Localism Bill

Lord McKenzie of Luton Excerpts

Wednesday 7th September 2011 Lords Chamber

[Lord Best]

My Lords, this amendment is about community land trusts and enfranchisement. Community land trusts acquire land from benevolent landowners or public bodies with a social concern free of charge or at a much reduced price. They then build homes for renting and shared ownership using the cheap or free land as the subsidy that makes the homes affordable. This means that they can keep the homes as affordable to those on modest incomes for present and future generations. They are very local, although they may use a housing association to help them; they work with the planners, the parish council, the landowner and volunteers. Very often they are self-help organisations in which future residents play a major part.

The community land trusts are real big society stuff. However, they have a problem in relation to the Leasehold Reform Act 1967, which entitles the occupier to acquire the freehold and remove thereby the opportunity for others in future to benefit from the initial gift or concession on the land price. Similarly, the right to acquire under the Housing and Regeneration Act 2008 can remove the property from its original purpose. This amendment seeks to protect the homes built through community land trusts from legislation that can undermine the whole basis on which they are set up to operate. It is not a denial of rights of tenants or shared owners, because those moving in are very willingly, indeed enthusiastically, signing up to getting homes that they could not otherwise afford. They do so in the full knowledge that they will benefit from the excellent accommodation, but any capital gains that they might make will not include the appreciation of the land value.

The community land trust approach, which is being used in east London as part of the Olympic legacy measures, as well as in rural areas, where benevolent landlords are making land available on highly beneficial terms, deserves our support. Removal of the enfranchisement arrangements, which were never intended to cover circumstances of this kind, seems essential to secure their future. Homes developed under the community right to build, of which I am also very supportive, will have the benefit of an exemption from the leasehold enfranchisement arrangements. This amendment would give the same exemption to community land trusts. I understand that the National CLT Network Board, which seeks to promote local community land trusts, has been advised that the local projects could convert into community right to build organisations, which would solve their enfranchisement problem. The community right to build schemes require a majority of the governing body to be local residents. This might not be an insuperable problem for a community land trust, as they are often extremely local, but the community right to build route requires that the project must eventually go to a referendum before proceeding, even if the parish council and planning authority and everyone else is very happy with it. That can be very worrying for landowners, local volunteers, prospective residents and lenders to the project. It means uncertainty, delay and possible local conflict. It would seem far simpler, less bureaucratic and more likely to encourage gifts of land and engage those big society volunteers locally if community land trusts could be taken out of the enfranchisement legislation, as this amendment proposes.

I know that Ministers are supportive of the community land trust approach and I assure them that acceptance of an amendment along these lines would be enormously important and greatly appreciated by all the supporters of this excellent way of creating affordable housing and guaranteeing its affordability in perpetuity. I beg to move.

[Lord McKenzie of Luton]

My Lords, I thank the noble Lord, Lord Best, for introducing this amendment and for his description of the Community Land Trusts approach. We have a good deal of sympathy with the thrust of this because we have seen the benefit of the Government’s reply to the amendment in the document they issued in August. Of course, this was one of the amendments that was withdrawn at the last stages of Committee.

As we have heard, these powers seek to replicate provisions already in the Bill relating to community right to build orders. The amendment seeks to remove enfranchisement rights in respect of dwellings owned by CLTs, and enfranchisement rights give leaseholders the right to acquire freeholds in certain circumstances—legislation, as the noble Lord referred to, that was started by the Leasehold Reform Act 1967, but I think those opportunities have been greatly extended since.

As I understand it, the gist of the Government’s position appears to be that CLTs do not necessarily have the same level of community engagement as bodies do under the community right to build provisions, which are proposed by the community, supported by the community, subject to a community referendum. However, where the CLT does satisfy the level of community engagement, it will be able to apply for a community right to build order and thereby obtain the benefit of disapplication of enfranchisement rights. But I am bound say, therefore, that I am not sure why, where there are circumstances that permit this, they could not be described in the prescribed circumstances that the noble Lord is seeking in his amendment. Proposed subsection (1) says,

“regulations may make provisions for securing that in prescribed circumstances, an enfranchisement right”—

et cetera. So why could what the noble Lord describes not be encompassed in that way?

