Planning and Infrastructure Bill

Lord Moylan Excerpts

Report stage
Wednesday 29th October 2025 Lords Chamber

[Lord Moylan (Con)]

My Lords, I support my noble friend Lord Goldsmith of Richmond Park. It is a difficult thing to do in the wake of the very learned speech by the noble Lord, Lord Krebs, but there are sometimes occasions when things do not work in theory but work in practice. In Gibraltar, where a similar measure has been introduced, the population of swifts has stabilised, as I understand it. In the Duchy of Cornwall estate, where this requirement is made of builders, the occupancy rate of the cavities created by the swift bricks is 97%, not in every case by swifts but by other cavity nesting birds.

While I perfectly accept that the noble Lord, Lord Krebs, may be right—possibly there is something in the atmosphere in Oxford, I do not know—at the cost of the measure, as the noble Lord, Lord Empey, said, it is worth an experiment and going ahead and making this requirement. I do not think it will happen, despite the good will of the builders, unless it is passed into law.

I am always against new and excessive regulation, but there are good and bad regulations. Good regulations impose a very small burden on economic actors and have a direct outcome that is intimately and obviously related to the regulatory measure. Of course, bad regulations tend to impose very high burdens and produce all sorts of unintended consequences. Granted, this measure may not produce the intended consequence to the full degree hoped for, but it is very hard to see what poor unintended consequences it could have, and the cost of introducing it would be very small.

Think, for those houses where it works, of the sheer joy of the children of those households in being able to look out of the window and see swifts not only nesting but flying to and fro, maybe even catching those insects in full sight of their bedrooms. It is a very pleasing thought. We should all support this, rally round and make the leap of faith that may be required but is fully justified in this case.

[Baroness Jones of Moulsecoomb (GP)]

My Lords, I did say not to trust any more amendments from this side, but this is one I will vote for if the noble Lord puts it to the House. It is worth repeating that there is no downside. Secondly, there are eight species that use these swift bricks, four of which are red-listed. So this is a much bigger issue than swifts—sorry to the noble Lord, Lord Goldsmith. It is for our native birds, and we should keep that in mind when we vote.

Planning and Infrastructure Bill

Lord Moylan Excerpts

Report stage
Wednesday 22nd October 2025 Lords Chamber

Moved by

[Lord Moylan]

47: Clause 33, page 48, line 39, leave out “possession or”
Member’s explanatory statement
This amendment is intended to remove the Secretary of State’s right to compulsorily acquire possession of highway land.

[Lord Moylan (Con)]

My Lords, Amendment 47 relates to Clause 33. We debated this in Committee at some length, but the result of that debate was not in any sense satisfactory from my point of view. I wish to take this opportunity to express my thanks for the letter written to me by the Minister after the Committee debate, which covered a number of points, including this, but added only to the veil of obscurity surrounding this issue rather than clarifying it.

Perhaps I could just explain the political background to this, which gives rise to concern. As a conservative party, we are the party of property rights, and when we see clauses coming forward that appear to extend the rights of compulsory purchase on behalf of the state, we wish to explore and understand them and see whether they are absolutely necessary—especially when they appear, effectively, as a one-line clause at the bottom of a left-hand page in a Bill that appears to be largely about other matters. As I said in Committee, this issue could well deserve a Bill in itself; it certainly deserves proper scrutiny and clarity about what the clause is doing.

I will give the Government something for free: the National Farmers’ Union strongly supports this clause. I will briefly read out its reasoning for doing so and its account of the clause. It says:

“This is a positive step for landowners as, presently, National Highways can only apply for powers of compulsory acquisition to enable to it to use the land needed for a scheme. Under the Bill”—


that is, as a result of this clause—

“developers using the Highways Act for a project will be able to temporarily use and possess land rather than acquire it”.

That is a much clearer and better account of what the clause is doing than any I have heard from the Minister or the Government so far. But the first question one has to ask is whether the National Farmers’ Union’s understanding of the clause is correct. Can the Government say what it is doing? For example, in the letter that the Minister sent to me, he said that the clause “put beyond doubt” the department’s “existing power”, but the National Farmers’ Union believes that this is a new power, not a matter of putting something beyond doubt. Legal advice that I have formally taken outside the Chamber suggests that it is indeed a new power and not simply putting something beyond doubt. Can the Government state clearly and crisply what the clause is doing and what is new about it? That is the first question.

The second question relates to the issue of whether the clause can be used for the temporary acquisition of the ownership of land—that would be something akin to requisitioning in the Second World War, and it would be totally new—or whether it relates to the possibility of occupying land, traditionally done by means of a licence, a way leave or something of that sort, so that you have rights over somebody else’s land for a period but the land remains their property throughout. It is unclear which of those two it allows—or is it both?—because the clause refers specifically to “possession or occupation”, suggesting that there is a difference in the minds of the drafters between possession and occupation.

That question is tested by the wording of my amendment, which would leave out the words “possession or”. That would test whether this is tautologous or there is a genuine distinction. If there is a genuine distinction, could the Government explain what it is and whether it includes the temporary acquisition of the title to land in some fashion or other? That would be completely new and definitely worth closer scrutiny. If they are tautologous and there is no distinction, could the Government accede to the proposal in my amendment that one of them be left out, so that we have one that is operative and works?

The third thing is that there is no promise of any guidance to accompany this. In creating this new power—I assert, on advice, that the power is new and does not put something that exists beyond doubt—questions of a practical character arise that should be covered by guidance before it becomes operative. For example, how long can somebody temporarily acquire land for? How long beyond completion of the works are they allowed to keep occupation of the land? It might be as simple as: how long can construction huts be left on the land beyond the point when they are actually needed? What is the state in which the land is to be returned if it is temporarily acquired? That would all be useful to know in strong guidance from the Government that would accompany this new power. Again, that is all completely absent.

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[Baroness Pinnock (LD)]

My Lords, that is a good start to today’s debate. It is a rather arcane topic with which to start the day. I wondered, when I listened carefully to the noble Lord, Lord Moylan, whether he had actually read the original section in the Highways Act 1980, which the Government intend to—

[Lord Moylan (Con)]

I assure the noble Baroness that I have done so.

[Baroness Pinnock (LD)]

Excellent. I am pleased that he has, though I wonder whether he has, therefore, understood it. It is surprising that he has chosen to create legal uncertainty, which is what would happen with his amendment. Its consequence appears to be that developers needing a temporary use of land have in the past had to use compulsory acquisition powers if the landowner was not prepared to provide a temporary use. The Bill provides more assurance for both landowners and those improving or constructing new roads. For us on these Benches, the amendment makes no sense except as a tool to frustrate road improvements, and we will not support it.

[The Minister of State, Department for Transport (Lord Hendy of Richmond Hill) (Lab)]

My Lords, I thank the noble Lord, Lord Moylan, for the amendment, which seeks to remove the Secretary of State’s ability to grant powers to an acquiring authority to compulsorily possess land necessary to facilitate delivery of highway schemes. The purpose of the measure is to allow acquiring authorities to temporarily possess land when needed for highway works to the exclusion of others without resorting to permanent acquisition.

Permanent acquisition of land or acquiring the freehold or long leasehold title of the land would mean that the acquiring authority would own the land outright and permanently. This is unnecessary and disproportionate when the land is needed only temporarily. In the event that agreement cannot be reached, this clause would enable an acquiring authority to compulsorily acquire the right to temporarily possess and occupy the land needed to facilitate the delivery of a highway scheme.

The rights of an applicant to temporarily possess or occupy land are routinely granted in development consent orders and Transport and Works Act orders. Furthermore, the power would use the same land compensation provisions as apply to compulsory purchase, adapting them as necessary to effect the temporary nature of the interest being acquired.

The noble Lord, Lord Moylan, quoted the National Farmers’ Union. It is not a new power; it is an implied right to take land temporarily that already exists and is already used, but the Government’s Bill makes it explicit.

Temporary possession is a well-established legal concept. It provides certainty and practical powers essential for the safe, efficient delivery of infrastructure works. Temporary possession would offer an acquiring authority—being a local highway authority or National Highways—a safe and proportionate route to exclude others from the land temporarily. This is critical when the land is needed for highways works. It could involve storing equipment and construction materials or manoeuvring large construction vehicles, as well as creating temporary routes to keep works traffic off the highway.

Temporary occupation, on the other hand, as the sole remaining power under the amended clause, would not confer the right to exclude others. This would pose serious safety risks and could undermine project delivery. Without clear powers, authorities would be unlikely to use the amended provision. It would risk introducing legal uncertainty, prolonging negotiations, leading to an increase in objections and public inquiries, all of which would increase costs and could delay delivery.

The Highways Act 1980 already contains powers covering the compulsory acquisition of land and rights in and over land. Clause 33, as I have said, would make it explicit that those powers can also authorise temporary possession. Clause 33, as currently drafted, provides the legal certainty, operational clarity and safeguards necessary for the safe and timely delivery of infrastructure projects. It does not create a new power; it is about ensuring that highways infrastructure can be delivered safely and proportionately.

Having, I hope, clearly defined the difference between possession and occupation, I also say to the noble Lord, Lord Moylan, that this is not an attempt to own the land. In fact, it is clearly designed not to own the land, so that the title to the land would not change; it would be a right to occupy the land.

Finally, the noble Lord raised the question of how long it would be after works finish that the land can be possessed and whether there would be a need for guidance. That clearly is a subsidiary matter; I will take that subject away and write to him on it afterwards. I therefore kindly ask the noble Lord to withdraw his amendment.

[Lord Moylan (Con)]

My Lords, I am grateful for the Minister’s comments. However, I thought I asked some fairly precise questions, and I do not feel that he has answered the questions with the precision that I was hoping for. Therefore, at the appropriate moment, I will seek to test the opinion of the House.

Division on Amendment 47 called. Tellers for the contents were not appointed, so the Division could not proceed.

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[Lord Blencathra (Con)]

My Lords, I am in the rather frightening position of agreeing with Amendment 48 in the names of the noble Baronesses, Lady Pinnock and Lady Bennett of Manor Castle—no doubt they are as concerned about my support for them as I am. However, they have raised some very good points here.

I am in complete agreement with my noble friend Lord Parkinson of Whitley Bay and his desire to delete Clause 41 in its entirety—now with the Government's amendment—but the noble Baronesses who have tabled Amendment 48 deserve some praise. We can all look at buildings, monuments or parts of the countryside and think that they are wonderful and should not be built on or destroyed, but we do not have our valuable heritage determined by such random means. As the amendment makes clear in proposed new sub-paragraph (b),

“structures and sites are designated for protection only where they are of special or particular historic or cultural significance”.

That is the key point. These protected sites are not based on the subjective opinions of us or local people, but on an objective determination using nationally approved criteria on what qualifies a building for listed building protection, or to be a scheduled monument or conservation area. Proposed new sub-paragraph (c) merely asks that due regard be given to conserving the historic environment alongside the need for future infrastructure. The question is, how long will that new infrastructure last?

I did a Google search, and this is what I got on typical building lifespan expectations. Standard residential buildings often have a design life of 50 years, with a possible maximum of 100 years. Commercial buildings can vary widely: some modern commercial properties may be constructed with a short design life of just 20 or 30 years, while others, such as high-quality concrete and steel structures, are built to last 100 years or more. Historical and monumental structures can, with constant care, last hundreds or even thousands of years, as seen with some Roman structures.

We destroy our history at our peril. It was Sir Winston Churchill who said:

“We shape our buildings and afterwards our buildings shape us”. —[Official Report, Commons, 28/10/1943; col. 403.]


On the one hand, we have the magnificent House of Commons next door and this marvellous Palace here. On the other, we have some of those appalling—but, no doubt, award-winning at the time—1970s tower blocks, which we are now flattening as quickly as possible because of their destructive effect on the people forced to reside in them. No Government would dare to demolish Stonehenge or Hadrian’s Wall, nor to drive a road through them, but there are thousands of ancient buildings that, although not as famous or sexy as Stonehenge or Hadrian’s Wall, are a vital part of our history and deserve protection—or, at the very least, special consideration—before they are demolished for some new construction.

In England, there are 9,320 grade 1 listed buildings and 21,782 grade 2 listed buildings. It is estimated that more than 1,000 of these buildings are over 1,000 years old. I cannot imagine any new development that would justify the destruction or damage of one of these buildings —except, possibly, a runway extension at Heathrow. Very few projects would justify it.

The noble Baroness, Lady Young of Old Scone, has amendments in later groups on protecting heritage trees. In Committee and in HS2 Bills, we have debated saving ancient woodlands. Once they are gone, they can never be replaced. The same applies to conservation areas. Amendment 48 does not call for a complete ban; it calls merely for regard to be had to the need to conserve our historic environment alongside the need for future infrastructure. I commend the noble Baronesses for tabling that amendment and bringing it to the attention of the House.

[Lord Moylan (Con)]

My Lords, I cannot resist a brief anecdote. When the inner ring road was being built around Birmingham’s city centre in the 1960s, the highways department at Birmingham City Council approached the Catholic Archbishop of Birmingham and said that, unfortunately, both the Pugin-designed Catholic cathedral and the Pugin-designed archbishop’s House next door to it would have to go to make way for the road. When the archbishop entered a modest word of protest against this loss, querying whether it was entirely necessary, the result was that the courteous gentlemen of the highways department went away and rethought the plans somewhat and the archbishop was given a choice: he could lose either the Pugin-designed cathedral or the Pugin-designed house. That explains why, to this day, the cathedral still stands but the house has long since gone. Happily, that approach to heritage is not something that we would see today.

