Renters (Reform) Bill

Lord Best Excerpts

2nd reading
Wednesday 15th May 2024 Lords Chamber

[Lord Best (CB)]

My Lords, I draw attention to my housing and property interests as on the register. This Second Reading provides an opportunity to review the current state of the PRS—the private rented sector—and to consider the impact on this sector of the Renters (Reform) Bill. Does the Bill address the key problems facing renters and, if so, will it fix those problems?

Let us take a quick look at the private rented sector today. By the late 1980s, the PRS accounted for only some 9% of the nation’s homes. Then, in the early years of this century, the sector dramatically doubled in size to around 20% of the stock, and it achieved this growth without building virtually any new homes.

Two factors propelled this extraordinary turnaround. First, the Housing Act 1988 removed rent controls and security of tenure for new shorthold lettings. This created a profitable opportunity, enhanced by low-interest buy-to-let mortgages for investors: today, there are 2.3 million private landlords. Despite tax and regulatory changes to dampen this phenomenon and the recent interest rate hikes, the PRS has continued to sustain its new-found size, bolstered by the shortages that have pushed up prices and rents.

The second big change, which has led to today’s dependency on the PRS, was the demise of council housebuilding. At its peak, local councils regularly accounted for some 150,000 to 200,000 new homes built in a single year. The housing associations have only ever built a fraction of these numbers. Along with council house sales under the right to buy, now approaching 2 million homes sold, the social housing sector—that is, councils plus housing associations—has suffered a huge decline. It has gone from around 34% of the country’s housing stock to just 17% today. Those who would have looked to the social housing sector in the past must now turn to private renting instead.

Has this switch from social housing to private renting been a success? Although PRS rents are higher and security is lower, the PRS has provided a satisfactory home for many. But the switch has not helped with the nation’s biggest housing problem: supply. There are simply not enough homes to go around. Building new homes has not kept pace with increases in households. PRS landlords do not build new homes, with the exception of a valuable but modest program of build-to-rent and purpose-built student accommodation; rather, private landlords have inevitably outbid others, particularly first-time buyers, to acquire existing properties. Critics argue that this has inflated house prices and led directly to a reduced number of people being able to become home owners. We are left with acute housing shortages, which only a big expansion of social housing can fix.

However, the Bill does try to address other serious criticisms of the private rented sector. These criticisms are, put simply, that landlords can—and some do—take advantage of the acute housing shortages and lack of options; and that the power imbalance between landlord and tenant means that renters have had to put up with rents that absorb half their incomes, with poor conditions and appalling service, all because they have nowhere else to go. Underpinning this imbalance is the constant threat—whether articulated or not—of retaliatory eviction, whereby the landlord can get rid of a complaining tenant through the notorious Section 21 no-fault eviction route.

The Bill takes some important steps to correct the landlord-tenant imbalance. It does not have much to say about the affordability of rents, because it is a fundamental characteristic of a private rented sector that rents are set by the market. As economists frequently tell us, tough rent controls could lead to an exodus of landlords. While a gentle reduction in the size of an overextended PRS could rebalance the sectors, too many landlords exiting the market at the same time because of controls on rents would create chaos. However, the Bill does seek to block rent increases in excess of market levels, to stymy an underhand way of forcing a tenant out when no legitimate grounds exist.

On other matters, the Bill has some valuable ingredients. Landlords will have to meet a set of decent standards, which will be established to address poor conditions such as cold and mould. Renters will all have access to a new ombudsman who will handle complaints and will be able to levy quite serious fines for incompetence and bad behaviour. As in Scotland, Wales and Northern Ireland, a register will be available online: a property portal will be maintained of all PRS properties, covering their compliance with legal requirements, to enable prospective tenants to check for health and safety features, and so on. The Bill will also make it more difficult for landlords to refuse a tenancy for those with a pet.

All these changes empower tenants in helpful ways. However, there are modest changes, which your Lordships’ scrutiny may achieve, that would amend the Bill for the better. There is also a desperate need for energetic enforcement. In addition, renters need a good online advice service to explain all their rights and responsibilities —one is being developed by the TDS Charitable Foundation.

However, a cloud hangs over what was the centrepiece of the Bill: the fundamental issue of renters’ security—their consumer protection against arbitrary evictions. As well as particular concerns about lettings to students, there are at least three further issues here. First, new grounds for possession will allow landlords to get the property back for a family member’s occupation or their own, or because they are selling. This means, perhaps inevitably, that any private sector tenant could still be evicted through no fault of their own. These are understandable grounds for repossession because a sector based on private investment has to enable the investor to sell up at some point, but could this change be made less sudden and less painful?

