Leasehold Reform (Ground Rent) Bill [HL]

Lord Greenhalgh Excerpts

Committee stage
Monday 14th June 2021 Grand Committee

[Lord Lennie (Lab) [V]]

My Lords, Amendments 14 and 15 refer to the penalties contained in the Bill, whereas Amendment 16, as we have heard, refers to the banning orders regime. I am pleased that the noble Baroness, Lady Grender, has introduced these, so that the Committee can consider whether these current penalties are appropriate and whether the banning orders should be extended.

First, on the issue of financial penalties, as we have heard, the amendments would increase the minimum financial penalty from £500 to £5,000, and increase the maximum penalty from £5,000 to £30,000. Given the sums of money which are involved in leasehold arrangements and the costs associated with ground rent, the current penalties seem lower than would be expected. If the Minister is not able to accept the noble Baroness’s amendment, I hope he will explain and justify how the Government arrived at those figures.

On the banning order regime, the noble Baroness brings forward the question of whether the provisions of the Housing and Planning Act should be strengthened. The amendment proposes the banning of landlords from collecting ground rents if they receive multiple penalties. On the same issue, I would be grateful if the Minister could explain whether consideration has been given to banning landlords from renting properties at all when they receive financial multiple penalties. Tenants must be protected from rogue landlords who break legislation over and over again. I hope that the Government will detail what steps they are taking to hold these repeat offenders to account.

[The Minister of State, Home Office and Ministry of Housing, Communities and Local Government (Lord Greenhalgh) (Con)]

My Lords, I also join the noble Baroness, Lady Grender, in recognising that today marks the fourth anniversary of the Grenfell Tower tragedy, which was the largest loss of life seen in a residential fire since the Second World War. My thoughts are with the survivors and the bereaved.

I thank noble Lords present and those participating virtually for all their time and effort in scrutinising the Bill so far. We have had very good discussions in this Committee and through our engagement meetings. I am grateful for the commitment from all noble Lords to improve the Bill and to reform leasehold more generally.

I have listened to the concerns raised by noble Lords that the penalties set out in the Bill are not high enough and that there should be more significant consequences for those who breach the provisions of the Bill multiple times. It is vital that the Bill contains enforcement measures that offer a strong deterrent to any freeholders and their managing agents who try to get around its provisions, and in so doing protects leaseholders. Amendments 14 and 15 in the name of the noble Baroness, Lady Grender, would raise the penalties that can be imposed per breach from a minimum of £500 and a maximum of £5,000 to a minimum of £5,000 and a maximum of £30,000 pounds —and my noble friend Lord Naseby would seek to quintuple it to a maximum of £25,000 pounds.

In response to the noble Lord, Lord Lennie, penalties in the Bill have been set with reference to the typical ground rent collected currently by landlords. I believe that the penalties have been set at an appropriate level to act as an effective deterrent without resulting in a disproportionate enforcement regime. I point out that £500 is a minimum only and that freeholders could easily be liable for multiple fines for the same building; a flat containing 40 leases could leave a freeholder exposed to a maximum fine of £200,000, which is a significant penalty. I ask noble Lords to also note that, through the Bill, we are introducing a minimum penalty amount. I believe this is the first time that this has happened in leasehold law—we have not seen this in other leasehold legislation. This will act as a strong deterrent to any landlord who considers breaching the provisions of the Bill. In addition, the penalty applies per lease, so freeholders of multiple properties could receive higher penalties if they breach the legislation multiple times.

In addition to any financial penalties, enforcement authorities and the tribunal can order the freeholder or their agent to refund any prohibited rent within 28 days, including interest. As I said, the enforcement regime in the Bill is the first time that a penalty regime has been applied to ground rent. This landmark change will ensure a strong deterrent in the protection of leaseholders.

Amendment 16 from the noble Baroness, Lady Grender, and the noble Lord, Lord Stunell, seeks to allow a housing authority in England to apply a banning order under the Housing and Planning Act 2016 against landlords who receive three or more maximum penalties from an enforcement authority under the Bill. Banning orders under the Housing and Planning Act 2016 are intended for the most serious rogue private sector landlords and are not intended for leasehold housing. I note again that the penalties in the Bill apply per lease, so enforcement authorities can impose multiple penalties on freeholders who commit multiple breaches. Enforcement authorities and the tribunal can also order a refund of any prohibited rent.

The noble Baroness, Lady Grender, asked what incentives there are for local authorities to carry out enforcement penalties set at this level. They retain proceeds and, as I have pointed out, multiple breaches incur multiple penalties. There is also a point of principle here: that local authorities should not consider the potential financial windfall when deciding to take enforcement action; they should seek to set fines relating to the breach, and therefore they should be proportionate.

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[Lord Stunell (LD) [V]]

My Lords, this has been a very interesting debate. Everybody has spoken with a sense of understanding and concern, remembering that today is four years since the Grenfell tragedy. It should be a matter of particular regret in the kind of debate that we are having that, four years on, so few of the deep issues that have been revealed subsequent to that fire have yet been fully dealt with or accounted for. It is a matter of regret to me that the building safety Bill is still somewhat on the distant horizon, and that we have not yet solved at all the question of who will pay for the costs of this tragedy, since it affects households right across the country.

Noble Lords would expect me to focus particularly on Amendment 20 in the rest of my remarks. Before I do, I will comment briefly on Amendment 19 from the noble Lords, Lord Kennedy and Lord Lennie, which calls for a review. I will skip the number of days and focus on the four issues that they have said need urgent reform and which every speaker in this debate and anybody who has considered the issue would agree on: lease forfeiture, transfer fees, redress schemes and enfranchisement. The Bill does not deal with those four issues. It is time that the Government face up to that and present to Parliament—preferably in the form of legislation, but if not a published report—precisely what their view is on those issues.

The move of the noble Lord, Lord Berkeley, to clarify where Crown exemptions come into play for leaseholders raises an issue that he has brought to your Lordships on a number of occasions. I would be very interested indeed to hear whether the Minister is brave enough to accept his challenge to write to the Duchy of Cornwall and get it to answer the noble Lord’s letter. Your Lordships certainly deserve to hear from the Duchy precisely how it intends to proceed. If the legislation needs change and reform to take account of that, we need to hear the Minister say that he is ready to do that and to make sure that Crown exemptions are used with appropriate discretion and not in any way at all to put residential leaseholders of Crown land in a more disadvantageous place than those holding leases where the freeholder is a private body.

On Amendment 20, my noble friend Lady Pinnock set out, as she has done many times before to your Lordships, the grievous burdens placed on leaseholders across the country as a consequence of the remediation made necessary following property inspections post Grenfell. Before I go on, I remind noble Lords that I served as a Minister in the Department for Communities and Local Government, as it then was, with responsibilities for building regulations between 2010 and 2012.

The Grenfell inquiry has been hearing evidence of failures at many levels: building owners, building managers, designers, materials suppliers, on-site contractors, inspection teams and enforcement bodies. No one has escaped damning evidence of their failures. What there has not been is any evidence at all of failure by residents or leaseholders. On the contrary, it was the residents of Grenfell Tower who repeatedly warned of the dangers that other people chose to ignore. That led to the terrible tragedy, the deaths and the unmeasurable impact on so many lives of families in and around Grenfell Tower who survived that night.

It also led to the discovery that this was not an isolated case of many unfortunate things coming together in a sequence of horrible coincidences to make a one-off dangerous, combustible building. We now know that more than 400 other residential blocks have been found to have similar dangerous cladding, and the enforced inspection of those blocks has brought to light many other fire safety defects, costing billions of pounds in total. Many of those blocks are occupied by blameless leaseholders who find that they now live in a dangerous and unsaleable home and are being presented with enormous bills for remediation under the terms of their leases.

The Minister will say that this is not the place to insert a proper compensation scheme—nor does Amendment 20 do that—but he needs literally to take stock. That is what Amendment 20 tabled by my noble friend Lady Pinnock does. It asks for a taking stock of the impact of this Bill on leaseholders who live in those defective properties.

Time after time your Lordships have pressed the Government to come forward with a proper scheme of compensation for leaseholders all over the country who have been unwittingly caught up in the Grenfell scandal. Every time your Lordships have pressed Ministers—this Minister in particular—we are told, “Not here and not now”. Meanwhile, as my noble friend Lady Pinnock spelt out, leaseholders are being sent five-figure bills with 28 days to settle or face the forfeiture of their lease. They cannot raise finance on their now-worthless properties, and the Government still have not issued the vital information on how they can even access the loan scheme the Government announced months ago.

Will the Minister tell your Lordships today when those missing loan scheme criteria will be published and what the distribution system of those loans will be? Please can he assure us that it will not be administered via an outsourcing company such as that in Virginia, USA, which earlier this year was the nemesis of the green homes grant fiasco? Let this piece of work be started soon, carried out efficiently and delivered to the benefit of leaseholders as quickly as possible.

Secondly, will he urgently bring forward a proper compensation scheme and lift the threat of forfeiture and bankruptcy from innocent leaseholders trapped in these blocks? Will he, as an earnest of good intent, accept my noble friend Lady Pinnock’s amendment today so as, at the very least, to commit to take stock of the impact that a ground rent ban could have on those affected leaseholders and tenants?

[Lord Greenhalgh (Con)]

My Lords, I turn to Amendments 19 and 20 from the noble Lords, Lord Kennedy and Lord Lennie, and the noble Baronesses, Lady Pinnock and Lady Grender.

Under Amendment 19 the Government would be required to carry out a financial assessment of the Bill within 30 days of Clause 3 coming into force. The Government would also be required to consider whether further legislation would be necessary to address any financial consequences related to the Bill

“for tenants in long leases of dwellings, including but not limited to in relation to … lease forfeiture … transfer fees … redress schemes”

and

“enfranchisement.”

The effect of Amendment 20 would be to require the Secretary of State to complete a financial assessment of the impact of the Bill on leaseholders, specifically with regards to building remediation costs.

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[Lord Lennie (Lab) [V]]

My Lords, we also strongly support Amendment 21. It rightly asks whether the Government can improve the definition of “rent”. Unfortunately—we heard much of this from the noble Baroness, Lady Grender—there is a litany of housing legislation that is in desperate need of modernisation. I hope the Minister will use today’s debate to explain what further legislation is planned to bring the provisions up to date.

On the specific issue raised by the noble Lord, Lord Young of Cookham, can the Minister confirm what engagement the Government have had with NGOs and representatives of tenants on the issue thus far? Can he confirm whether the Government have any plans, as suggested by the noble Baroness, Lady Grender, to update the definitions available in the Leasehold Reform Act 1967 and the Landlord and Tenant Act 1985?

[Lord Greenhalgh (Con)]

My Lords, this amendment from my noble friend Lord Young seeks to capture within the definition of rent other charges, such as fixed service charges, if they are reserved as rent in leases. It also seeks to exclude from the definition of rent variable charges or insurance if they are reserved or form part of the rent. The comments on a proposal regarding the definition of rent received from my noble friend Lord Young and other noble Lords continue to be carefully considered. I am very grateful to all those who have given it such close examination and look forward to hearing the further deliberations from the Law Society.

This is an important point to discuss today, as the treatment of what is meant by a ground rent and a rent lies at the heart of what the Government wish to convey through the Bill. It sets the tone for leasehold reform legislation to follow. On the specific meaning of rent, I am not unsympathetic to my noble friend Lord Young’s intention in his amendment. Since the very outset, this Government have been alert to defining what is meant by a ground rent in such a way as to discourage avoidance activity by sectors of the property market which make a habit of such activity. I believe we are all agreed that preventing such activity is of the utmost importance.

To give noble Lords some more of the context behind our reasoning for this definition, we started from a similar position to many of the Committee when approaching this issue by seeking to define closely what is meant by a ground rent. It is a logical approach; tightly drawn definitions are often meat and drink to a strong legislating body such as this House. However, I ask your Lordships to reflect on the seeming ease with which some parts of the leasehold sector have found ways around generation after generation of leasehold legislation, drafted with the greatest care and scrutinised in both this House and the other place, as my noble friend Lord Young knows well.

After very extensive consideration, we have concluded that we would need to take a different approach to the definition of rent for the leasehold sector. We therefore purposely defined rent widely to prevent landlords avoiding the restrictions in the Bill by including spurious periodic changes under any other name. As stated at Second Reading, the Bill intentionally uses a wide definition so that it includes anything in the nature of rent, whatever it is called. For example, we are mindful of not wanting to allow for a new garden rent or parking space rent replacing ground rent after the Bill is passed. That is why the meaning of rent in the Bill is drafted in such broad terms.

Any change faced by leaseholders that looks and sounds like a rent, whatever it is called, will therefore be open to challenge through trading standards and the First-tier Tribunal. Freeholders, landlords and even managing agents acting on behalf of a landlord will be able to refund this rental charge, whatever it is called, and may face a penalty fine. This imposes a potential liability on managing agents and ensures that they will scrutinise future contracts with great care.

We agree that it is not necessary for a lease to reserve charges, such as service charges and insurance, as rent. Under the Bill’s definition of rent, landlords will need to consider whether to itemise other charges separately in the lease. I point out that fixed service charges are a valid way for freeholders to charge for services where leaseholders and freeholders enter into a lease agreement. We are aware of criticism of the misuse of fixed service charges on occasion; these charges are generally in payment for a tangible service and differ from ground rent. Under the Bill, landlords will need to consider whether to itemise these in the lease agreement, and to be clear what the charge is and what a leaseholder receives in return.

I thank my noble friend Lord Young for raising the points made previously by my noble friend Lord Hammond of Runnymede. He raised two specific points, one on the definition of a ground rent for long leases over 21 years where a rack market rent is charged. I welcomed my noble friend Lord Hammond’s thoughts on this and am happy to undertake today that my officials and I will continue to engage with him and others as we look further into this matter. My noble friend Lord Hammond also raised a point on intermediate leases where there is a head lease or multiple properties. I point out that there are a number of potential options to address the complexities in this scenario. Once again, I am grateful to him for raising this issue and will continue to explore the matter further before Report.

Above all, I welcome the efforts of my noble friend Lord Young to achieve our shared objective of a clear definition of rent. However, I fear that my noble friend’s amendment would add complexity and provide opportunities for landlords to find workarounds to a Bill otherwise closed off by the simple definition it currently contains. I am interested to see what the Law Society comes up with and to see the revised drafting.

In response to the noble Lord, Lord Lennie, we have engaged with a number of NGOs and stakeholders in preparation for the Bill and I am happy to provide details of that in writing. While I appreciate the intention behind my noble friend’s amendment and I am happy to continue discussions with him, I ask him to withdraw his amendment.

