Leasehold and Freehold Reform Bill

Lord Young of Cookham Excerpts

Committee stage
Wednesday 1st May 2024 Lords Chamber

[Lord Young of Cookham (Con)]

My Lords, it is a pleasure to follow the noble Earl, Lord Lytton, who has been at the forefront of the campaign to extend protection to leaseholders since the Building Safety Act was passed. I say at the beginning that I will miss the contributions to our debates from the noble Lord, Lord Stunell, who was a regular contributor to housing debates and spoke with great authority.

This group of amendments is for many leaseholders the most important, and it differs from the rest of the Bill. The rest of the Bill gives rights to leaseholders that they did not have when they bought their lease. This group restores rights that leaseholders thought they had when they bought the lease but have now discovered that they did not. That right was to live in a building that complied with the safety regulations at the time. These leaseholders took all the necessary precautions, employing professional people before buying, but now find that they are faced with unaffordable bills, unsaleable properties and, quite often, repossession. As the noble Earl referred to, the Sunday Times revealed that more than 15,000 residents have been forced to leave homes due to fire or fire safety defects. These decants are on the rise, with residents decanted from 21 buildings last year. Until these injustices are addressed, the Bill, with its new rights, is meaningless to those leaseholders.

I welcome the steps the Government have taken through the Building Safety Act, and I am grateful to my noble friend the Minister for patiently listening to me during our many meetings. But despite the steps forward in recent years, there is still a gap between what the Government promised at the outset and where we are now. I will not repeat the quotes I gave at Second Reading but here is one I did not use, from Michael Gove:

“Most importantly, leaseholders are shouldering a desperately unfair burden. They are blameless, and it is morally wrong that they should be the ones asked to pay the price”.—[Official Report, Commons, 10/1/22; col. 283.]


I will come back in a moment to those who fall outside the protection.

Amendment 102 asks for a progress report. It covers the same ground as my Amendment 101, which was down for Monday but which I was unable to speak to owing to an aggressive Covid jab over the weekend. I am grateful to Giles Grover and the team at End Our Cladding Scandal for their briefing.

According to the department’s own figures on overall remediation, of the 4,329 buildings identified with unsafe cladding, over half had not started remediation at the end of March this year—seven years after Grenfell. Only 23%, 976 buildings, have completed remediation works. Within that overall figure there are 1,501 buildings 11 metres and over in height that have life-critical fire safety defects and where developers have committed to remediate or pay to remediate, but over half have not started remediation. Some 1,001 of the developers’ buildings have not even been assessed.

Looking at the cladding safety scheme, there are now 1,105 buildings within the scheme after the pilot was launched in November 2022. Work has been completed on not one. Work has started on two and the rest are in various stages, the largest number being in “pre-application”. Nor am I reassured by the statement by the department:

“All residential buildings above 11 metres in England have a pathway to fix unsafe cladding, either through a taxpayer-funded scheme or through a developer-funded scheme, protecting leaseholders from these costs”.


Having a pathway is like a traveller having a map. It does not follow that he has begun his journey. Where there is grant funding, the money is not being disbursed at pace. Because of these delays, the department had to surrender nearly a quarter of a billion pounds to the Treasury last year. We need a firm grip and oversight of remediation through the available schemes—which have no visible oversight or co-ordination—and that is what Amendment 102 provides.

The rest of my amendments have broadly the same objective as those tabled by the noble Earl, Lord Lytton, while getting there by a slightly different route. They would ensure that the Building Safety Act operates as intended, as was the Government’s stated objective in the King’s Speech last year. On Amendment 96, on buildings under 11 metres, the department’s view was set out by the Minister, Lee Rowley, on 22 April:

“Of those, we can count on one hand where there has been a problem. We are working with each of those three buildings to make the progress we need to make”.—[Official Report, Commons, 22/4/24; col. 636.]


Those three require full remediation but leaseholders are now reliant on the good will of their developer, without any mechanism in place to compel work to take place to the necessary standard. In Inside Housing on 26 April, it was reported that there are 586 homes under 11 metres in Barnet with defective cladding. One 25% shared owner has a bill of £23,000, and this falls outside the Building Safety Act. The other 75% is owned by a housing association, Notting Hill Genesis, which has said that under the terms of the lease the shared owner is responsible for all remediation costs. Mortgage lending on buildings under 11 metres is still inconsistent. Based on data from four or five mortgage lenders, an EWS1 certificate was deemed to be required for mortgage valuations on approximately 2,000 low-rise flats last year, although the Government have said that it is not necessary.

Insurance in low-rise buildings is another quagmire, with several insurers mandating work as a requirement of providing cover. There are many cases of difficulties with insurance; I cite only one. Aviva was the only insurer that would give cover on one low-rise block, but on the condition that HPL cladding would be removed within an urgent timeframe of four months. The judge at the First-tier Tribunal hearings was satisfied that this was the case, having seen the correspondence. There was no means of funding other than leaseholders. Cladding was removed in 2022 as instructed. It has taken two years to raise funds to replace the cladding, with the replacement due to begin in February 2024. The total cost will be £45,000 per leaseholder.

I remain concerned over resident-owned—or enfranchised —buildings, which were referred to by the noble Earl, Lord Lytton, and are covered by Amendment 99. Last November the department issued a press release confirming that this Bill would

“include measures to amend the Building Safety Act 2022 to make it easier to ensure that those who caused building-safety defects in enfranchised buildings are made to pay”.

Five months later, it remains unclear what measures these will be. Those who were encouraged by the Government to take ownership and control of their buildings remain beset with uncertainty on how and when their homes will be made safe. They do not have the protection afforded to those who did not enfranchise. The same press release also said that the Government would ensure that

“the leaseholder protections are not unfairly weighted against those who own properties jointly”.

This is addressed in Amendment 100. This is known as the marriage penalty, whereby a couple owning four properties together do not have this part-ownership accounted for in the leaseholder protection, despite tax law recognising this pro rata weighting. A call for evidence on this was opened in early April. However, time seems to be running out for the Government’s commitments to be kept in respect of joint-owner leaseholders—unless my noble friend can tell me otherwise.

The Secretary of State has repeatedly expressed his desire to ensure that

“those with the broadest shoulders must pay”,

so Amendment 100 would also help those who invested in buy to let but whose shoulders are not broad. It would ensure that all received protection for the first three flats that they owned, rather than the current cliff edge, and introduce a leaseholder wealth criterion, which is the same basis on which freeholders and developers are tested to assess whether they have the means to pay. The department is well aware of the case of Malcolm in Salford, a leaseholder of a number of properties with a total value below £1 million, who asked the department for help two years ago but has now been forced to enter into bankruptcy. Who will now pay his share of the remediation costs?

Finally, that amendment would end

“the distinction between qualifying and non-qualifying leases once prescribed conditions are met”—

once remediation is complete. This would ensure that the value of flats owned by leaseholders who are still deemed to be non-qualifying would be returned to somewhere near their market value without the severe impairment that non-qualifying leases currently suffer, even where no work is required.

Without this set of amendments, ordinary people across the country will still shoulder a desperately unfair burden, still face financial ruin and still be no closer to moving on with their lives, all at odds with the assurances that Ministers have given. I know my noble friend is sympathetic and I look forward to her reply.

[The Lord Bishop of Lincoln]

My Lords, I stand to support the amendments in the name of the noble Lord, Lord Young of Cookham. My right reverend friend the Bishop of Manchester has put his name to the amendments and regrets that he cannot be in his place today. As we have heard, the Building Safety Act 2022 contained welcome measures to address historic building safety defects, but the fact remains, as other noble Lords have noted, that it does not go nearly far enough. Seven years on from the Grenfell fire, only 21% of high-rise blocks have been fully remediated—and they are the ones that are eligible; there remain gaps in provision where leaseholders are disqualified for such arbitrary reasons as their block being 10.9 metres tall rather than, say, 11.1. The Act disqualifies huge numbers of people who are now trapped in potentially unsafe flats which they will struggle to sell. They might face very high bills through service charges and insurance premiums.

My right reverend friend’s diocese of Manchester has been identified, as mentioned by the noble Lord, Lord Young, as one of the areas most at risk from inadequate cladding. More than 20 buildings have been identified with ACM cladding in both Manchester and Salford, and in Salford between six and 10 of those are yet to be remediated. The measures are not being implemented fast enough, which is why I also support the amendment from the noble Baroness, Lady Pinnock, which would require a statement to Parliament on progress, because, clearly, more scrutiny is needed. But for those buildings which are ineligible for support entirely, a statement to Parliament does not go far enough. Does the Minister believe that living on the top floor of a block of 11.5 metres is significantly safer than living on the top floor of a block of 11 metres, where both have flammable cladding? Beyond this obvious safety issue, my right reverend friend has received correspondence evidencing the difficulties that some leaseholders face in selling ineligible properties due to the difficulties in obtaining a mortgage on those flats. Will the Minister commit to ending this injustice once and for all?

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[Baroness Hayter of Kentish Town (Lab)]

My Lords, I declare a non-financial interest in having worked with the Property Institute and other groups that have supported this area for many years. Also, as the noble Lord, Lord Best, alluded to, I chaired a committee working on one aspect of this matter, which I will come to shortly.

As the noble Lord said, it is quite unusual for this call for regulation to come not only from the consumers who would benefit but from the professionals already working in the field. It is virtually unanimous; in fact, among the organised groups, it is unanimous that this is the regulation under which they would like to work. The agencies and their representative bodies are waiting for this to happen.

