Leasehold Reform (Ground Rent) Bill [ Lords ] (Third sitting)

Ian Byrne Excerpts

Committee stage
Thursday 9th December 2021 Public Bill Committees

[Eddie Hughes]

As we draw towards the end of the Bill Committee, I thank Members on both sides of the room for their considered input. We work best when we work collaboratively. As I have said a few times, this is an issue I started to champion as a Back Bencher, so it is an incredible privilege to be the Minister leading the discussions. I thank everyone for their time.

New clause 3 brings us back to the issue of service charges, and to concerns about freeholders using such charges to charge ground rent by another name. The Government believe that all fees and charges should be justifiable, transparent and communicated effectively. Service charges that have been artificially inflated to make up for lost ground rent income would not meet those requirements. If any landlord seeks to recoup what they consider to be lost ground rent or other funds through service charges or any other charge, the wide definition of the term “rent” in the Bill will allow a tribunal to take the charge into account when deciding if it is actually prohibited rent. That is why the Bill has been drafted as it has, and why we have adopted a flexible definition of rent. As I explained in a previous sitting on Tuesday, the definition relies on its naturally understood meaning and includes anything in the nature of rent, whatever it is called. Where a freeholder has attempted to get around these provisions, the definition allows the tribunal to consider, in each case, whether such a charge actually represents a prohibited rent, even if it is not explicitly called a ground rent.

As was discussed earlier in the week, the penalties for landlords who charge a prohibited rent are significant —a maximum of £30,000 per lease. If a landlord had a block of 10 flats, then the penalty they would be risking would reach a significant amount.

We have provided a robust system with not only a serious deterrent, but a route for challenging freeholders who act this way. That is all relevant to the new clause, which asks for an impact assessment. I understand the concerns that motivated the new clause, but hopefully the hon. Member for Weaver Vale can appreciate that the drafting of the Bill is intended to specifically guard against service charges being used in the way that he mentions.

[Ian Byrne (Liverpool, West Derby) (Lab)]

It is an honour to serve under your chairship, Ms Elliott. Surely the new clause would make the Minister’s job easier, because after two years we would have an assessment of how successful the legislation has been. I am at a loss for a reason why the new clause should not be accepted; it would make it easier for the Minister, his Department and the Government to tighten legislation, if that was required. It asks for an assessment of the issue that we are speaking about. Could the Minister respond to that?

[Eddie Hughes]

I thank the hon. Gentleman for his intervention. It seems perceptive, given that the paragraph that I was about to move on to says: hon. Members will know that further leasehold reform will follow later in the Parliament, so the efficacy of an impact assessment of this kind, during a period of wider reform, would be questionable. It is difficult to carry out an impact assessment when many moving parts are changing simultaneously; this is not a laboratory experiment in which we can control just one element. As the hon. Gentleman is a member of the Select Committee on Levelling Up, Housing and Communities, I can say that I look forward to working with him in the future. Should any concerns arise, my door is always open.