[Lord Young of Cookham (Con)]

My Lords, I am grateful to all those who have taken part, as this is a modest Back-Bench amendment which has generated three Front-Bench responses. The noble Baroness, Lady Grender, reminded us that there is a lot of money riding on the definition of ground rent; there are huge financial instruments at stake. We do not want a shaky foundation for that market.

I listened to the Minister’s reply. I will say only that he has so far failed to convince the Law Society or the lawyers I referred to, who do not believe that the broad definition adopted by his department is the right way to proceed. I am not sure that I was reassured by the Minister saying that, if there was any doubt, tenants could go to tribunals. The whole point of the amendment is to try to avoid doubt and grey areas and reduce the need for litigation.

At the beginning of his response, my noble friend said that his department continues to carefully consider the issue of the definition and that he was not unsympathetic to what I was trying to do. I am grateful for those responses. On the basis that discussions will continue between the noble Lord, Lord Hammond, and the department, the Law Society and the department, and indeed, those solicitors who have expressed serious doubts about the current definition, I am happy to withdraw the amendment.

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The certainty of a date is, therefore, critical. That is why I was more than happy to put my name to the amendment, in the name of the noble Lord, Lord Blencathra, for it to come into effect as quickly as possible. It is funny that the noble Lord, Lord Young, and I took down exactly the same quote: we must make progress “as speedily as possible”. To do that, a clearly defined date is necessary, and not just for the leaseholders. The people in the marketplace neither trust nor believe that this is imminent and will happen. For that reason, I strongly support both amendments, particularly the one in the name of the noble Lord, Lord Blencathra.

[Lord Greenhalgh (Con)]

My Lords, these amendments seek to set a fixed date or timescale for the commencement of the provisions of the Bill. I sympathise with that and thank noble Lords for raising this issue. The Government also wish to bring an end to the unjustified charging of ground rents as soon as it is feasible. Clause 25 provides that the Bill’s substantive provisions will come into force on a day appointed by the Secretary of State by regulations. Noble Lords can rest assured that we do not intend to have an unnecessary delay in implementation.

Although I am grateful to my noble friend Lord Blencathra for his enthusiasm to see the Government’s legislation come into force, commencing all the Bill’s clauses immediately on Royal Assent is simply not workable. This would leave no time for the laying of regulations and other important matters relating to the implementation process. While most of the delegated powers in the Bill are intended for later use should the need arise—such as to close a loophole—some will be beneficial when the rest of the clauses are commenced and will need to be prepared prior to this. For example, regulations under Clause 2, specifying the form and content of notices to be exchanged by landlords and leaseholders in respect of a business lease, will aid transparency and understanding of the obligations of both parties under this legislation—an outcome which I am sure noble Lords would welcome. I am sure that noble Lords will want the Government to get such regulations right. I am also sure that the noble Lord will appreciate that, with the unpredictability of the parliamentary timetable, I cannot give a guarantee that the Act can come into force on the day it is passed.

Amendment 24, in the name of the noble Lords, Lord Kennedy and Lord Lennie, and the noble Baroness, Lady Grender, recognises that time is needed before the Act can come into force. Again, I appreciate the sentiment of wanting to see the Act brought into force as quickly as it can be. However, it is not appropriate at this point to set a hard deadline for commencement, as proposed in the amendment. The Government are mindful of the necessity of ensuring careful implementation of this new legislation and to allow for a planned transition to a leasehold sector without financial ground rents. As noble Lords would expect, we will work closely with the sector, enforcement bodies and others to ensure that the Bill is implemented as smoothly and speedily as possible. I again assure noble Lords that the Government are fully committed to bringing the Bill’s provisions into force without delay.

My eagle-eyed noble friend Lord Young has spotted that the Bill applies to England and Wales and that, as currently drafted, there could be different commencement dates. Conversations with the Welsh Government continue to ensure that we meet the needs of leaseholders in England and Wales and address any commencement concerns.

I state again that I have listened carefully to noble Lords’ concerns and will look at whether we can be more specific about commencement dates as we move to Report. I look forward to further discussions with noble Lords on this issue. Once again, the intention is to get the second stage of leasehold reform through in this Parliament, ideally in the third Session. However, I cannot make any hard and fast commitment to that, so I ask the noble Lord to withdraw his amendment.

[The Deputy Chairman of Committees (Lord Faulkner of Worcester) (Lab)]

I thought I had a request from the noble Baroness, Lady Grender, to speak after the Minister. Does she now not want to do so?

[Baroness Grender (LD)]

I will take the opportunity, since I have created so much confusion. I thank the Minister for saying that he will go back and see whether it is at least possible to specify some kind of commencement date. I would very much like to say to him that I think all sides of this House will happily work with him and his department and take recommendations if it is at all possible to specify a date in order to counter the market scepticism that I described to him. If it is at all possible to put a date by the end of this process, we would be very grateful for that move.

[Lord Greenhalgh (Con)]

Of course, as a Minister I would like to have stronger lines at this stage but it is important to recognise that we need to lay the regulations and ensure that the enforcement of this works, and there are communications challenges. However, taking that all into account, I am sure that we can reach a situation where we provide much greater clarity and we can be more specific around commencement dates. We can work towards that as the Bill moves through this House and on to the next stage.

Leasehold Reform (Ground Rent) Bill [HL]

Lord Greenhalgh Excerpts

Committee stage
Wednesday 9th June 2021 Grand Committee

[Lord Lennie (Lab) [V]]

My Lords, it was certainly worth waiting for the speech of the noble and learned Lord, Lord Mackay, because we now know we are all batting on the same wicket. As we have heard, Amendment 18, tabled by my noble friend Lord Kennedy and me, in addition to amendments tabled by the noble Lords, Lord Young and Lord Blencathra, introduces the issue of existing leaseholders and brings into question why the Government are not legislating to protect them. To us there seems to be no rhyme nor reason why they are not.

Although the provisions of the Bill are welcome and the Government are right to set future ground rents to zero, they are offering nothing for those tied into existing leaseholds. In 2019, the Ministry for Housing, Communities and Local Government estimated that one in five homes in England were leasehold dwellings. That equates to approximately 4.5 million properties, and the number will have grown since. Many of those households, tied into leasehold arrangements, are subjected to ground rent arrangements overwhelmingly balanced to benefit landlords—what the noble Lord, Lord Blencathra, called legal racketeering. Some leaseholders are being charged extortionate amounts and others have seen their payments rise exponentially.

In fact, the Competition and Markets Authority is currently taking action against both Countryside and Taylor Wimpey, which are doubling some ground rents every 10 to 15 years. There is one factor that every household paying ground rent has in common: they receive little to no benefit from paying that sum. The Government should take action for those already stuck in leaseholds and paying extortionate ground rent charges. Amendment 18, tabled by my noble friend Lord Kennedy and me, seeks to address this by ensuring that the Government bring forward further legislation. Can the Minister confirm whether any further legislation is anticipated or planned on this theme and, if so, when?

The purpose of Amendment 9 is to raise the question of remedial costs for leaseholders. The crux of this matter is that the Government have failed to introduce legislation to deal with the fact that building owners are attempting to pass on the cost of remedial work to leaseholders. Despite promises from Government Ministers that leaseholders would not be forced to pay to fix fire safety problems that were not their fault, the issue is still ongoing. I have a nephew who is a leaseholder in a block of flats in Hackney. The freeholder, Southern Housing, has simply failed to engage with the Government. It has not applied for any grant aid to assist to fix the fire safety problems, leaving the leaseholders potentially to bear the cost. We are talking here about tens of thousands of pounds per household. Can the Minister confirm when legislation will be introduced to prevent leaseholders facing those extraordinary costs?

Amendment 10, meanwhile, raises the issue of service charges in shared ownership properties. The purpose of the amendment is to highlight the sky-high fees that many residents in those properties are being charged, often with little return. Will the Minister use this opportunity to explain what steps the Government will take to help those in shared ownership agreements who are facing extortionate service charges?

Amendment 11 raises the important point of informal arrangements, which can be used to bypass the central provisions of the Bill. I look forward to clarification from the Minister in this area, and on the questions raised by Amendments 22 and 23, tabled by the noble Lord, Lord Young. I understand that the purpose of the amendments is to give time to prepare for all involved parties, but we should consider that the Bill’s proposals have been discussed for some time already. None the less, I trust the Minister will respond to the points made by the noble Lord.

[The Minister of State, Home Office and Ministry of Housing, Communities and Local Government (Lord Greenhalgh) (Con)]

My Lords, we have heard a great deal today about the difficulties facing some existing leaseholders, particularly in relation to ground rent—poignantly in the speech by my noble friend Lord Blencathra and, with some powerful examples, from the noble Baroness, Lady Grender.

We are very concerned about leases with high and increasing ground rents. We are aware that such onerous conditions affect not only the affordability of living costs for affected leaseholders but their ability to sell or even re-mortgage their properties. That is why we asked the Competition and Markets Authority to conduct an investigation into potential mis-selling and unfair terms in the leasehold sector. This included the issue of onerous ground rent. Following a detailed investigation, in February last year the CMA published its report, which estimated that the issue of doubling ground rent has affected more than 18,000 leaseholders. In March this year, it informed developers that they may be in breach of the law. Noble Lords will agree that this is very serious indeed, and the Government welcome the CMA’s continued efforts to bring justice to home owners affected by unfair practices.

Our commitment to existing leaseholders certainly does not end there. As I made clear at Second Reading, this is just the first of a two-part legislative reform programme that will improve the leasehold system. Further legislation later in this Parliament will address a range of issues facing existing leaseholders. In answer to the noble Lords, Lord Stunell and Lord Lennie, the aim is to have that next stage in the third Session.

On 7 January the Secretary of State announced a package of leasehold reforms covering enfranchisement valuation and 990-year leases. This is the first part of our response to the Law Commission’s reports on leasehold and commonhold. We will respond to the remaining recommendations in due course. We are absolutely committed to a comprehensive and ambitious programme of reform to create a fairer and more transparent leasehold market, but we need to make sure we get it right. That takes time, which is why we have started with this ground rent Bill, focused tightly on ground rents on new residential long leases.

I turn to the specific amendments before us today that deal with existing leaseholders. My noble friend Lord Blencathra has tabled Amendments 1 and 2. The whole House will have been left in no doubt as to his views of ground rents and the leasehold system following his barnstorming speech at Second Reading. His two amendments both aim to extend this Bill so as to reduce ground rent for existing leaseholders, and we can all understand his reasons for laying them.

I am grateful to colleagues from across the House for their close examination of the issues facing existing leaseholders. However, the decision to focus this legislation tightly on new leases was a very deliberate one. We are working to make the leasehold system fairer and more transparent for leaseholders, but we also need to ensure that we are fair to freeholders. Setting existing leases to a peppercorn raises complex issues and could have negative consequences that may extend beyond the leasehold sector. As just one example of these consequences, your Lordships will be aware that there are pension providers who hold existing investments dependent on ground rent income that were entered into some years ago. These are long-term financial commitments that service the needs of many of our elderly citizens.

I note again that we are in the throes of planning to bring forward further legislation on leasehold reform, and the changes to the valuation process will make a real difference for many existing leaseholders, especially those with fewer than 80 years remaining on their lease.

I come to the six amendments tabled by my noble friend Lord Young of Cookham regarding the right to buy out ground rent in pre-commencement leases, Amendments 7, 8, 12, 17, 22 and 23. As noble Lords will know, there is already statutory provision for leaseholders of flats to reduce the ground rent they pay to a peppercorn on payment of a premium when they extend their lease, and leaseholders of houses can buy their freehold and so extinguish ground rent liability that way under existing legislation. The Government are aware that for some leaseholders this may be prohibitively expensive. This is why we have announced forthcoming changes to the valuation process that will cap how ground rent is treated, reducing the premium to be paid for leaseholders with onerous ground rents.

In addition, the Law Commission has recommended that leaseholders should be able to choose to pay to extinguish their ground rent without extending their lease, as my noble friend Lord Young mentioned. I can confirm that the reforms we will bring forward in future leasehold legislation will enable leaseholders, where they already have a long lease, to buy out the ground rent without the need to extend the term of the lease. We are considering the remainder of the Law Commission’s recommendations and will respond in due course.

I know that my noble friend Lord Blencathra has asked me to be a latter-day Caesar Augustus, but I point out that we have not addressed this in this legislation because reform of enfranchisement and historical ground rents is complex and interlinked. It is important to address these issues together in the forthcoming legislation. The cost of enfranchisement is directly related to ground rents and other components, such as the length of the lease. That is why we are looking to do that in a second tranche of reforms in the third Session of this Parliament. That is the plan.

These planned changes will directly address the issue underpinning the amendments from my noble friends Lord Blencathra and Lord Young. Future leasehold reforms will allow existing leaseholders to pay a more affordable premium and buy out their ground rent when they extend their lease or purchase their freehold. This will be less costly for leaseholders than under the current approach to enfranchisement valuation. I hope that noble Lords will agree that these changes mean that the amendments are not needed, as their effect is being achieved through work beyond the Bill.

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[Lord Young of Cookham (Con)]

I am very grateful to the Minister for his reply. I press him on what he said right at the end about the importance of getting the Bill through “as speedily as possible”. I accept that, but if it is important that Parliament processes this legislation speedily, is it not then incumbent on the Government to announce an early date for the implementation of the Bill?

[Lord Greenhalgh (Con)]

My Lords, we want to move as speedily as possible but, as I stated in my reply, we do not want to set a deadline for things. We want to get this on the statute book very speedily in this Session; that is why it is so early in this Session. That is my answer.

[Lord Blencathra (Con) [V]]

My Lords, I am grateful to all noble Lords who have participated in this debate. I feel rather guilty that I am responding when it really should be my noble friend Lord Young of Cookham, who put forward an impeccable case today for the reforms he has suggested.

The one thing that has come through loud and clear to the Minister from all noble Lords is that the current system is totally unsustainable. My amendments are probably not appropriate; I believe the amendments of my noble friend Lord Young of Cookham are. If they cannot be accepted into this Bill, it is desperately important that we get them in the full leasehold reform Bill which we expect next year. If my noble friend wishes to put down his amendments on Report, I will support him; he may not wish to push them to a vote, but perhaps the Government need to see on Report that we are serious about talking about the injustice of the current leasehold system.