As has just been described, in a way the reasons are obvious, not only outside but within this House. We know that, as was mentioned, the Best report was welcomed, I think universally; the Select Committee on Industry and Regulators has called for it to happen; and in the world outside there is still an expectation—a hope—that this might happen. A number of us want an election soon but we could even put it off—if that would be the only thing needed to get this through, we will put up with more of this Government.

It is fairly obvious that housing is not just bricks and mortar. Homes are fundamental to people’s financial and emotional well-being. Get this right, and their own quality of life improves dramatically. Get it wrong, and it is debilitating, stressful and expensive. It starts, of course, with the purchase, or indeed the sale, of a leasehold property, which is a more complicated transaction than simply buying a freehold house. So even at that stage, transparency, clarity, openness and proper explanation by estate agents are essential, and so, therefore, is the need for their expertise in these specialist areas of purchase and sale.

However, even once it has happened and you are living in the leasehold property, that can be a particularly fraught arrangement. With leasehold management there is a three-way relationship between the landlord, the resident—that is, the leaseholder or the owner—and the managing agent. Marriages with three in are always a bit complicated, but in this case, of course, you have the managing agent, who is appointed by the landlord but who has duties and, even more importantly, a close working relationship with the leaseholder. That adds an element of necessary expertise in how to handle it.

As important is the complexity of the law involved in this. It covers particular rights that are different from those associated with a freehold house. There are the safety issues, which have been well rehearsed in Committee. There are consumer issues and fiduciary duties, as well as myriad external bodies and requirements that have to be met. Frankly, managing agency is no task for an amateur. Agents need to be trained in ethics as well as the law and building regulations, and they need to be checked to ensure that they are fit and proper to handle both people’s money and their safety, and to prepare all the legal and other paperwork essential for running a complex operation. That is why we require regulation and oversight of this important profession.

As was mentioned, a code of conduct is needed across the industry, not simply to provide the requirements on agents but, importantly, to enable consumers to understand and thus to be able to enforce their rights. As the noble Lord, Lord Best, said, a cross-industry group that I had the privilege to chair and whose outcome was welcomed by the department has prepared the code and it is ready and waiting, so the work in setting up this regulatory body would be less than otherwise. It is there, ready and waiting for the legislation to make adherence to that code a legal requirement. That is the key to professionalising the industry and enhancing the experience of all who deal with managing agents—landlords and leaseholders alike.

It is not sufficient, welcome though it might be, to have an ombudsman to adjudicate and put things right when things have gone wrong. We need to prevent problems arising, which means raising standards, ensuring compliance, requiring training and qualification, and continuing professional development in a world of statutory requirements that seem to be changing, not just year by year but month by month, as is the technology involved in building, which we know about.

The Best way is the only way. Let us give the noble Lord what he has been asking for for so long and just get this report into law—let us get on with it. I am delighted to support Amendment 94.

[Lord Young of Cookham (Con)]

My Lords, I will add a very brief footnote to the excellent speeches made by the noble Lord, Lord Best, and the noble Baroness, Lady Hayter.

The point I want to make is that the market is changing. We are moving away from a position where the freehold of blocks of flats was owned by the Grosvenor estates, Cadogan Estates, the Portman Estate —professional freeholders—and they were well able to choose responsible managing agents and keep an eye on them. We are moving away from that to a position where more and more of the blocks of flats are owned by the leaseholders. It is a trend that I that I welcome—indeed, the Bill accentuates that trend—and eventually we will end up with commonhold. Against that background, it becomes even more important that the managing agents should be professional. The background is changing and the need for this is now much more urgent than it was a few years ago.

I very much hope that the Government will be able to respond to the eloquence of the noble Lord, Lord Best, and introduce regulation of managing agents. However, if they cannot, he hinted at two intermediate steps, which I think the Government might be able to take. One is requiring mandatory qualifications. As the noble Lord said, these have already been introduced for the social housing sector and could be expanded to protect leaseholders and private tenants. The second thing the Government could do, which the noble Lord also mentioned, is to introduce the mandatory code of practice, drawing on his working group on the regulation of property agents—this case was well made by the noble Baroness, Lady Hayter.

The Government could do one final thing which has not been mentioned so far. There is a government document called the How to Lease guide, and they could make that a mandatory document to be shared with consumers who purchase a leasehold property, in exactly the same way in which landlords and agents must provide the How to Rent guide to tenants. Therefore, if my noble friend cannot go the whole hog, I very much hope that she can smile warmly on intermediate steps, which might then pave the way to the final introduction of regulation of managing agents in the very near future.

[Lord Truscott (Non-Afl)]

My Lords, I am pleased to follow the noble Lord, Lord Young of Cookham, and I agree with the comments that he just made. I remind the Committee that I have been a leaseholder for around 30 years, and over that time I have dealt with several property management companies.

I wholeheartedly support Amendment 94 in the names of the noble Lords, Lord Best and Lord Young of Cookham, and the noble Baronesses, Lady Hayter of Kentish Town and Lady Taylor of Stevenage. I pay tribute to the dogged determination of the noble Lord, Lord Best, in pursuing the reform and regulation of property agents over a number of years, and, of course, to the sterling work of the noble Baroness, Lady Hayter of Kentish Town.

I fail to see why His Majesty’s Government should not support this amendment in full. I also fail to see why the Government have failed to bring forward their own measures to regulate property agents, which, as we have heard, are long overdue. I know that the Minister will say that this is all very complicated and requires detailed and thoughtful legislation, that she will describe how property managing agents are making voluntary strides to improve their standards and operation, and how there are redress schemes in place. However, I do not really buy that argument. This amendment gives His Majesty’s Government two years to lay down regulations to regulate property agents. That is enough time even for this Government, and if not them, then certainly for the next one.

No other sector I know of handles potentially millions of pounds of other people’s money but is unregulated by statute. The City of London looks at property management companies aghast given the lack of oversight. I will give some practical examples of why property management companies should be effectively regulated, following the comments of the noble Lord, Lord Best.

Leasehold and Freehold Reform Bill

Lord Young of Cookham Excerpts

Committee stage
Wednesday 24th April 2024 Lords Chamber

It is an entirely political choice if the Secretary of State sets the deferment rate without any constraints—it hands money to one class or the other as seems politically suitable to you. We are asked to agree this measure with no indication, as my noble friend has said, as to what deferment rate the Secretary of State will choose. All this—whatever your views on the rights and wrongs, whether leaseholders are good people or bad people, what you should do about charities, and everything else—is profoundly unsatisfactory. We are moving from an evidence-based system to one that is essentially arbitrary. We are giving a power that is inherently political, not financial. We are doing this with no sight whatever of what the decision of the Secretary of State might be. Why on earth would we agree to this? Whether my noble friend’s solution is the correct one or we are better sticking with the current system is an important question, but why are we making changes in the first place and giving these powers away with no understanding?

[Lord Young of Cookham (Con)]

My Lords, I am grateful to my noble friend Lord Borwick for allowing what I hope will be a short debate on the deferment rate. I am conscious that I am a very inadequate substitute for the noble Lord, Lord Forsyth.

The deferment rate is very important, as my noble friend Lord Moylan explained. It is the current value of the vacant possession of a flat when the lease expires. According to what deferment rate you choose, it affects the premium that is paid by the leaseholder. My understanding is that the current deferment rate was set in a Court of Appeal case in 2007—the so-called Sportelli case—which ended up with the two rates that I think my noble friend Lord Moylan referred to: 4.75% for houses and 5% for flats. That was fixed nearly 20 years ago. There was a recent appeal decision in a Welsh court—I have the name in front of me but, like many Welsh names, it has a large number of consonants and very few vowels, so I am afraid that I cannot pronounce it. The appeal failed because the land valuer was not an economist, but it opened the way to an appeal to alter the rate. My noble friend Lord Moylan touched on my first question: when will the Secretary of State come to a decision? It affects what leaseholders do at the moment: whether they should wait for a preferential rate, which might be fixed by the Secretary of State, or whether they should try now, in case it moves the wrong way.

I want to raise a totally different point. At the moment, there already is a deferment rate set by the Government under the personal damages Act 1996. Using exactly the same basis as a deferment rate for leasehold, the Lord Chancellor sets the deferment rate for personal injury damages. Unlike what is proposed in this Bill, that rate changes quite often. In 2017, the rate was changed, and it was a negative rate for some time. It was changed again in 2019, and then again in 2023. It is now 0.5% for short-term cases and 3% for long-term cases. My question for the Government is: will we have two separate Secretaries of State fixing deferment rates at different times and coming up with different rates, or is there a case for rationalising the Government’s view as to what is an appropriate deferment rate?

One opportunity would be for the Secretary of State simply to replicate what the Lord Chancellor does. The Lord Chancellor has recently had a consultation on how to fix deferment rates and has come up with a short-term rate and a long-term rate. It seems odd to me to have two totally separate systems in the Government for basically coming to the same decision—that is, deciding what the long-term rate is on a risk-free investment. I wonder whether my noble friend the Minister has had discussions with the Lord Chancellor’s department to see whether we can have a common approach to this important issue.

[Baroness Pinnock (LD)]

My Lords, for me, this is a very technical set of amendments, but they are very important. As we have heard, this issue can have significant implications.