Secondly, the new measures to speed up the gaining of possession in arrears cases introduce some tough changes that may have gone a step too far. This needs exploring.

Thirdly, the biggest problem with the Bill is not content but implementation. The all-important ending of no-fault Section 21 evictions is now to be delayed until such time as the Lord Chancellor reports that the county courts are likely to process cases speedily. This could take a long time and, with no fixed date and no backstop for triggering the end of Section 21, the central plank of the Bill is missing.

In conclusion, the doubling of the size of the private rented sector and the halving of the social housing sector has exacerbated shortages and led to some cases of poor performance and exploitation of tenants. The Renters (Reform) Bill introduces some welcome measures, for which the Government deserve full credit, to redress the landlord/tenant imbalance. But last-minute government amendments to delay the ending of no-fault evictions for an indefinite period have led to anger and frustration from tenants’ representatives, such as Generation Rent and the Renters Reform Coalition. Perhaps the Minister can head off a Lords rebellion on this issue by indicating a willingness to address this concern, alongside more modest changes to a Bill that is worth having but could be much better.

Leasehold and Freehold Reform Bill

Lord Best Excerpts

Committee stage
Wednesday 1st May 2024 Lords Chamber

Moved by

[Lord Best]

94: After Clause 109, insert the following new Clause—
“The Regulator of Property Agents(1) The Secretary of State shall establish a body corporate known as the Regulator of Property Agents (“the Regulator”) to regulate property agents in respect of—(a) estate management of leasehold properties,(b) sale of leasehold properties, and(c) sale of freehold properties subject to estate management or service charges.(2) Regulations under this section—(a) must be laid within 24 months of the date of Royal Assent to this Act,(b) must be made by statutory instrument, and(c) may not be made unless a draft has been laid before and approved by resolution of each House of Parliament.(3) If, at the end of the period of 12 months beginning with the day on which this Act is passed, the power in subsection (1) is yet to be exercised, the Secretary of State must publish a report setting out the progress that has been made towards doing so.(4) The objectives of the Regulator are—(a) to protect the consumers of services provided by property agents, in respect of—(i) estate management of leasehold properties,(ii) sale of leasehold properties, and(iii) sale of freehold properties subject to estate management or service charges. (b) to set and uphold standards of competence and conduct for property agents in relation to the sale of leasehold properties and freehold properties subject to estate management or service charges.(5) “Property agent” means an individual or body of persons (whether incorporated or not) which carries out the roles of an estate agent as defined in Section 1 of the Estate Agents Act 1979 or of a property manager as defined in Sections 54 and 55 of the Housing and Planning Act 2016.(6) The Secretary of State may provide financial assistance (by way of grant, loan or guarantee, or in any other form) and make other payments for the establishment and maintenance of the Regulator.(7) The Regulator must establish a panel of persons called “the Advisory Panel”.(8) The Panel may provide information and advice to the Regulator about, and on matters connected with, the Regulator’s functions (whether or not it is requested to do so by the Regulator).(9) The Regulator must appoint the following persons to the Panel—(a) persons appearing to the Regulator to represent the interests of—(i) leaseholders of properties managed by property agents,(ii) freeholders of properties subject to estate management or service charges, and(iii) professional bodies and associations representing property agents who manage leasehold properties.(b) the Secretary of State.(10) The Regulator has powers as follows—(a) to monitor, assess, report, and intervene (as appropriate) in relation to the performance of property agents who manage leasehold properties;(b) to determine mandatory qualifications to ensure that those undertaking the activities of a property agent in England have, or are working towards, qualifications that demonstrate competency in respect of the sale or management of leasehold and freehold properties;(c) to enforce compliance with a mandatory and legally-enforceable Code of Practice for property agents selling or managing leasehold properties;(d) to provide guidance to property agents on the regulatory framework for the sale and management of leasehold and freehold properties;(e) to register all property agents complying with the requirements of the Regulator and to revoke the registration of property agents who persistently breach the regulatory framework;(f) to raise a registration fee and an annual fee to pay for the ongoing costs of the Regulator of Property Agents;(g) to review and make recommendations to the Secretary of State for the updating of the statutory guidance that sits alongside the regulatory framework for the sale and management of leasehold and freehold properties;(h) to delegate to designated bodies administrative and regulatory functions in respect of the sale and management of leasehold and freehold properties, as it deems appropriate.(11) The Property Ombudsman and other redress schemes, if any, covering property agents shall provide the Regulator with such information as the Regulator shall request.”Member’s explanatory statement
This amendment seeks to create a Regulator of Property Agents to regulate property agents in respect of estate management of leasehold properties, sale of leasehold properties, and sale of freehold properties subject to estate management or service charges.