My noble friend the Minister has said that this is a difficult area and that he is committed to giving leasehold reform “high priority”. If I may say so, the Law Commission is a worthy body, but its problem is that it is full of lawyers; they see leasehold reform as a matter of dotting some “i”s, crossing some “t”s and tweaking an 800 year-old system a bit here and there to make it work better. As politicians—and as politicians in the Commons would say—we find the whole system iniquitous. It is wrong. Perhaps it is those of us from a Scottish background who cannot believe that you buy a property and do not fully own it; it is an extraordinary, wrong system. When the Bill comes next year, we do not want leasehold reform tweaked; we want it stopped for all new contracts.

The wonderful innovation of commonhold failed because we gave developers and other money-grubbing people the choice of continuing with leasehold or commonhold. We thought they would implement common decency and common sense, but they operated a system which made the most money—well, we cannot criticise that; it is inevitable. When the new Bill comes, let there be no choice. Let it be clear that commonhold will be the only system acceptable for all new purchase contracts in future.

That still leaves the problem of current leaseholders. I am very certain that, with Amendment 5 from my noble and learned friend Lord Mackay, the amendments from my noble friend Lord Young of Cookham on a buy-out scheme must be the right direction to go in, because it affords justice to leaseholders who can get out of this wicked system and gives some compensation—too much in my opinion, but who am I to say?—to current freeholders who would demand the right not to be stripped of all their benefits.

On early implementation, I refer my noble friend Lord Young of Cookham to Amendment 26, where I suggest that the Bill should be implemented on Royal Assent. I appreciate that we may need to make exceptions for property for old folks’ homes—I am not sure what the current term is for an old folks’ home, but I believe that is to be exempted for a couple of years for us to figure out how to do it. The rest of this Bill should be implemented as soon as possible after Royal Assent.

With those words—and my apologies; my camera was off a lot of the time so that my machine did not run down, but I heard all the debate—I am grateful to all noble Lords who have taken part and, in conclusion, emphasise to my noble friend once again that the Government might get away with not sorting out leasehold and ground rents in this Bill, but they will not get away with it next year when the big Bill comes. I beg leave to withdraw my amendment.

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[Lord Greenhalgh (Con)]

My Lords, I thank all noble Lords for their time on this issue, particularly the noble Lord, Lord Young of Cookham. I am happy to engage with noble Lords further on whether we can make the business exemption as clear as possible.

The Government consulted carefully on the detail that has informed the Bill. During that consultation a small number of areas were identified where there was a justification for the charging of a rent or ground rent for a property. The Bill exempts business leases from the peppercorn rent requirement, and we have always been clear that this Bill is aimed at residential properties. Clause 2(1)(b) addresses the very small number of leases that fall between these; that is, mixed-use leases, where a single lease comprises both business and residential purposes.

For the avoidance of doubt, this does not relate to mixed-use developments, which may comprise a range of property types, including both business and residential, but each on a separate lease. In such cases, provided that no other exceptions apply, the residential premises in such a development would be subject to a peppercorn rent, and a rent may be charged for commercial properties.

In response to the noble Lord, Lord Stunell, the exemption applies only where flat and commercial premises are on the same lease. The Bill is clear that home businesses and other ancillary leases are not included in the definition of “business lease”.

The types of premises that Clause 2(1)(b) is intended to address are likely to be small in number. They could include, as mentioned by the noble Lord, Lord Young, a flat above a shop where the occupant of the flat is a shop worker living above the business where they are required to have the shop open at certain times. The noble Lord mentioned a publican living above a pub.

We have taken care to ensure that this exception does not provide a loophole whereby a ground rent is charged on a premises that is to all intents and purposes a residential one. To prevent such a loophole, there must be a close link between the business purpose and the need for the associated residential use. That is brought about by the requirement in Clause 2(1)(b) that the use as a dwelling

“significantly contributes to the business purposes”.

There is a further protection for both leaseholders and landlords in Clause 2(1)(c). This requires that, at or before the point the lease is granted, both the landlord and leaseholder provide written notices that they intend the premises covered by the lease in question to be used for the business purposes set out in the lease. The purpose of Clause 2(1)(c) is to make sure that there is no doubt for either party that the lease is intended to be used, and continues to be used, for business purposes.

The business lease exception is carefully drafted to enable a rent to be charged where it is justified, and to include sufficient protection against abuse of this exception. I restate to the noble Lord, Lord Stunell, that the Bill defines “dwelling” as including gardens or appurtenances, which should include parking spaces, but I will be happy to clarify that specific point before Report. I therefore ask the noble Lord, Lord Young, to withdraw his amendment.

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[Lord Greenhalgh (Con)]

My Lords, I start by addressing the point about age. It is great to hear from my noble friend Lord Naseby and my noble and learned friend Lord Mackay of Clashfern on why we are considering people aged a mere 55 for this. I do not have to declare an interest as I have not quite made that age threshold yet. However, it is fair to say that that sector broadly starts providing retirement housing for those aged 55 and above. Some people in that age group choose to move to those properties. In fact, one can access lump sums from one’s pension from the age of 55 but I know that people at a greater age look at that and ask, “How can you even contemplate retirement at such a young age?”

As noble Lords know, it is our intention to protect leaseholders from unfair practices through the Bill by ensuring that future regulated leases are restricted to a peppercorn rent, unless exempted. While we would like the provisions of the Bill to come into effect as soon as possible, we have decided to give the retirement sector additional time to prepare for these changes, as was mentioned by the noble Lord, Lord Best.

The noble Lords, Lord Kennedy and Lord Lennie, have tabled Amendment 25 to remove the provision that provides that the Bill will not come into force in regard to retirement homes prior to 1 April 2023. I thank them for their consideration of this matter.

I will explain to your Lordships the reasoning for including a transitional period for retirement properties and why it is the right thing to do. The detail of the peppercorn ground rent was announced in 2019, following the Government’s consultation Implementing Reforms to the Leasehold System. At the time of the announcement, retirement properties were to be exempt from the restrictions on ground rent in the Bill. Having reviewed this in further detail, the Government decided in January 2021 to widen the protections granted under the Bill and to remove the retirement exemption.

All other parts of the development industry have had time since the Government’s announcement in 2019 to adapt and review their business models and will have had sufficient time by the commencement of the Bill to adapt. However, given that the retirement sector has had less time to prepare, we have carefully considered the impact on developers and weighed this against our ambition to protect leaseholders. It is our firm belief that given these circumstances, the retirement sector should be given additional time to make adequate preparations to transition to peppercorn rents, as was carefully argued by the noble Lord, Lord Best.

The noble Lord’s Amendment 4 would have the effect of extending the transition period for retirement properties that are under development, potentially for an additional two years, or even longer where sites are slower to build out and sell. I am grateful to noble Lords for looking closely at this, and to stakeholders in the retirement housing sector who have provided information on this issue. We have carefully considered this matter to ensure that we are striking the right balance, thereby giving the retirement sector time to transition and ensuring that protection for leaseholders comes as quickly as possible.

I am sure that noble Lords will agree that the transitional arrangements that we have set out in the Bill will make it fair for all parties, both developers and leaseholders, and that it is the right thing to do. I therefore ask that the noble Lord withdraws his amendment.

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[Lord Lennie (Lab) [V]]

My Lords, this amendment returns the debate to the question of existing leaseholders and appears to allow existing leaseholders to pay a fee to exempt them from ground rent. As I said in the earlier group, ground rent arrangements are overwhelmingly balanced to benefit landlords and the system needs urgent reform for all involved.

I am grateful to the noble and learned Lord, Lord Mackay, for explaining that this was based on the Scots departing from the previous feudal system, but I am concerned that his amendment, if applied literally, could lead to landlords charging extortionate termination fees. None the less, I appreciate that he sees the need for reforming the system and I look forward to the Minister’s response.

[Lord Greenhalgh (Con)]

My Lords, I spoke earlier about the Competition and Markets Authority investigation into potential mis-selling and unfair terms in the leasehold sector. This included the issue of onerous ground rent. Our commitment to existing leaseholders does not end with the CMA investigation. As I have mentioned several times, this Bill is just the first of two-part legislation to reform and improve the leasehold system. As noble Lords will know by now, further legislation later in this Parliament will address a range of issues facing existing leaseholders.

My noble and learned friend Lord Mackay of Clashfern’s Amendment 5 would give an option of redemption on existing leases, allowing leaseholders to pay a capital sum to reduce their ground rent to a peppercorn. The broad aim of such an amendment to allow existing leaseholders to buy out their ground rent has been discussed previously, so I will avoid repeating the detail at length.

As noble Lords will recall, existing legislation already allows for the leaseholders of flats to reduce their ground rent to a peppercorn when they extend their lease, while leaseholders of houses can eliminate ground rent completely by buying the freehold of their property.

In January the Government responded in part to the Law Commission’s reports on leasehold and commonhold reform. This included a commitment to allow leaseholders who already have a long lease to buy out the ground rent, without the need to extend the term of their lease. We will respond to the remaining Law Commission recommendations in due course.

I hope that noble Lords will agree that the work currently being undertaken beyond the Bill means that this amendment is not needed. Noble Lords can rest assured that this Government have a desire to reform the leasehold system at the earliest opportunity and the ground rent Bill represents the first stage in a two-step legislative programme.

I point out—as was raised just now by the noble Baroness, Lady Grender—that there are pension fund investments and we need to take that into account. That is why the Government believe it is right not to take a big bang approach to the abolition of existing ground rents but to make it easier to enfranchise and to offer that in the most leaseholder-friendly way. That is why we have made a number of commitments where people will be able to buy out ground rents without the need to extend their lease, as well as making enfranchisement as easy as possible, along the lines of the recommendations of the Law Commission. That is the balance that we want to strike to ensuring that existing leaseholders will have the mechanism and the ability to remove ground rents. I therefore ask that my noble and learned friend withdraws the amendment.

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[Baroness Grender (LD)]

I should just like to ask the Minister to perhaps write to all Members involved in this debate to give a bit more detail about what proportion of pension funds are impacted, given that my understanding is that the pension funds are fully aware of the intention to abolish ground rents and extend that to existing leaseholders. I should still like to understand the balance of impact between the 4.5 million leaseholders and the pension funds, if that is to be deployed as a significant argument in this issue. I am very happy for the Minister to write to us later about this.

[Lord Greenhalgh (Con)]

My Lords, I shall try a second time, because obviously I did not manage it the first time. We have not made a commitment to abolish by fiat existing ground rents. We have committed to make it as easy as possible for leaseholders to enfranchise or to buy themselves out of the ground rent obligation. That of course then becomes a phased approach to the 4.5 million people who are paying ground rents. Of course, we are looking to the Competition and Markets Authority to deal with the issue of onerous ground rents. That is the policy position; the noble Baroness is implying something that we have not committed to.

[Lord Mackay of Clashfern (Con) [V]]

My Lords, I am grateful to all who have taken part in this short debate. It is quite important to have in mind the possibility of a variable way to buy off the ground rent, and that such a way of fixing that by a Minister in a regulation is flexible and could be of use in that regard. In the meantime, I am happy to withdraw my amendment.

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[Lord Lennie (Lab) [V]]

My Lords, this amendment would ensure that landlords with existing leases explain why they are charging ground rent and that agents publicise the details of any such ground rent. Both of these points are pertinent and I am pleased that the noble Baroness, Lady Grender, tabled the amendment.

The first issue of ensuring that landlords explain why they are charging ground rent is so important precisely because there is often no reason to charge ground rent. Residents get no material benefit from paying these sizeable fees, yet the landlords often increase the charges exponentially. If the Minister is reluctant to accept the amendment, could he estimate how many landlords currently offer explanations for the ground rent they charge?

On the second issue of ensuring that estate agents publicise the details of any ground rent, I understand that Rightmove has recently changed its policy to encourage agents to do exactly this. Can the Minister confirm whether the Government have any plan of their own to follow this and encourage it further?

[Lord Greenhalgh (Con)]

My Lords, to respond directly to the noble Baroness, Lady Grender, I appreciated the point about the importance of seeing where the CMA’s investigation ends up and the potential need to look at consumer protection should that not succeed. I do not want to pre-empt the investigation at this stage, but it is an important point, because one of the fundamental purposes of the Bill is to increase transparency and clarity for home owners. I listened carefully to the noble Baroness, Lady Grender, and the noble Lord, Lord Stunell, and I thank them for putting forward these amendments, which look at the issue of transparency and seek to add to that agenda.

I shall start by addressing Amendment 6, which would put a requirement on landlords to write to their leaseholders setting out why they are charging rent and what it is being used for. As noble Lords know, and I have mentioned previously today, it is our intention that no rent can be charged beyond that of a peppercorn for regulated leases once the Bill comes into effect, admittedly for new leases, unless special rules applicable to shared ownership leases or leases replacing pre-commencement leases apply.

In the Bill, “rent” has been defined in a way that will preclude landlords sneaking prohibited rents into leases under another name. This will ensure that there is clear transparency in the lease as to what is charged as “rent”—which is to say, generally, a peppercorn—and what is charged in return for a “service”. It is also important for your Lordships to note that, where a leaseholder may be dissatisfied with service charges, there are statutory processes they can use to seek redress. I am sure that noble Lords will agree that while this amendment is a welcome attempt to increase transparency, the Bill as drafted delivers the important changes that we want to see in the system.

I turn to Amendment 13, which would require a landlord to inform leaseholders of their rights under housing law in England and Wales and in relation to the Bill before entering formal and/or informal renegotiations or extensions to an existing lease. I note the concerns of the noble Baroness, Lady Grender, and the noble Lord, Lord Stunell, that without such an amendment there may be a rush for landlords to incentivise leaseholders to extend their leases before the changes in this Bill come into force. The effect of this, in their view, would be to ensure that ground rent on these leases could continue to be collected, thus trapping more people in a situation of ground rent payments in the system we are trying to stop.

Unfortunately, as drafted, the amendment would not come into effect until after the Bill commences, and it would not have the desired impact that the noble Lords seek. However, I assure noble Lords that we are working closely with a wide range of stakeholders who are committed, as the Government are, to ensuring that leaseholders are aware of their rights and what routes of redress they can take. I also invite the noble Lords to join me in these efforts to ensure that these important messages reach as far as possible. Communication of these important points is key. I therefore ask the noble Lords not to press the amendments.

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[Lord Lennie (Lab) [V]]

My Lords, the Motion moved by the noble Baroness, Lady Grender, on Clause 6 exposes the extortionate legal racketeering that goes on in this sector. We are right to seek clarification. We cannot allow a situation to develop whereby landlords are pressuring tenants to agree informal extensions as a means to continue their ground rent arrangements. The fact remains that leaseholders need greater legislative protection. While the Bill will, I hope, set the foundations for that, there is much more that needs to be done. I hope that the Minister explains the intention behind Clause 6 and considers whether further provisions are necessary to prevent any exploitation.