I always go back to first principles. One of the aims of the Bill is to make enfranchisement cheaper than it is currently, and so more readily available. However, as we have heard, that will entirely depend on the deferment rate and how it is set. My understanding was that the current deferment rate was set by the Court of Appeal in 2007, as the noble Lord, Lord Young of Cookham, said. The debate is around whether it is right for that to continue; whether another process should be used, such as that proposed by the noble Lord, Lord Borwick, in his amendment about using the bank rate as a base for setting a deferment rate; or whether, as in the Bill, the responsibility is passed to the Secretary of State to determine the deferment rate. I have to agree with the noble Lords, Lord Moylan and Lord Young of Cookham, that the latter does not seem right.

When I was investigating the deferment rate issue, I noticed that Homehold Services Ltd gave evidence to the Commons Public Bill Committee that was very telling. It criticised the fact that the “applicable deferment rate” was referenced throughout the Bill

“without specifying what this will be”.

It provided an example of what effect a change in the deferment rate could have on the cost of enfranchisement. It said:

“A lease extension … on a £200k flat with 80 years unexpired and no ground rent would be c. £4,000”.


That is the example given by Homehold Services Ltd; as it is one of the experts, I thought it might be right. It continues:

“If the deferment rate was reduced from 5% to 4%, the premium would increase to c. £8,500. At 3.5% it would be … £12,000”.


Those small changes in percentages have very high consequences for the leaseholders. This is important—that is what the evidence told me when I read it.

The argument from Homehold Services Ltd was that the deferment rate must be set no lower than that set by the appeal judgment in 2007. Otherwise, the consequence is that the rate can escalate considerably, as the noble Lord, Lord Moylan, pointed out. The cost of enfranchisement would increase, removing the ability of many leaseholders to continue with the process—contrary to one of the objectives of the Bill. Can the Minister say what consideration the Government have given to the deferment rate?

The noble Lord, Lord Young of Cookham, said that the Chancellor’s department has had a consultation on this and come up with some figures. Why are those not being adopted in this instance to set the rate in the Bill? As we have heard, it is very important to know exactly what the deferment rate will be. I do not believe that it is satisfactory to leave the applicable deferment rate to be set by a statutory instrument some time in the future. Surely, if the Government’s intentions are as they are set out in the Bill—to make it cheaper for leaseholders to enfranchise—one of the key rates must be this one. Therefore, I would have thought that we would want to see it set during the course of this Bill, rather than wait for a statutory instrument.

I have a lot of sympathy with the arguments that have been made by the mover of the amendment and others about the need for certainty here, rather than a principle and uncertainty as to the exact figure at which the deferment rate will be set.

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Moved by

[Lord Young of Cookham]

54: After Clause 45, insert the following new Clause—
“Crown Application(1) For section 33 of the LRA 1967, substitute—“33A Crown land(1) References in this Act to “Landlord”, include the Crown Estate and the Crown where the Crown Estate or the Crown hold freehold land subject to long leases, howsoever such freehold land is held or acquired, including land falling to the Crown as demesne, or by Escheat.(2) The prevailing standard method of dealing with lease enfranchisement in the market, is the method of valuation and calculation of fees for enfranchisement, the extension of leases, or grant of a new freehold title for Escheat land held by the Crown Estate, the Crown, in accordance with this Act, and applies to all leaseholders seeking to enfranchise their leases.”(2) LRHUDA 1993 is amended as follows.(3) Omit section 88.(4) For section 94, substitute—“94A Crown Application(1) References in this Act to “Reversioner” and “Landlord”, include the Crown Estate and the Crown where the Crown Estate or the Crown hold freehold land subject to long leases, howsoever such freehold land is held or acquired, including land falling to the Crown as demesne, or by Escheat. (2) The prevailing standard method of dealing with lease enfranchisement in the market, is the method of valuation and calculation of fees for enfranchisement, the extension of leases, or grant of a new freehold title for Escheat land held by the Crown Estate, the Crown, in accordance with this Act, and applies to all leaseholders seeking to enfranchise their leases.””

[Lord Young of Cookham (Con)]

My Lords, this amendment deals with the obscure but important issue of escheat, which I suspect will empty the Chamber. When I was a Minister and put the 1993 leasehold Bill on the statute book, I made a statement to Parliament that, although the Crown was not bound by the various leasehold reform Acts, it would in practice follow the provision of such Acts relating to enfranchisement, lease extensions and collective freehold purchases.

However, there is a difference between where the Crown holds a freehold and accepts the responsibility of a landlord and where the Crown holds the land in escheat. William the Conqueror decreed that, henceforth, all land in the realm belonged to the Crown. The Crown would grant fee simple—freehold interests held from the Crown—on the one hand and leasehold interests on the other. Thus, where a freeholder dies without a beneficiary who can inherit the land, or where a freeholder company is liquidated, the asset falls back to the Crown. If the Treasury Solicitor disclaims the land, it falls into escheat and the original title is extinguished.

This creates a problem, and I apologise for talking legalese. If a non-escheat freehold is vested in the bona vacantia division of the Treasury Solicitor, existing tenants can, as per my statement to Parliament, serve notice on the Treasury Solicitor of their intent to enfranchise their leases, collectively or otherwise. The current government guidelines, set out on GOV.UK, then apply. That is form BVC4. The premium payable is calculated by a straightforward multiplier of the ground rent, plus a contribution to the Treasury Solicitor’s legal costs.

However, where land falling into escheat previously comprised a freehold subject to long leases, the Crown accepts no responsibility as the landlord. It neither collects the rent nor complies with the landlord covenants under the long leases. More importantly, with reference to escheat land, the Crown does not currently accept any responsibility under the leasehold reform Acts. This gives no opportunity for the long lease holders affected to extend their leases or purchase the freehold, pursuant to the provision of the leasehold reform Acts. They are left in limbo. It is worth remembering that, where properties are owned freehold by private individuals or companies, qualifying leasehold owners in those properties have a legal right under the Acts to enfranchise, unlike where the freehold is held in escheat.

The Crown can offer the sale of a new title, subject to the existing leases, or respond to an application by tenants to enfranchise but, crucially, it is not bound by any guidelines or formula, as would be the case under the said Acts. It arbitrarily sets its own legal and valuation fees without any mechanism for control. Equally, there is no formula for calculating the price, so in practice the Crown can ask what it wants, plus the costly fees of the private consultant lawyers and valuers, on a take-it-or-leave-it basis. This is at odds with its stated policy to return assets it controls to private ownership quickly and efficiently.

The impact of what I have just described clearly conflicts with the stated intent of the Bill—namely,

“to amend the rights of tenants under long residential leases to acquire the freeholds of their houses, to extend the leases of their houses or flats, and to collectively enfranchise or manage the buildings containing their flats”.

By way of illustration, I have been made aware of a case where the Crown Estate is demanding an inflated premium, plus expensive private consultant lawyers’ and valuers’ fees, which total four times the total cost of what the premium and fees for an enfranchisement would be under the BVC4 formula that I mentioned a few moments ago. This is not justifiable or equitable, and it is wrong that, where the asset is effectively controlled by the state, namely through part of the same government department, the Treasury, this behaviour should take place.

As the unexpired term of the leases becomes shorter, it becomes increasingly difficult and costly for these leaseholders to raise capital on the asset. The inevitable result is that many leasehold owners are unable to afford the inflated premium and the fees demanded by the Crown to ensure that the housing stock is compliant and fit for purpose. So long lease holders where escheat applies are left powerless and exposed to the whim of the Crown’s legal consultants and surveyor representatives. These anomalies need to be brought into the 21st century to keep in step with the intent of the Bill.

My amendment is designed to provide a level and equitable playing field for all long leasehold owners. The Crown must accept that all Crown land, whether held in escheat or otherwise, must be subject to the provisions of the various leasehold reform Acts, subject to specific exceptions only where land is of a nationally sensitive nature.

To conclude, I hope that my noble friend will undertake to get those assurances that I have just referred to from the Crown Estate and the Treasury. I beg to move.

[Lord Berkeley (Lab)]

My Lords, I follow that interesting speech by the noble Lord, Lord Young of Cookham, which explained his amendment clearly. It may be that the amendments in my name in this group, Amendments 93A and 106, are not necessary—but I am not certain yet, because it is a complicated subject, shrouded in mystery and secrecy sometimes. So I should like to speak to those two amendments as well and hope that we can have some good discussions, meetings and so on, between now and Report with the noble Baroness the Minister to see whether there is a solution.

My amendments refer only to the Duchy of Cornwall: let us be quite clear about that. That is partly because I do not think that the other two members of the Crown need it in the way that I am speaking, because they do not have lots of residential properties. Secondly, if one reads the Law Commission report, which went into some detail, one sees that the Crown Estates and the Duchy of Lancaster both agreed to comply with what the Law Commission recommended, whereas the Duchy of Cornwall did not. So we need to we need to consider some special legislation to cover just the Duchy of Cornwall’s ownership of land.

The other reason for saying this is that the Duchy of Cornwall, unlike the other two Crown groups, is in the private sector. It states quite clearly on its website that it is in the private sector. The argument is that it should be treated differently from other big estates, such as Cadogan, Richmond, Devonshire, and so on. They are all in the private sector and my understanding is that, whether they like it or not, they are going to go along with whatever happens with this legislation when it is accepted. But the Duchy of Cornwall will not do so.

