con)
My Lords, that is quite right: we have committed to a £700,000 funding scheme to train up to 2,000 surveyors. That has already begun, and I will write to the noble Lord with the precise number that have been trained up to this point. We have also announced a bespoke insurance model to ensure that professionals have access to professional indemnity insurance cover. Details will be published in due course.
Baroness Thornhill (LD) [V]
At the heart of this is a very simple question, which I do not believe the Minster has actually answered: what action do the Government intend to take in the event that mortgage lenders continue to insist on this form being obtained for buildings that do not actually need one, according to the RICS criteria, with sellers finding themselves in a classic Catch-22 situation?
Lord Greenhalgh (Con)
My Lords, we recognise that there may still be an outstanding problem. Where the building is outside the scope of the RICS guidelines and lenders are still insisting on the form, we ask that sellers take that up with RICS in the first instance. But I point out that 80% of lenders have adopted the RICS guidance formally, so people who are purchasing properties have a choice in the market to go to lenders that will follow that guidance.
The Lord Speaker (Lord McFall of Alcluith)
My Lords, the time allowed for this Question has elapsed. We now come to the third Oral Question.
Town and Country Planning (Fees for Applications, Deemed Applications, Requests and Site Visits) (England) (Amendment) Regulations 2021
Lord Greenhalgh Excerpts(3 years, 4 months ago)
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Lord Greenhalgh
That the Grand Committee do consider the Town and Country Planning (Fees for Applications, Deemed Applications, Requests and Site Visits) (England) (Amendment) Regulations 2021.
The Minister of State, Home Office and Ministry of Housing, Communities and Local Government (Lord Greenhalgh) (Con)
My Lords, I beg to move that the House has considered these draft regulations, which were laid in draft before this House on 27 May. If approved and made, these regulations will introduce fees for new permitted development rights that are currently, or will be, conditional on obtaining prior approval from the local planning authority. These permitted development rights relate to constructing additional storeys on existing dwelling houses, changing the use of commercial, business and service-class buildings to residential use and the development of university buildings.
I turn to the details of the regulations. A fee of £96 for prior approval is introduced for the enlargement of a dwelling house by construction of additional storeys made under class AA of Part 1 of Schedule 2 to the general permitted development order. This fee reflects the resourcing impacts on local planning authorities in processing such applications, and it is the same as the fee for applications for prior approval for larger home extensions. This is less than the fee for a planning application—£206—had the permitted development right not been introduced.
A fee of £100 per dwelling house is introduced for prior approval for the change of use from commercial, business and service use, or class E, to residential use, or class C3, under class M(a) of Part 3 of Schedule 2 to the general permitted development order. Responses to the consultation for this permitted development right indicated support for the introduction of a fee per dwelling house to help to meet the costs of local planning authorities. There was support for a higher fee, but we believe that a fee of £100 per dwelling house meets the right balance between encouraging development and meeting the costs of determining such applications.
Finally, a fee of £96 is introduced for prior approval for erection, extension or alteration of university buildings made under class M of Part 7 of Schedule 2 to the general permitted development order. The introduction of a prior approval condition was a response to the concerns raised at consultation. The fee reflects the costs to local planning authorities in assessing these types of application and is the same level as fees for other applications for other non-residential prior approvals where a similarly limited number of additional matters are required to be considered. The development rights to which the fees relate have already been introduced. If these planning fees are not introduced, the cost to the local authority to process these applications would have to be funded, or would continue to be funded, by taxpayers.
We have announced ambitious reform of the planning system to support the delivery of more homes as well as key transport and infrastructure projects. The draft regulations that we are debating today reinforce our commitment to ensuring that local authorities have adequate resources to deliver a high-quality planning service. I commend the instrument to the House.
The Deputy Chairman of Committees (Lord Duncan of Springbank) (Con)
I call the next speaker, the noble Lord, Lord Jones. The noble Lord, Lord Jones, is not with us today, so I will move straight on to the noble Lord, Lord Moynihan.
Lord Greenhalgh (Con)
I thank all noble Lords for their contributions. This has been an interesting and short debate. I am very keen to hear my noble friend Lady Neville-Rolfe’s deliberations from her work on the House of Lords Built Environment Committee. It is really important that we think about the steps we can take to increase the supply of housing but also ensure that we get the right built environment.
I will turn to some of the other contributions. My noble friends Lord Moynihan and Lady Neville-Rolfe, and the noble Baroness, Lady Blake of Leeds, all raised adequate resourcing and fees. The proposed fees are considered to meet the right balance between encouraging development and meeting the costs of determining such applications. The new fees introduced by these regulations have been considered as part of the full regulatory impact assessment for the permitted development rights legislation. That will be published in due course.