At this point, I wish merely to congratulate those Members of your Lordships’ House who have spoken so clearly and valiantly against the original proposal in the Bill. I also thank the Government for listening, because what was originally proposed really was unsustainable; what we have now is a great deal more acceptable.

[The Parliamentary Under-Secretary of State, Ministry of Housing, Communities and Local Government (Baroness Taylor of Stevenage) (Lab)]

My Lords, in speaking to Amendments 48 and 50, I shall later move government Amendments 49, 51, 66, 258 and 260. I thank the noble Lord, Lord Parkinson, and the noble Baronesses, Lady Pinnock and Lady Bennett, as well as the other noble Lords who have raised this issue during the Bill’s passage. I also thank Peers for their time during the recess, when we discussed this matter at length.

As I have noted previously, the Government have no interest in loosening heritage protections; indeed, we see this country’s heritage assets as a vital part of our built environment. We are clear that these assets should be conserved and enhanced for their contribution to the quality of life of existing and future generations.

Amendments we have laid to the Bill on heritage and the Transport and Works Act order process will ensure that there is no loss of heritage protection while achieving the Government’s goal of streamlining the process to get on with delivering the infrastructure that this country needs.

Through these amendments, we have introduced a new power for the Secretary of State in England to direct that listed building consent is deemed to be granted in relation to Transport and Works Act order projects. This new power follows the same model as the existing long-established power for them to direct that planning permission is deemed to be granted for these projects. This means that, in practice, applicants for a Transport and Works Act order can apply for deemed listed building consent at the same time, rather than having to apply separately to the local planning authority. This will streamline the process.

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[Baroness Pidgeon (LD)]

My Amendments 52 and 57 aim to make it easier for people who do not have driveways to switch to an electric vehicle and install the necessary infrastructure so that they can charge from their home, thus benefiting from VAT-free electricity charging. Amendment 52 allows for cross-pavement solutions to be considered as public charge points to make it easier, quicker and cheaper for people to move to electric vehicles at home. Amendment 57 then extends permitted developments related to electric vehicle charge points where there is an agreed cross-pavement charging solution and the charger does not overhang the footway by more than 15 centimetres.

Up to 40% of UK households do not have access to off-street parking. They therefore rely on public charge points, which can cost up to 10 times more than charging at home. A recent survey by the Electric Vehicle Association England highlights that, generally speaking, drivers without off-street parking are more likely to rent, earn less and live in concentrated urban areas; they are less likely to switch to an electric vehicle and those who have are generally less confident in electric vehicle ownership and more concerned about the costs. This amendment would help to democratise access to electric vehicles and reduce inequalities.

As I highlighted in Committee, cross-pavement solutions have real potential to help to tackle this challenge, but the current costs of installation can be around £3,000 and it can take 12 to 15 months for a decision from a local authority. Only this month in Northern Ireland, residents can now apply for cross-pavement electric vehicle charging channels. Through just a simple online form, residents can apply for the channels that would allow residents with electric vehicles to reduce charging costs there from £25 at a typical charge point to just £3. We need to make it as simple and easy to access in the rest of the country too. These amendments seek to make the transition to electric fair and easy. I have been encouraged by discussions with the Minister about this issue since Committee and look forward to hearing whether any progress can be made to help people without driveways to transition to electric vehicles more easily and affordably.

While I am on my feet, on the other amendments in this group, Amendment 55 proposed by the noble Lord, Lord Borwick, has come late in the day. It will be interesting to hear from the Minister on this important area of accessibility and charge points. I shall not waste the time of the House on the new amendments that would add more bureaucracy in the transition to green vehicles. I beg to move.

[Lord Moylan (Con)]

My Lords, I shall speak to my Amendments 53 and 54 in this group, which the noble Baroness, Lady Pidgeon, disdains to address—so that leaves it to me to explain what they would do. Amendment 53 would require local authorities to conduct and publish a parking impact assessment before permitting EV charge point works that may displace general use parking to ensure that the wider motoring public is not disproportionately affected by the transition to electric infrastructure. Amendment 54 seeks to ensure that residents and businesses can request a review where proposed EV installations reduce access to conventional parking.

My concern is that the Government do not appear to appreciate the practical and societal risks of their current approach. Across the country, residents, particularly in towns and suburbs, are finding that parking spaces they have relied on for years are being removed or repurposed for electric vehicle charging bays without consideration of local needs. Of course, the argument is that this is all in the service of the transition to electric vehicles, although that transition appears to be stalling, if we take note of the number of electric vehicles being sold and what the take-up is. But for many people—and there is a class element to this—especially those who cannot afford an electric vehicle, dependency on a petrol or diesel-driven vehicle for getting to work, fulfilling the requirements of daily life and making a living is absolutely essential, and provision has to continue for those. We are in danger of pushing out from parking access poor people, on low incomes, who desperately need a car to make space for the better-off family’s second Tesla for the nanny to use. That cannot be equitable, can it?

What is proposed here is an impact assessment—no prohibition—and the opportunity for people to ask for a review. As I say, the benefits flow directly in one direction. The Minister said in Committee that we must ensure that the regulatory framework is enabling rather than encumbering. I agree, but I ask for whom it is enabling, and at what cost. The transition that we are aiming at has to be fair, balanced and practical, and these amendments would simply introduce a modest, reasonable safeguard to ensure that the wider motoring public is not unduly disadvantaged as infrastructure for electrical vehicles is rolled out.

Amendments 52 and 57—I am willing to address the amendments proposed by the noble Baroness, Lady Pidgeon, even though she cannot be bothered to address mine—raise the same issue that I have highlighted. By allowing private charging points to extend into the public sphere, these measures would in effect reserve and privatise particular road space for the benefit of particular residents and exclude the general public from parking in those bays even when they were free. Perhaps some means could be found whereby the general public could park in them when they were free, but nobody has proposed what this mechanism is.

It is incumbent on the noble Baroness to address this question. In a world where there was limitless parking space, these issues would not arise, but her amendments aim specifically at those places where there is relatively high density. Places where properties do not have their own driveway or on-site parking space tend to be those with higher levels of density—those are the ones she wants to address—and often they are more mixed economically. As I say, that question of equity is important too.

[Lord Borwick (Con)]

My Lords, first, I declare my interests as a taxi proprietor and driver of a wheelchair-accessible taxi. The reason why it is wheelchair-accessible is that I introduced that feature into the manufacture of taxis when I ran that business. I also introduced bus ramps to make low-floor buses accessible, and for some years ran the powered-wheelchair finance business Motability. I was also an electric vehicle entrepreneur, making an electric delivery vehicle— a business I started in 2004. I also declare that my wife and I have an eldest son who is disabled with learning difficulties.

The reason for my Amendment 55 follows the statistic that, in this country, fewer than 3% of public electric vehicle charging points are considered safe and reliable for drivers with accessibility needs. Without the protective measures I am putting forward, drivers with disabilities will likely see no end to the struggle of charging their car safely and reliably. This is an essential activity; it should not be yet another barrier for disabled individuals to carry out their day-to-day lives.

This amendment is modest in scope but vital in purpose. It would surely give the Government the power, if needed in the future, to make compliance with existing accessibility standards obligatory. It is an enabling measure, not an immediate imposition. Many EV drivers rely on the public network to charge their car. We know that around 40% of UK households do not have a driveway, for instance, and therefore have no easy access to home charging. We also know that disability and poverty are strongly correlated, meaning that drivers with disabilities are even less likely to own a private driveway and a home charger. It is therefore deeply troubling that most of the public network is unable to meet even basic accessibility needs.

According to EVA England, nearly half of all drivers, with or without disabilities, have experienced problems using public charge points. They cite heavy cables, high kerbs, obstructed bays and payment terminals that are too high or awkwardly placed. For many disabled drivers, these are not small irritations but complete barriers to participation. In July, electric vehicles made up around 25% of new sales, but in the Motability scheme, which supports drivers with disabilities, they represented 12%—less than half. Why are disabled people not choosing electric vehicles? It is because they cannot recharge them. Indeed, a full quarter of Motability drivers say that they entirely avoid public chargers because of accessibility issues. That is not a future issue but a crisis of access now.

The Department for Transport took an important step in 2022 by publishing an accessibility standard, PAS 1899, designed to address these issues. However, as of today, hardly any public charge points meet that standard, largely because the parts and design requirements have yet to be fully adopted by industry. A revised version is being developed, with input from consumer groups and manufacturers. It is expected to offer a workable compromise between what industry can deliver and what disabled drivers need but, when it comes, it will again be entirely voluntary.

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[Baroness Pidgeon (LD)]

My Lords, the noble Lord raises an important issue: the huge frustrations around roadworks, in particular utility works. As mentioned, lane rental schemes exist in places such as London, and other highway authorities are also setting them up in England. For our Benches, though, this is an issue of localism. Although the Government can always share best practice, we think that it is for local and regional areas to develop schemes that suit their locality and their needs. We do not see the need for this amendment at this point, but we await the Minister’s response with interest.

[Lord Moylan (Con)]

My Lords, I shall be brief. As I said when we discussed this matter in Committee, it seems perfectly obvious that the powers of Transport for London in relation to lane rental should be available to highways authorities in the rest of the country. There is no objection to their operation in London. They work reasonably well; nothing works perfectly, of course, and there will always be roads that are blocked. Speaking from my own experience, I think there have been continuous highways works on Knightsbridge, including the tunnel, for the whole of the past 12 months, including at the moment. None the less, I am sure they would be even worse if we did not have a lane rental scheme in London. It should be available to the rest of the country. My noble friend Lord Jamieson is speaking common sense; I hope the Minister will agree with him and accept the amendment.

High Streets (Built Environment Committee Report)

Lord Moylan Excerpts

Tuesday 13th May 2025 Grand Committee

[Lord Moylan (Con)]

My Lords, it was a great privilege to chair the committee during this inquiry and I am grateful for the kind remarks that have been made by noble Lords. The process must have addled my brain to some extent because I had absolutely convinced myself that I had put my name down to speak in this debate, only to realise too late that I had not, so I am grateful for the opportunity to make a brief contribution in the gap. I would like to use part of it, of course, to thank the clerks and officer support that we had during the inquiry, in particular our clerk Kate Wallis, our policy analyst Andrea Ninomiya, Sarah Carrington, who organised the committee operations so very well, and Dervish Mertcan, who reached out to our global press audience. I should mention the people we take for granted to some extent: the engagement team and, particularly, the technology team. I have now realised after three years, nearly, of chairing the committee that we take for granted the fact of all these wonderful people organising our room, our technology and everything, and we never thank them, so I would like to do that today. Of course, our external specialist adviser Dr Lucy Montague is an expert on this subject and made a real difference to our deliberations.

This is only a short contribution. The contents of the report and of the Government’s response have been aired thoroughly in the course of the debate, so perhaps I can turn myself briefly to a slightly different topic. The right reverend Prelate the Bishop of St Albans referred to the degradation of the high street consequent on the presence of so many betting shops. I was watching BBC News only a few weeks ago when it did a report, spread over several bulletins, of even greater degradation on the high streets. This involves the takeover of many of our high streets, not necessarily in pleasant county towns, but in many of our cities, by so-called barber shops, which never have any customers, and mini-markets that never sell anything, or they do because if you want to get some illegal cigarettes, with no tax paid, obviously—that is taken for granted—often imported cigarettes with no recognisable branding, which could contain anything at all, then that is the place to go. You will get them for a couple of pounds a packet, way below the price that you would pay for a legitimate packet of cigarettes. That is their main business —that and money laundering. The fact that they are so inherently profitable on the proceeds of criminal activity means that no legitimate business can compete with them in terms of paying rent.

We see this in the heart of London. You see premises of this character even in Oxford Street, which is meant to be our showcase high street—our showcase retail street—for the nation. The news bulletin on the BBC showed raids being carried out by local trading standards officers, but I think behind them were His Majesty’s Revenue and Customs and the National Crime Agency to some extent, so the authorities are aware. These are only the surface—the epiphenomena—of a network that brings crime and misery internationally. I hope that when the Minister replies he will be able to say that the Government are cognisant of what is now a serious threat to many of our high streets and that action will be taken across a broad front, not simply occasionally for the benefit of TV cameras, although I do not mean to deprecate in any sense the effort that was made to bring enforcement on that particular occasion. I hope that this will be carried out on a broad front, because it is a profound threat to our high streets and one that, sadly, the committee did not have an opportunity to explore, so I am glad to mention it now.

Housing: Modern Methods of Construction

Lord Moylan Excerpts

Thursday 5th September 2024 Lords Chamber

[Lord Moylan (Con)]

My Lords, I thank my noble friend Lord Carrington of Fulham for introducing this debate, especially when I had to withdraw due to a change of circumstances. It was a privilege for me to chair the short inquiry into modern methods of construction, undertaken by the Built Environment Select Committee. I add a word of thanks, although time precludes me from naming them all, to the clerks and the team that supported that inquiry when we undertook it.

Ten years ago, modern methods of construction were the future, particularly the top level of MMC, which is modular construction, where a whole unit—a whole home—can be built off-site, more or less, and be delivered to the site. However, in the last couple of years, most of the firms engaged in that activity have either withdrawn from the market or closed. The purpose of our inquiry was to try to find out why.