I live in the Isles of Scilly, as noble Lords probably know, and I have a number of friends who have been trying to enfranchise and have been turned down. It is not a question of them looking for a 99-year or 999-year lease. Some of them want 50-year leases and they cannot have them, either, because the Duchy does not like it. So nobody who leases from the Duchy of Cornwall at the moment can enfranchise. That is unfair on the people who live there. The population is about 2,500 and they should be treated like everyone else in this country. Whatever the legislation says, they should do it.

The duchy’s argument, which goes to some length and is repeated in the Law Commission’s report, states all the wonderful things that the duchy does as a kind of landlord in Scilly. Well, it is not really true. The Scillies have a council, a local authority, like any other area. They have a Member of Parliament, water services and national landscape designation. I could go on with a long list of all the organisations, but the environmental concerns are properly looked after and there are even marine protected areas around there. I think the people of the Isles of Scilly would say that they are well set up to manage themselves, just like any other part of the UK. I am grateful to the Minister for meeting me and for the correspondence we have had, but trying to find some solutions is important.

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[Baroness Scott of Bybrook (Con)]

My answer is that I am not sure, but I will make sure that I let the noble Lord know. If we can do that, obviously we will.

[Lord Young of Cookham (Con)]

My Lords, I am grateful to all noble Lords who have taken part in this short debate. I am grateful to the noble Lord, Lord Mann, for reminding us that it is often a rather one-sided battle, with leaseholders confronted by freeholders with massive resources. I am grateful to the noble Baroness, Lady Pinnock, for her support for my amendment.

As far as the noble Lord, Lord Berkeley, is concerned, I have happy memories of replying when I was on the Front Bench to his Duchy of Cornwall Bill. He spoke at somewhat greater length on that occasion about the need for major reform of the Duchy.

On the specific issue that I raised, I am not expecting any legislative change because my noble friend said, quite rightly, that the Crown is not bound by legislation, but she said on several occasions that the Crown would act by analogy with the terms of the leasehold Acts. I think that gives me what I want, so long as it covers the Crown acting as freeholder as well as the Crown acting as owner of land in escheat. At the moment, that is not the case. At the end of my remarks, I asked whether my noble friend would be good enough to get the necessary assurance from the Crown Estate and the Treasury that they would deal with escheat applications in the same way as applications for where they are the freeholder.

I am grateful to my noble friend for her sympathetic reply. I think I can build on the undertaking that she has given to make some progress. I do not want to wait until the Law Commission has gone round the course all over again, whenever that may be. The leases that I referred to are coming towards the end of their time, and each delay adds to the potential cost for the leaseholders.

I hope we can make progress without waiting for a Law Commission report. It is simply a case of the Crown acting equitably and doing exactly what my noble friend has said: acting by analogy and delivering the laws that have been passed by Parliament. On that basis, I am happy to withdraw the amendment at this stage.

Amendment 54 withdrawn.

Leasehold and Freehold Reform Bill

Lord Young of Cookham Excerpts

Committee stage
Monday 22nd April 2024 Lords Chamber

Surely the Government realise that the exemptions provided for by Schedule 1 could render the ban meaningless and will mean that new leasehold houses are still built in significant numbers. Can the Minister offer us any reassurance on whether an impact assessment has been carried out on the effect of these exemptions on the overall ban? Will she consider amendments that will tighten the proposed exemptions to ensure that the majority of homes that come forward will be freehold? Can she enlighten us any further on what will happen about leasehold flats, which affect 70% of leaseholders?

[Lord Young of Cookham (Con)]

I want to raise a slightly different point from the one raised by the noble Baroness, who is worried that there are loopholes in the schedule. My concern is slightly different, in that the schedule currently bans a form of lease that is actually beneficial. I refer to an arrangement called Home for Life, which has been operating for some time and is based on somebody who is over 60 selling their home. Homewise, which operates Home for Life, then buys the property to which the person moves and grants them a lifetime lease. That enables them to vacate a large family home, gives them the security of the home they move to and, in many cases, releases a sum of money that enables them to expand their income.

There are a number of exemptions under the schedule; this scheme is not one of them. This is, in fact, contrary to what the Government said when they consulted on this a few years ago, when they made it absolutely clear that they would exempt these leases. I quote from paragraph 252 of the Government’s response to a consultation document, Implementing Reforms to the Leasehold System in England:

“It is not the intention of the policy to affect lease-based financial products (home reversion plans—equity release, home purchase plans—lifetime leases and Islamic/Sharia compliant finance), so long as they do not provide a loophole from which to evade the ban. For both home reversion and home purchase plans the provider acquires the freehold and the consumer has a non-assignable lifetime lease. Because these leases are not assignable to another party there is no risk of such leasehold houses coming onto the open market”.


They concluded:

“We will provide an exemption from the ban for these financial products”.


The product I have just mentioned falls squarely within the terms of the exemption that I just read out, but I am afraid it is caught by the Bill as it now stands. I hope my noble friend the Minister will be able to say that this is an unintentional capture of a worthwhile type of lease and that the Government will provide the necessary amendment downstream so that Home for Life can continue to provide a worthwhile service, which I do not think is a loophole of the kind described by the noble Baroness, Lady Taylor.

[Baroness Pinnock (LD)]

My Lords, this Bill is really very important. It has been a long time since Second Reading, so I think it is worth reiterating some of the fundamentals that we hope it will achieve.

The first is that this is obviously a huge opportunity to reform the leasehold/freehold property rights and relationships. That is certainly one of the key aspects that we on these Benches will pursue with vigour. It is also an opportunity to tackle the huge omissions in the Building Safety Act to provide remedies for those leaseholders and tenants living in blocks of flats that are under 11 metres or five storeys. As we have all through the debates and discussions on the Fire Safety Act, the Building Safety Act and the levelling-up Act, we on these Benches will continue to pursue the safety of leaseholders and tenants in those blocks of flats, because that is the right thing to do.

On these amendments, we on these Benches acknowledge that there will, of course, be areas in the leasehold/freehold arrangement where the abolition of leasehold impinges on other important rights, so we accept that there will be examples where an exception is justifiably made. However, the noble Baroness, Lady Taylor of Stevenage, is absolutely right to probe the reasons for these exceptions, in this group and in the following group, and has drawn attention to them individually. For example, the noble Baroness drew attention to a situation where the developer has a head lease and has yet to build out to the development. She asked the pertinent question of what happens if leasehold is going to be abolished for houses. Where does that fit in with a development that is ongoing that will be developed under the terms of a leasehold? That is not explained either in the Bill or in the Explanatory Notes.

We on these Benches understand the importance of this for historic estates that are now owned by the National Trust in England, Wales and Scotland. The purpose of the leases in those instances ought to be protected, because the overwhelming responsibility is the protection of our national heritage. That makes good sense. However, although the schedule provides details of which properties are eligible for what was described as “permitted leases” under the tribunal certification, what is not clear in either the clauses or the schedule, or in the Explanatory Notes, is what criteria the Government are using to enable some leaseholds to be described as permitted. Can the Minister provide the reasons for the choices made by the Government in determining permitted leases in Schedule 1? This is important because the legislation will be challenged in the future. It is therefore vital that, before we get to Report, we understand the reasons, as well as the purpose, behind the tribunal certification. Perhaps the Minister can provide the details of the regulations that are to be provided to the tribunal for making those decisions.

The two examples used by the noble Baroness, Lady Taylor of Stevenage, and the noble Lord, Lord Young of Cookham, relating to retirement housing and homes for life, strike me as being very important in our discussions. Those of us who have been involved in leasehold, and in the debate about leasehold and some of the criticisms of the way in which leasehold is implemented in practice, have been astonished by the way in which some retirement housing service charges have risen exponentially, without, it seems, any recourse to an explanation or a reduction. It is important to understand, for both homes for life and retirement housing—one of which is referred to in the schedule and the other which is not, as the noble Lord, Lord Young of Cookham has said—how protections will be provided for these very important areas of housing in order to provide protection for the leaseholders in these arrangements.

We support the probing amendments of the noble Baroness, Lady Taylor of Stevenage, and look forward to the detailed response, I hope, from the Minister.

--- Later in debate ---

I thank the noble Lord, Lord Young of Cookham, for bringing up Homes for Life. I do apologise, but I will look into this; I will come back to him and make sure that the House is aware of our response to that.

[Lord Young of Cookham (Con)]

I am most grateful to my noble friend for that undertaking, but I remind her that the Government said:

“We will provide an exemption”,


for these types of scheme.

[Baroness Scott of Bybrook (Con)]

I have noted that.

The noble Baronesses, Lady Pinnock and Lady Taylor, and the noble Lord, Lord Young of Cookham, also brought up the issue of the exempting of retirement houses. Retirement houses do not stand alone; they are usually part of a wider scheme with extensive communal facilities and packages of support care and hospitality services. A lease can help to organise the relationship between the two parties, with the home owner and provider managing the development in properties such as these. We think this justifies an exemption from the ban.

The noble Baroness, Lady Taylor Stevenage, also brought up the commencement day for this Bill. The letter that we wrote to the noble Lord, Lord Kennedy, explained that it is a complex Bill, and there will be complexities as we roll out the Bill after Royal Assent. However, I think we did put in that that commencement is likely to be 2025-26, not 2026.