I am glad to assure noble Lords that we will continue to keep fee levels under review and maintain discussion with local planning authorities and users of the planning system. The change will come if it is indeed required.
My noble friend Lord Moynihan mentioned data standards and site selection. Data standards in local plans are key for increasing accessibility, transparency and improved decision-making in the planning process and wider planning sector. Local authorities will work with the support of MHCLG to develop and test data standards through the site selection process.
There has also been quite a bit of work on digital. The Housing Minister has announced a £1.1 million fund to test the use of digital tools and data standards across 10 local areas. This pathfinder programme will look at the digital transformation of local plans, which will increase community involvement and speed up the planning process.
The noble Lord, Lord Bhatia, wanted to know whether, and be assured that, there would be adequate provision of affordable housing, in particular for key workers. First of all, there is the importance of additionality in permitted development rights. Some 72,000 new homes have been delivered under such rights in the five years to March 2020. Of course, there are plenty of opportunities for more affordable housing with the commitment to £11.5 billion as part of the current affordable homes programme, the largest investment in affordable housing in a decade.
I do not recognise the description of this as a developers’ charter, which the noble Baroness, Lady Blake, raised. Indeed, I assure my noble friend Lord Moynihan that local authorities can remove a permitted development right where they are justified to do so in line with government policy by making an Article 4 direction. We recently consulted on proposed amendments to national planning policy on the circumstances in which an Article 4 direction could be used to remove permitted development rights. Further announcements will be made in due course.
In conclusion, planning fees are a vital source of income for councils to ensure the delivery of a well-resourced, effective and efficient planning system that underpins housing delivery and economic growth. I firmly believe that these regulations will support local authorities to have the capacity to consider these applications, play their part in creating new and improved homes and local communities, and support the economic recovery and growth our country needs. I commend the regulations to the Committee.
Homeowners: Cladding-related Costs
Lord Greenhalgh Excerpts(3 years, 5 months ago)
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The Minister of State, Home Office and Ministry of Housing, Communities and Local Government (Lord Greenhalgh) (Con)
The Government will fund the cost of replacing unsafe cladding for leaseholders in residential buildings of 18 metres and over in England. This will make homes safe and protect leaseholders from costs. There is no reason to suggest that there will be a funding shortfall for eligible applications to our remediation funds.
Lord Kennedy of Southwark (Lab Co-op) [V]
My Lords, the response from the Government is woefully inadequate. When will the noble Lord, the Government and the Prime Minister get a grip? The thousands of people trapped in this living nightmare need their Government to help and support them. When are we going to see action on the failures of the companies who built these buildings; the professional failures; the insurance companies not delivering on their obligations; the increased insurance premium costs levied on people; the building safety fund contract terms, which are not fit for purpose; the unrealistic bills being sent to innocent victims; the dangerous fire safety and building safety defects which have not been addressed; and the EWS1 form fiasco, which is making buildings unsaleable? What will it take to get the Government to make those responsible pay up, so that innocent victims get the justice they deserve?
Lord Greenhalgh (Con)
My Lords, I think that extended beyond two points. In addition to the unprecedented sum of £5.1 billion towards the remediation costs, we recognise the need to strengthen redress mechanisms. That will come forward as part of the building safety Bill. We have also stepped forward to support the installation of many hundreds of alarms to ensure that people do not have to pay for a costly waking watch, with our waking watch relief scheme of some £30 million. We recognise that it is for the building owners to shoulder their statutory responsibilities to keep their buildings safe. We will continue to work with all levels of government to make sure that that happens and that the costs are not passed on to the leaseholders.
The Lord Bishop of Manchester [V]
My Lords, four years on from Grenfell, one of the heaviest burdens being borne by those trapped living in unsafe buildings—whether due to cladding or otherwise—is simply not knowing when their plight will end. Will the Minister now urge Her Majesty’s Government to present this House with a clear timetable and deadline for resolving all outstanding issues, so that residents will know when they will be able to live in their homes safely and when they will be able to sell them for a proper price?
Lord Greenhalgh (Con)
My Lords, we have made further progress on the remediation of all forms of unsafe cladding. Nearly 700 buildings have had their funding approved, and around £400 million has been allocated as part of the building safety fund. We recognise some people’s problems with regard to access to EWS1, but that is why we have the RICS guidance, which has been adopted by about 80% of lenders. I hope that it that will see a more proportionate approach.
Lord Leigh of Hurley (Con)
Is my noble friend the Minister aware that there are instances where leaseholders have paid for recladding, mainly through their service charges, but freeholders, who are the only people who can claim for repayment, are withdrawing their applications because of onerous conditions imposed by the Government? Will he consider changing the legislation to allow leaseholders to claim for repayment of funds, rather than freeholders?
