Leasehold and Freehold Reform Bill (Second sitting)

Lee Rowley Excerpts

Committee stage
Tuesday 16th January 2024 Public Bill Committees

[Barry Gardiner]

Thank you.

Professor Leunig: For that, you need to build more houses.

[The Minister for Housing, Planning and Building Safety (Lee Rowley)]

Q I am trying to keep my interventions very brief, because I will be speaking a lot next week, but I could not resist asking you a couple of questions given your history, knowledge and background that is much more than my own. You have emphasised very clearly and articulately the rights of the people sat around this horseshoe to make decisions that will have economic impacts. Can I get your understanding of what you think the economic impact of the Bill as it stands broadly is?

Professor Leunig: First of all, I repeat what I said earlier, namely that it seems to me that a lot of it is up to the secondary legislation. In particular, I think that issues of compensation are entirely in secondary legislation and regulation. As I say, I am not a lawyer; I find it very hard to read a Bill. It is not my skillset at all. I would not like to have your job.

I think that the biggest effect is the dynamic effect of creating a much cleaner and clearer property market. We have a rather ossified property market in Britain; it has become more ossified over time. There are all sort of reasons for that, including the fact that far more people are now under stamp duty, as well as the effect of financial regulations that mean someone needs a relatively large deposit to get on the housing market. There is a bunch of other costs that we really could simplify and get rid of. Take searches, for example. You can buy a house that is two years old and you have to do a completely clean set of searches. Why? When did we last find a mine in central London? We know this stuff pretty well.

I think this is part of clearing up the housing market and if we do so it can have quite big dynamic effects—for example, facilitating the better movement of people in response to opportunity. Such opportunities may be economic. I do not want to sound too Norman Tebbit and say, “Get on your bike.” However, there can be opportunities to go and live next to an aged parent who has suddenly fallen ill, in order to provide better care for them, or opportunities to move nearer to better schooling. Whatever the opportunity is, a more flexible housing market allows people to move to a house that is better suited to their needs.

All those things are good dynamic effects that in the medium term are strongly pro-growth and I see this Bill being part of it, but it is a small step forward. A move to commonhold would be a better step forward to a nice, clean system, where everybody knows exactly what they are buying and nobody is left wondering, “What sort of freeholder is this? Are they an exploitative one? Are they a reasonable one?” Many freeholders are perfectly reasonable.

[Lee Rowley]

Q Understood. Question two of three: what are the risks of getting things wrong that the Committee should be aware of when we go into line-by-line analysis of the Bill next week? Where do you see the biggest risks in the legislation?

Professor Leunig: I see no risks in anything that you plan to do; I really do not think that there are any meaningful risks in moving to 999-year leases over 99-year leases. I certainly do not see any risk in ending leasehold for houses.

However, you might have people coming back with very specific cases of supported housing, for example—you always want to check with specialist groups about things like that—but I see no meaningful risks in this Bill as far as it goes. If you had gone much further, there would have been no meaningful risks either. The fact that commonhold and similar things work in places like Australia shows that it is a perfectly possible and viable system.

The time when you want to be really worried is when you are the first person in the world doing something. Of course, that does not mean you are wrong—right? When we privatised the first utilities, or when we privatised British Telecom, that was not a wrong decision, but there were definitely grounds for caution. However, when you are doing something that is already done in many countries—of all the things you lot have to worry about, I would not worry about that one. Sleep well tonight.

[Lee Rowley]

Q Thank you. I have a final question. I know that you were not here all day, but we have heard some very compelling testimony and questions from colleagues about the potential for going further and adding things to the Bill. Next week, we will get into a discussion, as colleagues know, about what we can do and the practicalities of that; we are not going to be able to do everything. However, we think that a very sensible set of propositions have already been put forward. If you had to prioritise, where would you go first in terms of additions, because there is a necessary prioritisation that needs to come in next week’s discussions and on Report?

Professor Leunig: The only prioritisation meeting I had was with the current Secretary of State for Levelling Up on the LURB—the Levelling Up and Regeneration Bill —because the first draft of the Bill had twice as many clauses as could get through Parliament. We had a meeting for about two hours with the Secretary of State and each part was read out, including what its intention was and how many clauses it required. That is the cost-benefit analysis.

If I say to you, for example, “The lady before said 150 is too big”, I would agree with her; I imagine that is a very sensible change to make. By contrast, I am sure that other people have said, “Go for commonhold for everything in future”. That strikes me as requiring a lot more clauses than the number that would be required to change the 150 figure to 99, or 75, or something.

What I urge you to do is to ask the lawyers—the people drafting the legislation—how many clauses would each change that has been proposed cost. Then you think, “Okay, we can probably manage another 24 clauses”, or whatever it is, “or we can change 24 clauses. Which ones do best in that cost-benefit analysis?” I do not think that it would be sensible for me to give you an answer without knowing that legislative cost.

[Andy Carter]

Q The Minister has just asked three questions to help the Committee; I wonder whether I can ask a question to help the Minister. Do you think that he should include flats within the scope of the Bill? Flats are currently excluded. What is your view on that?

Professor Leunig: Yes.