--- Later in debate ---

[Lord Best (CB)]

My Lords, Amendment 94 is in my name and those of the noble Lord, Lord Young of Cookham, and the noble Baronesses, Lady Hayter of Kentish Town and Lady Taylor of Stevenage, and I am very grateful for their support. Before I speak to the amendment, I want to add my appreciation of the life and shock at the loss of Lord Stunell. Andrew Stunell was a terrific advocate for better housing, as a notable Construction Minister in the coalition Government and an eloquent speaker on a range of Bills, not least the Bill we are debating today, which he analysed brilliantly just a month ago in this Chamber. He will be very greatly missed indeed.

Amendment 94 represents the grand finale in our Committee debates on the Bill. It would empower the Secretary of State to establish an independent statutory regulator of property agents who sell and manage leasehold property. It would introduce into law the recommendations from the Government’s own Regulation of Property Agents working group, which I had the honour to chair and which reported in July 2019. The twin objectives of the regulator would be to protect consumers and to raise standards. Although the working group recommended a regulator for all property agents covering estate agents, sales agents and letting agents as well as property agents handling leasehold property, the amendment relates only to the leasehold managing agents, to keep within the scope of the Bill. However, many property agents involved in leasehold sales and management also engage in sales of freehold properties and in the management of rented sector lettings, so would be covered. Moreover, a twin amendment in the Renters (Reform) Bill, due in this House shortly, could extend the regulators’ role to cover agents managing rented properties as well.

The need for regulation was spelled out graphically at Second Reading, and many of your Lordships have shared details of agents’ misconduct brought to their attention. The unsuitability of badly behaved agents ranges from simply not communicating with leaseholders to misleading them and taking advantage of their leaseholder status with exorbitant commissions, charges and fees, not least in retirement housing developments. Although there are some excellent agents providing a good service and value for money, there are also inept, incompetent and exploitative agents whose reprehensible behaviour cries out for proper regulation. The urgency for regulating the sector has now increased, following the passage of the Building Safety Act 2023. This legislation has meant managing agents of blocks of flats taking responsibility for spending substantial sums of leaseholders’ money and of taxpayers’ subsidies to cover remedial building works in blocks of flats. It is now more essential than ever that such responsibilities are exercised only by reputable and qualified professional agents.

There is rock-solid support for a regulator of property agents from the professional bodies and trade associations representing the sector: the RICS; Propertymark; and the Property Institute, which comprises the Institute of Residential Property Management and the Association of Residential Managing Agents. Those property agents who are acting honourably are undermined by the unprofessional conduct of too many. Of course, the organisations representing consumers, such as Citizens Advice and the Leasehold Knowledge Partnership, are extremely supportive of the proposals encapsulated in this amendment.

A regulator would establish requirements for relevant qualifications and continuous professional development and would require adherence to an overarching code of conduct and to subsidiary-specific codes covering the different components of property agency. The regulator would have a full range of enforcement powers, from requiring specific changes to levying fines or removing the licence for a firm or individual to operate. That would provide the same consumer protections as for social housing, with its social housing regulator and Housing Ombudsman, and as for the financial sector, with its Financial Conduct Authority and Financial Ombudsman Service.

As with accountants, lawyers or surveyors, property agents deserve to be respected as professionals with expertise and with the proper attributes that go with professional status. Why would the Government resist a measure that is likely to be extremely popular with millions of leaseholders, which is earnestly requested by those who would themselves be the subject of regulation, and which has been given so much support from this House, particularly following the strong encouragement from the cross-party scrutiny of your Lordships’ own Industry and Regulators Committee last month?

--- Later in debate ---

[Baroness Scott of Bybrook (Con)]

I thank the noble Lord, Lord Best, for his Amendment 94, and for his and other noble Lords’ persistence in pushing for the creation of a new regulatory body to oversee property agents. I put on record my sincere thanks to him for his valuable work on regulation over very many years. I note that he is also a member of the Industry and Regulators Committee, which recently concluded that the case for regulation of the property agent sector still remains. Ministers will respond to the committee in due course.