Time precludes me from explaining at great length why that is, but we certainly found disarray at the heart of government. The policy was good, but the implementation was almost totally absent. Reference has been made to the committee that never met. I also refer to the strange attitude of Homes England, which claimed that it had a strategy in the shape of the five Ss—five words that all began with S—but when we asked for the document that underlaid the strategy, it was not able to produce it. I hope that the new Government will look very carefully at that.

What is the role of government in this? It is very important for the Government to have a regulatory role that unblocks some of the things identified by my noble friend when he introduced the debate. I would be very cautious on one matter: I agree with the noble Lord, Lord Rooker, that you cannot switch a factory on and off. Many of these firms are demanding a pipeline but, as he said, every factory needs a pipeline. Why is it that the Government should supply the pipeline in this case, rather than encouraging these firms to go out and find and create their own market?

Leasehold and Freehold Reform Bill

Lord Moylan Excerpts

Committee stage
Monday 29th April 2024 Lords Chamber

[Baroness Thornhill (LD)]

The problem is evident and not disputed, but the solutions are clearly debatable.

We support the amendment from the noble Lord, Lord Bailey of Paddington, as we share his concerns. The insurance scheme in the Bill, without the permitted insurance payment being set at something nominal such as £5 or £10 a year, could become another cost centre for freeholders. We know how difficult it is for freeholders, especially on larger developments, to get like-for-like quotes. Often, brokers will not even quote, which makes challenging at tribunal very difficult, especially when the freeholder claims that their fees are for works done and not pure commission. It is good for there to be a backstop in the insurance scheme in the Bill, so that brokers are fairly remunerated, while ensuring that other parties in the distribution chain, including freeholders, are banned from profiteering from the captive leaseholders who pay but do not get to choose the policy.

Amendment 82 in the name of the noble Baroness, Lady Taylor of Stevenage, and signed by my noble friend Lady Pinnock,

“would prohibit landlords from claiming litigation costs from tenants other than under limited circumstances determined by the Secretary of State”.

Clause 60 puts limits on the right of landlords to claim litigation costs from tenants. When the Bill was in the Commons, the Minister said that

“unjust litigation costs should not be incurred”—[Official Report, Commons, Leasehold and Freehold Reform Bill Committee, 25/1/2024; col. 347.]

by leaseholders—and we agree—but the Bill as drafted does not go far enough in preventing that happening. There will be circumstances in which it is appropriate for leaseholders to bear those costs, but we believe that Amendment 82 makes provision for that. The presumption should be that the costs are not borne by the leaseholder, unless in circumstances specified by the Secretary of State.

My noble friend Lady Pinnock’s Amendment 80 would require the Financial Conduct Authority

“to report on the impact of the provisions in the bill around insurance costs in order to monitor progress on reducing costs passed on to leaseholders”.

I am pleased to say that the Law Society also supports the amendment. Rising insurance premiums have sent service charges soaring in the last few years, mostly due to the costs associated with remediation works following the tragedy of the Grenfell Tower fire. That means that even the leaseholders who can access funding to help them pay for vital works to their buildings are still paying the price to remedy a problem that they did not cause.

Clause 57 places a limitation on the ability of landlords to charge insurance costs to leaseholders. This is a very welcome step in the right direction. It is essential that this provision works as intended to protect leaseholders from extortionate costs. The Financial Conduct Authority’s report into insurance for multi-occupancy buildings, published in September 2022, found not only that premiums were rising, with mean prices increasing by 125% in the period from 2016 to 2021, but that the level of commission rates for brokers was

“an area of significant concern”,

with eye-watering rates of up to 60% being seen.

The FCA also found that brokers were sharing commission with the freeholder or the property management agent, meaning that they were unfairly profiting from leaseholders. Commission—and not cover or costs—was therefore the driving factor in the choice of policy. The provisions in the Bill to limit the ability of landlords to charge insurance costs to leaseholders, alongside the Bill’s increased transparency requirement, should—one hopes—go a long way to protect leaseholders. We also note that as of 1 January this year, the regulator will force insurance firms to act in leaseholders’ best interests and to treat them as a customer when designing products. They will be banned from recommending an insurance policy based on commission or remuneration level. It is clearly very early days, but we hope to see some improvement from that.

There is, of course, the argument that the Government should go further. A cap on service charges for leaseholds, especially at a fixed amount rather than as a percentage, has been suggested as a way to properly protect leaseholders from unreasonable costs. We would, therefore, want to place a requirement on the FCA, whose thorough report provided the impetus for these provisions, to assess whether it has had an impact in reducing costs for leaseholders and preventing freeholders and managing agents profiting off them. We hope that the provisions of the Bill will provide the necessary relief for leaseholders, who are clearly facing exorbitant costs. It will, however, be essential that the Government keep a close eye on the impact of Clause 57 and take action if it is not going far enough.

Finally, the noble Lord, Lord Moylan, does have some amendments in this group—I looked very worriedly at this point. On the surface, they appear to be about making the process simpler and easier, which is probably a good thing and worth consideration. I look forward to hearing what the noble Lord says.

[Lord Moylan (Con)]

My Lords, I had assumed that the noble Baroness had risen to speak to the amendment standing in the name of her noble friend Lady Pinnock. I will speak to the amendments in my name in this group. Although there are eight of them, they fall into three broad topics, so I hope to dispose of them fairly quickly.

The first are Amendments 81 and 81A. These relate to the ability of right-to-manage companies to bring legal proceedings and charge the costs to the service charge. The effect of the Bill is that freeholders will not be able to charge legal costs to the service charge unless they obtain a ruling from a tribunal. In the case of right-to-manage companies exercising the functions of the freeholder, they have no source of income apart from the service charge. If they are not able to charge their legal costs to the service charge, then they will not be able to bring legal action at all. In fact, without that ability, they would not even be able to initiate legal action unless the directors of the company were willing to fund the preliminary legal activities from their own pockets. If they were willing to do that, and they proceeded to court, they might find that the court or tribunal did not find that they were entitled to recover their costs or find that they could recover only part of their costs as a result. Again, they would have no recourse to any source of funds apart from their own individual pockets in such circumstances.

The second amendment, Amendment 81A, would extend this provision not just to right-to-manage companies but to residential management companies. Right-to-manage companies were established under the Commonhold and Leasehold Reform Act 2002, but there are other residential management companies that exist that are not right-to-manage companies under that Act. These two amendments are alternatives; they are both probing.

I have heard that the Government are aware that this is a problem and are willing to do something to address it, so I hope that this particular probe will find a positive response from my noble friend on the Front Bench, because it cannot seriously be the Government’s intention to make it virtually impossible for anyone to become a director of a right-to-manage company without having to face serious personal financial risks that were never envisaged when RTM companies were established in 2002.

Amendments 81B, 81C, 81D and 81E all work together. They relate to a different problem, which is that the Bill allows a court or tribunal to award costs to a freeholder in certain circumstances specified in the Bill. However, if these costs are not paid, the only recourse the freeholder has is to go back to the court and seek a new judgment to have the costs awarded to them, whereas the normal method of dealing with such a matter is to make a simple online claim for a judgment in default. That course of action is precluded, as I understand the Bill, in the case of freeholders seeking to recover the legal costs that have been awarded to them. All this will do is burden the courts with more applications, which can and should be, and are normally, dealt with through an online process that takes a few weeks to go through. That surely should be available to freeholders.

The third topic in this group relates to Amendments 82A and 82B. These, again, are probing amendments to understand why the Government are extending the protection in relation to legal costs to all leaseholders, when surely the intention must be to extend it to those leaseholders who are home owners—that is, who own the property that is the subject of the legal dispute. The Bill has the effect of giving this protection also to investor leaseholders—those who hold the property entirely as an investment. I do not understand the Government’s logic in doing this, and these amendments probe that by suggesting that it should benefit home owners only.

[Lord Khan of Burnley (Lab)]

My Lords, I thank the noble Lord, Lord Bailey of Paddington, for introducing this group, setting the context for this debate about insurance payments and asking for clarity in relation to his amendment, which I am sure was also the intention of the noble Lord, Lord Moylan, in asking for clarity with one of his amendments and probing efficiency in his other amendments. I agree with the noble Baroness, Lady Thornhill, about the extortionate increases in insurance charges passed on to leaseholders. We found that the risk price that insurers charged between 2016 and 2021 pretty much doubled. The brokerage charge increased by more than three times. The service charges added on increased by about 160%, so they more than doubled, and those charges were passed on to leaseholders.

I will quickly speak to Amendment 82, in the name of my noble friend Lady Taylor of Stevenage. This new clause would prohibit landlords from claiming litigation costs from tenants other than in limited circumstances determined by the Secretary of State.

--- Later in debate ---

[Lord Gascoigne (Con)]

My Lords, I thank my noble friends Lord Bailey of Paddington and Lord Moylan, and the noble Baronesses, Lady Thornhill and Lady Taylor of Stevenage, for their amendments in this group. I will take them in turn.

Amendment 79, moved by my noble friend Lord Bailey, aims to ensure that insurance brokers’ remuneration is linked to market rates. It also aims to prevent wrongdoing. We share the intent of this amendment and are committed to introducing a fair, transparent and enforceable approach to insurance remuneration. We also recognise that insurance brokers are an important party in the provision of insurance. Given that, this amendment pre-empts the content of secondary legislation. Following Royal Assent, we will consult on what would constitute a permitted insurance payment, then lay the necessary secondary legislation before Parliament. This will clarify what remuneration will be permitted by those involved in the arranging and managing of insurance. My noble friend Lord Bailey spoke with his customary passion. We continue to welcome his views and the Minister remains keen to meet. I hope that, with that reassurance, my noble friend will withdraw his amendment.

Amendment 80 was tabled by the noble Baroness, Lady Pinnock, and spoken to by the noble Baroness, Lady Thornhill. I assure all noble Lords that this Government are committed to banning building insurance commissions for landlords and managing agents and replacing these with transparent handling fees, to address excessive and opaque commissions being charged to leaseholders. The amendment seeks that within one year of the day on which Clause 57 comes into force, the FCA conducts a report into the impact of this clause in reducing instances of unreasonable insurance costs being passed on to leaseholders.

We agree in principle with monitoring the impact of the clause and, more widely, that insurance costs must be reasonable. The FCA has been closely monitoring the multi-occupancy buildings insurance market in recent years, has strengthened its rules on fair value, and provides regular updates. The most recent update to the Secretary of State was published on 29 February. We will continue to work closely with the FCA and other stakeholders to develop our secondary legislation and in monitoring buildings insurance. Please be assured that this is an area on which we, and the FCA, are keeping a close eye. I hope that with this reassurance, the noble Baroness will not move this amendment.

Amendments 81 and 81A were tabled by my noble friend Lord Moylan; I will take them together. Amendment 81 seeks to exempt right-to-manage companies from the requirement for landlords to apply to the relevant court or tribunal to recover their litigation costs from leaseholders through the service charge. This amendment would apply where the right-to-manage company is exercising the functions of the landlord. Amendment 81A seeks to exempt “non-profit entities” from the requirement for landlords to apply to the relevant court or tribunal in order to recover their litigation costs from leaseholders through the service charge. The amendment provides examples of types of “non-profit entities”, including resident management companies and right-to-manage companies.

Clause 60 seeks to protect leaseholders from being charged unjust litigation costs from their landlord. It does this by requiring landlords to successfully apply to the relevant court or tribunal in order to recover their litigation costs, either through the service charge or as an administration charge. The court or tribunal will make an order that it considers just and equitable in the circumstances.

We understand the intention behind my noble friend’s amendments. The Government recognise the position of resident-led buildings. That is why the reforms also include provision to set out in regulations those matters which the relevant court or tribunal must consider when making an order on an application. The Government will carefully consider the detail of these matters with stakeholders and the tribunal, including where a building is resident-led. We would be concerned that the exemption provided by Amendments 81 and 81A would leave leaseholders with little protection from paying unjust litigation costs where a resident management company or a right-to-manage company is in place. I ask my noble friend not to move his amendments. However, it goes without saying that this is a complex area of reform and we are considering the issue carefully.

[Lord Moylan (Con)]

It is unsatisfactory if this is to be left to secondary legislation. Bearing in mind that the directors of the right-to-manage company are elected by the leaseholders, and can be replaced by them, and that they are really one entity, what is to happen if the tribunal decides not to make an award of costs? How are the directors to recover that money and who would become a director in those circumstances if they did not have that assurance in advance?

[Lord Gascoigne (Con)]

I will have to pick that up at a later date. There are a number of variables in that circumstance. I hope that my noble friend will forgive me for not having an answer to hand. I will certainly take this up with the department, rather than saying something that is incorrect at the Dispatch Box. My noble friend is absolutely right to raise it as an issue. It is under certain circumstances that those individuals find themselves in that situation, but I am more than happy to take that away and then write to my noble friend.

I turn to Amendments 81B to 81E, also in the name of my noble friend Lord Moylan. As I have previously said, Clause 60 seeks to protect leaseholders from unjustified litigation costs by requiring landlords to successfully apply to the court or tribunal to recover their litigation costs from leaseholders. This replaces the right that leaseholders currently have to apply to the courts to limit their liability for landlords’ litigation costs. The relevant court or tribunal will make an order on a landlord’s application that is just and equitable in the circumstances.

Amendments 81B and 81D seek to amend the provision that allows the court or tribunal to make a decision on the landlord’s application for their litigation costs that it considers

“just and equitable in the circumstances”.

Instead, the amendment stipulates that where a landlord is successful in relevant proceedings, the court or tribunal will allow the landlord to recover their litigation costs from leaseholders—unless the landlord has acted unreasonably. We understand the intention behind my noble friend’s amendments—to minimise the amount of court or tribunal hearings. However, the Government have a few concerns with the amendment.