Amendment 13 would require landlords to inform tenants of any ground rent extensions. This raises the question of whether lease extensions will be agreed before the changes in the Bill are implemented. Can the Minister estimate the legislative timetable for this Bill and when it might receive Royal Assent? Can he also confirm whether the ministry has received any reports of lease extensions being rushed through before these changes have been brought into force?

[Lord Greenhalgh (Con)]

My Lords, I have just spoken of this Government’s efforts, including working with our key stakeholders, to strengthen leaseholders’ awareness of their rights and what entering into a lease might mean for them. The noble Baroness, Lady Grender, and the noble Lord, Lord Stunell, have tabled a Motion to oppose Clause 6 standing part of the Bill. I acknowledge the concerns that have been raised, but I point out that we have made a conscious decision that the Bill should not create barriers to non-statutory leasehold agreements. Part of the reason is that more flexible processes outside the statutory route can, in some cases, be more cost-effective and quicker for both the leaseholder and freeholder, so we want to allow this option and choice to remain.

I reassure your Lordships that we do not want leaseholders to be taken advantage of in this situation, so we are working to ensure that better information, advice and support are offered to them, and we will consider where we can strengthen this where appropriate. By making the system more transparent and exposing inappropriate practices, as described by the noble Baroness, Lady Grender, and others, we can protect leaseholders.

It is important that your Lordships note that the Government are considering the Law Commission’s recommendations on enfranchisement. They include recommendations on voluntary informal lease extensions. When the time comes, I will be more than happy to engage with noble Lords on this, as we have done on this Bill.

Our overall approach to increasing awareness and making things fairer and more affordable will help protect more leaseholders, whichever route they choose. I therefore ask the noble Baroness to withdraw the Motion.

Town and Country Planning (General Permitted Development etc.) (England) (Amendment) Order 2021

Lord Greenhalgh Excerpts

Tuesday 8th June 2021 Lords Chamber

[The Minister of State, Home Office and Ministry of Housing, Communities and Local Government (Lord Greenhalgh) (Con)]

My Lords, we have had an interesting and passionate debate on this order. I am grateful to noble Lords on all sides of the House for their contributions. I will take this opportunity to respond to some of the points which have been raised.

Before I do so, I will set out briefly what is included in this statutory instrument, which introduces a number of important measures. First, it includes the new permitted development right, discussed today, to allow for the change of use from the commercial, business and service use class to residential use. Secondly, to support the ambition of Project Speed and to ensure that new investment in public service infrastructure is planned and delivered faster and better, this order introduces important measures to allow schools, hospitals and prisons to expand their existing premises, helping to deliver additional capacity for local communities more quickly. Thirdly, it includes measures relating to freedoms for development at ports, including free ports. Finally, it includes measures to support the Government’s heritage agenda by allowing for local consideration of the removal of statues and monuments, which are often important heritage assets. This issue was raised by the noble Lords, Lord Berkeley, Lord Davies of Brixton and Lord Paddick.

I turn to the points raised on the adequacy of parliamentary scrutiny by the noble Baroness, Lady Pinnock, and the noble Lord, Lord Kennedy, as well as by the noble Baroness, Lady Thornhill. The general permitted development order under which permitted development rights are granted is made principally under Section 59 of the Town and Country Planning Act 1990—the primary legislation. That Act enables the Secretary of State, through secondary legislation, to make a development order under the negative resolution procedure. Therefore, it is entirely appropriate that this statutory instrument was laid before Parliament under the negative resolution procedure. That is the procedure that Parliament approved when it passed the parent Act. As demonstrated today, the House may call attention to and debate particular legislation of interest.

The noble Lords, Lord Kennedy and Lord Berkeley, the noble Baronesses, Lady Pinnock and Lady Thornhill, and others raised community engagement and prior approval by the local planning authority, as well as the adequacy of local decision-making. The permitted development right for the change of use from the commercial, business and service use class is subject to prior approval by the local planning authority if that authority so wishes. This enables the consideration of key planning matters in consultation with the local community. Adjoining owners or occupiers are required to be notified. The council may then consider representations made on those specified matters for prior approval as set out in the legislation. That was summarised by the noble Baroness, Lady Pinnock.

Other matters the local planning authority can consider include, in conservation areas, consideration of the impact of the loss of ground floor commercial use; and, in all areas, access to the site, flood risk, the impacts of noise on future residents, any impacts on occupiers from the introduction of residential use in an area that is important for heavy industry, storage and distribution and waste management, and—this responds to the noble Baroness, Lady Bakewell of Hardington Mandeville—the impact of the loss of health centres and registered nurseries on the provision of such services. The local authority is required to take into account any representations made to it as a result of any consultation when making its decision whether to grant prior approval.

It is important to recognise that the Government are committed to delivering the new homes that the country needs. Last year around 244,000 new homes were delivered, which is the highest number in over 30 years. Permitted developments are just one mechanism under which new additional homes can be delivered, and they encourage the development of existing buildings on brownfield sites. They protect the green belt. This enables additional net extra homes.

I do not agree with the points made about a lack of focus on quality. This will not be a floodgate to poor-quality housing—I think that that is the phrase that the noble Lord, Lord Kennedy, used. On this point, 72,000 new homes have been provided. There has been the example of the one home in Watford without natural light, and we recognise the issue of space standards. That is why we have listened to the House and made sure that we have taken steps to address these problems. We have introduced a condition that all homes delivered through permitted development rights must, since April this year, meet the nationally described space standards, and we require that all homes delivered under permitted development rights should include adequate natural light in all habitable rooms.

To respond to the noble Baroness, Lady Bakewell of Hardington Mandeville, I say that the nationally described space standards were introduced in 2015. My understanding is that there are no plans to review them, since they were introduced relatively recently.

As the Minister with responsibility for fire and building safety, I also point out that all homes built through permitted development have to meet building regulations, including fire and other building safety requirements. My department, the Ministry of Housing, Communities and Local Government, has made it very clear that there are restrictions on the use of combustible materials when additional residential storeys are added.

There has, quite rightly, been a great deal of concern about the importance of high streets. On the points raised by the noble Lord, Lord Kennedy, and the noble Baroness, Lady Thornhill, I reassure the House that we are committed to boosting regeneration and supporting our high streets and town centres. The pandemic has taken its toll and magnified the problems facing town centres and high streets, and we want to support them in adapting to these changes to become thriving, vibrant hubs where people live, shop, use services and spend their leisure time. We have therefore allocated £3.6 billion through the towns fund and an additional £4.8 billion in the levelling-up fund, which, alongside the high streets task force, will give high streets and town centres expert advice to adapt and thrive, and funding to help create jobs and build more resilient local economies and communities.

This new permitted development right will simplify the planning process and enable best use of existing and underused buildings. This is not about developers gaming the system; it is about ensuring that we see active high streets, that vacant premises do not sit there unused, blighting an area, and that there is greater flexibility in planning to enable the change—in this case—to residential use. But there are protections: there is a size limit of 1,500 square metres of floor space so that we focus on the medium-sized high street for this planning flexibility. In conservation areas, it further allows for consideration of the impact of the loss of ground floor use to residential on the character or sustainability of the area.

I beg the noble Baroness, Lady Pinnock, to reconsider the use of a fatal Motion. I have been educated by the noble Lord, Lord Kennedy, that fatal Motions come along very infrequently; I can count them on the fingers of one hand. We need to recognise that the fatal Motion would also impact on the delivery of public services in our schools and hospitals. The legislation is a very important part of our ability to grow our public service infrastructure: it enables permitted development rights for larger extensions for schools and hospitals, and enables schools, colleges and universities to increase their capacity by up to 25%, enabling them to respond to the challenges the country has faced in the pandemic and provide adequate social distancing. I hope that the noble Baroness will consider not dividing the House, because any move to annul this order would affect our ability to deliver this critical public service infrastructure.

The noble Lord, Lord Berkeley, is testing my knowledge of railway policy as the Minister responsible for local government, but we will take note of the important point he raises about the permitted development rights to demolish bridges and follow it up with the Department for Transport. With regard to the reason for the omission of railways, we will liaise with the Department for Transport on how we can best support infrastructure delivery, including for railways, and the asks of Network Rail.

In conclusion, I hope that I have provided some assurance on the benefits of these measures, and that bringing them forward via secondary legislation is the appropriate route provided for in law. The diversification of our high streets and town centres will help their recovery as the country starts to open. The mix of retail, leisure and residential uses will make them attractive places to visit, live and work. The legislation will enable a wider range of commercial and retail buildings to change use to residential through a simplified planning process while still providing important protections and allowing local consideration of a range of matters to protect local facilities and uses where appropriate, and allow local communities to have a say.

As I have set out, the legislation also provides important measures that support key public service infrastructure, such as schools, hospitals, ports and heritage. I therefore ask the noble Baroness, Lady Pinnock, not to divide the House and to withdraw her Motion.

Rogue Landlords Register

Lord Greenhalgh Excerpts

Wednesday 26th May 2021 Lords Chamber

[Baroness Grender]

To ask Her Majesty’s Government what progress they have made towards introducing a register of rogue landlords; and how many such landlords they have registered.

[The Minister of State, Home Office and Ministry of Housing, Communities and Local Government (Lord Greenhalgh) (Con)]

My Lords, I declare my residential and commercial property interests as set out in the register. The Housing and Planning Act 2016 introduced a database of rogue landlords and property agents as part of a package of measures to tackle poor standards within the private rented sector. This included banning orders, civil penalties of up to £30,000 and rent repayment orders. The database went live on 6 April 2018 and currently contains 43 entries.

[Baroness Grender (LD)]

Given the Government’s original estimate that there are well over 10,000 rogue landlords and that there would be 600 banning orders a year—not seven, as is currently the case—and given that every one of these criminal and rogue landlords getting away with it means untold misery for thousands of tenants, what was the Minister’s response when he found out it was such a small number? As a Minister, what did he then do to put this right?

[Lord Greenhalgh (Con)]

My Lords, this database is not meant to be a metric of local authority enforcement work. In its current form, it is targeted at only the very worst and most persistent offenders who have been convicted of a narrow range of offences or have received two civil penalty notices within a 12-month period. I have satisfied myself that the Government have provided a lot of support regarding improving enforcement against the most egregious and rogue landlords.

[Lord Whitty (Lab) [V]]

My Lords, due to inadequate levels of social housing and prohibitively expensive house prices, the proportion of households living in private rented accommodation is almost certain to go on increasing. There are many problems with this sector, as the noble Baroness, Lady Grender, has said. We are talking here about rogue landlords; there are of course also good ones, but we really do not have a clue about how many landlords there are and how well they all operate. Would it not be sensible to legislate for a comprehensive register, local authority by local authority, of all landlords and for registration to be subject to a requirement of minimum standards of safety and security and minimum terms for rental agreements?

[Lord Greenhalgh (Con)]

My Lords, the majority of private rented sector landlords provide decent and well-maintained homes; in fact, the proportion of non-decent homes has declined dramatically from 41% in 2009 to 23% in 2019. We have committed to exploring the merits of introducing a national landlord register and we will engage with a range of stakeholders across the sector to understand the benefits of different options for introducing one.

[Baroness Jones of Moulsecoomb (GP)]

That was a complacent answer from the Minister because this has been going on for a long time, and a national register would be an excellent thing. After hearing this debate, how much urgency will the Minister put into speeding up the introduction of that register?

[Lord Greenhalgh (Con)]

There is no complacency; I am merely outlining that we are considering the introduction of the register as part of our commitment to introduce a White Paper in the autumn. That will contain a number of measures designed to redress the balance between landlord and tenant.

[Lord Young of Cookham (Con)]

My Lords, I commend the excellent report Journeys in the Shadow Private Rented Sector by Cambridge House, which reveals the extent of organised crime in the murkier parts of this market: criminals who are wholly undeterred by local authority sanctions; the obliging of tenants who feel defenceless to pay their rent in cash; and police who are ill equipped to deal with this criminality, not just roguery. Will the Government respond to the report’s recommendations, such as the better detection of unlicensed HMOs and better monitoring of online platforms advertising private rentals?

[Lord Greenhalgh (Con)]

The report that my noble friend refers to provides valuable insights, highlighting illegal evictions and behaviours by the most criminal and irresponsible landlords and agents. Such reports will be very helpful in developing our proposed reforms. We will be publishing the White Paper in the autumn and continuing to work with these stakeholders, who have valuable knowledge in these matters.

[Baroness Walmsley (LD) [V]]

My Lords, I declare that I have recently let one property. Generation Rent, in its report published today, recommends a national regulator for standards in the private rented sector that has responsibility for overseeing the sector and ensuring that enforcement measures work effectively. This would include a national register of landlords. Will the Government please consider this proposal, which is also supported by Shelter and other bodies?

[Lord Greenhalgh (Con)]

My Lords, the Government are committed to ensuring that we build back fairer and to improving the relationship between landlords and tenants. We will certainly consider the policy ideas put forward by Generation Rent as part of our commitment to that reform.

[Lord Flight (Con)]

My Lords, I am advised that, in the two years since its launch, the Government’s database to keep track of rogue landlords contains only 21 names so far, submitted by 15 local authorities, despite the Government’s estimate that there are as many as 10,500. What reforms are the Government therefore proposing for a more realistic approach to identifying rogue landlords? Further, do they have any plans for a national rogue tenant database?

[Lord Greenhalgh (Con)]

I thank my noble friend but the latest data shows that the figure is slightly higher than that: there are 43 entries by 26 local authorities. However, we will consider what we can do to improve access to the database. We currently have no plans to introduce a national tenants database. There are a number of measures we can put in place, such as the referencing scheme, which we think are sufficient.

[Lord Bird (CB)]

Does the Minister agree with me that the reason why people fall into the hands of rogue landlords is that they are in need? They are often the most desperate people, and do not have a choice. Can we not support the decent landlords by getting them back to profitability as soon as possible—but not by Covid-inspired mass evictions?

[Lord Greenhalgh (Con)]

We have taken a balanced approach whereby we have tried to ensure that we do not see the mass evictions the noble Lord refers to. Equally, it is important that we crack down on rogue landlords. We have invested close to £7 million to improve the enforcement powers of local authorities, because those who do overstep the mark need to feel the full force of the law, whether that is the criminal law or housing legislation.

