Leasehold and Freehold Reform Bill

Lord Kennedy of Southwark Excerpts

Committee stage
Wednesday 24th April 2024 Lords Chamber

[Lord Bailey of Paddington (Con)]

It would be extraordinary, though possible, if fellow leaseholders could invoke forfeiture but the freeholder could not. That would be incredible, and I am sure it would have all its own problems.

The point remains that, if you keep some kind of forfeiture, freeholders will want to keep hold of that power, because it is exactly that: an unfettered, threatening power, which leaseholders speak about as though it is mythical, like a dragon that will burn you if you stand up to the freeholder. Words fail me when I try to describe how forfeiture must go. We have had many conversations in which the word “feudal” has been bandied about. This is one occasion where it has real meaning. Forfeiture should and must go.

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

My Lords, first, I declare a number of interests to the House. I am a vice-president of the Local Government Association, the chair of the Heart of Medway Housing Association, a non-executive director at MHS Homes Group, and a leaseholder.

Before the Bill arrived, it promised a lot. As it stands it is doing much less than that, so in a sense it is a fairly timid Bill. However, some of the things it does are actually very useful. I support the amendment of my noble friend Lady Taylor of Stevenage on forfeiture; it needs to be abolished. I have also listened to the noble Lords, Lord Truscott and Lord Bailey, and both make very valid points. The Government should listen and bring an amendment that addresses the points they made. That is not impossible, as far as I can see; it is absolutely right that there should be some remedy to deal with this.

Equally, we cannot have people being bullied into paying the service charge or ground rent; that it totally wrong. There must be remedies to deal with those things: if someone is owed money, they should get it, but forfeiture—losing their entire asset—is ridiculous. I hope that, on both points, which are extremely valid, the Government say to us that they hear what people are saying and that they will look at this issue and come back with amendments.

I want to ensure that people can enjoy their property without being annoyed by parties, noise and other trouble, and that there is a remedy to enforce that if need be. Equally, if someone has a freeholder coming after them, they could actually lose their property, or, worse, the freeholder could use their service charge or ground rent to take them to court. We need to deal with all these things.

I hope that, at the end of what will probably be a fairly short debate, the Government will recognise that there is a problem here and will help us by bringing back an amendment to deal with these issues; or, as the noble Baroness, Lady Pinnock, said, that they will get people together around the table to try to sort this out. The Bill is not doing much, but this is something very positive it could do.

--- Later in debate ---

[Baroness Scott of Bybrook (Con)]

I have said that it is not the right way of doing it, and we want a different way. That is exactly what the Government are looking at.

We have to be clear that the upkeep and safety of buildings is also paramount. Landlords, be they third parties or resident management companies, need effective mechanisms for securing prompt payment to ensure that those properties are insured and maintained in the interests of everybody else in the block.

We recognise that there is the potential for significant inequity at hand where a landlord stands to gain a windfall when a lease is forfeited. However, I reassure the noble Baroness, Lady Taylor, and the Committee that the Government have been listening to calls for us to act. The Government continue to work through the detail and we will report to the House shortly with more information. In the meantime, I welcome members of the Committee sharing their views on this matter, which the Government will reflect on when formulating their position.

In addition, I thank the noble Baroness, Lady Taylor, for Amendment 95, which seeks to abolish Section 121 of the Law of Property Act 1925 in respect of all rent charges. Let me be clear: the Government are sympathetic to the issue raised by the noble Baroness. We recognise that forfeiture is an extreme measure and should be used only as a last resort. Any changes will require careful consideration of the rights and responsibilities of all interested parties.

Clause 111 already seeks to abolish forfeiture for income-supporting rent charges, which are still in existence, even though the creation of new charges of this nature has been banned since 1977. However, some types of rent charges may still be created, including estate rent charges, which are used for the provision of services on managed estates.

Where they are created, estate management companies need a means to recover sums owed to them. Failure to do so means that costs may fall on other home owners, or the upkeep of an estate will worsen, to the detriment of everyone living on that estate. The problem may be particularly acute for resident-led management companies which do not have alternative sources of funding.

It is important that we fully understand any unintended consequences. This is an issue that we are carefully considering. I hope that, with those assurances, the noble Baroness will withdraw her amendment.

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

My Lords, before the Minister sits down, most of what she said was very welcome. The acceptance that forfeiture is draconian, unfair and open to abuse—we agree with that. It is not the right way to do things, as the Minister said.

Specifically on inequality, we all agree with that, and it was good to hear the Government say that. A bit more disappointing was that I did not hear the Minister say, “I want to meet colleagues”; nor, “We hope to bring an amendment back on Report to address this”. All we got was, “We will formulate our position”.

There is agreement around the Chamber that what we need to see is an amendment that addresses all these issues. We would like a commitment to get us all together, and to hear from the Minister that she hopes there will be an amendment on Report. If we do not do that, there have been lots of warm words here but not much else has been achieved.

[Baroness Scott of Bybrook (Con)]

My Lords, I thought the Committee was probably fed up with me saying that I am always very happy to meet any group of noble Lords, on any subject, at any time. I apologise for not saying it in this group, and I will never ever forget to say it in any group in the future. Also, I said that we will report back to the House shortly with more details. I think the noble Lord needs to look at those words—they are quite positive.

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

I am not saying they are not positive. At the end of the day, to make progress we need a government amendment, or an amendment that somebody else tables that the Government will support, at the next stage. That is progress; that is what I am trying to push. I know the Minister is very generous with her time, and wants to get this right, and wants to meet colleagues. I am just trying to get it on the record, that is all. I know the Minister has been good every time that colleagues have raised this issue in the House, and I have a Question on it again on, I think, 22 May. I thank her very much.

[Baroness Taylor of Stevenage (Lab)]

My Lords, I thank the Minister for her response. I thank the noble Baroness, Lady Pinnock, for supporting these amendments and the noble Lords, Lord Truscott, Lord Kennedy and Lord Bailey, for their comments.

In relation to the Minister’s comments about the time it takes to do this, I repeat that the Conservative Party has had this in its manifesto since 2017, so there has been quite a lot of time to think this through and have a look at this. It is a bit disappointing that we are in Committee in the House of Lords with some of these key issues still unresolved.

I ask your Lordships to reflect on, first, the example I gave in the earlier debate, of the elderly couple who told me they have a dispute with their landlord and are being threatened with forfeiture. They potentially have a £15,000 bill for the costs. If they pay that charge it is taken as agreement, but failure to pay it means that the landlord can invoke forfeiture, so where do they go? That is an awful position to put people in.

My second example is a young lady who I was out with the other day doing our political work. She lives in a leasehold flat; she put a political poster up in her window and then, almost immediately, received a letter from the landlord threatening her with forfeiture because that breached the terms of her lease. That seems an onerous way of dealing with a relatively small issue.

I listened carefully to the noble Lord, Lord Truscott, and he is right that there needs to be some form of resolution to this that means it does not need to go to the High Court—but it should certainly not be forfeiture, which is totally disproportionate. There may be a need to consider remedies other than the big sledgehammer of the High Court. Threatening to repossess people’s homes is certainly not an answer to technical breaches of lease.

Regarding rent charges, they will still be in place until 2037. We have to look at this and see whether we can find some way of getting rid of them before then.

As the noble Lord, Lord Kennedy, said, if we have to bring this amendment back again, we will, but I would rather the Government did so. That said, I withdraw the amendment.