The amendment would mean that the court or tribunal would always need to make an order that the landlord can recover their litigation costs from leaseholders where the landlord had been successful in proceedings in whole or in part. The only exception is where the landlord has acted unreasonably. Of course, where a landlord is successful in bringing or defending a claim, we would expect that the court or tribunal would allow them to recover their litigation costs from leaseholders. However, there may be a range of variables and nuances that occur in disputes which need consideration on a case-by-case basis.

The Government think the relevant court or tribunal is best placed to assess applications for costs, taking into account the circumstances of each case. In addition, the measures currently provide for regulations to set matters which the court or tribunal will consider when making a decision on costs applications, which we will consider carefully with stakeholders and the tribunal.

Amendments 81C and 81E seek to allow landlords to recover their litigation costs, where allowed under the lease, without needing to make an application to the relevant court or tribunal in certain circumstances. These circumstances include where proceedings before the county court are subject to a judgment in default, where litigation costs have been incurred in relation to forfeiture proceedings or where proceedings against a landlord have been struck out or are settled before the first hearing. Again, the Government have concerns about these amendments. For example, if a landlord is unsuccessful in proceedings of forfeiture against a leaseholder, this amendment would allow them to recover their litigation costs from a leaseholder regardless. These amendments would also make the provisions more complex, with different rules applying to different scenarios. We completely understand the intention behind my noble friend’s amendments. However, for these reasons, I ask that he does not press them.

Amendment 82, tabled by the noble Baronesses, Lady Taylor and Lady Pinnock, and spoken to by the noble Lord, Lord Khan of Burnley, seeks to prohibit landlords from recovering their litigation costs from leaseholders apart from in excepted circumstances to be set out in regulations. Clauses 60 and 61 already seek to rebalance the litigation costs regime for leaseholders in an effective and proportionate way. As I have previously noted, Clause 60 will require a landlord to successfully apply to the relevant court or tribunal in order to recover their litigation costs from a leaseholder. This applies whether the landlord is seeking to recover their litigation costs as a service charge or an administration charge. I also note that Clause 61 gives leaseholders a new right to apply to the relevant court or tribunal to claim their litigation costs from their landlord. For both landlord and leaseholder applications, the relevant court or tribunal will make a decision on costs in the circumstances of each case. Taken together, these measures will rebalance the litigation costs regime and remove barriers to leaseholders challenging their landlord. We believe the Government’s approach strikes the balance of being robust but proportionate. Therefore, I respectfully ask that they do not press this amendment.

Finally, I turn to Amendments 82A and 82B from my noble friend Lord Moylan. Currently, in the tribunal and for particular court tracks, leaseholders can claim their litigation costs from their landlord only in very limited circumstances even when they win. This may deter leaseholders from being legally represented or from challenging their landlord in the first place. As I have previously said, Clause 61 gives leaseholders a new right to apply to the court or tribunal to claim their litigation costs from their landlord where appropriate. As with the landlord application for costs, the court or tribunal will make an order that it considers just and equitable in the circumstances.

Amendments 82A and 82B seek to amend the new leaseholder right so that it applies only to home owners rather than investor leaseholders. Amendment 82B provides the definition of a “homeowner lease” so that the leaseholder right applies only to a leaseholder of a dwelling which is their only or principal home. Exempting certain leaseholders from this right would restrict access to redress where we are seeking to remove barriers. For example, there may be instances where a leaseholder who privately lets their flat needs to take their landlord to court because they are failing to maintain the building, which is impacting their property. In these circumstances, we would want the leaseholder to feel able to hold their landlord to account. Providing leaseholders with rights, regardless of whether they are home owners or investors, is in line with the approach we have taken throughout the Bill. Such an exemption would be out of step and will add complexity to the measures. Therefore, I ask my noble friend not to press his amendments.

[Lord Moylan (Con)]

May I ask the indulgence of the Committee? I should have declared when I spoke—as I did earlier in debate—that I live in a building which is run by a right-to-manage company of which I am a director, as is shown in the register of interests. I should have said that in my opening remarks, but I hope I will be forgiven for adding it now.

Leasehold and Freehold Reform Bill

Lord Moylan Excerpts

Committee stage
Wednesday 24th April 2024 Lords Chamber

[Baroness Taylor of Stevenage (Lab)]

My Lords, our amendment in this group refers to the fact that the Bill currently makes an exception to litigation costs being borne by landlords in the case where right-to-manage claims have been withdrawn or otherwise ceased early and the right-to-management company has acted unreasonably in bringing the right-to-management claim, allowing the landlord to apply to the tribunal for any reasonable costs.

The key arguments for the amendment are that, first, leaseholders should not be put at risk of having to pay costs simply for exercising statutory rights, in this case the right to seek to acquire and exercise rights in relation to the management of premises in which one has a leasehold interest. There is also concern that unscrupulous landlords might use the rights provided for in new Section 87B of the Commonhold and Leasehold Reform Act 2002 as a means of recovering costs from right-to-manage companies that act reasonably and in good faith and, by implication, that it would discourage right-to-manage companies from initiating a claim because of the financial risk it still entails for individual participating leaseholders. Put simply, the fear is that new Section 87B will incentivise unscrupulous landlords to fight claims on the basis that they are defective in the hope of recovering costs by means of it. Our main concern regarding Clause 48 is that the use of the words “reasonable fee” and “reasonable costs” would not allow either of the above situations to occur. I ask the Minister: who will determine the definition of “reasonable”, and how?

I will comment on other amendments. We think that the amendments tabled by the noble Lord, Lord Bailey, are very reasonable, and we support his aims here. In fact, colleagues in the other place submitted similar amendments in Committee.

I also look forward to hearing the noble Lord, Lord Moylan, introduce his amendments, which would incorporate local authorities and their properties, both within the HRA and without, but I ask whether he had discussions about this proposal with the Local Government Association or local authority stockholders. Most good local authority landlords already have substantial arrangements in place for liaison with leaseholders and tenants around the management of property, and there is certainly no issue with improving that through more effective right-to-manage arrangements. However, as much local authority property will be occupied by a mixture of local authority tenants and leaseholders, it would be important to ensure that there were no unintended consequences. I urge that that level of consultation takes place before any proposal such as this proceeds further. The noble Lord, Lord Moylan, will forgive me if he has already done that consultation, but it was not clear from the amendments. With that, I beg to move Amendment 60.

[Lord Moylan (Con)]

My Lords, it is a privilege to speak after the noble Baroness. I will come to answering her question. To give a blunt answer, I have not undertaken the consultation that she refers to, but I will explain when I get to that part of my introduction why I think that this stands on its own.

As I said at Second Reading, I strongly support those parts of the Bill which facilitate the exercise of the right to manage on the part of leaseholders in residential blocks. There are several measures in the Bill which do that. The right to manage is, in some ways, the crucial key to unlocking the levels of dissatisfaction which some leaseholders have with the way in which their blocks are managed. I strongly support it.

There is a particular issue which the Bill does not address. As a consequence of my general support for this—contrary to my remarks in earlier debates— I hope that the Government will give me a softer and more welcoming answer. As a result of my proposal, perhaps my noble friend on the Front Bench will even give me one of those answers which invites me to attend a meeting. In fact, I have had a meeting with my noble friend about this, though she may not recall it. We met last summer to discuss this issue with officials, and she was very sympathetic to it. That gives me additional reasons for thinking that this might be a welcome amendment.

The amendment arises from a particular case, but it raises questions of general importance. I shall refer to the case later, but I want to address the question of general importance first. When the right to manage was introduced through the Commonhold and Leasehold Reform Act 2002, certain exceptions were placed on it. The Government intend to ease some of those restrictions, and I welcome that. One restriction was that the right to manage did not apply where the landlord of the building was a local housing authority.

I have tabled two alternative amendments—this is my point about consultation. Both amendments would reverse that assumption. One would eliminate it entirely. It would bring within the ambit of right to manage all blocks where the local housing authority was the landlord, including those within the housing revenue account. The noble Baroness, Lady Taylor of Stevenage, said that this could raise certain difficulties in cases where a block had so many long lease holders that it could exercise the right to manage but would be left with certain local authority tenants in the block. I have experience of local government, as does the noble Baroness. I recognise that she is correct in saying that there might be certain sensitivities about this. I think it could be managed. Indeed, it would be liberating for all the tenants of the block in many ways. The local authority tenants would also have a say in the management of the block. They would not be excluded from it simply because they were local authority tenants.

Recognising that this is a slightly daring proposition, I have suggested an alternative which would simply take out of the provision local housing authority-owned blocks where they were owned simply as an investment. I have left it vague as to whether that is a commercial investment or one held in the local authority’s pension fund. These are probing amendments. I should be happy to discuss these issues with my noble friend the Minister.

I come now to a particular case. There are blocks where local authorities have acquired property as an investment. Doing so immediately extinguishes the right of the long lease holders to exercise their right to manage—there are no local authority tenants. I think that is wrong. The case I am thinking of concerns a block acquired by a London local authority from a commercial property investment trust, bought at market value as an investment. The local authority, the new owner, was dissatisfied with the accounts inherited from the previous manager—it had their own manager for the block. As a result, it has not been able to put satisfactory accounts together for the last three years. As a consequence, it has not had the legal standing to issue invoices to its tenants for its service charges. It has been running the building’s operating costs out of the capital sums that had been set aside as a sinking fund to pay for future improvements to the building. It is all very unsatisfactory.

That is a classic situation in which long leaseholders would normally exercise the right to manage but, completely arbitrarily, are precluded from doing so. That is wrong. We should facilitate this.

At the very least, my noble friend should welcome my second amendment, Amendment 62, and say that where a local authority acquires a property for commercial purposes—not for the housing of its tenants but as an investment, either in its own name or as part of its pension fund—the right to manage would be restored. The financial interests of the local authority would be preserved, as they are under the current arrangements. It is simply that the right to manage the building would be taken over by the long leaseholders, as elsewhere, and they would manage it in just the same way as in all the other right-to-manage arrangements we are so much in favour of.

I will stop at that point because I have simply made my case, but this is a strange omission from the current arrangements, and one that we now have an opportunity to correct. I would be very happy to attend the meeting.

[Lord Bailey of Paddington (Con)]

My Lords, I will speak to my Amendments 65A and 65B. The Government should be applauded for their ambitions as laid out in the Bill. Let us hope that we can achieve them all. I put on record that I am pleased with the Government’s direction of travel, because some of my interventions up until now may have seemed slightly belligerent, but can my noble friend the Minister provide some reassurance around the Government’s stated aim of a revolution in the right to manage? That would help to address what, for me, is at the heart of what I consider the leasehold scandal, which is really about control. Leaseholders in England and Wales are unique in the lack of control that they have. Worldwide, leaseholders and those with commonhold and many other types of tenure have much more control. I believe that is something the Bill can address, and the Government have to demonstrate that they want to deliver on it. Indeed, it was our own Secretary of State who said that he wants to see a revolution in the right to manage.

I put on record my colleagues Nickie Aiken and Barry Gardiner, who brought a very similar amendment in the other place. Amendment 65A seeks to ensure that leaseholders in mixed-use property who would otherwise qualify for the right to manage because 50% or more of the floorspace is residential, but because of a technicality—a boiler or an underground car park—are prevented from having that management given to them, still have that right. The current test means that you have to demonstrate that your building is self-contained or that the residential part is partly self-contained, but the layout of the building might suggest that it is not self-contained due to an underground car park or boiler room, when actually it is.

The Law Commission saw these two tests as too strict. It suggested that a third test could be set whereby, if it could be demonstrated that people are reasonably capable of managing the residential area fully independently, they should be given access to this power. As I have stated in most of the debate, the thing that most drives me is the potential for the abuse of service charging. Giving residents control over their assets is clearly the answer to that.

The amendment does not mean that leaseholders can take over the management of shops, hotels or commercial premises. That is not the idea of the amendment. The right to manage applies exclusively to the residential parts, such as corridors and lift lobbies —parts of the building used only by residents. The amendment does not seek to change that position.

At Second Reading, I made the point that even the leading freeholder lobby group pointed out that free- holders own, at best, only 2.5% of the capital interest in the buildings they have the freehold of. That leads me to my other amendment, Amendment 65B. We must lower the threshold at which a group of people can take over the management of that lease. It is currently at 50%. I suggest that it should be at around 35%—again, to help the Government achieve their stated aim of a revolution in right to manage.

--- Later in debate ---

[Baroness Thornhill (LD)]

My Lords, I have asked to speak to the amendments in this group, which is a bit shorter than it would have been had the Clause 47 stand part notice remained. That was certainly something on which I would have urged the Government to stand firm.

We strongly support Amendment 60 in the name of the noble Baroness, Lady Taylor of Stevenage. Anyone who has done a bit of googling on the right to manage can see that right-to-manage claims by leaseholders are often fiercely opposed by freeholders. What is meant to be a so-called no-fault process can involve costly and stressful litigation for leaseholders, as freeholders drag the right to manage claim into the tribunal system. Freeholders gameplay and try to block RTM bids, because the right to manage signifies loss of their control and ability to rip off leaseholders in perpetuity.

Against this backdrop of right-to-manage cases going to tribunal and becoming the subject of “lawfare” by freeholders, it is surely reasonable to ensure that right-to-manage companies cannot incur costs in instances where claims cease. The way things stand, it is clearly intended to be a disincentive to leaseholders to seek the right to manage, and that imbalance cannot be right. Some noble Lords may remember the Canary Gateway case: it took an outrageous four years for the shared-ownership leaseholders to secure their right to manage, with the freeholder-driven litigation going as far as the Court of Appeal.

