Baroness Stowell of Beeston
Main Page: Baroness Stowell of Beeston (Conservative - Life peer)
Baroness Stowell of Beeston (Con)
I am grateful to my noble friend Lady Maddock for securing this debate this afternoon. Although there have been very few speakers in today’s debate, we have covered quite a bit of ground. I will certainly do my best to respond to all the points that have been raised. However, I may need to supplement my response with a letter and I will do that if necessary.
The noble Baroness, Lady Gardner, estimated that there were about 5 million leasehold properties in England. The Government estimate 3 million, but that certainly makes up a significant proportion of the housing market. I should declare from the start that I am an owner-occupier of a leasehold flat and I understand, as someone living in a property that is part of this regime, that it can be a complex and technical legal system. I certainly recognise along with others who have spoken today that it can cause problems for leaseholders and freeholders alike. But not everyone who owns a leasehold property experiences a lot of problems. What is important is that we strike the right balance in a way that recognises and protects the rights and interests of both leaseholders and freeholders and that we make sure that these rights are kept up to date with changing realities without making things more complicated, burdensome or expensive.
As the noble Lord, Lord McKenzie, just acknowledged, where we can make changes that are perhaps small in and of themselves, we do so where we think that that will be beneficial to people. The most recent example was when the Government supported a Private Member’s Bill that cleared up an important anomaly. Until that Bill, leaseholders who were unable personally to sign certain legal forms could not extend their leases or take part in buying the freehold. That small change will make a big difference to many elderly or vulnerable people, who will be able to appoint someone to sign on their behalf in the future.
My honourable friend and colleague the Housing Minister, Kris Hopkins, is already aware of some concerns about the leasehold sector that have been raised with him by Members of the other place. He is keen to listen to concerns, hear what people have to say and explore whether there is any possibility of addressing problems within the sector. Today’s debate is timely and I intend to report back to him on the points that are raised.
In addition to responding to the questions that have been asked, I think that it is important to remind noble Lords what the Government have done and are doing to make sure that the system is working effectively, that it is—to refer to the point powerfully made by my noble friend Lady Gardner—simple to understand and that it delivers high standards and easy access to remedies when things go wrong.
First, perhaps I may highlight the complexity. It is important to remind noble Lords that to help leaseholders to navigate the leasehold system, the Government provide access to free, independent legal advice and information through the Leasehold Advisory Service. My noble friend Lady Gardner of Parkes, as well as my noble friend Lady Maddock and the noble Lord, Lord McKenzie, sought to draw some comparisons with commonhold. They highlighted what the Commonhold and Leasehold Reform Act 2002 offered as an alternative to leasehold for properties such as flats.
In the past few weeks, in answering different questions and responding to a couple of debates on this topic, I have studied more about this subject than ever before and have improved my understanding. It is important to make the point that, when buying a property or a home in a building that is shared with other properties, it is difficult to conceive of a system that will be perfect and address everybody’s competing needs and rights. Although commonhold certainly offers some advantages, it also has some disadvantages. When people own leasehold properties, it is possible for them to challenge some of the decisions which are put forward and which may affect them, whereas once you are in a commonhold situation, it is very difficult, if you are in a minority, to challenge decisions made by the majority of commonholders in that block.
My noble friend referred to conversion from leasehold to commonhold and asked why that has not happened so far. We do not have any plans to review the rule that requires a 100% sign-up to commonhold from the different property owners in a block. We think that that is right, and it was debated in great detail during the passage of the legislation. As someone who owns a property in a block, I feel that, if such a significant change were proposed, everybody with a property in the block would want the decision on it to be unanimous.
As we know, commonhold rather than leasehold is also available as the tenure for new constructions, but there has not been a great deal of take-up on that. One thing that I can claim a little credit for is that I have asked my department to press a bit harder, through the forum that it holds on a regular basis with the construction industry, in exploring why the industry is not pursuing commonhold as an option.
While I am on the subject of commonhold and conversions, I should respond to a point made by the noble Lord, Lord McKenzie, about barriers to collective enfranchisement. That is obviously a slightly different arrangement, going from leasehold to freehold. Collective enfranchisement requires a number of criteria to be met, but these protect the interests of both leaseholders and freeholders. We are not aware of any residual barriers to collective enfranchisement at present.
I move on to the costs associated with leasehold, which is often raised as a concern for leaseholders, and it has certainly been raised by noble Lords today, in the context of public sector—that is, local authority—landlords where people have bought a former local authority property. We have recently consulted on proposals to cap excessive service charges for leaseholders living in former local authority properties whose landlords—that is, local authorities—benefit from Decent Homes funding, and we will be responding to that consultation shortly. We certainly remain open and receptive to further proposals to make sure that public sector leaseholders have fair and reasonable charges. My noble friend Lady Maddock asked about the OFT market study on property management services and I can confirm that it includes management in local authority and other social sectors in its work.
We are running out of time rapidly. This is such a wide and diverse topic that I cannot do it justice in the time available.
On the quality of service provided through managing agents, codes of practice have to be approved by the Secretary of State, and my department is currently working with the Association of Retirement Housing Managers and the Royal Institution of Chartered Surveyors on updating the codes. We also support initiatives to raise standards and the quality of service across the residential leasehold management sector. We welcome the self-regulatory scheme being introduced by the Association of Residential Managing Agents to raise the professional standards of its members. We will be watching with interest to see how effective and successful it is.
On the right to manage, I say to my noble friend Lady Maddock that 4,000 right-to-manage companies are registered at the moment, but her point about raising leaseholders’ awareness of this option is interesting and I have taken particular note of it.
Transparency and the information that is available to leaseholders is an important issue, which was raised by all noble Lords. Where leaseholders do not already receive service charge information as a condition of their lease, they have a legal right to ask for a summary of the relevant costs from their landlord. However, some interesting points were made on transparency and I shall reflect on them further.
My time is up, but as I have a few minutes left and have some issues to address before the next debate is due to start—
Lord Hunt of Kings Heath (Lab)
My Lords, we had a communication from the Government Whips’ Office that these debates were to be rolling, because of the vote.
Baroness Stowell of Beeston
My sincere apologies to the Committee. That is my mistake completely and I offer my apologies. I have gone over my time. There is a considerable amount more information that I can provide, which I will do in a letter to follow up this debate.
The key point that I want to make in conclusion is that, while we do not have plans to reform the legislation in this area, my honourable friend the Housing Minister is very interested in the concerns that are being raised and we certainly look forward to hearing further following the meeting that will be chaired by the noble Lord, Lord Best, which was referred to. I am grateful to all noble Lords for their patience today.