Lord Greenhalgh (Con)
Unfortunately, we are aware of cases such as that my noble friend has raised with me; I thank him for drawing it to my attention. It is shameful that some building owners would rather refuse the Government’s offer of funding and push unaffordable costs on to innocent leaseholders than take responsibility for ensuring that their residents are safe. The conditions for government funding are designed to ensure that residents are protected from shoddy or delayed remediation works. As they are taxpayer funded, we require building owners to make reasonable efforts, claiming costs back from developers using warranties where possible.
Lord Thurlow (CB) [V]
One solution to funding remedial work following Grenfell is to take robust action against the French manufacturers Arconic and its then-parent Saint-Gobain, which supplied the defective panels. Following concerns over the safety of these panels in France, I read that they withdrew them from sale in their own country yet continued selling them in the UK. This is disgraceful and ethically dishonest. What action are the Government taking to demand compensation from Arconic and/or Saint-Gobain? It should not be a UK taxpayer burden.
Lord Greenhalgh (Con)
My Lords, we have to let the inquiry take its course, but we recognise that deficiencies in testing have been thrown up, so the Secretary of State has commissioned an expert group to look at construction products testing. We are establishing a new regulatory regime as well.
Lord Adonis (Lab)
My Lords, the Minister will remember that, when we had the emotional debates on this issue at ping-pong, he said that the Government would come forward with further measures to deal with a comprehensive settlement in respect of leaseholders. That was the argument why he was not prepared to accept the view of this House that we should impose a timetable. That was two months ago. Can he tell us precisely what measures the Government have come forward with in the last two months?
Lord Greenhalgh (Con)
We have continued with the progress of the existing fund, which is now at over £5 billion. As I have said, nearly 700 buildings have had their funding approved for the remediation of other forms of unsafe cladding, similar to the type seen on Grenfell Tower. Obviously, further details around the financing scheme will be announced in due course.
Lord German (LD)
On 24 May, I asked the Minister about the funding gap in remediating external wall cladding. The Government estimate that £15 billion will be required to fully remediate. The Government are putting in £5.1 billion and there is £2 billion from developers. That leaves a gap of £7.9 billion. In reply, he said,
“We need to watch this very carefully.”—[Official Report, 24/5/21; col. 807.]
Having cast his watchful eye over this matter, will he say whether these figures have altered, and how the gap will be filled?
Lord Greenhalgh (Con)
My Lords, those are not official figures. There are a lot of estimates, and there is a great range in those estimates. We are carrying out some detailed research so that we can properly understand the incidents, particularly in lower-rise and medium-rise buildings, where remediation would be required. Then we will be in a position to know the burden that will potentially fall either on the taxpayer or on leaseholders.
Lord Young of Cookham (Con)
My Lords, I welcome the substantial support that the Government have provided to deal with the cladding crisis but, on its own, it is clearly not enough to deal with the problem and with hardship. In February, the Government announced a new tax on future high-rise development, but would it not be fair to complement that with a levy on those developers who built these substandard homes?
Lord Greenhalgh (Con)
Of course it is right that the polluter pays. That is why we have announced not only a building safety levy on future high-rise developments as part of the building safety Bill, but a tax on developers that is aiming to raise some £2 billion over 10 years.
Lord Paddick (LD) [V]
My Lords, because of high demand on relatively few surveyors, the hazardous cladding on my home in London was only recently identified as needing to be replaced. We have been told that applications to the Government remediation fund closed in July last year. Leaseholders now face bills of up to £15,000 for something not of their making. How can the Government justify such a position?
Lord Greenhalgh (Con)
Although the registration closed for the initial tranche of £1 billion, we have announced a further £3.5 billion. There is a process of registration for further amounts of money available. If the noble Lord’s building qualifies, he would be eligible for government funding and would be able to register. Further details will be announced in due course.
Baroness Watkins of Tavistock (CB)
My Lords, this Government and previous Governments have encouraged essential workers to buy into shared ownership schemes. In the last week, various newspapers have reported that some shared owners who own as little as a quarter of the flat in which they live are receiving demands for up to £100,000. This includes teachers, nurses and laboratory technicians. Will the Minister please outline how the Government intend to work with housing associations to resolve this issue swiftly?
Lord Greenhalgh (Con)
My Lords, there was media coverage of a medium-rise building where leaseholders and shared owners were facing demands of around £100,000. I was struck by that, not least because the building in question did not have unsafe cladding. There we have a medium-rise building without unsafe cladding, but with some building safety defects that refer to compartmentation. Talk about levying bills of £100,000 seems to be disproportionate, so I have met in that case with the housing association and talked it through with my officials, to encourage them to find a more proportionate approach to keep people safe in these sorts of buildings.