Turning to Amendments 61 and 62 in the name of the noble Lord, Lord Moylan, we on these Benches would support them in principle as they are increasingly sold as access to the right to manage. However, they stand in stark contrast to the noble Lord’s other amendments, which sought to reduce leaseholder access to collective enfranchisement and right to manage.

[Lord Moylan (Con)]

My Lords—

[Baroness Thornhill (LD)]

I hesitated and thought about cutting that bit out, but go on.

[Lord Moylan (Con)]

The noble Baroness could not expect to get away with that. Any attempt to cast me as a as a poodle of freeholders and opposed to leaseholders is bound to be foiled because it is untrue. I have made it clear throughout that I strongly support the right to manage and its extension. This is very different from expropriation of somebody else’s property. This is simply a technique for managing a building and managing it well.

I should also say while I am on my feet that when we exercised the right to manage in the block in which I live, many years ago, the freeholder was highly supportive because they were sick to death of the managing agent as well, and realised that their building would be managed a great deal better by us, as it has been. They have an interest in the building being well managed: they want the roof to be repaired; they want the facade not to fall off in chunks in the street because, after all, they, too, whatever else is said, have a long-term interest in the building.

[Baroness Thornhill (LD)]

My comments were not about right to manage. That was a good segue into another short speech by the noble Lord.

However, we are conscious that expanding right to manage to leaseholders under local authority landlords was never considered by the Law Commission, nor put out to public consultation. We are unsure whether the Government have done policy work in this area. It is a whole other ball game and will be challenging. But, in principle, given that many local authorities have been guilty of significant and tragic failures of service, to put it mildly, this should be a right of local authority tenants too. But it will be complex, for many of the reasons that were well outlined by the noble Baroness, Lady Taylor.

It is also worth reminding ourselves that local authority leaseholders have, since 1994, been able to take over management through tenant management organisations. I do not believe any work has been done regarding their success or otherwise. But such a review could ignite and inform this topic on another occasion. We welcome the probe by the noble Lord, Lord Moylan, and also the subtleties of his alternative proposals, and will certainly attend the said—and very popular —meeting.

Finally, I come to Amendments 65A and 65B, in the name of Lord Bailey of Paddington. The aim of Amendment 65A is a good one: to ensure that leaseholders in mixed-use buildings can avail themselves of the right to manage. At the House of Commons Public Bill Committee in January, MPs heard that many leaseholders in mixed-use buildings would still be unable to benefit from the reforms in the Bill to take over management—because, as the noble Lord said, of the existence of, say, a shared plant room or car park, under rules regarding structural dependency and self-containment. The existence of a plant room or other infrastructure is something decided by the original developer and leaseholders have no control over these factors, so it feels unfair to exclude them from right to manage based on the way a block has been designed, especially if they qualify under the new 50% non-residential premises limit.

Amendment 65B would put rocket boosters under the right to manage, opening it up to far more leaseholders. We on these Benches support the amendment and the intent behind it. Members in the other place have raised concerns that the 50% trigger is too high. The 50% participation limit on right to manage was also flagged as an issue by leaseholder campaigners at the Commons Public Bill Committee in January.

There may be concerns about 50% being less than a majority, but, as the noble Lord said, many leaseholders will never be able to obtain 50% support because of the high levels of buy to let in their block. But ultimately the Committee was persuaded of the case to bring down the 50% threshold. It is not right that just one person—the freeholder or landlord—has such control over leaseholders and can impact almost at will on their finances. As the noble Lord’s amendment suggests, 35% of leaseholders triggering a right to manage, with a right to participate for remaining leaseholders who did not originally get involved, is a far better situation than rule by one freeholder, whose interests, as the Law Commission concluded, are diametrically opposed to that of the leaseholder. Leaseholder self-rule with right to manage and a 35% participation threshold is a much more democratic state of affairs. Let us be honest: many councillors and MPs are elected to govern on much less than 50% of the vote—in fact, usually around 35%.

[Baroness Scott of Bybrook (Con)]

My Lords, I thank the noble Baroness, Lady Taylor of Stevenage, for Amendment 60, which would leave new Section 87B out of the Commonhold and Leasehold Reform Act 2002. This is a new power, inserted into the 2002 Act by the Bill, for the tribunal to order the repayment of a landlord’s process costs for right to manage claims which are withdrawn or cease to have effect in circumstances where a right to manage company has acted unreasonably.

The noble Baroness asked who would decide what was reasonable or unreasonable and the level of reasonableness. The costs will be determined by the tribunal, as is the case with other kinds of litigation or court proceedings.

While we strive to reduce costs for leaseholders, we do not believe it is right to do so where the right to manage company acts unreasonably in bringing a claim and the claim also fails. For example, landlords should not have to meet their own wasted process costs where leaseholders clearly make an unfeasible claim or fail to bring the claim to an end at an earlier stage.

The noble Baroness should be assured that the new power for the tribunal does not automatically entitle landlords to repayment. If the tribunal does not consider that costs should be payable, it can decline to make an order. Removing new Section 87B would expose landlords to unfair costs. For these reasons, I ask the noble Baroness kindly to withdraw her amendment.

I thank my noble friend Lord Moylan for his Amendments 61 and 62. The amendments seek to remove or amend the existing exception to the right to manage for local authority premises so that the right can be used by their long lease holders. I should explain that there is a separate right to manage scheme for local authority secure tenants and leaseholders under the Housing Act 1985 and its relevant regulations. The Commonhold and Leasehold Reform Act 2002 therefore excepted local authority leaseholders from the long-leasehold right to manage to avoid creating conflicting schemes.

The Bill delivers the most impactful of the Law Commission’s recommendations on the right to manage, including increasing the non-residential limit to 50% to give more leaseholders the right to take over management, and changing the rules to make each party pay their own process and litigation costs, saving leaseholders many thousands of pounds.

An alternative route to management is available in some local authority blocks that contain a mixture of tenants and leaseholders, where a prescribed number and proportion of secure tenants are in support of exercising the right. This involves setting up a tenant management organisation. It would complicate a system that we are trying to simplify if two separate routes were to apply to a single block, and the Law Commission made no recommendations on local authority leaseholders.

[Lord Moylan (Con)]

My Lords, I have some familiarity with the Housing Act 1985 from my time in local government. I am reasonably well aware of the obligation to create tenant management organisations, which are often not block-specific but estate-wide or, in many cases, spread across the entire local authority council housing stock. It seems a strange way to go about trying to exercise the right to manage if we are discussing a block held as an investment that has no local authority tenants. Can my noble friend assure me that the Housing Act 1985 is an effective means for leaseholders in the circumstances I describe to exercise their right to manage, when in fact it is an obligation on a local authority rather than a right granted to long lease holders?

[Baroness Scott of Bybrook (Con)]

We believe this is the correct way of doing it. I would be very happy to meet my noble friend to discuss this further but, with the evidence we have, we agree this is the correct way forward. But I really am very happy to meet with the noble Lord.

Leasehold and Freehold Reform Bill

Lord Moylan Excerpts

Committee stage
Wednesday 24th April 2024 Lords Chamber

If we do not accept the amendments in my name and that of the noble Lord, Lord Howard, this law stands a very strong chance of being attacked under human rights law, because it is not offering fair compensation to the freeholders, and it is retrospective. I therefore very much hope that the Minister will see the dangers and unfairness in this, and accept the proposals in these amendments.

[Lord Moylan (Con)]

My Lords, it is a privilege to speak after the noble Baroness, with her depth of knowledge about this subject, and my noble friend Lord Howard of Rising, who did me a number of favours. First, he saved me from any obligation to explain the meaning of marriage value. Secondly, he made a moderate and temperate case for his amendment when my argument might be expressed in a somewhat less moderate and well-tempered manner, because I feel a real sense of outrage about what is being proposed.

As my noble friend has explained, marriage value is a real financial asset. His Majesty’s Government say that they are abolishing it. They are not abolishing it; they are, in effect, transferring, at the stroke of a pen, value from the freeholder to the leaseholder without any compensation. It is, simply, expropriation. My amendment, which is a probing amendment—I would not expect it to be part of the Bill—obliges the Secretary of State to pay compensation to those who have lost out as a result. Of course, I really want the Government to scrap the provision itself, rather than for compensation to be paid, and I would not expect my amendment to be a practical policy. It is a probing amendment to raise the question about expropriation without compensation.

I want to make three broad points. There are genuine evils in the leasehold system. I made it clear at Second Reading that there were things that I support in the Bill. For example, it was scandalous that in recent years some housebuilders sold leasehold houses with rapidly escalating ground rents, which they then securitised in order to increase their capital receipts. Also, it is scandalous the way that many freeholders are implementing their obligations in relation to the cladding crisis; people are genuinely suffering as a result.

However, how many of these evils are actually being addressed by removing marriage value from the calculation of the enfranchisement premium, or the premium paid for extending a lease? It is not germane to the main evils that the Bill has been advanced as addressing.

Expropriation of this character implies some wrongdoing on the part of the person whose assets are being expropriated. It requires a high test. Noble Lords will have noticed that even in the case of the friends of Putin, we have been sensitive and careful about expropriation. We have frozen assets, but when it comes to whether we should expropriate them and give them to Ukraine or do whatever useful stuff we might do with that money, we all draw back from it because of the legal consequences. Here, we are perfectly happy to expropriate assets and hand them around the market without any consideration, and with very few people rising to protest about it, even in your Lordships’ House.

I believe that the Secretary of State said that he sees this as an act of justice, but what justice is involved in transferring wealth from a group of people who include, as my noble friend has said, charities and pension funds to leaseholders, who in many cases are frightfully rich? We will shortly come to amendments in the name of the right reverend Prelate the Bishop of Manchester which deal specifically with charities, which I have put my name to. I live in Kensington, and as I declared at Second Reading, I live in a flat on a long leasehold. However, there are many people around Kensington with very expensive properties who are salivating at the prospect of this going through. This is not substantially helping the poor and middle classes; it is going to transfer huge amounts of wealth to people with long leases. The more valuable the flat, the bigger the benefit that they are going to get from it. Where is the justice in all this? I simply do not understand how that point can be made.

My second point relates to the European Convention on Human Rights, on which I do not claim to be an expert. I have a suspicion that my noble friend, when she rises to answer, will say that in respect of Article 1 of the first protocol—to which the noble Baroness, Lady Deech, has referred with such learning—similar cases in the past have been taken to the court, and that the landowners, the freeholders, have lost. Therefore, the Government are certain that this will pass that test. I am, of course, wholly unqualified to comment on the legal merits of the case in either way. However, even if it did pass that test, is this something that should pass the test in England, as far as the older rights that we have inherited are concerned? This is principally England that we are talking about, with its tradition of respect for private property and not implementing retrospective law or seizure of assets without very good reason. I would suggest that it does not pass the test. Even the Law Society—the “leftie lawyers”, as they are often referred to, which is not a phrase that I would use, and I hope Hansard will put that in quotation marks—is concerned about the damage that this will do to the reputation of English law.

My final point is addressed to my fellows on these Benches, who take the Conservative Whip. Are we and our noble friends on the Front Bench here to expropriate property without compensation, without justice, without an argument, or without there being serious wrongdoing on the part of the person whose assets are seized? Is this what we came into this House to do? I do not think it is. This is something that the Government need to take away and rethink very seriously, because it is wrong, it smells, and it is something that we should have nothing to do with.

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[Lord Moylan (Con)]

I am very grateful to the noble Baroness for giving way. If there is any suggestion that I have been critical of the European Convention on Human Rights, if that remark was addressed to me, I should be glad to know when that was the case because I have never said that we should withdraw from that convention. I do not know whether the remark was addressed to my noble friend Lord Howard of Rising and not me. If that was the case, I apologise for intervening.

[Baroness Pinnock (LD)]

There was, of course, no mention of or reference to any noble Lord in this Chamber. It was a general reference to criticisms of that court under the human rights legislation. We have heard in debates in your Lordships’ House over the past weeks that have hinged on the rule of law. So it is most interesting, for those of us who have felt that the rule of law had been breached in the decisions that have been made, that it is now being raised in defence of these amendments. The debate has become emotive on this issue.

I hope that we can draw back from that rather, because what we have here is the Government’s intention to rebalance the rights of leaseholders as against the rights of freeholders. From these Benches, we support the rebalancing of those rights. In many cases, we think that the Government are not going far enough, but there ought to be a rebalancing of those rights. That is not referencing in this case the fact that there seems to be an argument among those who have moved or supported the amendment, that the loss of value can be defined as an expropriation. I find that difficult to accept because all along, in changes to legislation on major infrastructure projects, property is infringed and property holders feel abused. But it is for the state to make those decisions. So I am not sure why we are going to the barricades on this issue.

[Lord Moylan (Con)]

I am grateful to the noble Baroness for giving way. In the case of infrastructure, it is certainly true that private property owners can have their property taken away from them to allow infrastructure to be built. But this is under a compulsory purchase regime whereby they receive something approaching the market value, normally plus a premium of so many per cent on top. My amendment would ensure that those expropriated of their marriage value would receive that. Is the noble Baroness, in fact, swinging in behind my amendment? There is a clear difference between what is proposed today and the compulsory purchase regime.

