Leasehold Reform (Ground Rent) Bill [HL]

Baroness Pinnock Excerpts

Report stage
Tuesday 20th July 2021 Lords Chamber

Moved by

[Baroness Pinnock]

27: After Clause 18, insert the following new Clause—
“Review of the financial impact of the Act
(1) Within 6 months of the day on which this Act is passed the Secretary of State must carry out a review of the financial impact of this Act on leaseholders.(2) The review must make a recommendation as to whether further legislation should be introduced to extend the ban on ground rents to existing long leases.(3) The recommendation in subsection (2) must take into account the potential financial impact of an extension of the ban on ground rents on those leaseholders and tenants who have been charged for the cost of fire remediation work.”Member’s explanatory statement
This amendment would require a review of the financial impact of this Act and make a recommendation as to whether a further extension of the ground rents ban could benefit existing leaseholders, especially those facing bills for fire remediation work.

[Baroness Pinnock (LD) [V]]

My Lords, I speak to Amendment 27 in my name and those of my noble friends Lady Grender and Lord Stunell. I draw the attention of the House to my relevant interests in the register as a member of Kirklees Council and a vice-president of the Local Government Association.

Amendment 27 asks that:

“Within 6 months of the day on which this Act is passed”


the Government

“carry out a review of the financial impact”

on leaseholders. Reviewing the impact of legislation is important, especially in instances such as these, where changes to an already complex situation are likely to result in unforeseen consequences—despite many noble Lords and the Minister doing their utmost to ensure that all aspects are fully considered. The amendment then goes further to ask that the review actively considers and makes a recommendation about “further legislation” —either for or against it.

Subsection (3) of the proposed new clause makes specific reference to those leaseholders and tenants who have been charged for “fire remediation work” consequent to the Grenfell tragedy. Noble Lords will notice that I am taking the opportunity provided by this Bill to raise again very grave concerns many of us have for those leaseholders and tenants who are, through no fault of theirs, at the heart of the cladding scandal.

The fact that up to 1.3 million households are at a very considerable risk of bankruptcy as a direct result of serious construction failings must never be allowed by decision-makers to remain unresolved. Leaseholders have done everything right and nothing wrong, yet they are being expected to pay for the failures of construction, developers and materials manufacturers.

I recognise that the Government have provided over £5 billion towards remediation but the total cost is anticipated to be over £15 billion—the vast proportion of which is being passed via so-called service charges to leaseholders. We are not talking about charges that are in any way affordable. For example, Pippa in Leeds has a bill for £140,000. The highest bill I have seen was reported in the latest article on this issue in the Sunday Times: a staggering £204,000.

Perhaps the Minister will be able to provide advice on how these leaseholders are to pay the bills that have landed on their doormats. He will be aware that a leaseholder’s major asset is their flat and that, currently, has no value. It is not only the costs of remediation that are pressing down on leaseholders, there are service charge increases—consequent, again, to the cladding scandal.

I have heard from a leaseholder today, who says: “I am knee-deep in service charge admin. I am being harassed with bills that I know are inflated and incorrect, and with huge penalties for late payment. No one should have to live like this. It takes a toll on every aspect of your life, and that is before consideration of planning bills.”

It is not only leaseholders who fear the worst. The Investors Chronicle has reported in the last two weeks that this may become the next PPI scandal. Flat sales are in decline. They affected flats are neither sellable nor mortgageable. Before long, the Government will have to take action to save leaseholders from bankruptcy and homelessness and the housing market in flats from collapse. This amendment simply asks the Government to take stock within six months and, in doing so, to be cognisant of the leaseholders whose dreadful plight I have described. The leaseholders have done everything right and nothing wrong, which is a phrase I cannot attribute to developers, constructors, material manufacturers or the Government, as the final regulator. Between them, they have responsibility for this absolute scandal.

I will listen carefully to the Minister’s response. However, if he is not inclined to accept this simple amendment, I give notice of my intention to seek the opinion of the House. I beg to move.

--- Later in debate ---

While I sympathise with the good intentions behind all three of these amendments, and thank the noble Lords for tabling them, I remain of the view that the benefits of any of these impact assessments would not be proportionate to the time and resource needed to satisfy all the requirements in these amendments. Both in this Chamber and in various meetings, noble Lords have impressed upon me, time and again, the need to introduce our leasehold reforms at speed, and I agree with them. These amendments would inevitably slow down the pace of reform, with little, if any, tangible gain for leaseholders to make up for this. It is for that reason that I ask noble Lords not to press their amendments.

[Baroness Pinnock (LD) [V]]

My Lords, I thank all noble Lords for their contributions and support on the very important issue I have raised again today. I particularly thank the noble Earl, Lord Lytton, for his supportive contribution. He is a recognised expert on these issues, and he expanded on my points. He has raised them before, and I certainly think the Government need to listen carefully to what he has to say.

The Minister has been handed the impossible task of defending the indefensible. Unfortunately, he always has to rely on the fact that future Bills will help solve this problem—but the future will never come soon enough for leaseholders struggling now. They have these bills now and will have to pay them by the end of the year.

As my noble friend Lord Stunell said, this is just a modest amendment. All it seeks is a review of the Bill’s impact in six months, with special reference to leaseholders who have been adversely and gravely affected by the consequences of the Grenfell tragedy.

I apologise to the House for not having moved my amendment formally at the end of my initial speech. I beg to move it now, but I also have to say that, having heard what the Minister said, I wish to seek the opinion of the House on this matter.