Leasehold and Freehold Reform Bill

Debate between Baroness Pinnock and Lord Bailey of Paddington

Report stage & 3rd reading
Friday 24th May 2024 Lords Chamber

[Baroness Pinnock (LD)]

My Lords, the noble Lord, Lord Kennedy, also drew attention to the lack of a clause in the Bill to reduce ground rents to a peppercorn, as promised several times by the Secretary of State in the other place. There is one, as there is one on forfeiture, that I have tabled, because I feel it is an important issue to include in the Bill. I tabled Amendment 45, which would enable a transition, over five years, of ground rent to a peppercorn. There is no justification for ground rents. It is a cost to leaseholders for no service provided as a consequence. I hope, because it is clearly government policy and it is clearly supported by those on the Opposition Benches and certainly by ours, that the Minister can stand up and have at least one amendment today that he does not have the word “resist” against.

[Lord Bailey of Paddington (Con)]

My Lords, I will speak to Amendments 51 and 52. I will not rehearse the arguments that I made in Committee, but I still have a major concern around the removal of any criminal sanction against bad landlords for service charge abuse. I want to be quite clear that this is not a crusade against landlords; landlords are often small family businesses, which are very good and want to help their tenants. However, a significant number of landlords have their leaseholders by the short and curlies, to coin a term that was sent to me by a suffering leaseholder. He was trying to get across just how powerless leaseholders are in this situation.

At a time when we have the likes of Alan Bates and sub-postmasters actively considering bringing private criminal charges against the Post Office, why would we remove that tactic from another set of people in our society who are roundly abused all the time? It is very simple: all this, for me, is about control. We need to give people who have paid this money control over their own future and their own money.

On Amendment 52, if a landlord does not pay back their overcharging within two months, they should face interest charges. This is to incentivise a landlord who has lost in an open, professional tribunal, who then drags their feet and forces leaseholders to launch other legal proceedings to reclaim money that they are rightfully owed. Again, this comes down to letting the little man or woman in the street have some control over their future. Perhaps my noble friend the Minister will comment on why the Government would not support these two reasonable, necessary measures, and send a signal to the country that the law is on the side of the small person who has ploughed all their savings into their home and who has no recourse.

Leasehold and Freehold Reform Bill

Debate between Baroness Pinnock and Lord Bailey of Paddington

Committee stage
Wednesday 24th April 2024 Lords Chamber

[Baroness Pinnock (LD)]

I thank the noble Lord for expanding on that.

It would be interesting to hear from the Minister whether there are any statistics regarding freeholders using the forfeiture system to address not the issues that are normally referenced—failure to pay ground rent or an accumulation of three years or more of debt—but breaches of the lease. It would be helpful to understand all that.

As the noble Baroness, Lady Taylor, has said, if the payment in lieu is more than £350, or is outstanding for more than three years, the freeholder is entitled to claim repossession—and then all the equity in the property is lost, of course. When I first looked at this, I could not see how it could possibly be right. I remember that, at Second Reading—I was just trying to find it in Hansard—the Minister said that the Government were considering bringing forward an amendment to address this issue. It is unfortunate that that has not been forthcoming in the time that has elapsed between Second Reading and Committee. Perhaps in her reply, the Minister can say whether the Government intend to bring an amendment on Report. It would help us resolve what is, on the face of it, a complete injustice. It would be sufficient if the Minister said that that is going to happen, and maybe those of us who have signed the amendments could have a meeting with her to discuss it, if necessary.

[Lord Bailey of Paddington (Con)]

I support this amendment. Although in his intervention the noble Lord talked about how to control peoples’ behaviour when they have misbehaved and breached their lease, it should be taken into account that the threat of forfeiture is held over leaseholders, in a very draconian fashion, for the smallest infraction. More importantly, it is used to enforce such things as the flagrant and inequitable boosting of service charges. If you are in dispute in this situation, you are told you will end up having to pay court fees. You are told that, if you do not pay—

Leasehold and Freehold Reform Bill

Debate between Baroness Pinnock and Lord Bailey of Paddington

Committee stage
Monday 22nd April 2024 Lords Chamber

[Lord Bailey of Paddington (Con)]

My Lords, it is a pleasure to follow the noble Baroness, Lady Taylor of Stevenage. I do not want to rehearse the reasons why I think that a mandatory share of the freehold is necessary, in the way that the noble Baroness laid out. I want to speak more to the contact that I have had with so many different groups and individuals who feel that they are trapped in their leasehold.

The number one thing that comes up is, of course, service charge abuse. Which? did a study in 2011 which suggested that 700 million service charges had been overcharged. The market for that has grown now to 6.7 billion, so we can only assume that this overcharging has grown along with it.

The challenge becomes: how do we make this market fair? How do we make sure that these abuses are washed away? That is to give the people paying the bills control, and not to lock them into the monopoly that leaseholders are currently locked into. Ultimately, the answer would be commonhold, but while commonhold is not on the table, we need to look at a share of the freehold. It should be mandatory, and it should happen straightaway. The noble Baroness laid out very eloquently the benefits that this would give to leaseholders.

We must understand that leaseholders do not want a landlord; that is why they have left the private rented sector—to avoid landlords. These amendments should stand. They really give leaseholders what they want. I have tabled an amendment which asks the Government to retain the power to bring forward a share of the freehold on new flats. That is the most important thing going on here.

[Baroness Pinnock (LD)]

My Lords, we on these Benches far prefer a move to commonhold. The journey towards commonhold is a solution to the leasehold/freehold issue.

I understand why the noble Baroness, Lady Taylor of Stevenage, and the noble Lord, Lord Bailey, have proposed a share of freehold as a route towards commonhold as being the ideal solution, as recommended by the detailed report from the Law Commission in 2020. However, it is only a small step, and it is an option that is already being exercised by some flat owners.

It seems to me that the disadvantage of share of freehold is that, in practice, it will be possible only for blocks of flats with a small number of units. Where there is a large number of units in a single block, it would be very difficult to have a share of freehold for some but not others. It will be interesting to hear what the Minister and the noble Baroness, Lady Taylor of Stevenage, think.