Commonhold and Leasehold Reform: Managing Agents

Debate between Gareth Bacon and Nusrat Ghani

Thursday 2nd July 2026 Commons Chamber

[Gareth Bacon (Orpington) (Con)]

I thank the hon. Member for Vauxhall and Camberwell Green (Florence Eshalomi) for securing and leading this important debate. I pay tribute to the work of the Housing, Communities and Local Government Committee under her leadership, which generated a 159-page report containing a series of recommendations. I am conscious of time, Madam Deputy Speaker, so I will not comment on the remarks made by Members from all parts of the House, but I extend my thanks to all those who made considered and important contributions.

The Opposition support leasehold reform. As we have heard many times, there are approximately 5 million leasehold properties in England and Wales, and it is clear that the leasehold system comes with problems and requires change. For too many leaseholders, the costs just keep piling up. In 2023-24, the average ground rent paid by a leaseholder in England was £304. Alongside that, there was a 5.8% increase in the annual service charge, taking the average annual cost to nearly £3,000. In London, those costs are even higher, with an average of £412 charged for ground rent and service charges sitting at about £8,000 in some modern high-rises.

Even at their highest, the costs continue to rise, bringing more uncertainty for leaseholders. Service charges in particular can rise astronomically, leaving leaseholders having to pay thousands of pounds more than they ever intended or believed they would pay, and some flats virtually impossible to sell. On top of that, for too many leaseholders, the costs they pay come with no transparency about how their money is spent, how spending decisions are reached, and who signs off on them. Lack of clarity around these costs is a problem that policy makers cannot ignore.

Knowledge of these problems is not new. In 2018, the then Government established a regulation of property agents working group under the chairmanship of the noble Lord Best. The group examined the key issues impacting leaseholders and the need for reform in the sector. The group issued its report in 2019 and proposed a new regulator and regulatory regime, and a new enforcement system. Neither the previous Government nor the current one did a great deal to bring that about. Seven years later, we still await any meaningful Government action building on the recommendations of the report, and the draft Bill is silent on that issue.

It is not the only thing that leaseholders have to wait for. In two years, the Government have not yet implemented the full measures promised in the Conservative Government’s Leasehold and Freehold Reform Act 2024. The Government have said that they have their own plans for leasehold reform, but leaseholders have been told time and again to wait for a new Bill because of significant flaws in LAFRA. For two years, we have been told that primary legislation is required to fix the Act, but nothing has been done, and the draft Bill produced by the Government in January this year does not address the supposed flaws of the previous Act.

That prompts the question: where is that legislation and what is taking so long? Why are the Government proposing to bring forward a Commonhold and Leasehold Reform Bill that does not offer these fixes? If the eventual Bill remains in line with the previously published draft Bill, when can we expect the next Bill to address those changes? Assuming this Parliament lasts for a full term, we are now 40% of the way through its life, and we have had more Secretaries of State in that time than actual leasehold reforms.

The Housing Minister himself spent the end of his time in Opposition highlighting the need for speedy implementation of new rights for leaseholders, pressing the previous Conservative Government to

“give us a sense of the timetabling of some of the more important provisions in the Bill, because leaseholders watching our proceedings will want to know when the rights provided for by the Bill can be enjoyed.”

Well, he was clearly correct, so I wonder what the shadow Minister of that day would say to the Housing Minister of today. I believe he would ask the same question as me: if not now, then when? When can leaseholders expect to see their rights come into force?

At the end of January this year, the Government published the draft Commonhold and Leasehold Reform Bill. According to the draft Bill, leaseholders can expect a ban on leasehold for most new flats; a new commonhold system, including rules for mixed use, mandatory reserve funds and quicker debt recovery; a ground rent cap of £250 per year for many existing leases, which reduces to a peppercorn after 40 years; abolition of forfeiture and the introduction of a more proportionate court-based enforcement regime; and the repeal of rentcharge powers on freehold estates.

Perhaps most eye-catching of those is the much-touted ground rent cap, as the Chair of the Housing, Communities and Local Government Committee set out in her opening speech. The Opposition recognise the need to support leaseholders facing high costs, but while capping ground rent may sound like a silver bullet, for many leaseholders it might be closer to a damp squib. That is because ground rent is usually nowhere near the level of service charges, which can have a genuine and very real impact on a buyer’s ability to find a mortgage. For the many leaseholders burdened by excessive and unclear service charges and rising council tax, the ground rent cap is a mirage in a desert of higher council taxes, escalating service charges and poor building management.

