Private Rented Sector

Debate between Desmond Swayne and Eddie Hughes

Thursday 16th June 2022 Commons Chamber

[Eddie Hughes]

I guess I should begin with an apology, saying I am sorry that the document was available at such short notice, although there is going to be considerable opportunity over the next couple of months for me and Members right across the House to discuss its content. I look forward to doing that either in formal settings or in the Tea Room with Members from all parties, right across the House.

But I am not going to let the hon. Gentleman rain on my parade on a sunny day like this. He is looking very serious, but I know that, deep down, Opposition Members welcome this legislation. They may be disappointed that it has taken a while to get to this point, but they may remember—it feels like a distant memory now—that we have had two years of a global pandemic in the meantime. The Government have done everything they could to support renters during that period. We have given furlough payments that have allowed renters to continue to occupy their properties and keep arrears as a result of the pandemic to a limit. We have also invested heavily in things such as discretionary housing payments to help people where arrears have been built up. So we have been doing an awful lot of work in the past two years and I think he should acknowledge that.

As I say, this is a White Paper; it is not the legislation. We have the opportunity now to discuss, as Members of Parliament and with stakeholders, what they think about the legislation and perhaps see if there is an opportunity to improve and enhance it, provided they are reasonable with their suggestions, before we get to the legislation.

On when that might happen, hon. Members will appreciate that our Department has an intense legislative programme. We have the Levelling-up and Regeneration Bill and the Social Housing (Regulation) Bill. As you will be aware, Madam Deputy Speaker, the Social Housing (Regulation) Bill has already life in the other place, so progress is being made with our legislation. However, clauses have been sent for drafting and work is already under way. People are beavering away on the construction of that document, so I hope we will see it in quick time. Once it gets to Parliament, I am expecting its passage through Parliament to be pretty smooth and fast because I think it is going to be welcomed by Opposition Members.

On the point about the abuse of mandatory grounds that we are strengthening for landlords, I understand completely the reservations of the hon. Gentleman. I commit to work closely with him to make sure that that legislation is tough and there is not the opportunity for rogue landlords to thwart it in some way, given our best intentions.

On how we might enforce the powers, I fully appreciate that councils are under intense pressure, so we are going to work with councils on a number of pilot schemes so we can test what the best way is for them to enforce good-quality housing within the private rented sector, and then we can develop best practice and I hope share that across the country.

On rent rises, one of the things we should appreciate with regard to the cost of living is that, if somebody is forced to move tenancy, perhaps because of a no-fault section 21 eviction, on average, that costs approximately £1,400. So if we can limit the number of times people move, we are going to make sure that they do not experience those unfortunate and unnecessary costs. However, as a Government, we are clearly not committed to the idea of rent control. We have seen that experiment carried out recently in some places in Europe and all it does is stop investment in properties. That is the last thing we want to do.

This White Paper commits to a fairer private rented sector for both tenants and landlords, and I look forward to working with Opposition Members to deliver it.

[Sir Desmond Swayne (New Forest West) (Con)]

Madam Deputy Speaker, can I refer you to my entry in the Register of Members’ Financial Interests?

Rents are rising because of a shortage of properties in the market as landlords flee from it. Has the Minister considered that these measures may have the very reverse effect of that which he intends?

[Eddie Hughes]

I always love to hear from my right hon. Friend. His powerful oratory suggests some things sometimes that may not necessarily be quite the case. The English housing survey tells us that as many landlords are talking about selling some of their stock as are talking about buying new stock, so I think the equilibrium within the market is likely to be marginally less dramatic than he has suggested. Clearly, as a Government, we will be keeping a watchful eye on these things to make sure there are no unintended consequences. Given the work we have put in to reassure landlords and the consultation we have had during the creation of this White Paper, I think he may find that they are less frightened of the White Paper than his oration might suggest.

Leasehold Reform (Ground Rent) Bill [Lords]

Debate between Desmond Swayne and Eddie Hughes

Report stage & 3rd reading
Monday 24th January 2022 Commons Chamber

[Eddie Hughes]

I would love to be tempted by something like that, but given that we have just gone through two years of a rather unexpected global pandemic, it is best not to pin these things down too firmly.

Unfair practices have no place in the housing market, and the Government are committed to ending them. That is why, in addition to our proposed reforms, we asked the CMA to carry out an investigation into the potential mis-selling of homes and unfair terms in the leasehold sector. We are clear that we want to see existing homeowners who have been affected obtain the justice and redress they deserve. During 2021, through determined negotiations, the CMA secured commitments from Aviva, Persimmon, Countryside Properties and Taylor Wimpey to amend their practices, which included righting the wrongs of doubling ground rents and houses being sold as leasehold. These settlements will help to free thousands more existing leaseholders from unreasonable ground rent increases. I am sure the whole House will join me in welcoming the progress the CMA has made.

Indeed, the investigation continues, and we are closely monitoring those developers and landlords that have failed to sufficiently change their practices, such as those described by my hon. Friend the Member for Warrington South (Andy Carter). The action against major industry players serves as a warning to other developers with similar arrangements in place. Let me be absolutely clear in reiterating the Government’s position: we want to see other developers come to the table.

Again, I reassure hon. Members that we take the plight of existing leaseholders extremely seriously, and we are making moves across a number of areas of Government policy to reflect that commitment. It is on that basis that I ask the hon. Member for Weaver Vale to withdraw the new clause, and to work with me on the development of further reforms to support existing leaseholders, as I have described—or, alternatively, the hon. Member for Greenwich and Woolwich (Matthew Pennycook) and the hon. Member for Ellesmere Port and Neston (Justin Madders), with his experience through the work of his APPG.