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[The Lord Bishop of Manchester]

My Lords, while I thoroughly enjoyed that previous group, I hope this one will not prove quite so wide-ranging. In tabling these amendments, my aim is to deal with an issue that in the charity world is specific to a small number of bodies but would severely impact the work that they do. First, I am a leaseholder myself, as it happens, as set out in the register of interests. I have been through the process of extending my lease; my flat is not in London, and it was quite a simple and cheap process. Secondly, although I am no longer on the board of governors of the Church Commissioners, it is the body that pays my stipend, owns my home and covers my working expenses, so I declare that interest too.

The commissioners are directly affected by the proposals in the Bill. They would indeed benefit from my amendments but, as has already been mentioned by the noble Lord, Lord Truscott, in the previous group, that charity is large enough to withstand the adverse impact. Smaller charities would struggle much harder to maintain their work, and it is their case I seek to plead today.

As I said at Second Reading, I wholeheartedly support the central thrust of the Bill, which is to protect leaseholders from freeholders who exploit them as a cash cow. I also agree that leasehold is ripe for bold reform. I have spoken repeatedly in your Lordships’ House on behalf of victims of the cladding scandal, as well as joining them on public platforms in Manchester. My lifelong commitment to those in housing need is well known in this House and that commitment remains undiminished.

I was unable to be in my seat on Monday and I am grateful that my right reverend friend the Bishop of Derby spoke to an amendment in my name that day. Having carefully read the report of that debate in Hansard, I have informed the Whips’ Office that I no longer intend to oppose the question that Clause 47 stand part of the Bill, nor does my co-signatory, the noble Lord, Lord Thurlow. I have taken that step as I believe my efforts at this stage are best focused on the specific issue of charities and marriage value. I apologise to noble Lords for the lateness of that decision but hope that they will take it as a sign that even a bishop can be penitent.

To focus on the subject of this group, in England there are a small number of charities, probably no more than a dozen, all of them with long and distinguished histories, which, in centuries far past, came into the possession of land lying largely within just a few miles of this House. As London grew and the land increased in value, rather than simply selling it and seeking to invest elsewhere—remember that back then there were far fewer opportunities for investment—the charities stuck with the business they knew and understood. They kept the freeholds and have used them as regular and predictable sources of income to drive their work. The charities, apart from the commissioners, of which I am aware, are John Lyon’s Charity, the Portal Trust, the Dulwich Estate, the London Diocesan Fund, Merchant Taylors’ Boone’s Charity, and Campden Charities —not a large number.

John Lyon’s Charity was gifted its land in St John’s Wood about 500 years ago. Income from being the freeholder, principally through marriage value, provides it with about £4 million per annum, which is one-quarter of its total income. Marriage value is not a matter, as we have heard, in which the freeholder can set their own arbitrary figure. It is not open to the abuses that have been associated with ground rents. It is also the case that around 80% of all marriage value is in or around the capital. This is a very London-focused issue.

The money that John Lyon’s Charity receives enables it to be one of the principal providers of youth services to some of London’s most needy children. Properties on its holdings sell for around £5 million. The leaseholders who purchase them are not London’s poor and needy. Many are not resident in the premises, which are let out to tenants. A typical leaseholder on such an estate is, as we have heard in previous debates, more than likely to be a wealthy overseas investor or corporation. I have nothing against them, but the Bill, in its present form, will transfer money used presently for youth work to these very rich organisations and individuals. It will present them with an entirely unearned windfall, hence my comments at Second Reading about this being a “reverse Robin Hood”.

I have been told that the Bill needs to be kept simple, and that making any exceptions will unnecessarily complicate it. Of course, there is already an exception for the National Trust, but I will not debate that any further. However, the simplest solution to a problem is not always the right one. In any battle between simplicity and justice, justice must always prevail.

I have also been told that it would be wrong for some leaseholders not to profit from the abolition of marriage value when others, whose freeholders are not charities, do. I will not go back as far as my good friend, the noble and right reverend Lord, Lord Sentamu, did when citing Magna Carta in the previous debate, but there is another principle that is long established: the assets of a charity should not be alienated from it at anything less than full market value, except where those assets are being applied directly to the purposes set out in the charity’s objects clause. That principle has been applied even to such flagship Conservative projects as tenants’ right to buy, in which charitable housing associations were excepted as not being forced to sell properties at a discounted value, unless that discount was being made up from elsewhere. I have not heard any case, not even an unconvincing one, as to why leaseholders of charity-owned freeholds should be treated more favourably than charity tenants.

My amendments in this group offer one way forward. They stipulate that marriage value should continue to apply in cases where the charity owned the freehold before the Act came into effect. There would be no loophole allowing charities to purchase freeholds and apply marriage value in future, nor any opportunity for other bodies to seek to register as charities thereafter. From day one, those leaseholders with charity freeholders should know exactly who they are.

We could tighten it up even further—this is still just Committee stage. It would make little difference if the exemptions applied only to charities, or their predecessors, which owned the freehold prior to 1950, which would of course exclude most housing association leasehold properties. Given how few they are, we could even name them in a schedule. We could explore how marriage value for charities might be phased out over a period of some decades, as was referred to more generally in the previous group, instead of the impact hitting in full in the first year. We can also look at ways of compensating charities in full for the loss of assets—again, an issue referred to in the previous group. I note the Minister’s comments that to fully compensate all freeholders would be an unfair burden on the taxpayer. We are talking here about something much smaller—a small number of charities severely impacted—and I beg to suggest that that can be afforded. None of this needs to slow down the progress of this much-needed Bill through your Lordships’ House.

I am grateful to the Minister, who has already met me and representatives of some of the affected charities, written to us setting out the Government’s current position, and assured us that she remains ready to meet again. I greatly appreciate her openness to such conversations. I also appreciate the Opposition Front Bench for similarly listening to our concerns. I look forward to hearing the views of other Members of your Lordships’ House, so that the charities impacted can have a better sense of where we might find ways forward to tackle this problem. In the meantime, I beg to move.

[Lord Moylan (Con)]

My Lords, it is a pleasure to follow the right reverend Prelate the Bishop of Manchester, and I have added my name to his amendments.

There is a great deal that I could say on this issue but, since I said most of it in the debate on the last group, I shall keep my remarks fairly short. I can add a little personal knowledge of one charity to which the right reverend Prelate refers, because it is very Kensington-based. I have no connection with it and no interest to declare—but Campden Charities was started in the 17th century by Count Campden, a devout Puritan. When he died, he left a charitable endowment, naturally in the shape of land that he owned, for the benefit of the poor youth of Kensington. His widow, when she died, did likewise with her property—hence the plural. It is Campden Charities: technically, they are two separate endowments, but they are run as one. They own land in Kensington to this day from which they have an income, and they continue to support the poor youth of Kensington—and there are poor youths in Kensington—giving them grants to allow them to continue their education and apprenticeships, and work of that sort. Their income is now going to be, to some extent by this measure, reduced and expropriated.

As I say, apparently as Conservatives we feel no embarrassment in doing this—we feel no constraint on us. We are too tender and too ginger to feel that we can expropriate the assets of ill-doers such as Putin’s friends—they are sacrosanct. But those who do good, such as charities, can have their money taken away with very little debate and handed to leaseholders who may or may not be poor and meritorious. Who knows? What is it next, I wonder, for my noble friends on the Front Bench? Shall we be stealing the widow’s mite from the poor box?

[Lord Bailey of Paddington (Con)]

My Lords, I want to pay tribute to Campden Charities, as I am a beneficiary of the activities of Campden Charities. I came from a community where the likelihood of one of us appearing in the Lords was next to zero, and Campden Charities is an important part of my arrival in your Lordships’ House. I point out that removing the ability of charities countrywide to provide such services would be devastating to some of the poorest communities in this country. Again, I stand here as a witness to the effectiveness of some of the work that they do.

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[Lord Gascoigne (Con)]

My Lords, I thank the right reverend Prelate the Bishop of Manchester, and my noble—and actual—friend Lord Moylan for their valuable contributions at Second Reading, and for the amendments that they have put forward which seek to alter the Government’s current position on marriage value and hope value. I say on behalf of my noble friend the Minister that we are grateful for all the time and engagement with the right reverend Prelate on this issue, along with the Church Commissioners and the charities which she has spoken to today.

In addition, we are grateful to all noble Lords who have spoken on this group and on the somewhat excited group previously. As has been noted, a lot of the points that I will speak to were covered in the previous discussion. I also say to the right reverend Prelate that we are always happy to meet. In answer to the noble Baronesses, Lady Taylor and Lady Pinnock, the Minister is more than happy to engage with any noble Lord who is impacted by this, as well as charities, to discuss it further.

Amendments 28 and 46 would exempt freeholders who are charities at the time of the Bill receiving Royal Assent from the removal of the requirement for leaseholders to pay marriage value, and for hope value to be payable. Before I go into detail, I reiterate the Government’s wholehearted recognition of the vital role and work that charities provide in our communities up and down the land, as has been noted by my noble friend Lord Bailey.

However, as the noble Baroness, Lady Scott, explained previously, we do not believe that leaseholders should pay marriage value. The leaseholder needs to enfranchise to prevent financial loss from the running down of their lease, and to prevent their losing possession when it ends. As has been said, we do not believe that their position, which concerns their security in their home, should be used as a basis for requiring them to pay more than a third party to enfranchise, nor that the freeholder should profit by way of windfall by selling to the leaseholder as compared to a third party. Under our valuation scheme, the freeholder is compensated as if the lease ran its course.

The good work of a charity is separable from its funding. Requiring leaseholders of charities, for no other reason than the coincidence of the nature of their freeholder, to pay marriage value when other leaseholders do not have to would be, I am afraid to say, unfair. Granting exemptions would also create an unbalanced two-tier system. By removing marriage value across the board, we will level the playing field and ensure that we are widening access to enfranchisement for all leaseholders, both now and in the future.

There have been a couple of references to the National Trust. Briefly—as I know it has been covered previously in this debate—it is a different scenario given that its land is inalienable and cannot be sold, yet it is not exempt from the removal of marriage value. I am not aware of the case that the noble Earl, Lord Lytton, mentioned, but I am certainly more than happy to look into it for him. I assume—and it is only my assumption—that it is because it is for the National Trust as an entity to decide, but I assure the noble Earl that I will look into it.

The noble Baroness, Lady Pinnock, asked about other charities that may be impacted by this beyond those that we have discussed. Again, I am not aware of any, but I am sure that that work has been done by the department. I will certainly take it back and investigate. Further to the point made by the noble Baroness, Lady Taylor, it is something on which we will continue to engage with any noble Lord or any charity that is impacted, as we have done with the right reverend Prelate.

For these reasons, I respectfully hope that the right reverend Prelate the Bishop of Manchester and my noble friend Lord Moylan will understand and therefore not press their amendments.

[Lord Moylan (Con)]

Before my noble friend sits down, perhaps I may address a point he made earlier which was made also by my noble friend Lady Scott of Bybrook. The idea that the Government are peddling, that if a landowner sells a leasehold or freehold interest to a third party, they do not receive marriage value, is to assume gross inefficiency of markets and complete ignorance of market participants. It is of course true that the purchaser would not pay marriage value as a separate sum, but the purchaser is perfectly aware of the potential for marriage value and will pay a price that incorporates that. To assume anything else is to assume that all those clever and evil hedge fund managers are too dim to notice what is going on. It simply is not the case. The line the Government are peddling is simply unfounded in fact and reality.

[Lord Gascoigne (Con)]

Obviously, I completely respect my noble friend, but I think I have answered that point.

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[Lord Borwick (Con)]

My Lords, I first declare my interest in my home, which is a long-leasehold property in London. It would not normally be declarable, but in the case of this Bill, this should be an exception. I also declare my interests as in the register in property companies, some of which are developing or have developed houses.

While I am not a great fan of a Conservative Government forcing freeholders to sell land to lease- holders, that principle sailed many years ago, and my Amendments 41, 43, 44 and 45 are designed to simplify the process in this Bill, reducing the costs for the department. They would speed up the process, perhaps by as much as 18 months, making it quicker and cheaper for the Government.

The present structure of the Bill has the price of the enfranchisement calculated by a system laid out in Schedule 4, under which the single most important factor is the deferment rate. I believe that the deferment rate is more important to the size of the actual price than the abolition of marriage value or any other factor.

What is the deferment rate? Some noble Lords believed that it must be in the Bill, but that is not so. The deferment rate, an interest rate by another name, is to be decided by the Secretary of State for DLUHC by way of statutory instrument. When will this be published? We do not know. Departments take a different time for SIs, and some take as long as five years. I have been criticised in the past for being acidic about the Department for Transport taking as long as five years to bring forward an SI on disability matters. The point is that it is certainly not instantaneous.

The interest rate is to be set by the Secretary of State at a date to be announced in due course. I could be rather difficult and quote my right honourable friend from another place, Michael Gove, on the subject of setting interest rates. He has been a supporter of the principle that interest rates should be set not by the Chancellor but by the independent Bank of England. For many years we have had that as a common policy between all parties, yet the Bill reverses that policy, at least in respect of the deferment rate.

The Minister has said that the rate will be a market rate for about 10 years, amended only by another SI. I am afraid that markets do not work like that—they alter fast and furiously. Over the last 10 years, the national rate has varied quite widely, between 0.1% and today’s 5.25%. Yet the department will fix it for the next 10 years, subject only to review at about a year’s notice. If the department was that good, it could make a fortune in the markets rather than create legislation. It cannot be done accurately, but the department still wants to do it.