I want to reassure noble Lords that there is a power in the Bill, should evidence of any abuse emerge, to tighten definitions further or remove exemptions entirely if there is evidence that a stricter approach is necessary. With these assurances in mind, I hope that the noble Baroness will agree not to press her amendment at this stage. In this group—

--- Later in debate ---

Given that agricultural leases rely on external definitions, can the Minister provide more detail on what exactly falls within these two definitions? Can she reassure the Committee of the suitability of all the new leases in that category being rightfully exempt? I look forward to her response, and I beg to move.

[Lord Young of Cookham (Con)]

My Lords, I will speak to Amendment 7 in my name, which deals with shared ownership—one of the issues touched on by the noble Lord, Lord Khan. Shared ownership was developed in the 1980s and I claim some paternal responsibility for it. It was a route into affordable homes, and there are now some 200,000 shared owners.

There is a risk that shared owners will fall between the cracks between conventional leaseholders and those who rent. The Government are doing a lot for the conventional leaseholder. Under the Renters (Reform) Bill, they plan to do a lot for the conventional renter, and as I said, there is a risk of shared owners falling between the cracks. If one looks, for example, at the New Homes Ombudsman Service, which I greatly welcome, and the new homes quality code under it, the protection does not extend to affordable homes—namely, those sold under a shared-ownership scheme.

The reason for this amendment is a report, which I am sure my noble friend has seen, from the Select Committee in another place published on 26 March entitled Shared Ownership. The crucial thing to remember about this is that it was published after the Bill left the other place. Therefore, these are comments on the Bill as we see it today. I will briefly quote from three relevant paragraphs from that report.

Paragraph 80 states:

“When we asked Baroness Penn about this issue”—


shared ownership—

“she told us that the provisions of the Leasehold and Freehold Reform Bill are intended to make it easier for those on the old form of the lease to extend when needed. However, Shared Ownership Resources have said that shared owners will not benefit from the leasehold enfranchisement reforms included in the Bill, as, as assured tenants, they do not have statutory rights to leasehold enfranchisement”.

I hope my noble friend can assure me that shared owners do have the right referred to in that statement—the right to enfranchise—and that the fact they are technically assured tenants does not mean they are precluded from the rights in the Bill. Paragraph 92 reaffirms that point:

“We also believe that it is unacceptable that shared owners do not have the same statutory right to leasehold extension as other leaseholders”.


My final quote is from paragraph 94:

“Finally, the Government should ensure that any legislation passing through Parliament which has provisions to reduce the cost of, and simplify, the process of leasehold extension (for example, as in the Leasehold and Freehold Reform Bill) also applies to leaseholders in shared ownership properties, so that shared owners have the same statutory right to leasehold extensions as all other leaseholders”.


It is clear from those quotes from the recent report that the Select Committee holds serious doubts about the entitlement of shared owners to some of the rights in the Bill.

Shared-ownership leases are often complex. Leases on flats, for example, with multiple sub-lessees with different rights and responsibilities, can add further complexity. It is worth mentioning that shared owners are liable for all legal and other administrative costs of superior leaseholders and freeholders, although they only own, for example, 50% of the property. As a result, they can be paying more in service charges than other people in the block, simply because they have that extra relationship with the registered provider as well as the freeholder.

When a shared-ownership owner, for example, extends the lease and the property is valued, they pay 100% of the legal costs, although they only own 50% of the property. The explanatory notes to the Bill state, on page 8, paragraph 20:

“The Bill also gives shared ownership leaseholders the right to a lease extension for 990 years”.


However, the registered provider—the shared ownership’s immediate landlord—may have only a short-term interest in the lease as a head lessee or a sublessee. So, what happens when the shared-ownership leaseholder exercises the right, but the registered holder says, “I’m very sorry but I don’t have 990 years available; I only have a short lease”? Is there an obligation in the Bill for that registered provider to get a long lease, which, in turn, is passed on to the shared owner?

Turning to Condition C in the Bill, which my probing amendment addresses, I wonder whether this precludes certain shared owners from the right to a lease extension. Paragraph 6(6), on page 136, states:

“Condition C: the lease allows for the tenant’s share in the house to reach 100%”.


However, some shared-ownership leases have caps. They have caps at 80% in a designated protected area, and a cap of 75% in older persons shared ownership. So, are these groups excluded, or does paragraph 6(2) come into play, which says that the Secretary of State can exclude Condition C if the lease is of a description he has specified? Again, I would be grateful for an assurance on this.

My final point, which was also raised by the Select Committee, is that there is a broader risk of a two-tier market in shared-ownership leases following the changes in lease terms as part of the affordable homes programme.

My noble friend the Minister may want to reply to this in a letter, but shared owners want an assurance that their entitlements have been properly take on board during the Bill’s drafting, particularly against the background of the Select Committee report that I have just referred to, which makes it clear that there are anxieties that the interests of shared owners are not adequately reflected in the Bill.

[Baroness Pinnock (LD)]

My Lords, there are two elements of this category of permitted leases that are worthy of further exploration. One—on which the noble Lord, Lord Young of Cookham, has gone into great detail, questioning how it will work—relates to shared ownership. The second is to do with agricultural leases.

I would like the Minister to explain, first, why agricultural leases cannot be subject to tribunal certification, rather than the current self-certification process. There does not seem to be a reason why that does not occur under the first element of permitted leases.

There are other issues, such as shared ownership and self-certification, that are not necessarily covered in the details the noble Lord, Lord Young of Cookham, went into, but which are very important. I would like to understand how self-certification will be subject to challenge, what the process is and how such situations can be resolved. Will it be a costly process? If so, granting permitted leases for shared ownership, and agricultural leases, becomes an expensive legal minefield for those caught up in it.

So, I would like to understand why agricultural leases are not in the first set of certifications for permitted leases, and how challenges can be resolved. I look forward to what the Minister has to say.

--- Later in debate ---

My noble friend also asked why shared ownership was not in the Bill, and what is going to be done for shared ownership. There was an amendment on this in the other place, I understand, which says that the equivalent lease extension rights have been given to shared ownership leaseholders: that is, extension by 990 years at peppercorn ground rent, on the leaseholder’s share, on payment of a premium. Presently, shared owners of houses were excluded from extension rights under the 1967 Act and their position for flat under the 1993 Act was uncertain due to contradictory court and tribunal decisions. Where the shared ownership provider is the freeholder, they will be able to grant an extension. I hope that helps my noble friend. With these assurances, I hope that noble Lords will agree not to press their amendments.

[Lord Young of Cookham (Con)]

I am enormously grateful for the assurances that my noble friend has given. Will the Government respond to the Select Committee report on shared ownership before Report? It raises some important issues which I touched on and it would be nice to have the Government’s response before Report.

[Baroness Scott of Bybrook (Con)]

I am not aware of the timescale for that, but I will make some inquiries and come back to my noble friend.

--- Later in debate ---

[Baroness Jones of Moulsecoomb (GP)]

My Lords, I do not have an amendment in this group, but it is almost therapeutic when your Lordships’ House is asked to consider a rare Bill such as this, where, instead of the Government seeking to do something really quite nasty, they are merely failing to do the best possible thing that they could.

The amendments in this group reveal that the Government have failed to bring in any proposals to replace leasehold ownership of residential property with commonhold ownership. It is obvious that there is a political consensus—at least on this side of the Chamber and partly on the other side—that commonhold should be the main model of ownership for multi-unit residential properties. However, 20 years since commonhold was first introduced, and four years since the Law Commission published legislative proposals to enable more widespread adoption of commonhold, it looks as though this Government have chosen to leave this issue to the next Government to sort out. That might be the best thing—I do not know—but, quite honestly, this Government have had the option, even in this Bill, to do the right thing.

Housing is part of survival: it is a human right and you have to get it right. It is time to end the commodification of housing by international finance and to end the feudal model of land ownership, which facilitates developers extracting as much money as possible from home owners while providing little or no value in return. Forgive me, I should have declared an interest as a leaseholder.

I would like to ask the Minister some questions; others have probably asked these questions before, but I just want to be specific and get clear answers. When do the Government expect the Commonhold Council to complete its work on the implementation of commonhold for new housing supply? When do they expect the completion of the work on conversion to commonhold? Why is it taking so long?

[Lord Young of Cookham (Con)]

My Lords, I will make a brief intervention to support the thinking behind Amendment 14, in the name of the noble Baroness, Lady Fox. We all understand the disappointment that it has not been possible to make progress with commonhold in this Parliament. We all understand that it would be impossible to try to retrofit commonhold into the existing legislation. One thing we have learned over the last two parliamentary Sessions is that the capacity of the department to produce legislation that does not need wholesale amendment as it goes through is limited. We all bear the scars of the levelling-up Bill.

We have also seen the number of government amendments that have already been tabled to this Bill. What ought to happen, and I wonder whether my noble friend would smile on this, is that at the beginning of the next Session, a draft Bill should be published on commonhold. That would enable us to iron out all the wrinkles and expedite the passage of an eventual commonhold Bill when it came forward. There is all-party agreement that we need to make progress with commonhold, so urgent work now on producing a draft Bill is time that would not be wasted. It would mean that early in the next Session of Parliament we could produce a draft Bill—we have the Law Commission’s work, which we could build on—and iron out all the wrinkles. Then, when the actual Bill came forward, we would be spared, I hope, the raft of government amendments. I exempt my noble friend on the Front Bench from responsibility for this; it would be a faster destination.