[Lord Kennedy of Southwark (Lab Co-op)]

My Lords, I refer the House to my relevant interests as set out in the register. Does the noble Lord think that the whole concept of the rogue landlords database has so far been a failure? Notwithstanding his answer to that, what is he planning to do to make the intent behind the concept a reality? Can we have a bit more detail on the White Paper and future measures?

[Lord Greenhalgh (Con)]

I do not accept that it has been a failure, partly because of the time taken going through the process of charging and convicting individuals. As I pointed out in the previous answer, it is one of a number of measures that we introduced to tackle the issue of rogue landlords. Obviously, we are consulting on a number of wider measures, including increasing the scope and accessibility of this database as part of that White Paper. More will be announced later in the year.

[Baroness Gardner of Parkes (Con) [V]]

My Lords, I refer to my entry in the register of interests. Can the Minister comment on the position on creating a register of short-term lets, whether by council area or more generally? These now represent a significant part of the rental market; most are unknown to councils and, consequently, avoid safety checks.

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[Lord Greenhalgh (Con)]

My Lords, I believe that this is being considered by the Tourism Minister, who will be publishing a tourism recovery plan in spring. Landlords who let out accommodation on a short-term basis must do so responsibly and in accordance with the law.

[Baroness Uddin (Non-Afl)]

My Lords, for decades, we have been all too aware of the detrimental effect on those most vulnerable of substandard, privately rented family accommodation, operated by so-called rogue landlords. Many of those who suffer the most will know nothing about the list or how to complain. There has been a raft of new housing and planning policy announcements and national adverts over the past few months, including www.ownyourhome.gov.uk. Will the Minister and his department consider widening access to this and other public information and make it available in small satellite channels, which target numerous community languages?

[Lord Greenhalgh (Con)]

My Lords, one of the measures in our wider reform of the relationship between landlords and tenants is to make sure that landlords are all members of a redress scheme. I will look at some of the other points the noble Baroness has raised as part of that reform agenda.

[The Lord Speaker (Lord McFall of Alcluith)]

My Lords, the time allowed for this Question has elapsed, and we now come to the fourth Oral Question.

Social Housing

Lord Greenhalgh Excerpts

Monday 24th May 2021 Lords Chamber

[Lord Shipley (LD) [V]]

My Lords, I remind the House of my register of interests and beg leave to ask the Question standing in my name on the Order Paper.

[The Minister of State, Home Office and Ministry of Housing, Communities and Local Government (Lord Greenhalgh) (Con)]

We have confirmed £12 billion over the next five years, which will be the largest investment in affordable housing in a decade. This includes our new £11.5 billion affordable homes programme; around half of its delivery will be for social and affordable rent. We expect our new programme to deliver around 32,000 social rent homes, double the number of the current programme.

[Lord Shipley (LD) [V]]

I thank the Minister for his reply. House prices have been rising steadily because of demand-side subsidies by the Government for owner-occupation, yet the National Housing Federation estimates that almost 4 million people need the security of a home for social rent because they cannot afford to buy. I ask the Minister whether he thinks that the Government have got their priorities right.

[Lord Greenhalgh (Con)]

My Lords, of course I think that we have got our priorities right. We are focusing on building homes of all types and tenures. That includes affordable and social rent and, importantly, giving people the opportunity to buy and own their own home.

[Lord Whitty (Lab) [V]]

My Lords, will the Minister also recognise that what is aggravating the lengthening waiting lists and undermining any future social housing target is a net loss of existing social housing stock, due to sales on the open market by certain social landlords; demolitions masquerading as regeneration, resulting in a net loss of social housing; and developers wriggling out of their commitment to social housing quotas? What are the Minister and the Government going to do about those factors?

[Lord Greenhalgh (Con)]

My Lords, I have set out our programme, which is designed to increase the amount of social rented homes. I also point out that, over the last decade, the number of social homes has remained broadly static at around 4 million households.

[Baroness Grender (LD)]

Does the Minister accept that, if house prices rose by 2.1% in April—the highest monthly increase since 2004—making homes more affordable is simply not working? Those 4 million who are waiting for homes deserve a better answer. If this Government are all about levelling up, why are all the subsidies currently pushing up house prices? Would levelling up not be more achievable and better value if a greater subsidy were redirected into social housing?

[Lord Greenhalgh (Con)]

It is not all about demand-side subsidies. We have pointed out that the Government are committed to increasing the supply of affordable housing and are investing over £12 billion in the affordable housing programme over the next six years, which is the largest investment in affordable housing in a decade.

[Lord Young of Cookham (Con)]

My Lords, we all agree that more social homes should be built and I welcome my noble friend’s statement, but does he agree that, for every one family housed in a newly built home, roughly eight are housed in the relet of existing stock? In addition to building more new homes, will my noble friend promote home ownership schemes for existing social tenants who want to move out and buy, thus freeing up a home for those in housing need?

[Lord Greenhalgh (Con)]

I agree with my noble friend that social mobility and social housing are critical, and that social housing can and should be a springboard into home ownership. We will look at promoting many of the schemes that he outlines, including our offer for shared ownership.

[Baroness Prashar (CB) [V]]

I declare my interest as a trustee of the Nationwide Foundation. The Affordable Housing Commission found that 72% of social landlords are concerned that the Government’s planning reforms could lead to fewer social rented homes. Given that social housing is one of the best ways of reducing poverty, will the Minister agree that any proposed planning reform should ensure that social rented accommodation is not only protected but its availability increased?

[Lord Greenhalgh (Con)]

My Lords, I do not accept that characterisation of our planning reforms. They look to simplify the developer contribution through a new infrastructure levy that I am sure will capture the land value uplift so that that can be put into social and affordable housing.

[Lord Kennedy of Southwark (Lab Co-op)]

My Lords, I refer the House to my relevant interests as set out in the register. Can the Minister explain why, when asked about social housing, he often refers to affordable housing? They are not the same thing. We need a greater percentage of government spend on social rented homes to address the chronic shortage of homes for people on low incomes. Many of the affordable homes he talks about are just not affordable for these people.

[Lord Greenhalgh (Con)]

My Lords, I was very clear in my original reply that this programme will deliver approximately double the number of social rented homes, but there are also ways to provide subsidised housing that gives a discount on the market price, which is the definition of affordable rent.

[Lord Goddard of Stockport (LD)]

Following on from the noble Lord, Lord Kennedy, by centrally imposing an assumption that around 50% of the programme will be used for home-ownership schemes, the Government are preventing local authorities and social housing providers delivering what is most needed: social housing for rent, including accessible and adaptable homes. Will the Minister consider the case for expanding the social rent element of the programme to reflect the ability of families to pay their rent, especially those with disabled members, who are much more likely to live in relative income poverty than those without?

[Lord Greenhalgh (Con)]

My Lords, I have already explained that the current programme looks to deliver far more socially rented homes. That definition of affordability takes into account relative county earnings so that these homes are genuinely affordable.

[Baroness Uddin (Non-Afl)]

My Lords, echoing the words of the noble Lord, Lord Young, does the Minister agree that family housing has been in short supply in major new developments, where the building of smaller units has meant that families are continuously in need of proper housing? Will he therefore ensure that all future developments take this on board? Will the Minister also ensure that units for people with disabilities are made to the highest possible standard? My own experience on visiting these is that often, they are not.

[Lord Greenhalgh (Con)]

My Lords, I accept that this should not always be about a drive for volume and that we need quality, decent-sized family housing and to ensure that we have the homes we need for people with particular disabilities.

[Baroness Gardner of Parkes (Con) [V]]

Are the Government considering setting aside a portion of the affordable homes programme funding announced by the Chancellor in March 2020 specifically for more social housing? My interest is declared in the register.

--- Later in debate ---

[Lord Greenhalgh (Con)]

My Lords, we have set out a distinct part of the programme to deliver more social rented housing. We are looking to deliver some 32,000 units over the course of the programme.

[Lord Best (CB) [V]]

Has the Minister considered the Affordable Housing Commission’s proposal for a fund to enable private landlords who want to exit the market to sell to housing associations or councils, which can carry out the necessary upgrading and re-let the property at affordable social rents, thereby achieving a much-needed increase in social renting and saving public funds spent on unsatisfactory temporary accommodation, while rescuing private landlords who want to sell up?

[Lord Greenhalgh (Con)]

My Lords, the Affordable Housing Commission’s September report proposed a fund to support social housing landlords to acquire both existing private sector stock and new-build stock from private developers. Through the affordable homes programme, we already allow social housing providers to use grants to acquire from developers market-sale properties that are above their existing planning requirements.

[Lord Davies of Brixton (Lab) [V]]

My Lords, the Minister’s initial Answer was a masterpiece in obfuscation—he referred to affordable housing, but the Question quite clearly relates to social housing. The Minister has also referred twice to 32,000 additional social housing units. May I draw his attention to the relative success of the Conservative Governments in the early 1950s, when they built more than 200,000 social housing units? They did so because they gave a leading role—the powers and the finance—to local authorities. What we need is a thoroughgoing council housing programme to get the number of social houses that we require.

[Lord Greenhalgh (Con)]

My Lords, in the last 10 years we have built more affordable homes than in the previous 10. We have seen around 148,000 homes built specifically for social rent in the last decade, and through this programme we are proposing to build more. The real revolution that has occurred is in the number of council homes: councils have built 29,993—nearly 30,000—affordable homes in the last decade, up from a paltry 2,994 over the previous 13 years. That is a record to be proud of.

[The Lord Speaker (Lord McFall of Alcluith)]

My Lords, all supplementary questions have now been asked.

Fire Safety: Leaseholder Bankruptcies

Lord Greenhalgh Excerpts

Monday 24th May 2021 Lords Chamber

[The Lord Bishop of Blackburn]

My Lords, on behalf of my right reverend colleague, I ask the Question standing in his name on the Order Paper.

[The Minister of State, Home Office and Ministry of Housing, Communities and Local Government (Lord Greenhalgh) (Con)]

It is not possible to make such assessments because it will depend on a professional fire risk assessment of individual buildings and the extent to which costs might be met by or recovered from developers, contractors or building warranties. In addition, we are unable to assess the potentially wide range of individual factors that could lead to people either losing their home or declaring bankruptcy due to additional costs.

[The Lord Bishop of Blackburn]

I thank the Minister for his reply. The Institute of Residential Property Management estimated the cost of non-cladding fire safety defects as between £26,000 and £38,000 per lease, depending on the height of the building. These are huge costs that will bankrupt residents, even within the Government’s grant and loan scheme. Will the Government consider including these specific defects in the provisions to exclude ordinary upgrade and maintenance costs in their forced loan scheme?

[Lord Greenhalgh (Con)]

My Lords, I point out that our approach prioritises action on the risks of unsafe cladding, which is what accelerates fire. The costs for remediating this, and the risk posed by it, are high. We are putting in unprecedented sums to cover those costs.

[Lord Kennedy of Southwark (Lab Co-op)]

My Lords, when does the Minister think the Prime Minister will take action to honour the promise he made in the House of Commons, when he said:

“We are determined that no leaseholder should have to pay for the unaffordable costs of fixing … defects that they did not cause and are no fault of their own”?—[Official Report, Commons, 3/2/21; col. 945.]

[Lord Greenhalgh (Con)]

My Lords, the Government have now committed more than £5 billion to the remediation of unsafe cladding. That will ensure that remediating the most risky element of a building will be covered in its entirety for those in high-rises and a substantial part of it for those in buildings of medium height.

[Lord Mackenzie of Framwellgate (Non-Afl) [V]]

My Lords, living in accommodation of whatever height with flammable cladding and other fire hazards is not the residents’ fault; they are the victims. Four years after Grenfell, does the Minister accept that natural justice requires speedy government action to right this appalling wrong and make these homes safe, with the bill being paid by those whose culpable negligence caused the problem in the first place?

[Lord Greenhalgh (Con)]

My Lords, I accept that leaseholders are victims and recognise the need to strengthen redress so that we can go after the people responsible for the shoddy workmanship. That is something we will bring through as we announce the building safety Bill shortly.

[Lord Moynihan (Con)]

My Lords, I would be grateful if my noble friend could update the House on any progress the Government have made to ensure that developers contribute to building safety remediation costs.

[Lord Greenhalgh (Con)]

My noble friend is right. We believe that developers should contribute and make buildings safe without passing the costs on to leaseholders. There have been a variety of announcements by developers: Bellway has announced a cladding removal fund of £46.8 million, Persimmon one of £75 million and Taylor Wimpey has pledged £125 million. The Government have also announced a gateway levy on high-rises, as well as a developer tax that will raise £2 billion over 10 years.

[Baroness Pinnock (LD) [V]]

My Lords, I refer the House to my relevant interests. Given the answer to the previous question, will the Minister provide any valid reasons at all for the Government expecting innocent leaseholders to pay the huge costs of remediating cladding and non-cladding fire safety defects, while those who created the problem—the developers he just mentioned—get off virtually scot free?

[Lord Greenhalgh (Con)]

My Lords, we are very clear that we expect building owners to make buildings safe and not to pass on costs to leaseholders where possible. We have provided a substantial sum of money to ensure that the costs of cladding will be affordable for those in medium-rises and that those in high-rises will not have to contribute to the remediation of the most dangerous element of the building.

[Lord Singh of Wimbledon (CB) [V]]

My Lords, the Government’s promise of a building safety Bill to reduce the possibility of future Grenfell-type disasters is welcome, but does the Minister agree that it is an acknowledgement of past national failure to ensure adequate fire safety standards, and that it should be the responsibility of the Government rather than of individuals to meet the cost of urgently needed safety improvements to existing property?

[Lord Greenhalgh (Con)]

My Lords, I recognise that this crisis has built up over many decades and that the Government have a duty to step forward and help to a degree, but we must recognise that government funding does not absolve building owners of their responsibility to ensure that their buildings are safe. They should protect leaseholders where they can.

[Lord German (LD)]

My Lords, the Government have said that they need £15 billion for the remediation of wall cladding. As the Minister rightly said, the Government are putting in £5 billion, but the levy they are seeking to raise from developers will provide only £2 billion over 10 years. It is capped at that sort of figure. When and how will the gap be filled?

--- Later in debate ---

[Lord Greenhalgh (Con)]

My Lords, I have mentioned the provisions made by major developers, which run into many hundreds of millions. The Government have also instituted a proposal for the gateway 2 levy. We need to watch this very carefully, but we have already committed more than £5 billion, which is an unprecedented sum, to make these buildings safe.