While this move may have some marginal benefit to leaseholders, there could be ramifications elsewhere. Investors have expressed deep-seated concerns about the potential impact on investor confidence and faith in the UK system. That is because the UK has long been seen as a safe, secure and predictable place for sound investment, and ground rent investments, favoured by UK pension funds among others, have become an important part of that environment. The Government’s plans to unilaterally and retrospectively revoke key aspects of pre-existing ground rent contracts have rippled through our financial districts and risk significantly negative impacts on investor confidence, with a wider undermining of our economy.

The risk of freeholder insolvencies does exist and could be dangerous, as the Government know because their own impact statement lists freeholder insolvencies as a realistic cost that could have spillover impacts on leaseholders. If the Government get this wrong, there could end up being a significant, albeit unintended, risk to leaseholders—people with families and mortgages, or those living in their first home. All of this prompts the question: why is the Government’s focus on ground rent and not service charges? I hope the Minister will take the necessary time to address these very real fears and explain his choice.

As outlined by the hon. Member for Vauxhall and Camberwell Green in her opening speech, one of the main focuses of today’s debate concerns the question of the regulation of managing agents and the Select Committee’s recommendation that clauses providing for this are inserted into any forthcoming Bill. We have heard compelling arguments from hon. Members from across the House, and powerful testimonies.

With the Government’s plans for a wholesale market conversion to commonhold, this issue becomes all the more pressing. That is because in moving to commonhold, there is the prospect of responsibility for building safety and management for thousands of flats moving from professionals to residents. That might work perfectly with a dedicated, well-trained and attentive residents’ committee at the helm, but what about the multitude of buildings where that may not be the case? What happens when the roof begins to crack, the water starts to seep in and the lifts begin to break down? What happens when the sinking fund has been drained and the residents’ committee chair, who might be under mounting social pressure, is forced to cut service charges to unhealthily and impractically low levels?

If commonhold is to become the norm, we must ensure that the Government are not laissez-faire in how they implement the system. They must not blindfold residents who may sleepwalk into a situation in which their homes are under management without proper training, a strong mandate and adequate knowledge of building safety and flood risks. To guard against that, it may very well be that commonhold residents choose to hire a managing agent to care for their homes.

Managing agents exist today—some are good, and some are not—but, as I outlined at the start of my speech, many leaseholders have spoken about the bad experiences they have had at the hands of some agents. The difference between managing agents being appointed under a commonhold system rather than a leasehold one is that the managing agent’s client would be the homeowners themselves, not a distant freeholder. The residents themselves would have the power to hire and fire the managing agent. That is why the Committee’s recommendations are so important.

If there is to be a regulator, it must have teeth, as the noble Lord Best said in his 2019 report and implied again in his evidence to the Committee on 10 March, and as the hon. Member for Vauxhall and Camberwell Green said in her speech. If there is a regulator, it is absolutely crucial that it works as intended. It would need to have the requisite expertise, personnel and budget to discharge its duties efficiently. Lessons must be learned from the failings of other regulators, such as the Building Safety Regulator.

The Government are considering bringing their Bill forward and examining the Committee’s work. If the Government decide to heed the recommendations of the Committee, I hope the Minister will commit to working across parties and with the whole industry to ensure that the Government get it right the first time.

[Madam Deputy Speaker (Ms Nusrat Ghani)]

Minister Pennycook has agreed to give a short speech to accommodate the next debate.

Sustainable Aviation Fuel Bill

Debate between Gareth Bacon and Nusrat Ghani

2nd reading
Wednesday 11th June 2025 Commons Chamber

[Gareth Bacon (Orpington) (Con)]

Let me begin by setting out an unambiguous truth: aviation is vital to the British economy. It is a cornerstone of our national infrastructure, our competitiveness and our connectivity.

When it comes to the impact of aviation on our economy, the figures speak for themselves. Aviation contributes £52 billion to UK GDP, supporting over 960,000 jobs across the country. That includes 341,000 people working directly in aviation—from air traffic controllers to aerospace engineers—350,000 jobs in the supply chain, and another 269,000 supported through consumer spending. Aviation also delivers nearly £8.7 billion in tax revenues, and aerospace manufacturing adds a further £9 billion directly to GDP, plus over £10 billion more when including its supply chains. Some 197 million passengers and 2 million tonnes of freight move through our airports each year. The economic case is therefore unanswerable. In short, we must all support this thriving industry with clear benefits to the country.