By way of comment, what has happened to draft Bills? When did we last see a draft Bill? If you look at the Cabinet Office’s recommendation, I think in 2022 it said that they should be part of a normal legislative programme; there should be a number of Bills produced in draft, which we can get our teeth into. All my experience as chairman of the Parliamentary Business and Legislation Committee is that when you have a draft Bill, the actual Bill goes through much more quickly. Again, my noble friend has no responsibility for the legislative programme, but I think we need to spend more time as a Parliament looking at draft Bills rather than at Bills that have been drafted in haste, and then having to cope with a whole range of government amendments.

[The Earl of Devon (CB)]

My Lords, I too was unable to speak at Second Reading, and I apologise for that. However, I was able to attend much of the debate and to listen to a number of your Lordships’ speeches. I noted the numerous times in which leasehold tenure was described as “feudal”; we have heard this many times today. It is used as a pejorative term, which I do not strictly agree with, being a feudal Member of your Lordships’ feudal House, serving our feudal sovereign. It seems a somewhat discriminatory term to use. I also note that not all feudal rights are bad; we laud the Magna Carta, the right to trial by jury, and the rights of habeas corpus, all of which are essential feudal rights. I would hazard that leasehold tenure is similarly a feudal right that we should be particularly proud of, like your Lordships’ feudal House.

That said, I realise that the days of leasehold are numbered, but we should not remove such an important element of our residential housing market without ensuring that there are at least adequate alternatives that are fit for purpose. There currently are not. I believe it a mistake to dismantle leasehold tenure without ensuring that the commonhold alternative is fit for purpose.

Here I note my interests: in 2003, as a junior property barrister, I was a contributing author to a handbook on the exciting new tenure of commonhold. Since then, and despite our best hopes, the book has sold barely a copy, and I understand that commonhold has been adopted by hardly anyone. In 2015, and again more recently, the Law Commission has explored the shortcomings of commonhold, and has, as we have heard, identified numerous ways in which the law could be amended to make it better. I believe the Government are therefore wrong not to have grasped the nettle and made commonhold fit for purpose at the same time as, if not before, introducing this piece of legislation.

For this reason, I support the probing amendment of the noble Baroness, Lady Taylor, with respect to the publication of a commonhold strategy. Without that viable alternative, I am particularly concerned that the leasehold reforms will have the unfortunate effect of decreasing the available housing stock, and will drive up the price of housing, which will decrease the number of homes that are affordable. I note my interests as a member of the Devon Housing Commission, ably chaired by the noble Lord, Lord Best, which is exploring why there is so little housing available in the county for people who actually live there.

I have a question for the Minister: have the Government sought to measure the likely impact of the Bill on the availability of new housing, and the willingness of freeholders to make land available for development?

Social Housing: Right-to-buy Sales

Lord Young of Cookham Excerpts

Thursday 18th April 2024 Lords Chamber

[Baroness Swinburne (Con)]

I return to the statistic that we have increased the number of affordable homes by 482,000 during the period since 2010. That means there are more houses for people to rent at an affordable rent. We also acknowledge that the rent agreements with regards to the increases, particularly for social housing over the last year, while inflation was running high, have had an impact on the housing associations, but we are working closely with them to make sure that they have the right to increase their rents at an acceptable level while the tenants themselves are not having to struggle with the high cost of living.

[Lord Young of Cookham (Con)]

My Lords, as one of the Housing Ministers in the 1979 Parliament, I say to the noble Lord, Lord Bird, that I do not recall the right-to-buy legislation being in my briefing pack when I took office. Returning to the original Question, I agree that we need more affordable homes. Has my noble friend seen a report by the Home Builders Federation that 13,000 sites for affordable homes have been earmarked as a condition for market sales on the rest of the site but no housing associations or local authorities have come forward to claim them? Can my noble friend find a solution?

[Baroness Swinburne (Con)]

I thank my noble friend for that question. We have been monitoring this for some time. All measures to increase the rate of housebuilding for the provision of affordable homes are being considered, including the preferential borrowing rate for councils, and housebuilding from the Public Works Loan Board, which has been extended to June 2025. Indeed, that 100% temporary measure for the right-to-buy receipts for the last couple of years was to increase the capital buffer to allow the speeding up of housebuilding and acquisition in the sector. The abolition of the housing revenue asset borrowing cap also helps, alongside the £11.5 billion affordable homes programme. We believe that local authorities and housing associations are being supported to maximise delivery at pace, and we strongly urge them to utilise the flexibility to build these new homes.

Building Safety

Lord Young of Cookham Excerpts

Wednesday 27th March 2024 Lords Chamber

[Lord Young of Cookham (Con)]

My Lords, I am grateful to my noble friend for the additional information, but can I press her a little further on the key issue raised by the two noble Baronesses: the pace of remediation? I welcome the action taken last year by the Government to compel 50 major developers to sign the developer remediation contract, but it does not have a timescale. One large London-centric developer, Galliard, says that its remediation plan could take another eight years. That will be 15 years after the Grenfell tragedy. Does my noble friend think that is acceptable? Related to that, under the contract, developers are obliged to report their target dates for each building to my noble friend’s department in their quarterly returns data. So far, the department has not published that data, meaning that leaseholders are unaware of what progress is being made. Can she consider publishing that data, which the department has, so that people know the pace agreed by the developer and her department?

[Baroness Swinburne (Con)]

I thank my noble friend for that question. To start with the second question first, yes, I shall take that back to the department. Given that transparency is a tool that we are using, it would make sense to make that communication transparent. I shall report back to my noble friend on progress on that.

On whether I personally think that developers taking eight years to fix this is acceptable, absolutely not. These are people’s homes; they need to feel safe. The reason why that new money has become available for regulators is to ensure that enforcement action can happen and to increase the pace of the change that is required, ensuring that remediation takes place as soon as possible. Therefore, I suggest that, if there are specific instances, noble Lords should speak to the department so that we can make sure that pressure is put on.

Leasehold and Freehold Reform Bill

Lord Young of Cookham Excerpts

2nd reading
Wednesday 27th March 2024 Lords Chamber

[Lord Young of Cookham (Con)]

My Lords, it is a pleasure to follow the noble Lord, Lord Best. I agree with everything he said about the regulation of property agents and, were he minded to table an amendment to the Bill, I would like to add my name. I thank my noble friend for her readiness to consult colleagues throughout the passage of the Bill: I am sure this will facilitate its speedy work.

My speech is in two halves, the first focusing on the Bill and the second dealing with unfinished business with the Building Safety Act. The Government are well ahead in the first half but heading for a score draw by the end. I warmly welcome the Bill, building as it does on previous pieces of legislation, all progressively empowering leaseholders and moving away from a feudal system of tenure that exists nowhere else in the world. I will just touch on the more controversial measures on ground rents and marriage value. Having attended a meeting, with other noble Lords, with freeholders, it is absolutely certain that this is going to be challenged in the courts. I take comfort from what is on the face of the Bill, namely that my noble friend asserts that the Bill is compatible with the ECHR.

The consultation on ground rents closed on 17 January and the Cabinet Office guidance says Governments should

“publish responses within 12 weeks or provide an explanation as to why this is not possible”.

That runs out on 10 April, so will we have a response before Committee, hopefully rebutting rumours in last week’s Sunday Times? If the Bill becomes an Act, and a leaseholder declines to pay the historic rent demanded by a freeholder, citing this Bill, and is taken to court, as seems likely, will the Government stand behind that leaseholder and bear the costs?

On marriage value, many properties in London, from where most of the freehold objections have come, have been on 99-year leases for centuries. Each time the lease expired, the freeholder had all the marriage value—financial polygamy if ever I saw it.

There is one area where we are going make progress: I was relieved to hear what my noble friend said about forfeiture. A tenant can lose possession of a £500,000 flat for a debt of £351, with the landlord keeping the entire difference between the value of the property and the debt. Will my noble friend go a little further than she did in her opening speech and commit to a government amendment to abolish forfeiture and replace it with a more balanced response?

I share the disappointment of other noble Lords at the absence of progress on commonhold. In 2019, the House of Commons Select Committee, with a Conservative majority, urged the Government to ensure that

“commonhold becomes the primary model of ownership of flats in England and Wales”.

The noble Baroness, Lady Taylor, quoted Michael Gove’s statement, which is worth repeating:

“I don’t believe leasehold is fair in any way. It is an outdated feudal system that needs to go. And we need to move to a better system and to liberate people from it”.


But in the Bill, there is no progress whatever on these flats.

Turning to the Building Safety Act, I welcome the measures the Government have introduced to alleviate the problems of those living in flats requiring remediation following the tragedy of the Grenfell fire, but there is a significant gap, best illustrated by quoting the commitments the Government made at the outset. In his Statement in the other place on 10 January 2022, the Secretary of State said:

“We will take action to end the scandal and protect leaseholders”.


Later, he clarified what he meant:

“First, we will make sure that we provide leaseholders with statutory protection—that is what we aim to do and we will work with colleagues across the House to ensure that that statutory protection extends to all the work required to make buildings safe”.—[Official Report, Commons, 10/1/22; cols. 285-91.]


Note that that commitment extends to all building work, not just cladding, and there was no qualification of the word “leaseholders”.

This broad commitment was confirmed by a letter written to all noble Lords by my noble friend’s predecessor, my noble friend Lord Greenhalgh, on 20 January 2022. He wrote:

“The Secretary of State recently announced that leaseholders living in their homes should be protected from the costs of remediating historic building safety defects”—


not just cladding. However, the position now is that not all buildings are covered; not all building safety defects are covered; and, crucially, not all leaseholders are protected. In particular, it remains perverse that, while we debate a Bill to facilitate enfranchisement, the Government have deliberately chosen not to give protection to those that have enfranchised, while leaseholders who have not enfranchised continue to enjoy a better deal.