The Lord Speaker (Lord McFall of Alcluith)
My Lords, the time allowed for this question has elapsed.
Flood Plains: Housing Development
Lord Greenhalgh Excerpts(3 years, 5 months ago)
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The Minister of State, Home Office and Ministry of Housing, Communities and Local Government (Lord Greenhalgh) (Con)
My Lords, I congratulate my noble friend Lady McIntosh of Pickering on securing this important debate and campaigning on flood-related matters so ardently. I am grateful to all noble Lords who have contributed this afternoon. The debate has been passionate and very well informed. I am glad to hear that noble Lords share the Government’s commitment to ensure that flood resilience and reducing flood risk is a priority.
Flooding presents a risk to homes, towns and cities every year. The devastating effects of flooding can be seen year on year and, as my noble friend set out in her Question, climate change is a critical consideration in thinking about the future. As the recent UK Climate Risk Independent Assessment sets out, climate change will increase sea levels and associated flooding as well as river, surface and groundwater flooding changes due to altering rainfall patterns. Flooding goes right to the heart of our communities, and the Government take that risk very seriously.
To directly address my noble friend’s Question, our national planning policy is clear: new housebuilding and most other forms of development should not be permitted in the functional flood plain, where flood-water has to flow or be stored. Areas at little or no risk of flooding from any source should always be developed in preference to areas at higher risk of flooding. I cannot comment on individual planning applications or development plans, but our planning policy ensures that only water-compatible or essential infrastructure developments are allowed in the functional flood plain. That should not include new homes.
The National Planning Policy Framework sets out a clear, overarching policy on flood risk: inappropriate development in areas at risk of flooding, whether an existing or a potential future risk, should be avoided and, where possible, alternative locations at a lower flood risk should be identified. That is known as the sequential test. Where development is necessary, and where there are no suitable sites available in areas with a lower risk of flooding, the proposed development should be made safe without increasing flood risk elsewhere. This is the exception test. Where these tests are not met, new development should not be allowed.
That policy recognises that it is unrealistic to completely ban all development in flood-risk areas, as currently around 11% of England is in national flood risk zone 3, which is commonly referred to as high-risk. Flood zone 3 is split into two separate zones by the local planning authority: zones 3a and 3b, where 3b is classified as functional flood plain and has the highest likelihood of flooding. Large parts of many major towns and cities comprise land classified as flood zone 3. However, I have to stress that building on land assessed as high-risk is not the same as functional flood plain. Even then, building in flood zone 3 is not common, as less than 0.2% of land use in flood zone 3 is residential. Areas at the lowest risk of flooding can still experience flooding following a very heavy downpour, which is why we have prioritised the use of sustainable drainage systems for all development in areas at risk of flooding.
In addition to the framework, there are further safeguards in place to protect against inappropriate development on areas at high risk of flooding. The Environment Agency must be consulted on planning applications in areas at risk of flooding from rivers and the sea, and in critical drainage areas. Lead local flood authorities must be consulted on surface water drainage considerations in applications for all major new developments. Their comments and advice should help inform the local planning authorities’ decisions on planning applications and ensure that they are in line with the framework policy on flood risk.
The framework is clear that flood risk assessments are needed for all areas where development is proposed that are at risk of flooding from all sources, both now and in future. Appropriate design and risk considerations that include an allowance for climate change need to be included in any flood risk assessment. Allowances that consider future impacts of climate change on flood risk incorporate a precautionary risk-based approach for more vulnerable areas. This means that increased levels of resilience are factored in.
Our planning guidance recognises the need for appropriate flood resilience and resistance measures. Guidance highlights that such measures are unlikely to be suitable as the only mitigation measure to manage flood risk. We are clear that flood resistance and resilience measures should not be used to justify development in inappropriate locations.
For any major developments within flood zones 2 and 3 where the Environment Agency raises objections on flood risk grounds, the local planning authority is required to consult the Secretary of State if it is minded to grant an application against the agency’s objections. This provides the Secretary of State with an opportunity to call in the decision.
In July 2020, the Government published the policy statement Flood and Coastal Erosion Risk Management, which sets out the Government’s long-term ambition to create a nation more resilient to future flood and coastal erosion risk. This means that we will reduce the risk of harm to people, the environment and the economy. Boosting our resilience will mean that more properties will be protected and communities will be better prepared to reduce the impacts when flooding happens.
The Government are not standing still on this issue. We are assessing the current protections in the National Planning Policy Framework and are considering options for further reform, as part of our wider ambitions for an improved planning system. As part of that, we recently consulted on proposed changes to the framework, including to clarify that the sequential test should consider all sources of flood risk.