The Conservative party has always recognised the strategic importance of aviation, but, unlike the current Government, we understand the damage that can be done with poor policy choices—I regret to say that we have seen plenty of that from the Labour Government over the past year. Alongside their national insurance jobs tax, which is putting pressure on businesses and threatens to leave working people £3,500 a year worse off, Labour’s decision to hike air passenger duty threatens the vitality of this thriving industry. The Office for Budget Responsibility confirms that rises planned by the Chancellor of the Exchequer will raise an extra £555 million in taxes over five years, pushing up the costs for businesses and passengers alike.

In a speech that will have a lot of common ground with the Secretary of State’s speech, I regret to say that Labour’s handling of its professed desire to expand aviation raises more questions than answers. The decision to approve a second terminal at Luton airport, which we support, will be judicially reviewed. The proposal for a second runway at Gatwick has been kicked down the road for surprising reasons, to say the least, and the supposed support for a third runway at Heathrow is no more credible. The Chancellor has promised that the latter proposal will be operational by 2035, with spades in the ground in this Parliament, but that ambition looks very far-fetched, and there are substantial logistical and financial barriers to its construction. So far, the Government have provided no solutions on those points, so we will watch developments in the next few weeks with considerable interest.

It is against that backdrop that we come to the Bill before us. When we entered opposition, we made it clear that we would not oppose the Government just for the sake of it. We made it clear that where the Government’s choices would benefit the country or the economy, we would welcome them. That is why we will not seek to divide the House on this legislation on Second Reading. This Bill is a logical follow-on from the statutory instrument passed in September last year that established the SAF mandate, the first stage of which came into effect in January. Having mandated that airlines will be required to use a specified percentage of SAF—2% this year, rising to 10% in 2030 and 22% in 2040—it is logical to take steps to ensure adequate levels of locally produced fuel.

While the mandate requires the consumption of SAF, it is a new technology, and its production carries a high risk for investors. Encouraging the development of the plants required to produce this fuel is the purpose of this Bill and, to a very large degree, it is a continuation of the policy of the previous Government. In 2023, it was the last Government who committed to an industry-funded revenue certainty mechanism to support UK-based SAF production. In early 2024 we published the detail, with plans for a guaranteed strike price model to give price certainty to SAF producers. I hear the Minister say, “You didn’t do it!” He is completely correct, because unfortunately there was something called a general election that followed shortly after.

As the Secretary of State has outlined, under this model, producers will be topped up when the market price falls below a guaranteed strike price; when the market price rises above, they will pay it back. The system mirrors the successful contracts for difference model in offshore wind, and the economic benefits could be considerable. A cost-benefit analysis produced by the Department for Transport before the general election suggested that the SAF industry could add more than £1.8 billion to the economy and create more than 10,000 jobs in the country, but, more fundamentally, SAF is a product of what we know to work. As the Secretary of State said in her speech, it can be blended with conventional Jet A-1, used in existing aircraft and refuelled at existing airports. The capability exists. The challenge is not scientific; it is economic. That is why the concept of a revenue certainty mechanism was one of the six pillars in the previous Government’s jet zero strategy, and, as the Secretary of State outlined, the introduction of a revenue certainty mechanism has wide support in the aviation industry.

Let me be clear: while we will not oppose the legislation this evening, we will carefully scrutinise it as it progresses through the House. In that spirit, I will put some questions to the Minister, which I hope he will address in his summing up. The first is about passengers. In the press release announcing the Bill, the Government said that the revenue certainty mechanism would keep ticket price changes minimal:

“Keeping fluctuations to £1.50 a year on average.”

The Secretary of State said the same in her speech. Perhaps in his speech the Minister could outline what this figure is based on. Do the Government stand by it? Is it a commitment, or a rough estimate?

The second question is about what type of SAF the Government favour and how it will be produced. While the SAF mandate permits the production and use of hydroprocessed esters and fatty acids SAF in the early years of the mandate, and also contains a small but increasing requirement for power-to-liquid SAF in later years, the bulk of the SAF to be developed and used under the terms of the mandate is second generation SAF, which is to be made from municipal waste, non-edible crops and woody biomass. The UK is a small island, with insufficient spare land to enjoy self-sufficient food security or to grow new forests at scale. Does the Minister think we will be self-sufficient? If not, what proportion of the ingredients necessary for making second generation SAF does the Minister think we will need to import?