I think that the noble Lord makes a good point about referendums in relation to community right to build orders. In circumstances where there is clearly a very high degree of support for a project, why indeed put the project through the process, cost and challenges that this entails? It does appear that one way or another there is a route to the result that the noble Lord is seeking, which is all well and good, and I agree that we should not be seeking to remove enfranchisement rights lightly—these are important rights. I think that he has described fully why they should be removed in these sorts of circumstances.

I therefore support the thrust of the noble Lord’s amendment. I believe that they should not be forced through the community right to build process just to achieve the outcome here and that it could be dealt with by regulations that, as his amendment suggests, fully cover the situation.

[Earl Attlee]

My Lords, enfranchisement rights are an established and significant right, and removing them must not be undertaken lightly. We expect to use the community right to build powers to ensure that the enfranchisement rights are only removed where the proposal is by the community, for the community and has the backing of the community through a community referendum, as identified by the noble Lord, Lord Best.

I understand that the regulation-making power provided for by the amendment is expected to be used to disapply enfranchisement rights simply where a CLT is the landlord of the property. There is, however, no requirement for a CLT to be made up of members of the community and there is no requirement for a community referendum. This means that a CLT development may not be proposed or supported by the community. I am afraid that the removal of these significant rights cannot be justified. The design of the community right to build will allow the majority of CLTs to apply for a community right to build order. As such, they will be able to benefit from the disapplication of enfranchisement rights under a community right to build order, again as explained by the noble Lord, Lord Best. With these reassurances, I hope that the noble Lord is willing to withdraw his amendment.

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[Lord McKenzie of Luton]

My Lords, perhaps I should start by declaring that I am a landlord of a property that is let through a letting agent in London, and it is in the register of interests. I shall take the amendments in reverse order.

I have a great deal of sympathy with the thrust of Amendment 93, spoken to by the noble Lord, Lord Palmer, although I feel that it is overly prescriptive. No doubt in the private rented sector in particular there is enormous pressure, and we all know that that pressure is going to build and be exacerbated by what his Government are doing on housing benefit. It will put pressure on homelessness in that sector in particular. Of course there is bad practice, and we should support propositions which look to protect vulnerable tenants. He also made the excellent point that the organisations to which tenants traditionally may have looked, such as Citizens Advice, are under pressure because of funding.

Again, I have great sympathy with Amendment 92, but I would like to read the technicalities a bit better. The thrust of it is that it would give the courts some added leeway before actual possession is obtained. In the current climate, if people are being thrown out of their properties, that must be something which should gain our support.

On Amendment 91, I believe that just before we left Government, we did have proposals coming forward to do just what the amendment is seeking. The noble Lord may say that we took too long to get it done, but again I support regulation. It is interesting to note that good providers in the field, the good letting agents, also support this. They know that their reputations can be tarnished by bad practice out there and that they can be undercut by unscrupulous letting agents. We need some proper regulation in this sector.

I am therefore broadly supportive of the thrust of all these amendments. However, given where we are with the Bill, at the Report stage and just about to move out of the housing environment, it will not be until Third Reading that we get to this. I do not know what the Minister will be able to say in winding up the debate that will give us any assurance about progress, but along with the proposers of these amendments, we would like to see progress on all three fronts.

[Lord Taylor of Goss Moor]

I rise to speak very briefly. I suspect that for all sorts of reasons Ministers are going to be reluctant to go down the regulatory route and indeed that, while my memory may fail me on this, I had thought that the previous Government ultimately came to that conclusion as well, although they certainly investigated the possibility of taking it. However, I may be wrong. I just want to throw into the discussion that in the absence of regulation we must recognise the absolutely fundamental role the private sector will have in housing all sorts of vulnerable people because there are not enough houses in the social and affordable sectors. Furthermore, these people are often at the lowest end of the private sector market and, in those circumstances, they are very vulnerable. It seems that an opportunity has been consistently missed over the years to reward those landlords in the private sector who behave best and, indeed, to encourage landlords in the private sector to do some of the things associated with social housing.