We are also finalising our review of our policy for building in areas at flood risk. This will seek to ensure that communities have the reassurances that they need that future development will be safe from floods. The Government are investing a record £5.2 billion in a six-year capital programme for flood defences that will better protect 336,000 properties from flooding and coastal erosion, which will become even more vital in the light of our changing climate.
In summary, my noble friend asks an important question. I can reassure her and the Committee that we not only have incredibly strong protections against the development of new homes on the functional flood plain but that we are working to ensure that these are as effective as possible.
I will now respond to some of the additional specific points that have been raised during the debate. We had a call from the noble Lord, Lord Whitty, and the noble Baronesses, Lady Jones of Moulsecoomb and Lady Blake, to have a complete ban on development on functional flood plains. As a Government, we feel that to ban development in flood zone 3 would mean that land that could safely be built on could no longer provide the economic opportunities that our coastal and riverside settlements depend on. That is why we are against an outright ban.
My noble friends Lady McIntosh and Lord Randall and the noble Baroness, Lady Blake, wanted to see sufficient resource for local authorities both to improve flood resistance and to boost enforcements. The Government want to ensure that local authority planning departments are well resourced and that planning professionals have the right skills to make creative decisions and take forward our ambitions, which will be outlined in the forthcoming planning reform Bill. Since 2010, we have provided direct grant support to local authorities and neighbourhood planning groups to help them engage their communities in neighbourhood planning to shape and influence the places in which they live and work.
My noble friend Lady McIntosh also raised the issue of the automatic right to connect to sewerage. The Government’s planning practice guidance already includes a hierarchy for sustainable drainage options that favours non-sewer solutions. The guidance is clear that draining to a combined sewer should be the least-favoured option in new development. Removing the right to connect to an existing sewer does not offer clear benefits over the current arrangements. It is likely to add costs and delay the planning process.
My noble friend Lady McIntosh also referred to catchment management control liaison and asked whether I could liaise with Defra on that matter. In its Flood and Coastal Erosion Risk Management policy paper, Defra has committed to increase the number of waste management schemes within and across catchments to reduce flood risk and help manage drought risk, and I can assure my noble friend that we will work with Defra on that.
My noble friend also referred to Flood Re and asked whether we could extend it to those homes that were built after 2009. Homes built after 2009 are one of the categories of property excluded from Flood Re, as she pointed out. This mirrors a similar exclusion in the statement of principles, a voluntary agreement between Her Majesty’s Government and the insurance industry that was the forerunner of Flood Re. Measures introduced in 2006 and reaffirmed in 2012 through the National Planning Policy Framework should ensure that homes are built only where appropriately robust flood mitigation is in place.
The noble Lord, Lord Whitty, also referred to the implementation of the Pitt review recommendations. Defra has informed me that all recommendations from the review were accepted by the Government, and the Flood and Water Management Act 2010 was introduced as a result.
The noble Baroness, Lady Ritchie of Downpatrick, wanted to know the publication date of the planning reform Bill. It was announced in the Queen’s Speech and will be introduced in the autumn.
I conclude by reassuring your Lordships that the Government are committed to reducing the risk that flooding poses to our communities. We acknowledge that climate change will increase the risk of flooding. We have strong protections in place to ensure that inappropriate developments are not given permission to go ahead in areas of high flood risk, especially new homes. We are working hard to go further via our planning reforms, investing £5.2 billion in flood defences and reviewing flood policy.
The Deputy Chairman of Committees (Lord Faulkner of Worcester) (Lab)
My Lords, the Grand Committee stands adjourned until 4.40 pm. I remind Members to sanitise their desks and chairs before leaving the Room.
Housing: New Developments
Lord Greenhalgh Excerpts(3 years, 5 months ago)
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The Minister of State, Home Office and Ministry of Housing, Communities and Local Government (Lord Greenhalgh) (Con)
We know that the planning system has a poor record of community engagement and can often be adversarial. That is why our reforms have effective engagement at their heart. By ensuring that communities are meaningfully involved in preparing plans and local design codes, they can have real influence over the location and design of development. This will be supported by digital transformation, with new tools to make planning more transparent, accessible and engaging.
Baroness Thornhill (LD) [V]
I thank the Minister for what he said, but could he explain how involving the public only every five years when a plan is drawn up, alongside so many sites under the new reforms having automatic permission in principle, will restore trust and confidence in the system? As a former council leader, how does he think this will work in reality years later, when work actually begins?
Lord Greenhalgh (Con)
My Lords, it is not just involvement in the local plan that happens every five years but producing the design codes. But, importantly, communities will have a say in detailed aspects of planning applications.