On amendment 1, which is in the names of my right hon. Friend the Member for New Forest West (Sir Desmond Swayne) and my hon. Friend the Member for Waveney (Peter Aldous), as hon. Members will know, it is our intention to protect leaseholders from unfair practice through this Bill by ensuring that in future regulated leases are restricted to a peppercorn rent unless excepted. The Government believe that those who purchase retirement homes should benefit from the same reform as other future leaseholders. While we would like the provision of the Bill to come into effect as soon as possible, we have decided to give the retirement sector additional time to prepare for these changes. The transition period for retirement properties is being granted in recognition of the fact that the sector had previously been informed that it would be exempt. We have provided this additional time—first announced over a year ago, on 7 January 2021 —for the sector to prepare for these changes. As such, the ground rent Bill will come into force no earlier than 1 April 2023 for retirement homes. We have carefully considered this to ensure we are striking the right balance—giving the retirement sector time to transition and ensuring that protection for leaseholders comes as quickly as possible.

Amendment 1 seeks to exempt retirement properties from the peppercorn rent provisions where part of the development remains unsold at the commencement of the Bill and where the development itself was commenced prior to 6 July 2021. There is a simple reason why I am rejecting this, which is that we want to protect more leaseholders. The amendment would mean that many new leases enter the market charging a monetary ground rent, with more consumers of retirement properties being left outside the Bill’s protections.

[Sir Desmond Swayne]

What was the rationale for granting the exemption in the first place? Surely the Minister recognises that, for many people in the retirement sector, it will be in their financial interest to pay a lower purchase price and have a continual ground rent, rather than to pay a significantly greater capital sum upfront. Individual circumstances will of course differ.

[Eddie Hughes]

I was delighted when I was appointed as a Minister for the Department on 16 January 2021. The negotiations to which my right hon. Friend refers pre-date my time at the Department, so I will have to take his word for what happened. It is important that as many people as possible benefit from the provisions of the Bill. We have offered a generous transition period and many people have already adopted their operating models, so he can be reassured: the sector will cope.

The amendment could serve only to incentivise any retirement developer to sell simply one unit on a development before commencement of these provisions in order to continue to charge ground rents on all the properties in that development. The amendment would risk providing a loophole. Throughout consideration of the Bill, arguments concerning the transition period have been made on both sides: there have been those who wished to extend the period, including by application to part-sold properties, and those who wished to remove the period entirely.

On Second Reading, we heard arguments by my right hon. Friends the Members for Chipping Barnet (Theresa Villiers) and for New Forest West in favour of amending the transition period for the sector. Subsequently, I had helpful conversations with representatives of the retirement development sector, whom I met on 8 December. I am grateful to them for taking the time to explain their position to me.

We appreciate that there are likely to be some developments that will continue to include a mixture of properties with monetary and peppercorn ground rents. That will not be limited to retirement properties, and we do not consider that that is a compelling case for retirement sector leaseholders to be exempted or treated differently. I put it to you, Madam Deputy Speaker, that there is a simple way to avoid this: reduce all ground rents to a peppercorn.

The Bill provides a clear-cut date for consumers. If a regulated lease is sold after the date, there can be no monetary ground rent. That is transparent and easy for consumers to understand. Indeed, many consumers may already be planning their purchase based on that date, secure in the knowledge that they will be protected from pointless monetary ground rents from that point forward. To bolster the clarity and transparency provided by the Bill, we will of course ensure that all relevant leaseholders are aware of the legislation and the impact that it will have on them, before the Bill comes into force. I therefore ask Members not to press the amendment.

Question put, That the clause be read a Second time.

Leasehold Reform (Ground Rent) Bill [Lords]

Debate between Desmond Swayne and Eddie Hughes

2nd reading
Monday 29th November 2021 Commons Chamber

[The Parliamentary Under-Secretary of State for Levelling Up, Housing and Communities (Eddie Hughes)]

I beg to move, That the Bill be now read a Second time.

As hon. Members may know, I have long championed a root and branch comprehensive reform of our leasehold system. It has been a long journey to get here from my private Member’s Bill—Ground Rents (Leasehold Properties) Bill—to try to overhaul the regulations on ground rents. It is particularly gratifying to be standing here today as the Minister responsible for this hugely important legislation.

The Bill will make home ownership fairer and more transparent for future generations of leaseholders. We will do this by reducing the ground rent on new residential long leases where a premium is paid to a peppercorn. I am sure that this change, which will benefit thousands of future leaseholders, will be welcomed right across the House.

[Sir Desmond Swayne (New Forest West) (Con)]

I lobbied for an exemption for the retirement living industry, which was granted and then withdrawn in January this year. Why was that?

[Eddie Hughes]

I appreciate my right hon. Friend’s strong lobbying on this matter. I think the Government decided that it was appropriate to treat all leaseholders the same and therefore we made that change, although we did allow an extension in the introduction of that to April 2023.

--- Later in debate ---

[Eddie Hughes]

Once again the right hon. Gentleman points out an egregious and unfortunate practice that hopefully we will be finding ways to address in future.

[Sir Desmond Swayne]

That prompts the question of what proposals the Minister may have to enable leaseholders to enforce the purchase of freeholds from such companies. Does he have plans for that?

[Eddie Hughes]

As my right hon. Friend will know, unfortunately I am not the Secretary of State, much as I would like to be. [Interruption] Not yet, anyway. It is best to leave the fine detail of the formation of future legislation to the Secretary of State to decide. However, I look forward to discussing the matter further with my right hon. Friend as we progress.