However, as the noble Lord is acutely aware, the Secretary of State indicated in the other place that he did not consider that this was the right time or the right Bill to set up a new regulator for property agents. I know that he and other noble Lords will be disappointed, but perhaps not surprised, by this. However, the Government remain committed to driving up professionalism and standards among property agents. Leaseholders deserve a good service for the money they pay, whether from their landlord or their managing agent, where one is in place.

The noble Lord once again brought up, as he has many times with me, mandating professional qualifications. This was one of the areas that the Government asked the noble Lord’s working group to look into as part of its review. I assure him that that remains on the table.

At this point, I will respond to the interesting idea from my noble friend Lord Young of Cookham about the How to Lease guide. Interestingly, I spoke to officials about this idea not too many hours ago, building on the guide to renting. That is something that could be put in place. I will work further on it and talk to my noble friend more.

Industry plays an important role in driving up standards, and we welcome the ongoing work being undertaken by the industry and others to support this. This includes the efforts of the noble Baroness, Lady Hayter of Kentish Town, and her independent steering group in preparing an overarching code of conduct. I thank her for that. I know that the Government are very interested and looking at it in much more detail. This is an important development to ensure that all consumers are treated fairly and agents work to the same high standards. I echo what many noble Lords have said. We have some excellent agents in this country who do a fantastic job. The agents we are talking about are the rogue agents, who I know noble Lords are trying to ensure come up to the same high standards. I thank the noble Baroness for her work on this.

I should also stress that measures in this Bill, alongside existing protections and work being undertaken by the industry, seek to make managing agents more accountable to those who pay for their services. That includes making it easier for leaseholders to take on the management of their buildings themselves, where they can directly appoint or replace agents.

However, I recognise the strength of feeling expressed on this issue at Second Reading and today by a number of noble Lords, and the ambition of all noble Lords who spoke to drive up the standards of property agents. The noble Lord, Lord Truscott, the noble Baroness, Lady Bennett of Manor Castle, and others spoke about individual cases where managing agents have been either good, as we heard from the noble Lord, Lord Truscott, or extremely unacceptable.

I will continue to engage with the noble Lord, Lord Best, my noble friend Lord Young of Cookham and any others who would like me to on this issue during the remainder of the Bill’s passage. I know I already have a meeting in my diary with the noble Lord, Lord Best, in a week or so. With the assurance that we will keep working on this, and following what I have said, I hope the noble Lord will withdraw the amendment.

[Lord Best (CB)]

My Lords, I am very grateful to all noble Lords who have spoken—all of them in favour of the concept of a regulator of property agents. I think the case is now unavoidable. My especial thanks to the noble Baronesses, Lady Hayter and Lady Taylor, and the noble Lord, Lord Young of Cookham, for supporting this amendment, and to the noble Baroness, Lady Thornhill, who, if we were allowed one more name on the list, would have been there as well. It was great to hear illustrations from real life from the noble Lord, Lord Truscott, bringing a consumer perspective to the story. The noble Baroness, Lady Bennett, shared stories of cowboy agents. I am afraid they do exist, and we should be doing something about it.

The Minister offered me some consolation. We are going to meet again soon, and she recognises the strength of feeling that everybody has been expressing. I thank her for continuing to engage on the subject and I hope there is something we can salvage, before the Bill finally passes, that will at least make a start on this really important mission of creating a regulator to the benefit of the 5 million leaseholders out there. I beg leave to withdraw my amendment.

Amendment 94 withdrawn.

Leasehold and Freehold Reform Bill

Lord Best Excerpts

Committee stage
Monday 29th April 2024 Lords Chamber

This review will be a good positive start to identifying both the problems and how to resolve them. The main thing is that older people are being ripped off, and we are not able to develop a potentially lucrative housing sector because of our friend leasehold once more. Let us sort it out, do a review and see if we can come up with something better.

[Lord Best (CB)]

My Lords, I support Amendment 85 in the name of the noble Baroness, Lady Fox. This amendment calls for a government review of the retirement leasehold sector, covering a range of issues of special relevance to elderly and vulnerable leaseholders.

It is possible that some of the questions raised in this amendment will be covered by the forthcoming report from the Older People’s Housing Taskforce referenced in the amendment. This report is expected to be published in the summer, but I understand that it will be ready for Ministers to consider in the next few days. This government-initiated report, which fulfilled a promise to the All-Party Parliamentary Group on Housing and Care for Older People, which I co-chair with Peter Aldous MP, may answer some of the questions implicit in the noble Baroness’s amendment.