The two principal exclusions from the commitment given by the Secretary of State are leaseholders who live in buildings less than 11 metres tall; and other non-qualifying leaseholders, a category that does not exist in Wales, where remediation funding is available for all buildings and all leaseholders are protected. On buildings under 11 metres, the Government’s position seems to be that residents should be able to leave the building in the case of fire without expensive remediation. This position is at odds with that of the London Fire Brigade. This is its statement:

“With regards to the remediation of buildings, we strongly assert that all buildings with serious fire safety defects should be remediated regardless of height”.


Many of these flats are unsaleable and unmortgageable, the owners cannot afford to pay for remediation and, in the view of the fire brigade, they are unsafe. The department’s case-by-case approach is moving at a glacial pace, with no clear outcome even for cases that are audited by the department and deemed to require remediation.

Also excluded are leaseholders who own three or more residential properties. The perverse consequence of this is that you can own a manor in the Cotswolds, plus a villa in Italy on Lake Garda and a luxury penthouse in central London worth £1.5 million and qualify for protection. Yet if you and your partner own a small, terraced house and three small £100,000 buy-to-let apartments as part of your pension planning, only one of which has non-cladding fire safety defects, you will face bankruptcy. If we are to have exclusions, they should be value-based, not quantity-based.

Then there is the position of joint ownership. In many cases, landlords exceed the threshold of more than three UK properties only because they jointly own properties with their partner. I welcome the Government’s rather belated decision to consult on this. They issued a document last week, with consultation due to end next week. That is a very short time for consultation, but if it means that a fit-for-purpose amendment can be introduced in this Bill, then that could excuse it.

The LUHC Committee in the other place, with a government majority, rightly noted last year:

“Leaseholders are no more to blame for non-cladding defects than they are for faulty cladding on homes they bought in good faith. Buy-to-let landlords are no more to blame than other leaseholders for historic building safety defects, and landing them with potentially unaffordable bills will only slow down or prevent works to make buildings safe”.


That, of course, affects everybody in the block. At the moment, there are 4,092 buildings over 11 metres with unsafe cladding, but over half of those—2,077—have no remediation plans in place.

In short, the Building Safety Act created a two-tier system where leaseholders deemed qualifying will benefit from the protections, whereas those arbitrarily deemed non-qualifying have been left to fend for themselves, exposed to uncapped costs for non-cladding remediation. Those people took all available precautions when they bought and are in no way responsible for the defects that now need remediation. Without a truly comprehensive solution for all buildings of all heights and tenures, unfairness and uncertainty are set to perpetuate, not least because there is no deadline for remediation. My amendments to this Bill will seek to rectify those injustices and I hope the Government will listen.

Housing: Young People

Lord Young of Cookham Excerpts

Thursday 14th March 2024 Lords Chamber

Moved by

[Lord Young of Cookham]

That this House takes note of the housing needs of young people.

[Lord Young of Cookham (Con)]

My Lords, I am grateful to the usual channels in my party for selecting this debate, as my contributions on this subject have sometimes caused distress. I am also grateful to those who have put their names down to speak on a subject whose salience is rising up the political agenda, and I look forward to an informed and constructive debate.

I want to outline what steps might be taken in the next Parliament to improve housing outcomes for everyone, but particularly for young people. They have been one of the principal casualties of the housing market, which the Government themselves admitted in their White Paper seven years ago was broken and which is now, at best, convalescing. The foreword to that White Paper said:

“Soaring prices and rising rents caused by a shortage of the right homes in the right places has slammed the door of the housing market in the face of a whole generation”.


In 1989, more than half of those aged 25 to 34 had a home of their own; now that figure is about a quarter. The most common form of living for those of that age is with their parents. Shelter tells me 45% of renters aged 16 to 24 spend half or more of their income on rent. Many would spend far less with a mortgage on the same property, but the high rent means that they cannot afford a deposit—and, not always mentioned, they are now getting much less space within each flat.

There are wider political consequences from this. That generation of young people have parents and grandparents who share their concern—and may indeed be sharing their home—and will be looking for solutions when they vote later this year.

I was lucky enough to have done nine years as Housing Minister, in four Parliaments, under seven Secretaries of State—counting the noble Lord, Lord Heseltine, twice—and with four Permanent Secretaries, confounding the usual “Yes Minister” caricature of transient politicians and permanent civil servants. I draw on that experience in my contribution to this debate, recognising that I got many things wrong.

The first job of the Prime Minister after the election is to make it clear that the Housing Minister will be there, barring accidents, for the whole of that Parliament. That was not unusual. In my first nine years in the other place, there were two Housing Ministers, each lasting the whole Parliament, and both were highly effective. Since 2010, there have been 16. It is important to understand why this is a serious mistake.

An effective Housing Minister who will drive through the radical changes that are needed must build a strong personal relationship with the key players: the National Housing Federation, Homes England, the LGA, the Chartered Institute of Housing, the Town and Country Planning Association, the Home Builders Federation, and many others, including the think tanks. You cannot subcontract the building of those relationships to civil servants. That takes time.

Those relationships will be crucial in getting a picture of the challenge, but also later on when one needs to draw on trust and good will to get reform through. You need to know which go-ahead directors of housing are making the weather, which housing associations have some interesting solutions, and which group of talents is turning around a difficult-to-let estate. There are some really good people in housing today.

More than that, you need to understand the complexities of public expenditure—you need to know your AME from your DEL—and you need to watch the Treasury like a hawk. That requires an understanding of Treasury theology as well as economics. If the Housing Minister is ever in doubt about what to do, he should consult the person who knows more about housing and has done more for housing than anyone else: the noble Lord, Lord Best. To make my point about continuity: who has been the most successful Cabinet Minister in this Parliament? Ben Wallace—he was there for four years.

The key word in the White Paper I mentioned, Fixing Our Broken Housing Market, was “market”. A market is where buyers and sellers meet and where supply matches demand. A good market would make it easier for people to move, promote mobility and make it easier to buy and sell. The group that would benefit most from this extra mobility are those waiting for their first home.

There are 3.6 million homes with two or more spare bedrooms. Many older people want to trade down or to rightsize, freeing up their homes for young families. Professor Mayhew estimated that we need 50,000 homes for older people who want to rightsize, but we are only producing 8,000. An older person rightsizing triggers a chain of movements, promoting labour mobility and making better use of the stock we have. The planning system should be more proactive in securing the right mix of new builds. The best way to help younger buyers is to help older buyers.

Stamp duty is an important impediment to the market—£15 billion of friction—and then there is the hassle of house purchase. Last year, I sold my car. I took a photo, uploaded the details on a website and had an acceptable offer within hours. Later that day, a flat-bed truck arrived and, as the car was driven up the ramps, the money arrived in my bank account. What comparable progress has been made using modern technology to simplify house purchases? None, since I bought my first home 60 years ago.

Many young people have to rent, but private landlords are leaving the market, due to high interest rates, fears about impending legislation, a less attractive tax regime and new energy efficiency standards. The NRLA says that private landlords are more than twice as likely to sell properties than they are to purchase them, exerting upward pressure on rents. We should say to private landlords that, if they sell to their tenant, no capital gains tax or stamp duty will be payable—not a right to buy but an incentive to sell. That would have a dramatic effect on home ownership for young people, almost certainly lowering their housing costs and enabling them to move up the ladder.

I support the Renters (Reform) Bill—by the way, what has happened to it?—but it will reduce supply. The Bill should have been accompanied by measures to increase supply and put the private rented market on a more sustainable basis. Other countries have a different model, which we should progressively adopt. In Europe, long-term institutional finance provides secure, well-managed rented accommodation; in this country, it provides 2% of the rented stock. We need to progressively reduce the overdependence on the private landlord, who can release capital only by selling, and get the pension funds and insurance industry to invest in what, historically, would have been a better investment than equities. The next Minister needs to get those institutions in the room with the Treasury and unlock the barriers to that investment.

I mentioned selling to the tenant, but what about the deposit? I read in the Times that there is £2.5 trillion tied up in housing equity. That is £2,500 billion, money will eventually end up with children and grandchildren, but not when they need it. I understand all the caveats about equity release and the need to take advice, but the product today avoids any negative equity on death and can reduce inheritance tax. People are cautious about it because of the unknown care costs. Many more would take that option, and help young people buy, if the next Government implement the recommendations of the Dilnot commission in 2011 and cap care costs. Again, focusing on the older generation helps the younger ones.

Many young people will not be in the fortunate position of having that help and will need access to social housing, adding to the 1.2 million people on the waiting list. My party needs to overcome its residual resistance to social housing. The old norms that trade unionists and council tenants voted Labour while home owners and professional people voted Tory have been blown out of the water by Brexit and the 2019 election. In 1953, 250,000 council houses were built and my party won the next two elections. What regime encouraged the local authorities, now going bankrupt, to invest in speculative shopping centres and office blocks when they could have been building houses?

A new Administration should look at the role of social housing for young people. Forty years ago, a young couple could put their name on the waiting list and be reasonably confident that, in due course, they would get to the top. Today, if that young couple are sharing with in-laws or living in rented accommodation, they are not likely to have that ability.