[Lord Alton of Liverpool (CB) [V]]

My Lords, I will take the Minister back to what he said about the role of developers. Following the United Kingdom’s departure from the European Union and the changes to public procurement rules, what consideration have the Minister and the Government given to banning developers which refuse to mediate their own defective buildings from bidding for public contracts?

[Lord Greenhalgh (Con)]

My Lords, obviously we take into account whether developers are good partners. There are many national schemes they will want to access for their businesses. We monitor very closely the number of defective buildings and whether the developers step up and contribute. That will be a factor in their future relationships with government at every single level.

[Baroness Fox of Buckley (Non-Afl)]

Will the Minister acknowledge that, by kicking this scandal down the road, the political crisis surrounding who pays for fire safety defects has not gone away but intensified, while the financial demands on blameless home owners who are unfortunate enough to be leaseholders are escalating way beyond cladding? Will the Minister specifically investigate the spiralling costs of the enforced requirement for waking watch patrols provided by private security firms, whose efficacy is, to say the least, contested? I note that the average cost to individual leaseholders is an extra—unaffordable—£400 a month even before the huge remediation bill drops through the letterbox.

[Lord Greenhalgh (Con)]

My Lords, I was asked to carry out a waking watch review on behalf of the Secretary of State some months ago. The noble Baroness is right that it is a significant cost for leaseholders. This is why we created the £30 million waking watch relief fund, which will help between 300 and 400 buildings put a fire alarm in place and benefit between 17,400 and 26,520 leaseholders, who will no longer have to pay those high interim costs for waking watches.

[Lord Stunell (LD) [V]]

During the passage of the Fire Safety Bill, the Minister repeatedly assured your Lordships that measures to protect leaseholders from cladding remediation costs would be coming forward in the building safety Bill and so would be out of place in that Bill, and at his fourth attempt, a majority of the House gave him the benefit of the doubt. Can he now confirm that the draft building safety Bill will be amended by the Government to achieve that comprehensive protection for leaseholders, or will he again leave it to your Lordships’ House to do it for him?

--- Later in debate ---

[Lord Greenhalgh (Con)]

My Lords, I will not pre-empt the publication of the building safety Bill, save to say that we recognise the importance of strengthening redress, otherwise the bill will fall either on the taxpayer or the leaseholder. That redress issue is being addressed in the Bill.

[Lord Wigley (PC) [V]]

My Lords, I declare my interests as set out in the register. Would the common-sense way out of this problem not be for the Government to buy out those leaseholders facing bankruptcy and, when the premises have been made safe, to let them to the thousands of people wanting rented accommodation?

[Lord Greenhalgh (Con)]

I thank the noble Lord for that creative idea. We will take it away and ponder it. In reality, we must recognise that the only three ways of helping leaseholders are by providing an additional grant, providing a financing scheme—of which we will provide details—or levelling a tax on the polluters, namely the developers that caused this problem in the first place.

[The Lord Speaker (Lord McFall of Alcluith)]

My Lords, all supplementary questions have been asked. We now move to the next Oral Question.

Leasehold Reform (Ground Rent) Bill [HL]

Lord Greenhalgh Excerpts

Monday 24th May 2021 Lords Chamber

Moved by

[Lord Greenhalgh]

That the Bill be now read a second time.

[The Minister of State, Home Office and Ministry of Housing, Communities and Local Government (Lord Greenhalgh) (Con)]

My Lords, first, I declare my residential and commercial property interests as set out in the register.

This Bill will lead to fairer, more transparent home ownership for thousands of future leaseholders. It represents part of the most significant changes to property law in a generation and should be welcomed by all across this House. The Bill is intentionally narrow in scope and exists to put an end to ground rent payments for new residential properties with long leases—those in excess of 21 years.

The Bill’s measures have been informed by consultation with the public and the leasehold sector. We consulted on proposals to reduce future ground rent in October 2018; that consultation received more than 1,200 replies, which have informed the Bill and its implementation approach. I extend my thanks to all those who have made invaluable contributions to the process of bringing this Bill forward, as well as to those who engaged with me ahead of today. We can all agree that this has ensured that the Bill will be even more effective in delivering on its promise to ensure that, for the first time, ground rent in residential long leases will have no financial element. I look forward to further engagement with noble Lords across the House in the coming weeks.

The Bill is only the first part of a two-part legislative programme to reform the leasehold system. Further leasehold reform will follow later in this Parliament and will redress a range of issues facing leaseholders. Taken together, this programme of reform delivers on our manifesto commitment to improve the leasehold system for generations to come.

I am pleased that the Bill is now before the House. It is an integral part of Government’s broader reform to create a housing marking that works for everyone. This includes improving leasehold as a system of home ownership. There are an estimated 4.5 million leasehold dwellings in England and 235,000 leasehold properties in Wales. In England, that represents almost one in five of the total housing stock. Leasehold has always been a common form of ownership for flats: more than two-thirds of leasehold dwellings are flats and the rest are houses, which equates to 3.1 million leasehold flats and 1.4 million leasehold houses in England.

We know that leaseholders face a range of problems, such as a lack of transparency in an often opaque system and high charges when buying or extending a lease. We have been consistently clear on our ambition to take forward a comprehensive programme of reform to end these unfair practices in the leasehold market. We are committed to helping existing and future homeowners by banning the sale of new leasehold houses, giving freehold homeowners the same rights as leaseholders to challenge unfair charges and closing loopholes to prevent unfair evictions.

On 7 January, the Secretary of State announced a package of leasehold reforms covering enfranchisement valuation and 990-year leases. This is the first part of our response to the Law Commission’s reports on leasehold and commonhold. We will respond to the Law Commission’s remaining recommendations in due course. In addition, we know that commonhold does not work as well as it could. That is why we have established the Commonhold Council—a partnership of industry, homeowners and government—to prepare the market and consumers for the new, widespread take-up of commonhold; the first meeting of that council took place last week. Our reforms will ensure that leasehold is a fairer and more transparent system for homeowners.

I am aware of the concern that many noble Lords will have for existing leaseholders. The package announced in January by the Secretary of State will result in substantial savings for existing leaseholders, particularly those with fewer than 80 years left on their lease. For existing leaseholders, we will increase the length of lease extensions to 990 years, which is a significant improvement on the current length of 90 years for flats and 50 years for houses. Existing leaseholders can currently pay a premium up front in exchange for extinguishing or buying out the ground rent and extending their lease.

We will also abolish marriage value, cap the treatment of ground rents at 0.1% of the freehold value and prescribe rates for the calculations at market value. A new online calculator will make it simpler for leaseholders to find out how much it will cost them to enfranchise.

We know that some leaseholders have faced serious problems with high and increasing ground rents, which is why we asked the Competition and Markets Authority to conduct an investigation into potential mis-selling and unfair terms in the leasehold sector, including the problem of onerous ground rent. The CMA carried out a detailed investigation into these practices. Its report, published in February last year, estimated that doubling ground rent has affected more than 18,000 lease-holders. In March this year, the CMA informed developers that they may be in breach of the law. This is a very serious issue indeed, and the Government strongly welcome the CMA’s efforts to bring justice to home owners affected by unfair practices.

On the specific issue of ground rent for future leaseholders, historically, leases would require a ground rent payment of no or little financial value. This payment was often used to form the contract between the leaseholder and freeholder, and what might be known as a “peppercorn ground rent”, but the leaseholder received no tangible service in return for this limited ground rent payment.

Since the early 2000s, we have seen an increasing number of properties sold with leases that require significant financial ground rent payments from leaseholders. We have seen little consistency in when and how much ground rent is charged—and, still, no tangible service in return. Thousands of leaseholders bought homes for which the ground rent started at hundreds of pounds a year. These payments were subject to increases, some doubling more frequently than every 20 years. Unfair practices relating to ground rent have damaged the reputation of the leasehold system, but, fundamentally, we know that ground rents are frequently not transparent and have caused substantial difficulties for some leaseholders. With this Bill, we are legislating for the first time so that new residential long leases have no financial demand for ground rent. In new leases, ground rent will be set in law at a genuine “peppercorn rent” level. This means that nothing more than an actual peppercorn can be sought from leaseholders, if indeed any ground rent is sought at all.

Let me be clear: this Bill is not an attack on freeholders. They play a clear, central role in the property market. However, by ensuring that ground rent in new residential long leases does not impose a financial burden, we are removing an opaque charge faced by home owners and making home ownership more transparent and fairer for future generations. We are ensuring that the costs associated with home ownership are clear and easily understood, and that high charges with no tangible service in return can never happen again. Institutional investors will be able to benefit from their existing investments, but in future they will find alternative investment elsewhere. I fully expect investors to adjust their business models to account for this change. Crucially, the benefit to future home owners will be significant.

I turn to the key provisions of the Bill, which apply to future long leases exceeding 21 years of dwellings in England and Wales. The Bill will mean that if any rent is demanded as part of a new residential long lease, it cannot be for more than one literal peppercorn per year. As is the case now, there will be no obligation on a freeholder to charge or collect a peppercorn, and following this Bill we do not envisage that in practice freeholders will ask their leaseholders to pay a peppercorn in rent.

It is not our intention to put barriers in the way of freeholders collecting payments needed to maintain the building and provide tangible services to leaseholders, but it is unacceptable if freeholders attempt to find loopholes and ways around this legislation. We have tussled with the notion of closely defining the meaning of “ground rent”, and of a “rent”, and concluded that a fixed definition could lead to workarounds by those who wish to avoid the legislation. That is why the Bill includes a wide definition of “rent”: to deter attempts by freeholders to charge what is effectively a ground rent by another name.

For the same reason, the Bill also bans freeholders from charging an administration fee for the collection of a peppercorn rent from long residential leaseholders. Leaseholders will have the right to apply to the first-tier property tribunal if a prohibited rent or administrative charge is paid.

There are some exemptions in the Bill. It does not apply to leases used only for a business purpose. As my noble friend Lord Young of Cookham has previously pointed out, the Bill includes a slightly different definition of a business lease from the one used for business tenancies in the Landlord and Tenant Act 1954. We have carefully considered how to define business use for this Bill. As a result, we have crafted a new definition to ensure that residential leaseholders are protected, and commercial landlords can still collect rent from their tenants. For mixed-use properties, the residential use must significantly contribute to the business purposes of the lease for the exemption to apply.

Statutory lease extensions for flats are unaffected by the Bill because they are already restricted to a peppercorn rent. Statutory lease extensions for houses—for which no premium is currently paid—are exempt and can continue to include a ground rent higher than a peppercorn, but we intend to reform this later in this Parliament. Leaseholders extending through the voluntary process are also exempt and will be able to choose to continue to pay ground rent for the remaining period of the existing lease instead of paying a large up-front sum. However, the peppercorn limit will apply to the new, extended lease.

Clause 2 provides for applicable community housing leases also to be exempt. This allows a community land trust or a co-operative society to collect rent to provide services for their community. Community housing schemes that promote the supply of new housing to meet local need and where residents contribute towards the cost of shared community services are very different from ground rent for long residential leases where no clear service is provided in return.

The Bill also makes special provision for home reversion equity release plans and homes bought using a rent-to-buy arrangement. It is important that such specialist financial products can continue, maximising choice for home owners over how they finance their property purchase. This exemption ensures that such specialist financial products that rely on rent can continue, giving home owners choice over how they finance their property purchase. Clause 2 is clear that to benefit from this exemption, home reversion plan products must be regulated by the FCA.

The Government believe strongly in the benefits of home ownership. It is right that we should do everything we can to support people from all backgrounds to realise their ambition to own their own home. We believe that shared ownership has a vital role to play in offering a route into home ownership to those who would otherwise struggle to buy a home. By purchasing a share of a property, aspiring home owners can overcome the income and deposit barriers that may stand in their way. Under the shared ownership model, landlords can collect rent on their share of the property and this Bill will allow them to continue to do so. Once the leaseholder has purchased 100% of the property, the rent will be limited to a peppercorn. The Bill does not amend any other aspect of shared ownership.

It is only right that older residents also benefit from the Bill and are no longer burdened by a financial demand for ground rent. That is why it will also apply to retirement properties. I acknowledge that the Government had originally announced that the retirement housing sector would not be covered by the legislation. In recognition of that, the Bill will not affect retirement properties until after 1 April 2023, giving the retirement sector additional time to transition.

The Bill proposes a number of enforcement measures that offer a strong deterrent to any freeholders and their managing agents who try to get around its provisions and in doing so it protects leaseholders. Enforcement will be the duty of local trading standards authorities. Trading standards do a good job of enforcing current regulations and have an excellent understanding of their local areas. District councils in England will also have the power to enforce this Bill if they choose to do so. Enforcement authorities will be able to retain the proceeds of any penalties they impose to meet the costs of their work relating to residential leasehold property.

In terms of sanctions, freeholders who charge a non-peppercorn ground rent on regulated leases will face financial penalties of between £500 and £5,000. The penalty applies per lease, so freeholders of multiple properties could receive higher penalties if they breach the legislation multiple times. In addition to any financial penalties, enforcement authorities and the tribunal can order the freeholder or their agent to refund any prohibited rent within 28 days. Leaseholders who have paid prohibited rent or administrative charges can also apply to the First-tier Tribunal for recovery of the rent or to determine if the charge is payable. Enforcement authorities may also help a leaseholder apply to the tribunal. This help can include conducting proceedings or giving advice. I believe that this enforcement and penalty regime has been set at an appropriate level to act as an effective deterrent.

These measures will deliver an important and meaningful improvement to the leasehold system for future generations of home owners. We recognise that the system as it stands is not working for all leaseholders, which is why we are committed to an ambitious programme of reform. The Bill is an important first step, and with noble Lords’ support we will see it made into law with speed. By banning ground rent for future residential long leases, while delivering on our commitment and making the leasehold system fairer and more transparent, the Bill will make a real difference to thousands of future leaseholders across England and Wales. I commend it to the House and beg to move.

--- Later in debate ---

[Lord Greenhalgh (Con)]

My Lords, I am grateful to all noble Lords for their very valuable contributions and for setting my expectations for the depth of scrutiny in Committee. It has been extremely helpful to hear all noble Lords’ views.

I pay tribute to my noble friends Lord Blencathra and Lord Young, who in many ways set out the historical context for this modest first step in the Government’s programme of leasehold reform. It has taken nearly 1,000 years to establish landlord and tenant law. We started with the Domesday Book of 1089 and then gravitated to the Middle Ages and the feudal system, when the words “freehold” and “leasehold” were formally established. I am surprised that my noble friend Lord Blencathra did not mention copyhold, the form of tenure whereby a serf received a copy of the manorial roll as an indication of where they should live—so they had absolutely no rights at all. That was true serfdom.