I submit that my solution is better: there should be a variable rate, varying automatically as a simple margin over base rate. We can have a debate about what that margin should be. I have proposed 5% as a probing amendment. The leaseholder will, in almost all cases, be a worse credit risk than the freeholder, and I have asked several banks about their prospective price for a loan to finance an enfranchisement. I have had a variety of suggestions, as each price will of course depend on the particular circumstances, but a margin of 5% over base rates seems to be a reasonable guess.

There are occasions when leaseholders of flats in a block have enfranchised but one in 100, say, has not come up with their share. It is not unknown for the freeholder himself to provide the finance, and I am told that a margin of 5% over base is considered reasonable by freeholders when they are the lenders.

The first thing would be to agree that the rate should be variable, to take account of current financial circumstances. My Amendment 41 achieves this. The second thing is to agree that the margin on the rate over bank rate should reflect the leaseholder’s cost of borrowing, which is consistent with the rest of the terms of the Bill, but at present I am not entirely certain what that margin should be. I look forward to other noble Lords expressing their opinions.

Amendments 43 to 45 are either consequential or the equivalent measure for leaseholds to be extended rather than enfranchised. My noble friend Lord Forsyth, who is not in his place, was going to support this proposal and may put his name to it later, if it comes forward on Report.

The noble Lord, Lord Truscott, mentioned this amendment at an earlier stage. I did not know whether I should stand at that moment or wait. I hope he will forgive me for replying to his point now. The current rate set by the tribunal is 4.75% or 5%—the noble Earl, Lord Lytton, can immediately correct me if I am wrong—so 10.25% may be wrong, but so is 4.75% or 5%. The noble Lord, Lord Truscott, asked whether a return of 10.25% is available, but the question should be whether any lenders charge as much as 10.25%. I believe that they do, so his argument is actually an argument for variable rates. I beg to move my amendment.

[Lord Moylan (Con)]

My Lords, I rise to support, in general, the principle of what my noble friend Lord Borwick has said, but I am not entirely sure that we need to go into this new world that he is creating when we have a perfectly satisfactory world that already exists. I hasten to add that I am not a chartered surveyor, and everything I say is subject to correction by Members of this Committee who understand these matters better than I.

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[Baroness Scott of Bybrook (Con)]

My Lords, I thank the noble Baroness, Lady Taylor, and my noble friend Lord Borwick for Amendments 41 to 45 in this group. I turn first to the series of amendments tabled by my noble friend, and I thank him for his constructive engagement with me and for the time he spent in trying to address this vital matter.

Amendments 41 and 43 to 45 would seek to replace the current provisions in the Bill, which will allow the Secretary of State to set the deferment rate used in enfranchisement valuation calculations, as well as removing a requirement to review these rates every 10 years. Instead, these amendments would require the deferment rate to be prescribed by a formula, which would be based on the Bank of England’s base rate plus 5%. The specific deferment rate would then be calculated based on the date of the leaseholder’s enfranchisement claim.

As I have discussed with my noble friend Lord Borwick, this is one potential solution for setting the deferment rate, but it is not the only one. I am aware of the importance of the deferment rate to both leaseholders and freeholders, and it is important that we take the time to take this decision carefully. There are serious consequences with any attempt to prescribe the methodology for setting the deferment rate in the Bill; this would tie the hands of this Government, and successive ones, in terms of adapting the approach if the need were to arise. It is also important that the Government retain their role in providing balance between market stability and the need to review the rates. It is the Government’s view that the proposals in the Bill enable this balance, and it would therefore be inappropriate, at this stage, to prescribe in the Bill the methodology for setting the deferment rate.

These deferment rates are a really important part of the Bill. At the moment, it is difficult for leaseholders to understand how much they may have to pay to the landlord when they enfranchise. Different rates are used across the country and across the industry on a case-by-case basis. The deferment rate is used to calculate the reversion value, and this provides the landlord with the compensation for the value of the freehold property with vacant possession in the future; that is, at the end of the lease. Prescribing these rates and using them to develop an online calculator, which will help leaseholders understand what they may have to pay, is also important. These rates will be prescribed at a market value to ensure that the amount that landlords are compensated reflects their legitimate property interests. These are important decisions.

The noble Lord, Lord Moylan, asked about the timing; this could take years and years, but we do expect the majority of these reforms to come into effect in 2025-26, as set out in the Bill’s impact assessment. Obviously, this may change, but that is what we expect. We will continue to carefully review all the information and views shared on the setting of rates, and I welcome any further thoughts that the Committee has on this matter.

[Lord Moylan (Con)]

Does my noble friend the Minister have a moment to give a response to my query about whether the Government regard the deferment rate as a real interest rate or one that incorporates inflation? I ask because the calculation, as I understand it, assumes zero inflation in the value of the asset over the time to the point at which it is being valued, and that a real interest rate is therefore appropriate. Is that her assumption or is she assuming an inflation-based interest rate, which, I suggest, would have consequences for how the asset is valued at the end of the term during which it is assessed? Does she have any comments on that?

[Baroness Scott of Bybrook (Con)]

I reiterate that this is why we would like the Secretary of State to be involved because it is complex and there needs to be a balance. I will come back to the noble Lord with any further comments, but this is why we would prefer the Secretary of State to have this role, to make sure that we are balancing the market at the time with leaseholders’ representation.

I turn to Amendment 42 from the noble Baroness, Lady Taylor, which would require the Secretary of State, when prescribing the deferment rate used in the enfranchisement valuation calculations, to set this at a level that would encourage

“leaseholders to acquire their freehold at the lowest possible cost”.

I assure the noble Baroness and the Committee that the Government are committed to making enfranchisement cheaper and easier and that these reforms will achieve that aim.

I understand how vital setting rates is for enfranchisement premiums. This very proposal was discussed in the other place, and I reiterate the importance of not constraining the Secretary of State via the Bill when making such important decisions. We have been clear that we will set the rates at the market value and recognise that many different elements need to be considered when setting them, as I have just reflected to my noble friend. We continue to have conversations with all relevant stakeholders. As I said, I welcome members of the Committee sharing their views on this matter so that the Government can take them into consideration when making a final decision. For these reasons, I ask my noble friend—

Impact of Environmental Regulations on Development (Built Environment Committee Report)

Lord Moylan Excerpts

Friday 19th April 2024 Lords Chamber

Moved by

[Lord Moylan]

That this House takes note of the Report from the Built Environment Committee The impact of environmental regulations on development (2nd Report, Session 2022-23, HL Paper 254).

[Lord Moylan (Con)]

My Lords, I begin by offering a few words of thanks to the committee and its current and former members. I am delighted to see so many of them here today contributing to the debate. I also thank the clerk of the committee, Kate Wallis, the researchers, Anna Gillingham and latterly Andrea Ninomiya, our administrator Hadia Garwell and, in particular, our specialist adviser Kelvin MacDonald both for his academic insights and his experience as a planner and former planning inspector. I will also take this opportunity to congratulate my noble friend Lord Banner on what I am sure will be a very welcome maiden speech that will follow shortly in the course of the debate.

The time available for this debate is cruelly short, given the significance of the topic, so I have broken my thoughts down into three broad areas. The first is the general problem, the second is to illustrate it with some particular problems and the final point, if I get to it in time, is to ask whether there needs to be a problem at all, because perhaps there does not.

The general problem is that the Government have ambitions for building a certain number of houses—there are well-publicised housing targets—and to leave the environment in a better state than previous generations had it. The starting evidence for the committee is that neither ambition is likely to be met. In fact, we found very few people who thought the Government would hit their housing targets, and we heard authoritatively from various senior figures at some government agencies that they will not meet their environmental targets either. Even worse than not meeting them is the fact that they appear to be operating in antagonism with each other, so that, rather than cross-departmental working to achieve both, we appear to have two sets of targets working against each other the whole time.

In that context, it is worth saying that the environmental targets tend on the whole to win. Part of the reason for that is the legal background to the environmental targets, which is European Union law that we have inherited, particularly the habitats regulations. They are fundamentally coercive. They require things to happen or prohibit things from happening. On the other hand, housing is driven fundamentally by the Town and Country Planning Act regime, which is essentially a permissive regime—having planning permission does not oblige you to build anything—and is of course based on domestic law. There is no European Union background to it in particular. As a result, we have constant, unnecessary battles going on that arise in part from conflicting legal systems.

Of the particular problems that the report addresses, the most prominent and the one most deserving of time is summarised in the expression “nutrient neutrality”. This dates back to a judgment of the European Court of Justice delivered in 2018, I believe. It related to Dutch farmers. The Netherlands is very intensely farmed. For a small country, it produces an awful lot of food and a lot of pollution from that runs off into rivers. Various parties went to the European Court of Justice and said that this must stop. The European Court of Justice agreed and the Dutch Government completely kiboshed themselves by putting in place a draconian plan for buying up farms and closing them down, which has resulted in a sort of revolution in domestic Dutch politics.

That is not the key matter of interest to us. The key matter of interest is that Natural England, an unaccountable agency that exists under statute in the UK, decided that that judgment applied to England as well—we are speaking predominantly of England in this debate, incidentally, as noble Lords will be aware. It was backed up in this, I understand—although, of course, I have not seen it—by legal advice from Defra. As a result, it started to issue advice in relation to applications for residential planning permission which effectively banned them because they would add pollutants to nearby watercourses without any mitigation.

It is not possible for Natural England to actually ban or nullify a planning permission. It does so by way of advice. None the less, it is very potent advice because, first, local planning authorities live in constant terror of having judicial review proceedings brought against them and, secondly, it must be said that many local authorities are delighted to be told that they cannot build anything in their area, which is a further problem we have with our housing market.

In fact, of course, we all know that the pollution in our watercourses comes predominantly from sewage overspills and agricultural practices. These agricultural practices are licensed by the Environment Agency, another player in this complex ecology of quangos running round causing confusion in every direction. Natural England has no purchase on that, but it does have purchase on applications for planning permission—so the whole burden is being put on the housing market when in fact it belongs elsewhere. As a result, 14% of England’s land area is now effectively under a ban for residential development at a time when we need more housing.

Biodiversity net gain offers a contrasting story. What was notable about nutrient neutrality was that it arrived out of the blue, as court judgments tend to do, so those in the development world had no chance to repair or plan for it. In the case of biodiversity net gain, there was discussion and consultation, and the larger housebuilders have incorporated it effectively into what they are doing; but the smaller housebuilders, for whom the committee has great concern, have not managed to do that.

I remind noble Lords that, 20 years ago, 40% of homes were delivered by small and medium-sized housebuilders. That is now down to 10%. We have moved towards a highly oligopolistic market for the provision of homes and we have driven the small builders out, mainly through the costs of planning permission and regulation of this character. If you are building a small site, as smaller builders tend to do, incorporating biodiversity net gain is extremely difficult.

The larger housebuilders often get permission to deliver it off-site, and here we come to another conflict with government policy, because they do that by buying up agricultural land and turning it fallow, yet Defra tells us that it has an objective that we must continue to produce food for this country. At the moment, we produce 60% of our own food. The Defra target is that that figure should not fall, yet it is encouraging people to buy up agricultural land and turn it into a nature reserves, or whatever.

Finally on biodiversity net gain, there are perverse outcomes in relation to derelict sites. Everyone agrees that building on a brownfield site is better than building on a greenfield site. Yet a brownfield site, if left derelict, becomes biodiverse quite quickly. The weeds come, the birds, the bees and the rodents arrive, and so on. So, if you are going to take a brownfield site that has been left derelict for some time and build on it, the first thing you do is contribute negative biodiversity net gain, as you will flatten it and destroy all of that. What you have to supply to make up the difference and the additional 10% starts from a lower base and is a bigger challenge. We are perversely encouraging greenfield site development when we say we want to encourage development of brownfield sites.

Finally under particular problems, I come to the question of what is referred to as “water neutrality”. This is a slightly misleading expression as it suggests some parallel with nutrient neutrality. It is almost better described as “water sufficiency”. We do not have enough water for many of the developments. It was announced in the Sunday Times while we were doing our report that the Secretary of State had said there were going to be 250,000 homes built in Cambridge. It was pointed out that a planning application for 5,000 homes in Cambridge was being held up because the Environment Agency claimed there was insufficient water to supply them.

Happily, when we quizzed the Housing Minister on this, she was able to assure us that the Secretary of State had said no such thing and it had appeared on the front page of the Sunday Times entirely as a matter of speculation. So it was a great consolation to us to know that that article had no basis in the thinking of the Secretary of State, given that there is no water to service these 250,000 houses. But it does raise the question: why have we not built any reservoirs for 40 years, or whatever it is, that might help and contribute to our housing target?

I will be very brief now. Is there a problem? I think there is a problem at the moment. Does there need to be a problem? Of course not. We are a reasonably well-off country. A reasonably well-off country can both build houses and improve the environment. It should not be that difficult. There should not be a conflict. But it requires a vision and a plan—and, in the case of pollution in rivers, a plan that will take at least 30 or 40 years to deliver. It requires buy-in to that plan; it requires leadership and selling that vision, and then delivery with cross-party support.

I think that can be done. The current way is to go around insisting that you are entitled to have what you want now. Well, nobody is going to get what they want now. The only answer will be a long-term plan. Somebody has to take the lead. I look to my noble friend on the Front Bench to do that as she steps forward and explains how the Government are going to resolve these problems for future generations. Sadly, it is unlikely that she is going to resolve them for this generation. If we can cast light on that and point at a path, we can feel that we have done something very valuable.