For example, there is no recognition in the rents that are available through housing benefit if landlords are willing to give longer tenancies, and there is little likelihood of recognition of relative quality. I have never understood why we would allow payments through the state in terms of housing benefit to the worst landlords offering the meanest opportunities and yet do nothing to reward those who behave better. That reward could involve a voluntary system of signing up to charters. In particular there is an issue for tenants in this sector over lack of security. Tenants in the private sector may be elderly and have lived long periods in a house, or they may be people with young children, and yet they may not have any real security in the tenancy. It would encourage landlords to offer security if we were to reward longer periods of tenancy and if we were not to draw such a sharp line that says a brief tenancy gives the landlord the security of being able to get the property back or the tenants become secure and highly protected. Why cannot we have something in between and why cannot we reward landlords for such behaviour? I think the Minister is going to be averse to regulation but perhaps he will be a little bit more supportive of an approach that uses the carrot rather than the stick.

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[Lord Jenkin of Roding]

My Lords, this is the first time that I have addressed the House at the Report stage of this Bill. I have not taken part on the housing part of the Bill hitherto for one very good reason. It is exactly 50 years since I became the chairman of the housing committee of Hornsey Borough Council, and there has been an astonishing amount of change in that 50 years. Over the past two days I have learnt a very great deal about the current state of housing and the institutional framework in which housing in this country is currently run and managed. We all know that there is a huge shortage—perhaps more in London than in other parts of the country—and of course measures are in hand to deal with that.

I should immediately declare an interest, as I did in Committee. I am a president of London Councils and a vice-president of the Local Government Association.

The noble Lord, Lord Palmer, has made the case for putting the housing and regeneration board for London on to a statutory basis. The question here is of the long-term security of the existence of an institution. As my noble friend said in response on this matter, and as was set out in the Government’s response to the amendments that were withdrawn at the end of Committee, the question is why you need to put this on a statutory basis when the Greater London Assembly, the mayor and London Councils have been able to agree it without a statutory basis. They say that putting it on a statutory basis would make it less flexible. However, the central point is that they asked for this. The mayor, the Assembly and London Councils all asked for it to be put on a statutory basis. Everything else that they asked for when they wrote to my right honourable friend last year—the end of the London Development Agency, the setting up of the Homes and Communities Agency and so on—has all happened; that is in the Bill. One thing that has not happened is putting this housing and regeneration board on to a statutory basis.

When really responsible democratic bodies such as the mayor, the Assembly and London Councils ask the Government to provide some stability and security for the arrangement that they have made, it is a little impertinent—if I may put it that way—for the Government to say, “No, we are not going to do this. We don’t think you should have it. You don’t know what you want”, or whatever it is. There is a strong case here for putting this on an effective statutory basis.

The amendment has been supported by Members of all parties in the House. All right, I am on record as having said that we must have much less bureaucracy etc. in the Bill. Happily, we are on the path to getting some of that. I had a nice birthday present of an e-mail from one of my noble friend’s officials this evening and I am extremely hopeful. This is not adding new bureaucracy. It makes an existing arrangement, set up voluntarily by democratic bodies, a statutory body and gives it and all those who will work with it the security that that would imply.

My noble friend Lord Palmer of Childs Hill has made a strong case, supported by the noble Lord, Lord McKenzie, and, from the government Back Benches, me. I hope that my noble friends will now be able to think again.

[Lord McKenzie of Luton]

My Lords, I can be extremely brief. As the noble Lord, Lord Jenkin, indicated, we have put our name to the amendment and support it for the reasons that have been advanced by the noble Lords, Lord Palmer and Lord Jenkin. It is about getting long-term security of what has been agreed and what is seemingly in place into primary legislation. I am bound to say that we do not expect that Ken would overturn these arrangements any time soon. I can well understand that people may want security just in case it might cross his mind.

It is good to hear the noble Lord, Lord Jenkin, again in our debates. His long-standing engagement with housing in Luton under the old system was seen as one of the more important committees. It was 10 years before I was allowed on it. He has a great deal more experience than I do. I support the amendments and urge the Government to take them forward. We do not need to be apart on this. There is agreement on what is happening. It is the right thing to do.

[The Parliamentary Under-Secretary of State, Department for Communities and Local Government (Baroness Hanham)]

My Lords, I thank all noble Lords who have participated in this. One of the most enlightening things that we have heard today is that the noble Lord, Lord Jenkin, took up the Housing Committee at the age of 35, as he has admitted that it was exactly 50 years ago and we know that today is his birthday. On behalf of the House we wish him a very happy birthday. Patrick, thank you for all that you do and the contribution that you make.