In his speech, my noble friend Lord Young showed the relatively recent steps that we have taken. In the year of my birth—1967—nearly 54 years ago, the first Act was passed, and we saw the legislation that he brought in in 1993 and, obviously, the Commonhold and Leasehold Reform Act 2002. That is a little over half a century to reform, so I argue that reform of a system that has taken over 1,000 years to establish is not—and can never be seen as—a quick fix. Certainly, I prefer the description of the noble Baroness, Lady Grender, of this as a small but significant step, as opposed to the metaphor used by my noble friend Lord Blencathra, which I will not repeat.

To return to some of the points made, the noble Baronesses, Lady Andrews, Lady Pinnock, Lady Ritchie of Downpatrick and Lady Wheatcroft, and the noble Lords, Lord Berkeley, Lord Stunell and Lord Kennedy, all pushed for an indication of when wider leasehold reform would take place. Essentially, the Law Commission has made it very clear that bringing in the more detailed legislation will take at least a year, so, ideally, we hope to get this through quickly—notwithstanding the depth of scrutiny in Committee—so that we can bring the second step of the legislation in the next Session of Parliament. That is our objective; of course, events may take place that steer us away from that, but we certainly want to move at great speed to establish that very important second stage.

The Government are committed to reforming the leasehold system. It is complex, and it will take time to get the detail right because, as referenced by the noble Lord, Lord Best, commonhold has not taken root, even though it was introduced and established in 2002. We want to get it right this time: this is very much a first step in getting leasehold reform to work and in the widespread adoption of commonhold.

The noble Baroness, Lady Pinnock, the noble Lord, Lord Stunell, my noble friend Lord Blencathra and many others mentioned and asked about existing leaseholders, who are unhappy with ground rents that their lease requires them to pay. We understand these difficulties and have been working with industry to get existing leaseholds with onerous ground rent terms changed to a better deal. We are pleased that the Competition and Markets Authority is taking enforcement action in relation to two key issues: first, tackling certain instances of the mis-selling of leasehold property; and, secondly, addressing the problems faced by homeowners due to high and increasing ground rents.

It should also be noted that, where existing leaseholders have a complaint about a conveyancer, solicitor, property developer, estate agent, freeholder or management agent, there are existing routes to redress. We have worked with trading standards, which have published comprehensive information for leaseholders to access the right support.

In January 2021, we announced the introduction of a cap on ground rents in the enfranchisement valuation process. This will make it more affordable for leaseholders to purchase their freehold or extend their lease. As we set out in January, we will bring forward those further reforms in this Parliament.

This is not the Bill to address the costs of historical fire safety defects, as raised by the noble Baroness, Lady Pinnock. We will look at measures to strengthen redress and the building regime for high-risk buildings as part of the building safety Bill that will come before Parliament later this year.

Many noble Lords, including the noble Baronesses, Lady Andrews and Lady Grender, and my noble friends Lord Hammond, Lord Young and Lord Bourne, all raised the definition of ground rent. In drafting this legislation, we considered at length whether closely to define the meaning of “ground rent” or “rent”. We concluded that such a definition would likely do little more than offer a fixed target from which a nimble operator could diverge at ease. That is our principal concern. To avoid this, the Bill adopts a flexible definition of rent, which relies on its naturally understood meaning and includes anything in the nature of rent, whatever it is called. I understand that there are some concerns around this, but I can confirm that the Bill applies only to properties that can be considered long leasehold tenure with residential use. I am happy to meet noble Lords again to discuss the matter further. My noble friend Lord Hammond of Runnymede gave an interesting “person A to person B” example involving passing on a shorter lease of some 25 years where no premium was charged and then establishing a rent. He asked whether that would be covered. We recognise my noble friend’s concern and can be clear that it is not our intention to cover market rents and restrict those to a peppercorn. The Bill is forward-looking, so current investments are protected, and it applies only to leases of over 21 years. However, I would be happy to meet him and discuss these concerns further.

My noble friend Lord Hammond also mentioned the publication of regulations. There is no secondary legislation in relation to home finance plan leases. Clause 2(8)(b) is a reserve power which will be used only if abuse occurs and the Secretary of State needs to specify further conditions to deter such abuse. We have no plans to introduce conditions on the sector.

My noble friend Lord Young mentioned buying out existing ground rents. He will forgive me if I say that it was an issue also raised by my noble and learned friend Lord Mackay of Clashfern. Leaseholders of flats can already buy out their ground rents. Leaseholders of houses can do it by buying their freehold, which I appreciate can be prohibitively expensive. In January, we announced plans to reform the valuation process, which will cap how rent is treated and reduce the premium to be paid. The Law Commission has made specific recommendations in this area, mentioned by my noble friend, which we are currently considering.

Many noble Lords, including the noble Lord, Lord Stunell, and the noble Baronesses, Lady Bowles of Berkhamsted, Lady Andrews and Lady Grender, mentioned the important issue of resources for trading standards. We are very clear that funding for new burdens and new requirements will be taken into account in future local government settlements—I know that response was predicted by the noble Lord—but enforcement authorities will also be able to retain the proceeds of any penalty imposed by them. Penalties can be up to £5,000 per breach. If someone is doing this multiple times, they face that fine on multiple occasions. I am sure that we can explore in Committee whether we consider that to be enough, but that is currently what we have set, and it can be applied multiple times to an individual who perpetrates the breach on many occasions. We will publish guidance to local authorities and trading standards to help them enforce the Bill and work closely on implementation.

The noble Lord, Lord Best, an expert on retirement housing, asked whether the transition period was long enough. We believe that those who purchase retirement homes should benefit from the same reform as other future leaseholders. Including retirement properties in the Bill means that they are not exempt.

That does not change the way in which other types of charges such as event fees can be used in the retirement sector, but I am happy to discuss this further with the noble Lord, as he brings a wealth of experience, including in the regulation of property agents. I thank the noble Lord for the invaluable work that he led in that area, with the publication of the report on the regulation of property agents. We welcome the working group’s final report. The recommendations are with the Government for consideration, and we are committed to ensuring that those living in the leasehold sector are protected from abuse and poor service and to raising professionalism and standards among property agents.

The noble Baronesses, Lady Wheatcroft and Lady Ritchie of Downpatrick, raised unreasonable or egregious service charges. We believe very strongly that any fees and charges should be justifiable, transparent and communicated effectively and that there should be a clear route to challenge or redress if things go wrong. The law is clear that service charges must be reasonable and, when costs relate to work or services, the work or services must be of a reasonable standard. We will continue to be very vigilant on that matter and will consider any other measures that we need to take as part of our second step on the road to leasehold reform.

The noble Lords, Lord Stunell and Lord Kennedy, referred to other abuses. I point out that the Bill as drafted covers administrative fees so that we can stop freeholders who charge fees for the collection of a peppercorn ground rent, which would be frankly ludicrous, as it is a peppercorn that we do not even need to see levied. We will continue to look at fees such as those mentioned by the noble Lords, Lord Stunell and Lord Kennedy—transfer fees, permission fees and transfer charges. We welcome the report from the noble Lord, Lord Best, that looked at those issues, and we are considering his recommendations.

The noble Baroness, Lady Bowles of Berkhamsted, mentioned the estate charges scam. We intend to legislate to give freeholders on private mixed-tenure estates equivalent rights to leaseholders to challenge the reasonableness of estate rent charges, as well as the right to apply for the First-tier Tribunal to appoint a new manager to manage the provision of services covered by estate rent charges. It is important that there is a level playing field.

The noble Earl, Lord Lytton, asked why we should not bring about a statutory redefinition of “quiet enjoyment”. We have not looked at the statutory definition of quiet enjoyment as part of the legislation; the Bill does not affect rights to charge and receive ground rents for commercial premises in mixed-use development when the lease for the commercial premises is held on a separate lease from the residential part of the development.

The noble Lord, Lord Berkeley, wanted some clarification on the scope for new leaseholders’ conversion of houses into flats and retail into housing. I can provide the assurance that the Bill will apply to all new residential long leases, including in those instances exceeding 21 years. That includes those new leases created as a result of subdivision or conversion of properties. He also asked whether we had applied for consent from the Crown and, specifically, the Duchy of Cornwall. I can say that consent was sought and granted in writing from the Crown and the Duchy of Cornwall, and no changes were made.

The noble Baroness, Lady Ritchie of Downpatrick, wanted to know about the Government’s discussions with devolved Administrations, especially Northern Ireland. I point out that the legislation applies to England and Wales only. However, early discussions with Northern Ireland officials took place to help to inform the development of the policy.

I hope I have done my best to cover the principal points. This is necessarily tightly focused legislation which will improve the leasehold system for future home owners. The Government are therefore keen to get this Bill on the statute book as quickly as possible so that the new measures can take effect. I will be grateful for the support of noble Lords in achieving this.

This is only part of the start of an ambitious package of leasehold reform, with further legislation on a wider set of measures to follow later in this Parliament. As I have indicated, this will come in the next Session, I hope. This Bill is small, but it is vital and it is a step towards the better, fairer and more transparent leasehold system that the Government are committing to delivering. Therefore, I commend it to the House, and I beg to move.

Bill read a second time and committed to a Grand Committee.

Rent Arrears: Covid-19

Lord Greenhalgh Excerpts

Thursday 20th May 2021 Lords Chamber

[Lord Carrington (CB) [V]]

My Lords, in begging leave to ask the Question standing in my name on the Order Paper, I declare my interests as set out in the register.

[The Minister of State, Home Office and Ministry of Housing, Communities and Local Government (Lord Greenhalgh) (Con)]

I declare my residential and commercial property interests as set out in the register. The Government have provided an unprecedented £352 billion support package, keeping millions in work and temporarily bolstering the welfare safety net by more than £1,000 a year for families most in need. Financial support from private rented sector tenants remains in place. The job retention scheme and universal credit uplift are available until the end of September. For renters who require additional support, £140 million of discretionary housing payments are available.

[Lord Carrington (CB) [V]]

I thank the Minister for his response, but the recent housing resilience survey suggested that the proportion of private renters in arrears increased from 3% in 2019 to 9% in 2020. Will the Minister accept that allowing arrears to grow in this way is not sustainable for tenants or landlords? The Budget announced a pilot no-interest loan scheme to help vulnerable consumers who would benefit from affordable short-term credit to meet unexpected costs. Will the Minister consider a similar loan scheme to support tenants who are now in arrears but do not claim benefit support?

[Lord Greenhalgh (Con)]

My Lords, I point out that two-thirds of the tenants identified in the survey have two months or less of rent arrears. We have preferred to avoid encouraging further debt, instead providing non-repayable financial support through furlough and the welfare system.

[Lord Young of Cookham (Con)]

My Lords, in the debate in Grand Committee on 22 April on poverty and mass evictions I asked my noble friend whether his department would do a quick review of the schemes in Wales and Scotland of grants and loans that prevent evictions to see whether any lessons might be learned for England. He replied:

“I will encourage my officials to look at what we can learn from the devolved Administrations”.—[Official Report, 22/4/21; col. GC 402.]


What was the outcome of that review?

[Lord Greenhalgh (Con)]

My noble friend is quite right. I have asked my department to do that. My officials carefully studied the Scottish and Welsh schemes to support tenants with rent arrears. I understand that a relatively small number of loans have been made by these schemes. Indeed, the Government continue to believe that it is right to provide non-repayable financial support rather than encouraging further debt.

[Lord Best (CB) [V]]

My Lords, I declare my housing interests as on the register. Has the noble Lord’s ministry been able to study the outcomes of the tenant loan scheme operating in Spain? Has this enabled tenants to pay off Covid-related arrears successfully and avoid the traumas and cost of widespread evictions? If the scheme is working well in Spain, why not here?

[Lord Greenhalgh (Con)]

My Lords, we continue to review other examples of support, including that in Spain, as well as those in the devolved Administrations in the United Kingdom. We will consider what impact they might have, but we will continue with the policy we have about not encouraging further debt.

[Lord Kennedy of Southwark (Lab Co-op)]

My Lords, I refer the House to my interests as set out in the register. Right now, an estimated 353,000 private renters are in arrears. Rent arrears have doubled since the beginning of the Covid-19 pandemic. The Government promised that no renter would lose their home due to the pandemic. Is it not time for the Government to accept the need for a Covid rent debt fund to clear Covid arrears for the most financially destitute renters, who are at severe risk of homelessness? If not, with the ban on evictions that has been in place during lockdown being lifted next month, how will the Government stop evictions because of Covid rent debt?

[Lord Greenhalgh (Con)]

My Lords, we are aware of the exhortations from many organisations, but we consider that the increase in rent arrears is not statistically significant between the two surveys. It went from 7% to 9%. We also recognise that we have provided a substantial package of support for renters during the pandemic, including legislative protections and unprecedented financial support.

[Baroness Grender (LD)]

Does the Minister accept that loosening restrictions when 353,000 private renters are in arrears risks making families homeless, particularly while no-fault evictions are still in use? Even at this late stage, will he agree to meet Generation Rent to discuss a Covid rent debt fund, enabling renters to clear their debts and landlords to claim up to 80% of income lost, all at a fraction of the current subsidies for home owners?

--- Later in debate ---

[Lord Greenhalgh (Con)]

My Lords, I am always very happy to meet Generation Rent and hear its proposals. I point out that we continue to provide support even at this stage. We lifted the local housing allowance rates to the 30th percentile of local rents in April 2020. That has provided 1.5 million claimants with around £500 more housing support per year. We have announced that local housing rates will be maintained at the increased level in cash terms in 2021-22.

[Lord Moylan (Con)]

My Lords, financial assistance to renters finds its way straight into the pockets of landlords, but rents have fallen during the pandemic, not least in London. Does my noble friend agree that any scheme designed for this purpose should ensure that landlords do not receive returns greater than they would have received in market circumstances?

[Lord Greenhalgh (Con)]

My noble friend is right that we have seen rents reduce as a result of the pandemic. All the schemes that we have designed cover rent at the level presented by the landlord. Obviously, schemes that we have provided to support renters will reduce as a consequence of reducing rents.

[Lord Singh of Wimbledon (CB) [V]]

My Lords, although the excellent furlough scheme has helped to reduce some financial suffering during the pandemic, the reduced incomes of individuals and households have led to increased arrears for many tenants. If we are to avoid the hardships of a rise in homelessness with the ban on evictions due to end this summer, will the Minister consider loans to be used exclusively to clear rent arrears, as has been mentioned by many speakers?