The amendment enables us to put on record the need for special support for leasehold housing designed and managed exclusively for older people. For example, I am hoping to see a recommendation in the task force report to tighten up on consumer protection for older people’s shared ownership leasehold schemes. Our APPG has heard horrifying stories of leaseholders, and their heirs and successors, finding themselves trapped into liability for fees and charges that make sales of the property impossible.

It would also be good to hear this evening of any news the Minister can bring us on implementing the recommendations of the Law Commission’s 2017 report Event Fees in Retirement Properties, aimed at developers which have been less than transparent in informing leaseholders of the exorbitant charges for which they would be liable.

A number of the issues highlighted by the amendment could be addressed by my later amendment on the regulation of property agents. The need for a regulator is of particular relevance to leasehold schemes for older people, who may be especially vulnerable to bad behaviour and incompetence of property agents. For all existing leaseholders, creating a properly regulated managing agent sector would weed out cases of poor conduct and ineptitude. The list of factors within Amendment 85, listing possible harms for older leaseholders, provides a helpful checklist for the issues which should be covered by a new regulator.

Meanwhile, those working in this field see a need to go further than the establishment of a regulator of property agents. ARCO—the Associated Retirement Community Operators organisation—which we heard about earlier, points to the different legislative structures in other countries. A Bill to switch future schemes from leasehold to what might be termed commonhold plus would enable new models of retirement housing to flourish; for example, there is a system of licences to occupy that has worked well in New Zealand, Australia and several US states. Indeed, an arrangement of this kind has worked extremely well for the retirement village in York created 25 years ago by the Joseph Rowntree Foundation, for which I had some responsibility.

After the Retirement Villages Act in New Zealand, which heralded a new framework for older people’s housing and care, production rose threefold, achieving all the well-known benefits from encouraging rightsizing: bringing previously underoccupied family homes into use for the next generation and providing an environment for older people that is sociable, affordable, safe and secure. Similar legislation in this country could achieve comparable results.

Sadly, at present, progress towards a major expansion of older people’s housing, preferably with care services on tap, is moving very slowly in the UK. Potential demand is estimated by Professor Les Mayhew at up to 50,000 homes per annum; but actual output is around 7,000 homes this year. The Older People’s Housing Taskforce should raise the profile of the relevant issues, and the review recommended in the amendment of the noble Baroness, Lady Fox, would take the matter forward. It would be great to hear from the Minister that, in the context of this Bill, elderly leaseholders can expect positive and specific changes for the better in the months ahead.

Affordable Housing: Supply

Lord Best Excerpts

Thursday 25th April 2024 Lords Chamber

[Lord Best (CB)]

My Lords, I thank the noble Viscount, Lord Chandos, for initiating this debate, I congratulate him on an excellent opening speech, and I look forward to the maiden speech of the noble Baroness, Lady Smith of Llanfaes.

The background to our debate is a rather frightening recent deterioration in the availability of affordable housing. I have just seen the figures out earlier this month, showing a rise of 21,000 children now living in temporary accommodation. The figure has risen from 121,000 to 142,000 over the last five quarters. Temporary accommodation is the best barometer of acute shortages. It is also a hugely expensive alternative to having a sufficient supply of genuinely affordable housing, to use the noble Viscount’s phrase, which is seriously compounding local authorities’ budgetary problems.

The simple reason why tens of thousands of children are being expensively and inappropriately housed in temporary accommodation is that there is just not enough housing to go round. The UK has not been building new homes at an equivalent rate to other European nations. If we had achieved the average new-build output for all members of the European Union, the Centre for Cities estimates that we would have an additional 4.3 million homes nationwide. When there is an overall shortage, it is, of course, those on the lowest incomes who are hardest hit.

The independent Affordable Housing Commission, which reported in 2020, spelled out the twin phenomena of, first, the decline of social housing—namely, provision by councils and housing associations—from 34% to 17% of the nation’s stock and, secondly, the growth of private renting from 9% up to 20%. Simultaneously, there has been the loss of more than 1.5 million social rented homes from sales under the right to buy—more than a third of these are now in the hands of private landlords at much higher rents. The private rented sector is unsuitable or unaffordable for many, so doubling this sector’s size and halving that of social housing has left many households with no options.

To rebalance the market between the private rented sector and the social rented sector, the commonly acknowledged solution is to increase the supply of social rented housing—that is, homes that are let at often half the market rents, according to a formula used for most existing social housing. Several studies have concluded that a figure of around 90,000 such homes should be built every year. Secretary of State Michael Gove told the Lords Built Environment Committee on 6 February this year that

“we need to aim to have a net addition of 30,000 homes for social rent every year”.