Baroness Whitaker (Lab)
My Lords, I declare an interest as an honorary fellow of the RIBA. People, if consulted, often prefer smaller and lower-rise developments. What steps will Her Majesty’s Government take to promote such developments and secure public approval of ecological measures to reduce carbon emissions from them?
Lord Greenhalgh (Con)
My Lords, the drive for development does need to take into account the need for sustainable development. Planning will take on board a zonal approach, with some of the positives of the existing system, and will divide areas into growth areas, renewal areas and protected areas.
Baroness Scott of Needham Market (LD) [V]
I am sure that the Minister will agree that neighbourhood planning has been very successful in involving communities, delivering approximately 18,000 more houses than were contained in local plans. So can he confirm that neighbourhood planning will remain after the Government’s planning reforms are introduced and that they will remain a material consideration when decisions are made?
Lord Greenhalgh (Con)
My Lords, I do not want to presuppose what will be in our response to the planning White Paper, but I recognise the important contribution that neighbourhood plans provide to delivering homes.
Baroness Redfern (Con) [V]
How are the Government intending to ensure that there is full community involvement in planning and a strong focus not just on housing numbers and speed of delivery but on developing sustainable communities, with a much wider remit?
Lord Greenhalgh (Con)
My noble friend is right that we should focus on sustainable communities, not just the drive for volume and more housing. It is important to strike a balance between enabling vital development, including building the homes we need more quickly, and continuing to protect and enhance the natural and built environment.
Baroness Prashar (CB) [V]
My Lords, the Town and Country Planning Association has raised concerns that bypassing meaningful input from local bodies, councillors and the public, and delivering homes through permitted development rights, undermines public support for new housing. Does the Minister agree that, by continuing to expand the delivery of homes through PDR, the Government are undermining their own stated goal of making the planning process more democratic?
Lord Greenhalgh (Con)
My Lords, I point out that permitted development rights have enabled us to deliver a net additional 72,000 homes in the last five years and make an important contribution to the planning system. Our planning reforms are all designed to get effective community engagement at the front end of the process.
Baroness Blake of Leeds (Lab)
The expansion of permitted development rights is taking away the voices of local communities in the planning process and handing them to Whitehall’s appointed boards of developers. Are the Government consulting local government representatives about these changes? If so, what representations have they received?
Lord Greenhalgh (Con)
My Lords, at this stage of the planning reform process we have had 44,000 responses and have continued engagement with the Local Government Association and other important stakeholders, and we will be responding to those responses in due course.
Baroness Janke (LD) [V]
My Lords, the city of Freiburg is widely recognised as a global first-rank model of urban sustainable life, based on strong and active democracy and citizen participation. Is it not time that councils in this country were given the real powers they need to redress the balance between overpowerful developers and democratic institutions?
Lord Greenhalgh (Con)
My Lords, we need to recognise the existing frailties of the current planning system, which has not been reformed for over seven decades and has a very poor record on public engagement. Data shows that less than 1% engage on local planning consultations and only 3% engage on applications. That is something that we intend to improve with the reforms that we have outlined in the White Paper.
The Lord Bishop of St Albans [V]
My Lords, there is a real risk that the proposed changes to the planning process could mean that fewer accessible homes are built for older and disabled people. Research from the housing association Habinteg reveals that more than half of all local plans make no requirements for new homes to meet any accessible housing standard. Fewer accessible houses are being planned now compared with 2019. What plans do Her Majesty’s Government have to ensure that more homes are built to accessible and adaptable standards?
Lord Greenhalgh (Con)
My Lords, we continue to set standards around accessibility and recognise that it plays an important part in getting the right number of new homes. We have set out an approach that allows more public engagement, so that local communities can shape the places that they live in.
Lord Lucas (Con) [V]
My Lords, do the Government recognise the importance of place-making when it comes to building homes; that we are making communities for people to live in, not just houses; and that, in particular, living in the places we make should not be dependent on using a motor car?
Lord Greenhalgh (Con)
My noble friend is right that it is important not just to have volume as the driver but to think about the quality of the housing. Indeed, our reforms enable there to be model design codes. We have a draft national model design code that shows how to engage the community in creating places that reflect local views and allow people to shape the places they live in.
Baroness Young of Old Scone (Lab) [V]
My Lords, what local people object to is large numbers of houses being dumped in their back yard to fulfil the Government’s flawed housing targets, because they know that they are based on out-of-date 2014 assumptions and dodgy algorithms that focus housing in areas where houses are least affordable. The Minister has already had a biffing on this from his Home Counties colleagues. Will the Government revisit the housing target calculation and will the Minister comment on why annual planning permissions for houses have more than doubled in the last 10 years, yet house prices have not come down and, indeed, houses have not been built?