Social housing is focused, rightly, on priority groups: those threatened with homelessness—increasingly under Section 21—threatened with domestic violence, in poor health or living in very poor conditions. Then there is additional pressure from those from Ukraine, and as the Home Office stops using hotels for asylum seekers. Access to social housing has become an accident and emergency service. This raises the sensitive question of life tenancies. If a family face a crisis and then, thanks to social housing and the support that goes with it, rebuild their lives and other options become affordable, should they make way for another family who face the crisis that they once faced? I am not suggesting making them homeless again, but perhaps some nudges.

This is relevant because, the last time I looked, a young couple on the waiting list is eight times more likely to be rehoused through a re-let than through a new build. Increasing the flow through social housing will help them. There is a role for an expanded tenant incentive scheme to help families move on, securing a re-let for those on the waiting list at a fraction of the cost of new build and far quicker.

We need to build more new homes of all tenures to meet demand from first-time buyers. Veterans of the LUR Bill will know my views about planning, confirmed by last month’s CMA report, which referred to a

“complex and unpredictable planning system”

with “under resourced” planning departments. There is no need to increase public expenditure to unblock the system—just allow planning departments to recruit the staff they need and cover their costs with application fees.

Then my party has to confront the nimbys within our ranks. Yes, we may lose a few votes to the ever-opportunistic Lib Dems if unpopular development goes ahead, but we will lose far more if we do not have a coherent housing policy. We should recognise that the green belt is not sacrosanct and should reinstate local authority targets. You cannot rely on the good will of local government to provide the homes we need.

I do not have time to mention all the relevant factors: the tension between second homes and first homes, skill shortages in the building sector, the dominance of large builders, slow buildout rates and getting the balance right in social housing between new build on the one hand and maintenance of existing stock on the other. I hope other noble Lords will fill the gaps. Nor have I mentioned the many good things this Government have done, a deficiency that I know my noble friend, whose commitment to good housing I applaud, will remedy.

Finally, the next Minister will need what I call a following wind—public opinion. In 1966 “Cathy Come Home” did for homeless young families what “Mr Bates vs The Post Office” has done for sub-postmasters. It mobilised public opinion, drove housing up the agenda so that political parties had to respond, and gave birth to Shelter.

My most formidable opponents—Des Wilson and Sheila McKechnie of Shelter—were also my greatest allies. Their tireless, well-targeted and well-informed campaigning was deeply uncomfortable, but it strengthened my bargaining position with the Treasury and more broadly within the Government. We will need that following wind to open the door that was slammed in the face of a whole generation. I beg to move.

--- Later in debate ---

[Lord Young of Cookham (Con)]

My Lords, I am grateful to all those who have taken part in this debate. It could go on until 6.26 pm, but the House will be relieved to hear that I plan to speak for just a couple of minutes.

The noble Baroness, Lady Donaghy, quite rightly mentioned Lord McKenzie of Luton, who shadowed me when I was on the Front Bench and asked the most difficult questions with the utmost courtesy. We all miss him. She rightly pointed out the illogicality of current ratable values and the HMO loophole, which does need to be looked at.

I am grateful to the noble Baroness, Lady Thornhill, for her comments, particularly on the need to arrest the drift from long-term lets to short-term lets. There are a number of provisions in the pipeline, and I know she will be keeping a close eye on that.

My noble friend Lord Lilley raised the issue of demand. He was right to do so if one is talking about the housing market, where supply and demand are relevant. Where I think I agree with the noble Lord, Lord Best, is that one needs to raise housing in immigration debates as well as raising immigration in housing debates. I know he and I will both pursue that.

The noble Lord, Lord Best, was also right to mention the disenchantment of young people at the current housing position: it is feeding into disenchantment with politics as well as disenchantment with housing. I am grateful, as always, to the noble Lord, Lord Best. I thought the point he made about the public expenditure benefit of home ownership because it reduces the housing benefit costs of older people was a valid one. I hope the Treasury can feed that into its computer when it looks at future expenditure plans. The noble Lord also rightly mentioned the Letwin review, which had a whole lot of worthwhile policies which I think should be pursued.

We welcome my noble friend Lord Attlee to housing debates, with his robust common sense. We learned that the planning system was a conspiracy to keep the rich rich, but I agree with him on what he said about some of the complexities of the planning system.

I am very grateful to the noble Baroness, Lady Valentine, who focused on temporary accommodation and its huge cost to local authorities; and on the disruption to the families who are caught up in the moves, including the disruption to education. She was right to mention housing benefit. I think she was the only person in the debate to mention housing benefit, which is highly relevant to any debate on housing. She also reminded us of the good people who are doing heroic work in voluntary organisations on the front line.

I am grateful to my noble friend Lord Jackson. On nutrient neutrality, I was slightly surprised after the defeat in your Lordships’ House that the policy was not overturned in the other place, but my days of party management are now way behind me, so I will not go too much into that.

I am grateful to the noble Lord, Lord Shipley, for endorsing the need for the planning departments to have the resources that they need, the need to have up-to-date plans and, of course, the need to increase supply.

The noble Baroness, Lady Taylor, reminded us of Housing First and what we could do when we really had to and how we got everybody who was sleeping rough off the streets. That was a fantastic response by local authorities and voluntary organisations. She agreed with me on the need to reinstate local authority targets.

Finally, I am very grateful to my patient noble friend the Minister, who provided an important balance to our debate by setting on the record the Government’s many achievements. She dealt, as helpfully as she was able to do within the confines of her brief, with all the issues that were raised.

In conclusion, this debate has been a rich quarry for material for party manifestos. I beg to move.

Motion agreed.

Housebuilding

Lord Young of Cookham Excerpts

Wednesday 28th February 2024 Lords Chamber

Asked by

[Lord Young of Cookham]

To ask His Majesty’s Government what is their response to the final report of the Competition and Markets Authority’s housebuilding market study, published on 26 February.

[The Parliamentary Under-Secretary of State, Department for Levelling Up, Housing & Communities (Baroness Scott of Bybrook) (Con)]

We welcome the CMA’s final report, following its full market study into housebuilding. In 2022, the Secretary of State wrote to the CMA, supporting the suggestion of a full market study, the first since 2008. The Government will now take away and carefully consider these findings and recommendations, and formally respond within 90 days. The CMA’s recommendations can help industry, the Government and regulators to make sure that the market is operating effectively, and working well for consumers.

[Lord Young of Cookham (Con)]

I appreciate that the report was published only two days ago, but it was published after the Government made significant changes to housing and planning policy. On those changes, the CMA report is very clear. It says that “significant interventions” and “further actions” are required by government if we are to address what it describes as the “complex and unpredictable” planning system, with its underresourced planning departments. The report also makes it clear that local authorities should have clear housing targets if we are to meet the demand in housing that we have just heard about. Will the Government be looking very sympathetically at these recommendations?

[Baroness Scott of Bybrook (Con)]

As I have said, we will carefully consider all the recommendations and findings from the report. Our National Planning Policy Framework means that councils must have local plans in place to deliver more homes in the right places and of the right type that are required in that particular community. As part of the recent consultation on changes to the National Planning Policy Framework, we have committed to review our approach to assessing housing need, once the new housing projections data based on the 2021 census is released next year.

Housing: Section 21 Evictions

Lord Young of Cookham Excerpts

Tuesday 20th February 2024 Lords Chamber

[Baroness Penn (Con)]

My Lords, we have always set out our intention, in the White Paper that preceded the Bill and in the guidance that goes alongside the Bill, that we will need to give six months’ notice for implementing Section 21 for new tenancies. That is to give time for a number of things to happen. The noble Baroness is right that we need to allow time for the courts to prepare for this, to allow evictions, court rules, forms and administrative systems to be updated. It is also to allow for secondary legislation that flows from the primary legislation to be laid, and for guidance to be put in place. But we are working hard, and we have already provided upfront money to the court system to kick-start that process, so that we can move towards implementation as soon as possible.

[Lord Young of Cookham (Con)]

Could the Minister clarify that? On the Laura Kuenssberg programme, Michael Gove said that Section 21 would be “outlawed” before the general election. Does that mean that, by the time of the general election, a landlord will not be able to serve a Section 21 notice on a tenant?

[Baroness Penn (Con)]

My Lords, I looked very carefully at what my right honourable friend said, and he said that we will have outlawed it by the next general election—we will have passed the Bill and put money into the courts to ensure that we can enforce it. We are already putting money into the courts—£1.2 million this year.

Leasehold: Property Management Companies

Lord Young of Cookham Excerpts

Monday 19th February 2024 Lords Chamber

[Baroness Penn (Con)]

I am afraid I have to disagree with the noble Lord’s assessment of the Bill. I can set out a number of ways in which the Bill will improve the position of leaseholders regarding service charges. It will require greater transparency of service charges, so that leaseholders receive key information regularly; we will rebalance the legal costs regime, giving leaseholders greater confidence to challenge their service charges; it will replace the buildings insurance commissions system for managing agents, so that transparent admission fees are in place; and it will increase the non-residential limit from 25% to 50% for buying the freehold or exercising the right to manage, giving leaseholders greater rights in respect of taking over the freehold of their property or managing it themselves.

[Lord Young of Cookham (Con)]

My Lords, my noble friend will know that the law of forfeiture allows a managing agent to take possession of a flat worth, say, £500,000 if there is a debt of more than £350 outstanding. In those circumstances, the freeholder pockets the difference between the value of the flat and the debt. Surely the leasehold Bill should put a stop to that.