Leasehold Reform (Ground Rent) Bill [HL]

Lord Stunell Excerpts

Consideration of Commons amendments
Monday 7th February 2022 Lords Chamber

In conclusion, I hope that noble Lords will accept all the amendments made in the other place, and I beg to move.

[Lord Stunell (LD)]

My Lords, I rise to speak on the amendment in my name, which refers to Amendment 6, to which the Minister has just spoken. I hope I am fully in order to do that.

[The Deputy Speaker (Lord Geddes) (Con)]

If I could interrupt the noble Lord, the Question to the House was that we agree Amendments 1 to 5 en bloc. We will then come to Amendment 6.

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Moved by

[Lord Stunell]

Leave out “agree” and insert “disagree”.

[Lord Stunell (LD)]

My Lords, I rise to speak on Amendment 6. I should start by saying that I am the joint owner of a leasehold property, but we got our lease extension some seven or eight years ago—outside the scope of the Bill. Also, both now and earlier the Minister has been very generous with his time in discussing the progress of the Bill. I very much thank him for that and for the great courtesy and good humour he has always shown in doing so.

Clause 8 is a duty to inform the tenant. I was very disappointed to find that the Commons, led by the Government, thought that that was an appropriate safeguard to take out of the Bill. I have listened carefully to what the Minister said by way of a substitution and I will cover that in my further remarks.

First, the Minister has accepted the evidence that the noble Baroness, Lady Grender, among others, brought forward in Committee: that there really is a loophole and it needs to be tackled. The loophole is one that may be exploited by unscrupulous landlords—a minority of landlords, certainly, but ones who are well practised in being unscrupulous. It is a real-world issue. Of course, they are often aided and abetted by their in-house or tame lawyers who are helpfully acting for both parties and do not necessarily spend too long explaining what the hapless leaseholder is being invited to sign.

We hope very much that the Bill will outlaw that practice, but it will not do so immediately. The purpose of the original amendment that your Lordships sent back to the other place was to effectively freeze the imposition of any such unfair terms meanwhile. The Minister has understandably exaggerated the difficulties of Clause 8, but it actually requires that, when a tenant and landlord are about to commence negotiations, the landlord has a duty to inform the tenant of the existence of this Act and the fact that, in a short period of time, they would essentially be able to carry out their transaction for free, whereas in the intermediate period they would do so under the existing regulations, where it is commonplace for escalation clauses and so on to be built into a lease, which would then be an enduring one. There is clearly a temptation for the unscrupulous to do that. You can see the marketing pitch: “New lamps for old”—or rather “New leases for old”—an offer of a VIP lane to leasehold extension, with legal fees waived if you do it by 31 July. Unwary leaseholders could well fall for that, perhaps prompted to go for it by the knowledge that they have only, say, 20 more years on their lease, and perhaps overlooking the fact that it would essentially be free if they waited until 31 July.

I have chosen that date purely for illustration, because the fact is that the Minister has not told us when the new provisions will become operational; I hope he will be able to enlighten us on that point shortly. The window of opportunity for this unscrupulous behaviour to carry on is between now and the moment when this provision comes into force. I want to hear exactly what the Government intend to do to shut that window at the earliest possible opportunity.

What is being offered instead? Superficially, it certainly sounds very plausible, and I hope that it will turn out to be as robust as the Minister hopes it will be. I hope that it will reach every leaseholder, because what is being substituted is an intention in Clause 8 that is a transactional one that would come into play only if a particular lease was going to be extended or was thought likely to be extended, for a general one—so we have a popgun firing at every leaseholder rather than simply providing a provision for landlords to act on at a time of leasehold extension.

I am very pleased to hear about what the Minister had to say about getting in touch with legal firms and those who represent leaseholders and others. I find that a very satisfactory part of his reply.

I would say that a couple of press releases in the ordinary course of business are unlikely to be very effective. The Minister might perhaps like to emphasise how this communications plan will take place. Is there a budget for it? Is it a real-life thing or just a piece of ministerial gloss? I know that the Minister does not go in for ministerial gloss, but I would like an assurance that we will see a real effort made to make sure that this is closed.

When exactly will it be closed? Clause 26(2) says that this will come into force

“on such day as the Secretary of State”

determines. Is that soon, shortly, in the summer, this year, next year, sometime or never? The longer the window stays open—the longer the gap between now and when the Bill’s provisions come into force—the more the risk and the more difficulty there is.

So I would like to hear an assurance from the Minister. Can he give us a date on which this provision will come into force so that we can hold him accountable? Perhaps he could also comment on whether we will get the second leasehold Bill, which he spoke of frequently, in the forthcoming Queen’s Speech? I look forward to hearing what the Minister has to say in respect of this and will listen carefully. I beg to move.

[Baroness Hayman of Ullock (Lab)]

My Lords, I have not previously spoken in the debates on this Bill, but I will be brief. I start by thanking noble Lords who have done a lot of work to improve this much-needed legislation. The amendment in the name of the noble Lord, Lord Stunell, is a welcome reminder that the Bill lacks any obligation for landlords to alert leaseholders in advance of changes relating to ground rents and leasehold extensions. We fully support the noble Lord’s amendment, which seems to be an entirely proportionate measure and in no way presents an obstacle to the core provisions of the Bill.

The Government have been unable to bring forward any safeguards to address this specific power imbalance at the expense of leaseholders. Without it, we believe that the legislation remains flawed. The relationship between leaseholders and landlords should be defined by the principle of transparency and accountability—as, in fact, the Minister agreed in his opening remarks—but this is simply not possible without provisions such as these. So I ask the Minister, even at this late stage, to provide further assurances that have not previously been forthcoming to allay the concerns from across the House.

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[The Deputy Speaker (Baroness Barker) (LD)]

My Lords, the Motion is that this House do agree with the Commons in their Amendment 6. As many as are of that opinion will say “Content”. Lord Stunell?

[Lord Stunell (LD)]

Well, if that is the Motion being put to the House, that is fine. I beg leave to withdraw my amendment—although I do so a little grumpily and I shall be keeping a very sharp eye on the Minister.

Amendment to the Motion on Amendment 6 withdrawn.