Lord Greenhalgh (Con)
My Lords, we have already looked at the approach to assessing local housing need to ensure that we see greater focus on the renewal of our cities and towns rather than urban sprawl. So we have already taken that point on board.
Lord Young of Cookham (Con)
Does my noble friend agree that the public would be more supportive of the proposals to build the hundreds of thousands of new homes that the country needs if more of these homes were clearly being targeted at families on average incomes, with children, already living in the area and at key workers such as nurses and teachers, with perhaps less emphasis on unaffordable homes for newcomers?
Lord Greenhalgh (Con)
My noble friend is absolutely right that we need homes of all types and tenures. Our reforms will give communities a greater voice from the start of the planning process. The reforms will make planning more straightforward and accessible and make it easier for people to influence local plans and have a say on locations, standards and types of development. The Government are of course committed to home ownership; the First Homes scheme allows a discount of up to 30% of full market value and, of course, there is the £11.5 billion affordable homes programme that will allow for the decent family homes that my noble friend sees as so critical.
The Lord Speaker (Lord McFall of Alcluith)
My Lords, all supplementary questions have been asked, so we will move the next Question.
Private Landlords: Tenants with Pets
Lord Greenhalgh Excerpts(3 years, 5 months ago)
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The Minister of State, Home Office and Ministry of Housing, Communities and Local Government (Lord Greenhalgh) (Con)
I draw attention to my residential and commercial property interests as set out in the register. The Government want to improve life for tenants and recognise the importance of pets in people’s lives. Earlier this year we published the revised national model tenancy agreement, the Government’s suggested contract for assured shorthold tenancy in the private rented sector. We revised it to encourage landlords to allow responsible tenants to keep well-behaved pets in their home.
Lord Black of Brentwood (Con) [V]
My Lords, during the difficult and often lonely days of lockdown, pets have been a vital source of companionship, well-being and love for many people across the UK, especially the vulnerable. However, is my noble friend aware that, according to Cats Protection, 1 million households that would like to have a cat cannot do so because they live in a rental property? I welcome the changes made to the Government’s model tenancy agreement, which my noble friend mentioned, meaning that consent for pets will be the default position for any landlord using it, but not all landlords use the agreement as it is voluntary. What action will the Government take to encourage landlords to use the model tenancy agreement to allow all those who want to have a pet in their rented property the chance to do so?
Lord Greenhalgh (Con)
My Lords, I am aware of the issue that my noble friend raises. The model tenancy agreement is the Government’s suggested contract with which to agree a tenancy and is freely available online. We will continue to work with landlords and other stakeholders to ensure its wider adoption for use in the private rented sector.
Baroness Wheeler (Lab)
My Lords, I understand from the excellent briefing from Battersea Dogs & Cats Home that tenants’ housing problems resulting from people moving to a property that does not allow pets are the second most common reason why dogs are given to Battersea for rehoming. Battersea helped to develop the model tenancy agreement but key areas, such as defining what constitutes a reasonable excuse for landlords to turn down a pet request or how any appeals process might work, are still to be addressed. How do the Government plan to take these issues forward?
Lord Greenhalgh (Con)
My Lords, it is fair to say that Battersea Dogs & Cats Home has been involved in the development of this agreement. Indeed Peter Laurie, the Battersea Dogs & Cats Home interim chief executive, welcomed the announcement that demonstrated the clear continued commitment to improving access to pet ownership for renters as well as helping to support and promote responsible pet ownership. The purpose of the agreement is to ensure that there is no blanket ban on pets and to consider each pet on a case-by-case basis, and to accept a pet where they are satisfied that the tenant is a responsible owner and the pet suitable for the premises.
Lord Lexden (Con)
Does my noble friend recall the importance that Winston Churchill attached to his pets, which included budgerigars that flew around his bedroom, to the discomfort of visiting Ministers? Would not the great man have been distressed that so many landlords are denying their tenants the affection and companionship that loving pets provide? Perhaps my noble friend can hear a famous voice muttering those words, “Action this day”, to get those new tenancy agreements widely applied, so important in this context, and to bear down on the landlords who are not using them at the moment.
Lord Greenhalgh (Con)
I am grateful to my noble friend for pointing out the views of the great man. We recognise that domestic pets bring joy, happiness and comfort to people’s lives. We have seen that particularly in the pandemic. We also recognise that the model tenancy agreement is a step forward. We need to see its wider adoption, which is why we will work hard to ensure that landlords adopt it as often as possible.
Lord Berkeley of Knighton (CB) [V]
My Lords, I endorse the purpose of this Question. I declare my interests as set out in the register, which inform these comments that I hope are constructive. Is the Minister aware that it is possible to have conditions such as that if pets become a problem, the offer is rescinded—and also that it is possible to put in a clause stating that money must be charged for cleaning, especially where hairs become a problem. So there are ways that could help landlords give permission if they were encouraged to do so.