[Lord Greenhalgh (Con)]

My Lords, I restate the Government’s position that we are not looking to encourage further debt. I also point to the statistics regarding homelessness. We have seen a 40% decrease in homelessness duty owed in the period between October 2020 and the same period in 2019. We are not seeing that massive spike in homelessness that has been alluded to.

[Baroness Bennett of Manor Castle (GP) [V]]

My Lords, before the pandemic it was taking a median of 42 weeks for court cases to reach repossession. The mean length was nearer a year. Analysis suggests that the small number that are being processed now are taking nearly twice as long. The courts cannot cope with the likely flood, and the delays will greatly increase the stress, suffering and uncertainty for private tenants, and difficulty for landlords. Does the Minister agree that the pile-up of repossession cases in the courts is another argument for a grant scheme, ideally, or at least a loan scheme to rescue people from unpayable arrears, provide certainty and prevent delays?

[Lord Greenhalgh (Con)]

My Lords, I am not aware of a pile-up in the courts. Indeed, we have actually seen a massive drop in the number of repossession cases. It decreased to 262 repossessions in January to March 2021—a reduction of some 96%—and 214 local authorities had no landlord repossessions at all.

[Lord Taylor of Goss Moor (LD) [V]]

Given that the number of tenants in arrears on low incomes who have been impacted by Covid has more than doubled, have the Government conducted an impact assessment of the change to allow evictions once more? If so, will they make that available to Members of the House?

[Lord Greenhalgh (Con)]

My Lords, we continue to survey this very carefully indeed. As I pointed out, although we have seen an increase, according to the survey, in the number of renters in arrears, the vast majority of them—some two-thirds—have arrears of no greater than two months.

[Baroness Gardner of Parkes (Con) [V]]

My Lords, I declare my interests as in the register. Can the Minister comment on what plans the Government have to assist small and medium landlords who are unable to recover Covid-related rent arrears and face potential enforcement action by their mortgage providers? Might the Government persuade mortgage providers to extend their overall repayment period in these cases, instead of seeking to enforce the mortgage?

[Lord Greenhalgh (Con)]

My noble friend will be pleased to know that, to support landlords, mortgage lenders have agreed to offer payment holidays of up to six months, including for buy-to-let mortgages. Although that is available only until July 2021, from 1 April 2021 there have been moves to enable forbearance options tailored to the individual landlord.

[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.

Mobile Homes (Requirement for Manager of Site to be Fit and Proper Person) (England) (Amendment) Regulations 2021

Lord Greenhalgh Excerpts

Wednesday 19th May 2021 Grand Committee

Moved by

[Lord Greenhalgh]

That the Grand Committee do consider the Mobile Homes (Requirement for Manager of Site to be Fit and Proper Person) (England) (Amendment) Regulations 2021.

[The Minister of State, Home Office and Ministry of Housing, Communities and Local Government (Lord Greenhalgh) (Con)]

I beg to move that the House consider the draft Mobile Homes (Requirement for Manager of Site to be Fit and Proper Person) (England) (Amendment) Regulations 2021, which were laid before the House on 22 March 2021.

My Lords, the purpose of these regulations is to amend the Mobile Homes (Requirement for Manager of Site to be Fit and Proper Person) (England) Regulations 2020 to correct an error in that instrument. Specifically, these new regulations change the reference in Regulation 3(5)(a) to the Local Government Finance Act. The year of this Act was incorrectly given as 1992, and this is now amended to show the correct year, which is 1988.

On 23 September 2020, we made principal regulations to prohibit the use of land in England as a relevant protected caravan site—a site on which year-round residential occupation is allowed—unless the relevant local authority is satisfied that the owner or manager of the site is a fit and proper person to manage it. This will be guided by a fit and proper person test.

I will set out the reasons for the reference to the Local Government Finance Act 1988 in the principal regulations made on 23 September. The fit and proper person requirement does not include sites that are operated by local authorities; operated for holiday purposes only; exempt from requiring a site licence; or being occupied by members of the same family and not run as a commercial residential site.

To determine if a site is a commercial residential site, a local authority will take into consideration both the amount that any person is required to pay the site owner in respect of the right to station a caravan, to reside, or use the common areas of the site, and whether that amount exceeds a fair contribution towards the relevant costs.

Part of the definition of relevant costs in the principal regulations is:

“any amount which the occupier”—

who for the purpose of this debate we will refer to as the site owner—

“is liable to pay as regards the site by way of a non-domestic rate under Part 3 of the Local Government Finance Act 1992”.

The reference to the Local Government Finance Act 1992 is an error, as it is Part 3 of the Local Government Act 1988 that deals with non-domestic rates. This amendment is therefore necessary to ensure that local authorities are able properly to apply the intended exemption from the fit and proper person test requirements for non-commercial, family occupied sites when the principal regulations come into force on 1 July and 1 October this year. I emphasise that these regulations will not amend or affect any other aspects of the principal regulations, which were laid before noble Lords last year.

To conclude, the fit and proper person test requirements form part of the comprehensive programme of work that we announced in 2018 to drive up standards of management and conduct across the park homes sector and ensure that residents’ rights are respected. Good site owners who already provide a professional service will not be concerned about being unable to meet the required standards. The minority who continue to abuse and exploit residents will have to improve or make way for more professional people to manage the site. The fit and proper person test will also be a useful addition to local authorities’ existing powers to help them tackle the worst offenders in the sector. I commend these regulations to the House.

--- Later in debate ---

[Lord Greenhalgh (Con)]

My Lords, we have had a short but informative debate this afternoon. I am grateful for the insightful and helpful contributions from the noble Lords, Lord Mann and Lord Kennedy. I have been in the House for a relatively short time and work as a Minister across two departments, and I have now had two issues with SIs where we have had to come back and repeat them. One was in the Home Office, and it was a little unfortunate; we had to almost redo things. This is now in my other department, HCLG. I am fairly sure that this was a cock-up rather than a conspiracy. I had to determine that it was caused by an error, because it was not offered up particularly as something that people wanted to dwell on. However, the consequences are very minimal, because the fit and proper regulations have not come into force yet; we have nipped it in the bud. So I think we should be reassured that this was a genuine error; it has been picked up and there are no consequences.

To respond to the noble Lord, Lord Mann, I do not have the specifics on the number of authorities that have challenged the fitness of individuals who run these sites. I shall need to get back to the noble Lord after I find out whether we have any figures, and I shall certainly write to him with the information that we do have. There is no doubt that local authorities are very much in the front line of implementing this, and we are providing them with a quite considerable degree of support and guidance to ensure that they understand how to implement these important regulations to ensure that we get the people we want in this sector and get rid of the rogues. We are encouraging them to share information, so that an individual who is known to be a troublemaker is then put on a list so that other local authorities can pick that up.

In conclusion, these regulations are to correct a small error to the principal regulations that we made on 23 September. I reiterate that the majority of site owners are responsible and compliant, and make a valuable contribution to the park homes sector and the housing market, providing well-maintained and safe sites for their residents. But we recognise that a minority do knowingly flout their responsibilities, and these regulations are designed to deal with that. The residents deserve our protection and support. I am glad that noble Lords recognise this, and I am very pleased that we have been able to correct this small error in time.

Motion agreed.

Anti-Semitic Attacks

Lord Greenhalgh Excerpts

Tuesday 18th May 2021 Lords Chamber

[Baroness Hayter of Kentish Town (Lab)]

My Jewish 97 year-old aunt Rose lives in St John’s Wood. I never imagined I would see such scenes on her street. As Simon Wiesenthal said,

“For evil to flourish, it only requires good men to do nothing.”


And Pastor Niemöller wrote:

“First they came for the Jews, and I did not speak out because I was not a Jew.”


Does the Minister agree that each and every one of us must stand up to, and speak out against, what we saw at the weekend?

[The Minister of State, Home Office and Ministry of Housing, Communities and Local Government (Lord Greenhalgh) (Con)]

I completely agree that we must stand in solidarity with British Jews. The events we saw in the past week were abhorrent and I am pleased the police acted swiftly to arrest four individuals for that offence of driving up and down Finchley Road. Equally, there was the violent attack on Rabbi Rafi Goodwin in Chigwell, and I am pleased to say that the latest news is that the police have arrested two individuals concerning that incident.

[Baroness Ludford (LD) [V]]

My Lords, it is poignant that today’s exchange on anti-Semitism coincides with the important Jewish festival of Shavuot, which has kept some of our colleagues away from this debate. One of the examples that accompanies the International Holocaust Remembrance Alliance definition of anti-Semitism, is

“Holding Jews collectively responsible for actions of the state of Israel.”

Can the Minister tell the House what steps the Government are taking to ensure that all public and private bodies adopt not only the definition but also the examples? Can the Government stress at every opportunity that the supposedly pro-Palestinian demonstrations of recent days have actually been pro-Hamas, and not in support of the Palestinian people?

[Lord Greenhalgh (Con)]

My Lords, this Government are very proud of the fact that they were the first adopters of the International Holocaust Remembrance Alliance definition, and we are working very hard to ensure that that is fully embedded across our universities and local councils and, of course, every single Member of Parliament, bar one, has also signed up to that definition. It is important that we take that forward and we will continue to work very hard to ensure that we tackle anti-Semitism wherever we see it.

[Lord Pickles (Con) [V]]

My Lords, I draw attention to my entry in the register of interests. The Jew haters and the women-despising thugs who threatened murder and sexual violence on our streets brought great shame to our nation. At the first chance, they exposed the thin veneer between anti-Zionism and anti-Semitism. Does my noble friend share my sadness that many of the car convoys of violence came from my native city of Bradford, a city that has a proud record of co-operation between communities, not least through the Near Neighbours programme? Does he agree that we cannot allow the men of violence to define the relationship between communities? Will he commit to measures that combine strict policing and a strong social cohesion? We must, as a priority, remove fear from our streets.

[Lord Greenhalgh (Con)]

My noble friend, with his experience as a leader of Bradford, is absolutely right. We need to combine that strict policing, where we do more than engage and the police act to ensure that we take the hate off our streets and online wherever it occurs, with an equally strong and robust approach to social cohesion. In fact, Bradford pioneered the Near Neighbours programme, which brings different communities, such as the Muslim and Jewish communities, closer together. We can learn from that.

[The Lord Bishop of Manchester [V]]

Is the Minister aware that the Union of Jewish Students has raised serious concerns that Jewish students and societies are now being targeted with really quite disgusting anti-Semitic abuse due to the conflict in the Middle East? Will he reassure Jewish students that the Government will clamp down on all forms of campus anti-Semitism and encourage all universities not just to adopt but to implement the IHRA definition of anti-Semitism?

[Lord Greenhalgh (Con)]

My Lords, we are aware of this tension. The Community Security Trust has reported a massive spike in anti-Semitic incidents, but equally, Tell MAMA has seen a similar increase in anti-Muslim incidents of 420% in the past week. We are funding the Union of Jewish Students to do precisely that: to tackle these issues. We want to see the full implementation, not just the adoption, of the IHRA definition of anti-Semitism.

[Lord Pannick (CB)]

The Jewish community will be very grateful to the Minister for what he said today. He knows that anti-Semitism is not confined to appalling attacks on a rabbi in Chigwell and threats to Jewish women in north London. The IHRA definition of anti-Semitism, to which the Minister referred a few moments ago, gives as an example applying double standards by requiring the State of Israel to behave in a way not expected of any other democratic nation. Does the Minister accept that there have been many examples of those double standards in the past week, particularly by broadcasters, and that this more subtle form of anti-Semitism contributes to an atmosphere in which the cruder forms breed?

[Lord Greenhalgh (Con)]

My Lords, my right honourable friend in the other House talked about how sometimes anti-Zionism is a subtler form of anti-Semitism. We need to root out even those most subtle of forms absolutely and ensure that we take these forms of anti-Semitism away from both the internet and the streets of our big cities.

[Lord Triesman (Lab) [V]]

Just a couple of days ago and less than half a mile from my home, a motor convoy with loudhailers passed by calling for Jews to be killed and our daughters raped. I know that there has been a quick response from political leaders and the police, although I must say to what effect I do not yet know. I abhor Islamophobia and anti-Semitism. No decent safe society can live with either. I have never come across a Jewish group calling for the death or rape of Muslims. If I did, it would find me an outspoken enemy. What discussions have the Government held with the many law-abiding Muslim groups to encourage public expression of their anger and repudiation of the hatred of Jews? What concrete additional help can be given to the Community Security Trust to enhance community protection?

[Lord Greenhalgh (Con)]

My Lords, we continue to have our cross-government working groups to tackle both anti-Semitism and anti-Muslim sentiments. We continue to work with a number of stakeholders to address those challenges. We also provide substantial support to the Community Security Trust. It is £14 million this year, but it has been £65 million to date. We will continue to support what those groups do, but they also provide important support for other minority and faith communities.

[The Deputy Speaker (Baroness Garden of Frognal) (LD)]

The noble Lord, Lord Polak, has withdrawn, so I call the noble Lord, Lord Carlile of Berriew.

[Lord Carlile of Berriew (CB)]

The remarks by the noble Lord, Lord Greenhalgh, about the speedy action by the police were extremely welcome. For the sake of Holocaust survivors, such as my beloved sister, and the whole of the community, can we ensure that once prosecutions are brought, they are brought quickly and not delayed? Will the Government call on the Director of Public Prosecutions to account to the Government for the speedy way in which these cases should be processed?

[Lord Greenhalgh (Con)]

My Lords, I cannot talk about specific cases, but equally, justice delayed is justice denied. We need to see swift and sure justice in these matters.

[Baroness Ramsay of Cartvale (Lab)]

My Lords, does the Minister understand that while all decent people in the United Kingdom disapprove of anti-Semitism and find it abhorrent, there is particular resonance for the Jewish community in what was happening on the streets of London just a few days ago? In the 1930s, that is exactly the kind of thing that proved to be a precursor to a Holocaust. Does the Minister agree that it behoves all of us, not just the police and the judiciary, but those of us in this and the other House and journalists, to take the utmost caution in the language we use to describe events in the Middle East just now so that we do not inadvertently inflame the fires of anti-Semitism?

--- Later in debate ---

[Lord Greenhalgh (Con)]

My Lords, I completely agree with those sentiments. We need to react and enforce robustly, but equally to find the right tone to cover these sorts of events.

[The Deputy Speaker (Baroness Garden of Frognal) (LD)]

My Lords, I apologise to the noble Baroness, Lady Eaton, but the time has now elapsed for this Question.