Leasehold Reform (Ground Rent) Bill [HL]

Baroness Ritchie of Downpatrick Excerpts

Monday 24th May 2021 Lords Chamber

[Baroness Ritchie of Downpatrick (Non-Afl) [V]]

My Lords, it is a pleasure to follow the noble Lord, Lord Best, who has a wide knowledge of housing—especially housing policy matters. I remember meeting him some years ago when I was the then Minister for housing in Northern Ireland.

This Second Reading of this small piece of housing finance legislation provides an opportunity for the Government to set out how they intend to fully reform the leasehold provisions within the legislation in England and Wales. Instead, in this instance the Government have chosen to deal with the reform of ground rent. Although this is welcome, it represents only part of the change that is required and is a missed opportunity for the Government to fully address and embrace the needs of communities within the wider housing field.

Last week your Lordships’ House debated the Queen’s Speech; there was much reference to the need for building better for the communities and societies of the future in the post-pandemic phase. A better way to do that is through greater accessibility to social and affordable housing; the sustaining and provision of new jobs; investment in skills and training; the provision of decent homes and a reformed welfare/social security system; regeneration of our towns and cities, and investment in the rural economy. All those sectors are interlinked, and central to them all is the provision of affordable and social housing so that communities have a kick-start as we rebuild out of the marginalisation and disadvantage created by the pandemic. Housing provision offers communities and people a safe basis on which to rebuild their lives following the pandemic, and homes provide that necessary foundation and security to individuals and families.

However, and as a matter of regret, the Government in many ways are still ensuring that the housing market is geared towards the developer and have offered reform only of ground rent, which is referred to by this leasehold Bill. I ask the Minister: where are the other components required in leasehold reform that were promised? In July 2017, the then Conservative Government under Prime Minister May ran a consultation seeking views on measures to

“tackle unfair and unreasonable abuses of leasehold”;

in particular, the sale of

“new leasehold houses and onerous ground rents.”

In December 2017 the Government published their response to the consultation and stated that they would seek to bring forward legislation

“as soon as Parliamentary time allows, prohibiting new residential long leases from being granted on houses.”

The Government also stated that ground rents allow developers to maximise their profits, despite consumers seeing no clear benefit from them. Consequently, they also reaffirmed that they would introduce legislation so that ground rents on newly established leases of houses and flats were set at a peppercorn rate. I recognise what other noble Lords have said—that such a provision could not be retrospective—but could a time limit not have been placed on that to ensure that, in many cases, exorbitant ground rents are truly tackled?

Furthermore, the Government asked the Law Commission to review leasehold enfranchisement to make it easier, quicker and more cost effective for leaseholders to buy their freehold or extend their leasehold enfranchisement. The consultation ran until January 2019 and in July 2020 the Law Commission published its findings. It identified problems with leaseholds and made several recommendations, and in January this year the Secretary of State, Robert Jenrick, stated that the Government would bring forward legislation to set future ground rents to zero in the next parliamentary Session—hence the Bill under discussion today. He stated that it would

“be the first part of major two-part legislation to implement leasehold and commonhold reforms in this Parliament.”—[Official Report, Commons, 11/1/21; col. 11WS.]

The Minister has today referred to the commonhold forum that has been established, which I understand he may chair. In that respect, can he indicate the timeframe for this legislation, which would involve enfranchisement and the whole area of commonhold?

I note that this legislation has been welcomed by the property associations and the Conveyancing Association. Notwithstanding this fact, the property associations have called on the Government to extend the provisions of the Bill to those who would be exempt from it as drafted. Why was the legislation to extend the provisions on ground rents not extended to those who own a leasehold property? Maybe the Minister could provide answers to those questions, which have already been referred to by previous noble Lords in the debate.

I am reminded of the words of the noble Baroness, Lady Andrews, in last Monday’s Queen’s Speech debate:

“There was nothing on the scale of leasehold reform that we were anticipating. Yes, ground rent reform is important, but it is the low-hanging fruit of leasehold reform.”—[Official Report, 17/5/21; col. 408.]


This percipient statement clearly highlights what is not in the ambit of leasehold reform but needs to be, thus highlighting the importance of a more all-encompassing reform of leaseholds. The noble Baroness, Lady Andrews, referred to those issues today in her speech.

There is a need to correct the injustices faced by leaseholders locked in unfair contracts and faced with rip-off costs. The leasehold model needs to be totally reformed to include some of the following provisions: to impose a cap on ground rents for existing leaseholders at 0.1% of the property value up to a maximum of £250 a year; to set a simple formula for leaseholders to buy the freehold to their home, or commonhold in the case of a flat, capped at 1% of the property value—I ask the Minister whether that will be included in future legislation on commonhold; to crack down on unfair fees and contract terms by publishing a reference list of reasonable charges, requiring transparency on service charges and giving leaseholders a right to challenge rip-off fees and conditions of poor performance from service companies; and to ensure that residents are given greater powers over the management of their homes, with new rights for flat owners to form residents’ associations and by simplifying the right to manage. Can the Minister indicate when the Government will be prepared to bring forward supplementary legislation to reflect the foregoing points, which would encompass a total reform of the leasehold system?

I suppose I am a little envious, from a Northern Ireland perspective, because there is not much set out here in terms of leasehold. Rules on leaseholds are set out in individual contracts and there is no regulation of service charges in Northern Ireland. I will be pursuing this legislation—and, I hope, subsequent legislation—with the Minister for housing in Northern Ireland. But, in the meantime, can the Minister indicate whether discussions have taken place with the devolved Administrations—notwithstanding the fact that all matters to do with housing are devolved—about the content of this legislation and future reforms of the leasehold sector?

I have posed several questions to the Minister and look forward to his response.