Lord Greenhalgh (Con)
My Lords, I am aware that measures are in place to facilitate wider pet ownership in the private rented sector, and I encourage landlords to work with tenants to ensure that there is a solution that works for both parties.
Lord Goddard of Stockport (LD)
I draw Members’ attention to my interests as set out in the register. The Government recognised the importance of pets and made changes to the model tenancy agreement. However, not all landlords use that model agreement and it is voluntary, so some landlords can still say no to pets. Animal welfare charities, including Cats Protection, have helped tenants find lots of properties and use a cat’s CV—a template that outlines details about pets and shows responsibility of ownership. Will the Government encourage wider use of pet CVs to allow more responsible pet owners to keep their pets in rented accommodation?
Lord Greenhalgh (Con)
My Lords, we are happy to look at any ideas that encourage wider pet ownership, and I will certainly take that back to the department to consider.
Baroness Jones of Moulsecoomb (GP)
The Minister keeps talking about encouraging flat owners to do the right thing and allow pets, but he did not answer the question put by the noble Baroness, Lady Wheeler: what are you actually doing to encourage this?
Lord Greenhalgh (Con)
My Lords, we have set out a model tenancy agreement that encourages wider pet ownership. It also ensures that the landlord must give a clear reason why they will not accept a pet. This agreement strikes a balance between making it easier for responsible tenants to keep pets and ensuring that landlords are not forced to accept them.
Lord Young of Cookham (Con)
My Lords, last week the Public Services Committee took evidence from a rough sleeper in Birmingham who was full of praise for the Everyone In campaign, which helped him and other rough sleepers into safe accommodation last year. However, he told us that rough sleepers with dogs were now at risk because hostels would not accept them. Is my noble friend aware of this problem and does he have a solution?
Lord Greenhalgh (Con)
I am aware of the issue that my noble friend raises. We know how important pets are to many people, particularly rough sleepers. That is why we have supported a number of local schemes enabling people to find accommodation that will also accept pets. Housing authorities need to be sensitive to the importance of pets to some applicants, particularly rough sleepers, and I thank my noble friend for raising this.
Lord Singh of Wimbledon (CB) [V]
My Lords, depression and loneliness have an adverse impact on health and cost the country millions. Having someone or a pet to look after takes us out of ourselves, and pets have undoubtedly helped mitigate the enforced isolation of the pandemic. Does the Minister agree that a more collaborative approach between landlords and tenants in keeping tenants happy and keeping property in good condition would benefit both?
Lord Greenhalgh (Con)
My Lords, we agree that it is precisely that which has required a collaborative approach that landlords and tenants can work through to find practical solutions and ensure wider pet ownership in the private rented sector.
Lord Flight (Con)
My Lords, I much agree with the comments of the noble Lord, Lord Berkeley of Knighton, and the noble Lord, Lord Singh. It is very important, particularly for single older people, to be able to have a pet. Some ideas to perhaps consider are that, if landlords could render a modest additional rental for pets, it might be more attractive to them, and it might be worthwhile requiring insurance policies to be taken out by tenants. It might also be an idea to have a system of interviewing tenants and choosing tenants who seem to be responsible with regard to pets.
Lord Greenhalgh (Con)
My Lords, I thank my noble friend for coming up with practical suggestions for how tenants and landlords could work together to ensure wider pet ownership. It is of course for the landlord to consider each case on its merits.
Baroness Gardner of Parkes (Con) [V]
My Lords, pets have done much to help those recovering from medical incidents. This cannot be overestimated. Following the updating of the Government’s model agreement for shorthold assured tenancies in January, to encourage landlords to allow pets, what will the Government do to help allay landlords’ concerns over the inadequacy of a five-week deposit to address any pet damage at the end of the tenancy? Are there plans to allow for a larger deposit to be taken at the outset or, alternatively, a monthly sum to be added to the rent to pay for damage that is refundable at the end of the tenancy to the extent that it is not required? I declare my interest in rental property as in the register, but I have no tenants who have asked to have a pet—although some have them quietly without mentioning it.
Lord Greenhalgh (Con)
My noble friend is right to point out the impact of the Tenant Fees Act 2019. The Government recommend that the rental deposit of five weeks is a maximum rather than a default. Charging a deposit of four weeks’ rent would provide leeway to expand it to five weeks for such things as pet ownership and also to take up some of the suggestions that we have heard today around insurance or potentially looking at rent levels to accommodate wider pet ownership.
The Lord Speaker (Lord McFall of Alcluith)
My Lords, the time allowed for the Question has elapsed. We now come to the third Oral Question.