Relatedly, the HEFA cap comes into force incrementally from 2027, despite there currently being no domestic production of second generation SAF in the UK and low levels of second generation SAF produced globally, removing the opportunity to source mandated volumes through imports. This risks making the costs of hitting SAF mandate targets very high indeed, because suppliers will soon be forced to buy out of their mandate obligations—a significant cost that will be passed on to the airlines and, ultimately, to passengers without delivering any decarbonisation benefit at all. Will the Government consider revising the timelines for phasing out HEFA SAF to bring them more in line with the timescales for domestic second generation SAF production, in order to minimise the costs for passengers?

The next area of interest is planning. The plants in which the Government are seeking to encourage investment will be large, and—as the Minister no doubt knows—large developments tend to attract a lot of local opposition, often leading to planning inquiries, judicial reviews, vast expense and years of delay before any construction work begins. If this does not change, the revenue certainty mechanism may not be sufficient to attract investors, so what will the Government do to minimise delays in the planning process?

I turn now to timescales. When will the first contracts be awarded under the RCM? Will there be a timetable for reaching full mandate compliance? As my right hon. Friend the Member for Goole and Pocklington (David Davis)—who is no longer in his place—touched on, the issue of the strike price is critical to the success of the proposal. What criteria will be used to set the strike price? Will the methodology be published, and will there be regular reviews? Finally, will the Government commit to regular reporting to Parliament on industry take-up, production capacity and cost trajectory, to ensure that they remain accountable for the Bill over time?

The importance of this Bill is clear. Backing UK production of sustainable aviation fuel is necessary if we are to meet our net zero goals without undermining the competitiveness of the aviation sector. However, let me be clear: as the Bill moves through the House, we will continue to look closely at the detail and press for changes where necessary, where improvements can be made to ensure that the scheme delivers on its promise.

[Madam Deputy Speaker (Ms Nusrat Ghani)]

I call the Chair of the Transport Committee.

Passenger Railway Services (Public Ownership) Bill

Debate between Gareth Bacon and Nusrat Ghani

Consideration of Lords amendments
Tuesday 19th November 2024 Commons Chamber

[Madam Deputy Speaker (Ms Nusrat Ghani)]

I call the shadow Secretary of State.

[Gareth Bacon (Orpington) (Con)]

I thank the other place for providing these amendments. Although the measures in this Bill are not a surprise—and we have stated our opposition to its fundamentals from the outset—we have made the case that, in effectively nationalising the operation of our passenger railways, we risk going backwards. Its core provisions will mean that the progress made on passenger services since privatisation will not be carried on.

That said, we do agree that there is a need for reform, and we support the reform laid out in the Williams-Shapps review. But the reforms proposed by this Government go too far and will undermine any potential progress. That is why the Lords amendments we are discussing are of central importance. Neither of the two amendments passed in the upper House descend from the Government’s intention to bring the franchises into public ownership, and they are clearly reasonable and measured. As the noble Lord Moylan pointed out, a

“glaring omission from the Bill is, of course, the passenger.”—[Official Report, House of Lords, 6 November 2024; Vol. 840, c. 1510.]

This is the Passenger Railway Services (Public Ownership) Bill, yet it says nothing about the passenger.

Lords amendment 1 attempts to put that right and put the passenger back at the head of the Bill as the driving force in what the Government are trying to do, and to require Ministers to test their actions under the Bill against the standard of whether it will improve matters for the passenger. It clarifies that the Secretary of State

“must, in taking any actions under the provisions of this Act, have regard to this purpose”,

which is the

“improvement of passenger railway services”.

It is a simple but deeply important amendment that will ensure that the Bill, which is little more than an ideological undertaking if it lacks the proposed amendments, would be required to act unambiguously in the service of passenger railway improvement. How could anyone oppose that? There is little public appetite for ideological measures that are not based on the improvement of the passenger experience, and to reject this amendment would be a tacit admission that the Government are rejecting the principle that legislation directed at the passenger services should be in line with service improvements. In doing so, they would reject the general public consensus. I urge the Government to support the amendment on those grounds. If they choose to reject it, it is incumbent on them to explain why they have decided to make a significant legislative change to our passengers’ railways that could risk worsening services.

Lords amendment 2 contains a simple measure: to ensure that the Government, when terminating existing franchise agreements, consider operational performance and terminate the worst-performing franchises first, enabling franchises that are currently working well to continue. That would clearly be in the best interests of passengers.