Leasehold Reform

Baroness Scott of Bybrook Excerpts

Tuesday 6th September 2022 Lords Chamber

[Lord Kennedy of Southwark (Lab Co-op)]

My Lords, I beg leave to ask the Question standing in my name on the Order Paper. In doing so, I declare an interest as a leaseholder.

[Baroness Scott of Bybrook (Con)]

As the noble Lord will be very well aware, as of today we have a new Prime Minister, and therefore it would be pre-emptive for me to set out so soon the details of when any legislation will be introduced. None the less, I want to be clear that the Government are committed to creating a fair and just housing system that works for everyone. This includes our reforms to improve fairness and transparency in the leasehold home ownership market.

[Lord Kennedy of Southwark (Lab Co-op)]

I thank the noble Baroness for that response. Can she go further and confirm that she will speak to the new Secretary of State and other relevant Ministers, when appointed this week, to urge progress on leasehold reform? There are some dreadful abuses of leaseholders taking place across all aspects of this tenure—on service charges, insurance and forfeiture—and truly radical reform, or even abolition of this tenure and the development of commonhold, is required.

[Baroness Scott of Bybrook (Con)]

I assure the noble Lord that I will speak to whoever is the new Minister, or to an old Minister coming back. While I cannot set out precise details of the future Bill at this stage, the Government have been very clear about our commitment to addressing the historic imbalance in the leasehold system. Further legislation will follow later in this Parliament. This is a long-term reform programme; it is complex and it is important that we get the detail right.

[Lord Young of Cookham (Con)]

My Lords, my noble friend will know that the leasehold reform Bill was originally planned for this Session and has now been postponed to the next one. In the meantime, in addition to the problems mentioned by the noble Lord, Lord Kennedy, there is considerable uncertainty in the leasehold market. Leaseholders when they buy a flat do not know what additional rights they may acquire under the Bill, and this affects the value. To minimise the uncertainty in the meantime, can my noble friend do what she can to ensure that the Bill is introduced very early in the next Session, preferably on the first day of the Queen’s Speech debate?

[Baroness Scott of Bybrook (Con)]

I totally understand the issue that my noble friend raises. As I have said to the noble Lord opposite, I will do my best to ensure that all the issues that noble Lords bring up today are communicated to the department and to the new Ministers. My noble friend understands that I cannot give the commitment that he requires but, again, I assure him that the Government are still very strongly committed to taking forward a comprehensive long-term programme of reform in the house ownership sector. However, as I have said before, it is complex and we need to get the detail right.

[Baroness Pinnock (LD)]

My Lords, here is something that maybe the Minister could address. Ground rents are not controlled for the vast majority of leaseholders, and there is obviously no service for that, just a payment that they have to make. Leaseholders are telling me that often that is linked to RPI, which is obviously going through the roof, resulting in very high additional charges for the leaseholders affected. It is profiteering that is inexcusable in the circumstances. Will the Minister use whatever influence and pressure that she and the Government can to put on to freeholders to stop these extortionate rises in RPI-linked ground rents?

[Baroness Scott of Bybrook (Con)]

I will use every opportunity I can to do that, and the Government are looking at capping rents across the social sector. I will also bring up the issue of ground rents while they are looking at those issues. I think that is an important point we can take back from the noble Baroness.

[Lord Adonis (Lab)]

The issue of ground rents that the noble Baroness has just raised is fundamentally different from the issue of social rents. As the Government themselves recognise, it is totally unjustified to be charging exorbitant ground rents, for which landlords offer no services whatever, because they have been illegal with respect to new leases since the end of June. It is not just increases related to RPI—in some cases there are doubling clauses in contracts every 10 years, which leads to totally unsustainable increases for leaseholders. I strongly encourage the noble Baroness to take up this issue with the new Secretary of State.

[Baroness Scott of Bybrook (Con)]

I assure the noble Lord that I will do that. I understand. That is why we brought in the Leasehold Reform (Ground Rent) Act in 2022, which came into force, as the noble Lord said, at the end of June. Things have changed and are changing, and as we are looking at capping social housing rents, I do not see any reason why we cannot look at—without any promises—ground rents as well.

[Lord Watts (Lab)]

My Lords, can the Minister explain why there is plenty of parliamentary time available at the moment and yet these important Bills do not come forward? Is it the case that they have all followed the procedures of the ex-Prime Minister and gone on holiday for a month?

[Baroness Scott of Bybrook (Con)]

I think noble Lords will find that every department thinks that its legislation is as important or more important than that of others. But I agree with the noble Lord that these are important pieces of legislation, and I shall talk to Ministers as they come in, and to the department.

[Baroness Fox of Buckley (Non-Afl)]

My Lords, I watched all the hustings that have taken place throughout the summer and was reassured by people talking about the need for affordable housing and home ownership as part of democracy, but there was no specific reference to leasehold. Would the Minister try to get the message through to the new Prime Minister that although she may think, as many of us did when we bought our flats, that you are buying into home ownership, actually, if you buy as a leaseholder, you do not own anything—you are just tenants by any other name, with very few rights? Maybe the new Prime Minister does not know the details. I urge the Minister to draw her attention to this very important issue, or it makes the home ownership rhetoric only just that.

[Baroness Scott of Bybrook (Con)]

I am taking back from this Question a very clear view of what this House wants doing about these leaseholder issues. It was in the Government’s manifesto, and we are due to deliver these changes within this Parliament, but I shall certainly take back the views of this House, which have come across very strongly this afternoon.

[Baroness McIntosh of Pickering (Con)]

My noble friend may be aware that leaseholders trying to control their energy and electricity usage have no control over the energy and electricity being used in the common parts of the building. Is that something that she might take up with the new Energy Secretary of State at BEIS in due course?

[Baroness Scott of Bybrook (Con)]

I thank my noble friend for that question. The Government have confirmed that we will provide equivalent support of £400 for the households who will not be reached through the Energy Bills Support Scheme. This includes those on communal heating systems, where they are currently excluded. The Government are due to announce in the autumn details of how those households will receive £400 of support. The energy security Bill introduced in July will also give Ofgem powers to set prices for consumers on heat networks where necessary.

[Lord Best (CB)]

Can the Minister to add yet another item to the long list of things that she is going to take back to the Secretary of State—the special position of leases for retirement housing? People moving into retirement housing is a very good thing, because it frees up family homes, and we want people to be in more suitable accommodation in old age, but people are rightly put off by not understanding, and sometimes by being ripped off by, the lease arrangements that govern their service charges and other fees. Could she draw particular attention to that? Possibly a solution may lie in the new legislation, as it comes forward, specifying the content that will go into each leasehold that will be permitted in future.

[Baroness Scott of Bybrook (Con)]

I thank the noble Lord for that. I am personally aware that this is an issue in housing for those over 50 and 55. I shall try my best to urge the department to take on board those issues when it comes to the next piece of leaseholder legislation.

[Lord Kennedy of Southwark (Lab Co-op)]

My Lords, I have one final thing for the Minister to take back to the new Secretary of State. There are a couple of really good Private Members’ Bills on these issues, including the Leasehold Reform (Reasonableness of Service Charges) Bill and the Leasehold Reform (Disclosure and Insurance Commissions) Bill.

[Baroness Scott of Bybrook (Con)]

Noted, my Lords.