Leasehold and Freehold Reform Bill

Baroness Twycross Excerpts

2nd reading
Wednesday 27th March 2024 Lords Chamber

[Baroness Twycross (Lab)]

My Lords, I declare an interest as deputy mayor for fire and resilience in London, and I thank the noble Lord, Lord Young, for his kind words about the London Fire Brigade.

My deputy mayoral role does not cover residential housing directly, but I am acutely aware of the emotional and financial costs faced by leaseholders. In particular, the issues in relation to remediation following the tragic Grenfell Tower fire have opened my eyes about leasehold and about what a number of noble Lords have observed, and what I understand the Secretary of State himself has said, to be a feudal and outdated system. If it is not quite from the dark ages, as the noble Lord, Lord Moylan, argued, it definitely deserves to be consigned to history.

I shall speak later about some the issues faced by Londoners. First, however, I ask the Minister about the issue of forfeiture covered by my Private Member’s Bill, which would seek to amend the Housing Act 1988. I thank the Minister for her time discussing it, and for her assurances that the Renters (Reform) Bill would cover this. I know from her opening remarks that the Minister is aware of the issues around forfeiture.

As the Minister is aware, the main issue that my Bill would address is the current uncertainty as to whether residential leasehold properties with ground rents of more than £250 a year outside Greater London, or more than £1,000 inside Greater London, are to be deemed to be assured tenancies under the Housing Act 1988. Currently, if the leases are assured tenancies and the ground rents are not paid, the landlord is able to repossess the property. There is no jurisdiction under the Housing Act 1988 for a court to refuse to grant possession to the landlord under an assured tenancy. However, a court has the discretion to grant relief from forfeiture, provided that the leaseholder pays any outstanding amounts owed. This is an anachronism that should be addressed at the earliest stage. Would the Minister accept an amendment that would do this in this Bill, given that the renters Bill appears to be taking some time to progress? As the noble Baroness, Lady Thornhill, said, it appears to have had a quiet death.

In my view, it does not really matter that there are not numerous examples of such forfeiture happening; it is the principle, possibility and threat that matter. This is an opportunity to address this through legislation. Forfeiture of this nature could undoubtedly happen. We know this, because it already happens in relation to service charges. Recently, the Evening Standard raised the case of a Londoner who had not paid her service charge due to the fact she had lodged a tribunal case against the freeholders for bogus service charges. Because the woman concerned had refused to pay a £5,500 bill —a figure 10 times higher than the estimate provided when she bought the flat—she is in breach of the lease and could lose her home. The paper rightly pointed to forfeiture as being the most mafia-like element of leasehold law in what it described as a crowded field. The woman concerned was in fact owed money by the freeholder; she had been awarded money by a tribunal challenging bogus charges but was still liable to lose her home.

The tribunal system is slow and unfair. Many freeholders do not play ball. There are examples of unscrupulous freeholders and agents slowing down an already glacial process and often not paying what they owe. Will the Minister say how the Government feel this legislation will address issues in the tribunal system and why they have not included removing forfeiture at this point through the Bill?

The Bill is a missed opportunity to transform an outdated system which affects millions of people. In the case of this city, over one-quarter of London’s households live in leasehold properties. It is not good enough that more fundamental change, a move to commonhold, is being delayed. While the Government’s recent proposals for reform are welcome as far as they go, they are too little and far too late. England and Wales are, as far as I know, the only countries in the world still operating this feudal freeholder/leaseholder system. The Bill is a missed opportunity to provide the fundamental reform required.

The Mayor of London has championed London’s leaseholders and, like other Labour politicians, has called for wholesale reform of leasehold. London’s housing strategy calls on the Government to introduce alternative tenures, such as commonhold, which has already been introduced in Scotland, and increase the support and advice to existing leaseholders. Mayors have limited levers to improve the situation—this definitely needs government action—but in London, the mayor has developed a range of ways to support fairer outcomes for leaseholders. This includes a requirement for 990-year leases as standard for shared ownership homes funded by City Hall. The mayor has introduced a leasehold guide for Londoners, which provides guidance to help leaseholders make sense of the current unfair and complicated system.

London has also introduced a service charges charter. This ensures that City Hall’s investment partners consider affordability and transparency when providing information to leaseholders. But best-practice guidance is only ever picked up by responsible freeholders; what we really need is an end to leasehold once and for all. What more will the noble Baroness do to ensure that leaseholders get a fair deal? In the absence of government action, will the Government give further powers to regional mayors? Or will they commit to go further than the current Bill by including stronger measures in government amendments?

The Mayor of London is also campaigning for a cap on ground rents of existing leases at a peppercorn rate, which would bring the greatest benefit to leaseholders who are currently required to pay ground rent to their freeholder, often with no clear service in return. I was disappointed to read that the Secretary of State has apparently bowed to pressure from those purporting, without basis, I understand, to represent the interests of pension funds and may back away from measures introducing peppercorn ground rents. Can the Minister reassure us that the Government will reconsider this?

My final point is about the remediation of historic building safety failures. The Government have rightly acted, through legislation and through funding, to protect some leaseholders. But remediation has been far too slow and some people are left either unable to move or with unreasonable and rising insurance bills, even after remediation work has been completed. I know that the Minister is aware of the issue with timber-framed leasehold properties in Barnet, and the recent fire which has led to high remediation costs that are not obviously currently covered by building safety legislation and which will potentially, therefore, unfairly fall on the leaseholders. Will she meet with Barnet Council to discuss this issue? Will she commit to looking at the gap it represents in current building safety legislation? The issues in Barnet are by no means unique. The building safety issues are part of a shocking legacy of many years of poor practice in development. Almost seven years after the tragedy of the Grenfell Tower fire, we are still seeing issues in building safety for leaseholders revealed only when fires occur.

This Bill goes only part way to address the issues faced by leaseholders. Like other noble Lords, I ask the Government to strengthen the Bill further as it passes through this House to avoid continuing an outdated and unfair system.