--- Later in debate ---

[Lord Moylan (Con)]

My Lords, I thank all noble Lords who contributed to this debate. I add my particular congratulations and thanks to my noble friend Lord Banner on his maiden speech. Given the time constraints, I hope that the noble Lords who spoke will forgive me if I do not respond individually to each of them but instead confine myself to making a few remarks in response to the comments from my noble friend the Minister.

All of us in this Chamber are agreed, I think, that the objectives of building housing and of improving the environment are desirable and, if properly planned, attainable. That is also true of my noble friend the Minister; we are all as one on this. I was pleased to hear from my noble friend that the Government are doing various things they can boast of, but what I did not hear was an acknowledgement, as was well identified in this report, that the system we are operating with is broken—not necessarily fundamentally broken, but there are systemic problems—nor that the Government are going to grasp the problem. What I heard was that the Government are spending money, perhaps for the highly desirable objective of trying to work around the nutrient neutrality bans on housing, but not what they are doing to address the overwhelmingly predominant cause of the pollution in our rivers: farming practices and the discharge of sewage and other pollutants. It seems to me that the Government have not quite grasped the seriousness and systemic nature of the problems that the report identified.

I am gratified on behalf of the committee that the report itself attracted so many compliments from noble Lords who spoke. If I may say so, I am very proud of it. I am pleased that I can say I have been associated with it. It has lessons that any Government should seriously learn; that is true of not only current Ministers but Ministers who will hold office after the general election that we must expect this year. These problems are not going away; they require a long-term, well-thought-out solution. Whoever’s laps these problems land in, I hope they will find this report a useful guide to what they should do.

Motion agreed.

Social Housing: Right-to-buy Sales

Lord Moylan Excerpts

Thursday 18th April 2024 Lords Chamber

[Baroness Swinburne (Con)]

I remind the House of the statistic I gave in answer to an earlier question: of those homes, since 2010, 172,600 are for social rent.

[Lord Moylan (Con)]

My Lords, further to the question from my noble friend Lord Young of Cookham, perhaps my noble friend the Minister has not quite grasped the root of the problem. We are dealing here with small and medium-sized housebuilders. When they generate social housing to accompany their private sector developments, that social housing frequently comes in penny packets, isolated to one house on the site and so on. There are 13,000 of these now waiting to be built, but the housing associations are not interested in them—they are simply not interesting to housing associations, as they are too difficult to manage. It is unblocking that logjam that I think my noble friend was asking my other noble friend on the Front Bench to address herself to.

[Baroness Swinburne (Con)]

Indeed, this is where a local authority could step in to deliver more replacement homes. In the current economic climate, councils are able to continue to deliver 50% of their right-to-buy replacement homes as acquisitions each year until 2025, with a focus on the purchasing of new homes. That should help small, medium-sized and large housebuilders.

Leasehold and Freehold Reform Bill

Lord Moylan Excerpts

2nd reading
Wednesday 27th March 2024 Lords Chamber

[Lord Moylan (Con)]

My Lords, it is a pleasure to follow the noble Lord, Lord Stunell, with whom I served on the Built Environment Select Committee. I declare as interests that until August 2023, I was a member of the board of the Ebbsfleet Development Corporation, and that I own and live in a leasehold flat in London and own nominally a further leasehold flat as a will trustee, though I have no financial interest in it.

Some time ago, the block of flats in which I live was the second block in the country to exercise the right to manage when that legislative provision was introduced. It has worked extremely well for us. It has persuaded me very strongly that the control of the management of the building in which you live is the solution to many of the problems that leaseholders have experienced with their freeholders and managing agents. I am slightly baffled as to why the noble Lord, Lord Stunell, suggests that this is something that only the middle classes can attain to. The residents in the block where I live probably fit the description that he set out, but I do not understand why he says that this can be done only by them. We do not manage the building ourselves. We interview, appoint and periodically change a professional managing agent—a property agent—but that agent reports to us and is accountable to us, financially and in the decisions made. The structure also allows us to put in place a long-term plan. The legislation requires us to have a 10-year plan, which has made the prediction of service charges very much easier.

I strongly support those parts of the Bill aimed at giving residents greater control of the management of the blocks in which they live. However, if, as is not the case where I live, there is profound disagreement between the residents of a shared property concerning heavy expenditure, no legal structure will resolve those issues satisfactorily. We need to bring about a change in human nature, which I am afraid is probably beyond the capacity of your Lordships’ House.

I am concerned that the right-to-manage provisions appear not to extend to local authorities, even where the property is held outside the housing revenue account. That is a point that I may wish to probe further in Committee. I am also concerned that landlords will not be able to recover their legal fees from tenants as a result of disputes and about how that impacts on right-to-manage companies and any other form of tenant control that might be adopted as a result of the Bill. It would in effect make it impossible for the right-to-manage company to take action against delinquent leaseholders, because they do not have the resources or the deep pockets of these freeholders to take legal action and risk being left with large legal bills. I would like to probe that further as well.

Where the right to manage is not exercised, leaseholders must face the prospect of service charges being administered by or on behalf of the freeholder. This is the nub of the matter. I will come to ground rents in a moment; this is a much more important issue. I certainly take the view that freeholders should not make a penny out of service charges. There is no justification for them to do that. I would be perfectly happy if the Bill contained a provision preventing that from happening. I would also be happy if the Bill contained a provision saying that the total revenue to a managing agent was capped at a certain percentage of expenditure. I do not think that it requires, at least in this respect, for a regulator to enforce that. One could simply make such Bills unenforceable in the courts, so that the demand could not be collected.

Where I depart from the Government—and, I think, from nearly all noble Lords who have spoken so far—is on the provisions relating to the retrospective cancellation of ground rents, and indeed of marriage value. I am afraid to say that this is an astonishing proposition from a Conservative Government. As lawyers have said, it clearly threatens to damage the reputation of English law in the eyes of both domestic and foreign investors. It makes a wholly unjustified transfer of wealth from one group of persons to another—an estimated £40 billion being transferred from one pocket to another, with almost no justification involved. It will cause very serious difficulties for pension funds and other good-faith investors. I worry that there will be a tendency in this House not to engage properly with this issue, but to say, “Leave it all to the European Court of Human Rights, because they’re going to sue anyway; let them sort it out”. I think we have to engage with the equity of this issue: with its fairness and justification. I have great difficulties with it.

I come to the question of estate charges. I have not heard until today the expression “fleeceholder charges”; I think we are talking about the same thing. These were brought up with great eloquence by the noble Baroness, Lady Thornhill, and I share her outrage. The reason I mentioned my former membership of the board of the Ebbsfleet Development Corporation is that Ebbsfleet is being developed on this basis. The residents of Ebbsfleet will be paying charges for the maintenance of common utilities—parks, roads, amenities and things like that—which would normally be borne by a council.

I think this is the next great scandal approaching the housing market; I have actually said this in the House before. But I do not think it is the case that one should present this, as the noble Baroness did, as a case of wicked mis-selling by developers, because it is in very large measure attributable to councils that are simply resiling from taking on their duties. They will accept the additional council tax generated by the new properties, but will not take on the responsibilities for maintaining those common amenities. So there are at least two parties involved whose attitude on this needs to be addressed if we are to correct it.

I come finally to two lighter points. First, could we all agree to drop this use of “feudal” as a term of abuse? First of all, not everything about feudalism was bad, despite what the noble Baroness, Lady Finn, may choose to correct me on. But, much more importantly, the law of property in this country was totally reorganised by the Law of Property Act 1925. That made provision for a form of tenure where property was shared and gave it the name “leasehold”. That might be an ancient name—they have got rid of “copyhold” and all the other stuff that existed—but the fact is that leasehold as we know it today is not even 100 years old, let alone medieval. It is the creation of 20th-century law. We should recognise that and stop trying to demonise it by making out that it comes from the Dark Ages.

Finally, and very briefly, although this last point may be thought to stretch the scope of the Bill a little, I shall be making a personal effort at some point to try to persuade the Secretary of State that it is time to amend the building regulations to make starling nest bricks compulsory in new developments.

--- Later in debate ---

[Lord Truscott (Non-Afl)]

My Lords, it is a pleasure to follow the noble Lord, Lord Adonis. I will come to ground rents shortly. I declare an interest as a long-standing leaseholder.

The Bill before your Lordships’ House today is, in my view, profoundly disappointing, as one or two noble Lords have said. As the Secretary of State for Levelling Up, Housing and Communities, Michael Gove, said in the other place, leasehold is a “fundamentally unfair system”, and his aim is the effective destruction of the leasehold system. Leasehold is, in his words, “outdated” and “feudal”, although I know that the noble Lord, Lord Moylan, does not like that word. I agree with the noble Baroness, Lady Finn, that leasehold has no place in the 21st century. The Bill falls a long way short of its objective of the destruction of leasehold, as the noble Baroness, Lady Andrews, also said.

As it stands, the leasehold system is virtually globally unique—in a bad way—to England and Wales. It perpetuates a property market where around 10 million leasehold dwellers are at the mercy of freeholders and associated freehold professionals who sponge off them. Leasehold codifies and preserves, in the modern age, the medieval relationship between the serf and the lord of the manor, because that is historically where leasehold comes from. I agree with the noble Baroness, Lady Finn, on this. As a historian with three degrees in history, I can assure noble Lords that it is quite the historic pedigree. There is a gap between those who own property outright and those who do not. This applies not just to the great estates that still own huge chunks of prime London and other areas but our country as a whole.

The Secretary of State, Mr Gove himself, said in the other place that the Government would destroy the feudal leasehold system:

“We will do so by making sure that we squeeze every possible income stream that freeholders currently use, so that in effect, their capacity to put the squeeze on leaseholders ends”.—[Official Report, Commons, 11/12/23; col. 659.]


The noble Baroness, Lady Thornhill, repeated this. We hear that Mr Gove is having trouble fulfilling the Tories’ election manifesto pledge to reduce all ground rents to peppercorns. The noble Lord, Lord Adonis, referred to this. But Mr Gove is being opposed by the Treasury, Downing Street and freeholder interests. Meanwhile, as noted in the debate, the Competition and Markets Authority has ruled that there is no legal or commercial justification for ground rents. Ground rents provide no service and are purely rent-seeking.

I have very little sympathy for the self-serving arguments of vested interests that want not only to water down the Bill further but to emasculate it completely. The effect of reducing ground rents to peppercorns is exaggerated by the pension industry and freeholder lobby groups. I do not agree with the noble Lord, Lord Moylan, on this point. Some are hiding behind the European Convention on Human Rights and the right to property. The noble Lord, Lord Adonis, referenced this. Apart from this making an excellent case for an opt-out from the ECHR, which I would have thought the noble Lord, Lord Moylan, would welcome, I point out that the rights of leaseholders need protecting too.

We were told that marriage value was to be abolished under the Bill—

[Lord Moylan (Con)]

I have never actually argued that we should withdraw from the European Convention on Human Rights. I have an open mind.

[Lord Truscott (Non-Afl)]

I did not say that at all. I said that I would have thought that the noble Lord would welcome an opt-out from the ECHR on this. If that is not the case, I am happy to accept what he says.

Going back to marriage value, I do not think that marriage value should be replaced with a deferment rate that makes lease extensions even more expensive than they are now, because the deferment rate that the Government are talking about setting is merely marriage value by another name, and it can end up with leaseholders paying even more for lease extensions than they pay now, because it depends on the rate. In my view, His Majesty’s Government should completely abolish the outmoded concept of marriage value based not on what a property is currently valued at but on what a freeholder imagines it may be worth in the future. However, I welcome the Government’s commitment to an online calculator, so at least leaseholders know what the cost of extending their lease might be.

I listened carefully to the Minister’s opening speech, and I hope that she can assure the House that, when the Bill becomes law, it will indeed be cheaper and easier for existing leaseholders to extend their lease or buy their freehold. The greater transparency on charges, including insurance, and the end of the unfair presumption of leaseholders always paying all the landlord’s legal costs is a step forward. As it stands, the system is heavily weighted in favour of the landlord or freeholder. Any legal challenge is fraught with risk, uncertain and extremely costly. Very few leaseholders attempt it. As noble Lords have said, the stories of excessive and padded service charges and extortionate insurance premiums are legion and endemic. These abuses must be brought to an end as soon and as far as humanly possible.

The extension of right to manage in residential blocks is long overdue. I do not accept that mixed residential and commercial blocks cannot be managed by right-to-manage companies, or that investments will dry up as those who live or invest in such blocks are given more say over how they are run.

I regret the absence of the regulation of property management agents, as the noble Lord, Lord Best, has repeatedly raised, or even an insistence that they should be trained and qualified. Property agents can control millions of pounds, and the standards of some of them are unbelievably poor. I know of no other body that manages potentially such large sums of other people’s money that is wholly unregulated. Voluntary codes and redress schemes are not enough.

Commonhold is once again being insufficiently promoted by His Majesty’s Government, as mentioned by the noble Lord, Lord Young of Cookham, and others, including the noble Baroness, Lady Taylor of Stevenage. It may be unpopular with developers but I believe it offers a realistic alternative to the flawed leasehold system.

On forfeiture clauses in leasehold, which a number of noble Lords and the Minister mentioned, although I agree that no one should lose their home for service charge arrears of a few hundred pounds—these can be dealt with by the county court and bailiffs—forfeiture clauses can be a useful deterrent to other breaches of the lease that are otherwise difficult to enforce, such as persistent anti-social behaviour. I look forward to these and other issues being fully debated as the Bill progresses through your Lordships’ House.