This target from the Secretary of State may sound unambitious, but it would mean far greater numbers of social rented homes than have been added in recent years.

However, without major changes, there is no possibility of achieving either the overall government target of 300,000 homes a year or, within that, 30,000 social rented homes. Indeed, rather than there being a growth in supply, output in both the private and social sectors has been falling significantly. Higher interest rates and inflation of building costs mean that social housing grants fund fewer new social rented homes. At the same time, it has become necessary to channel more social housing investment into the existing stock, rather than funding new supply. This follows a number of high-profile cold and mould cases, most notably causing the death of little Awaab Ishak.

With the Social Housing (Regulation) Act 2023 and more powers for the Housing Ombudsman, the housing associations and the stock-holding councils are rightly spending more on retrofitting their existing stock. The result of these trends is a big reduction in the pipeline of new affordable homes. One major housing association, for example, has self-imposed a two-year moratorium on any new development. Overall starts on site by social landlords are expected to fall by more than 30% this year. Meanwhile, because the private sector housebuilders, faced with lower profits, are postponing their developments, fewer new social rent homes are being achieved through planning gain contributions from the developers.

What can be done? I did not declare earlier my housing and property interests, as on the register. A starting point must surely be to have a national housing strategy. This would comprise an agreed vision for achieving the quantity and quality of new and existing homes that we all seek, with a road map to take us to this destination. Following the Church of England’s report Coming Home, a number of noble Lords have been supporting the Church’s subsequent efforts to help create such a strategy. We suggest the establishment of a statutory national housing committee, modelled on the Climate Change Committee. This would provide a long-term mechanism that holds government to account, irrespective of changes of Housing Ministers—we have had 16 in the last 14 years—and Secretaries of State, monitoring progress toward the agreed goals. It would be wonderful if this concept found its way into party-political manifestos.

In the short term, there is no escaping the need for government funding, principally via Homes England and the GLA. Most immediately, more investment is needed for property acquisition and modernisation to switch private rented sector properties into social housing and reverse the shocking rise in temporary accommodation spending—but more fundamental change is needed.

The Labour Party has made bold statements for growth through developing “grey-belt” land and building a new generation of new towns. For initiatives such as these, any Government will need to find ways of making available funding that goes much further and securing a better-resourced planning system. To that end, I advocate adoption of the model spelled out by Sir Oliver Letwin in his excellent report which, disgracefully, has been sitting on the shelf since 2018. The Letwin approach involves ending the dependence on the oligopoly of volume housebuilders, whose interests seldom coincide with the public good, and shifting the initiative for all major housing projects to locally established development corporations. These corporations—which are less susceptible to local opposition—would have CPO powers to acquire land at a price that reflects the content of a master plan that embraces the necessary infrastructure, green space and facilities. The site would then be parcelled out to the appropriate providers, including social landlords, SME builders, community land trusts, providers of retirement housing et cetera. By capturing the uplift in land value for the public good, this model makes possible affordable, quality homes at scale.

In conclusion, I therefore suggest that the way forward begins with establishing a statutory national housing committee, just like the Climate Change Committee, which sets out the path to agreed goals and provides the continuity and persistence to see the job done. To get there, as well as the necessity of more public investment—which is handsomely repaid in lower health, care and welfare spending and improved productivity—there are also bigger and bolder changes of approach to planning and land acquisition that could make a huge difference. It is certainly worth trying, against the backdrop of human misery that the severe underprovision of genuinely affordable housing has created.

Leasehold and Freehold Reform Bill

Lord Best Excerpts

Committee stage
Wednesday 24th April 2024 Lords Chamber

The amendment covers all the necessary points. There is much more that I could add in context, but the Committee will be relieved to know I am not going to do that. The Minister may well tell me how to improve the clause and I would be very pleased if she could do that, but I hope she will not find fault in my seeking to help her to put in place simply what the Government said they wanted. I remind her that the decision was based on legal advice that they themselves commissioned, it was announced by the Minister in another place and it was contemplated in the Bill’s own impact assessment. All that is missing is the actual new clause that would have delivered it, which I have now provided and which I look forward to the Minister accepting. I beg to move.

[Lord Best (CB)]

My Lords, I support Amendments 23 and 24 in the name of the noble Baroness, Lady Andrews. I can imagine the anguish that must be felt by leaseholders in blocks of flats who are facing the disruption of one or even two new storeys being built on the roof of their flats. With freeholders now having permitted development rights for upward extensions, residents face the disruption, noise and hassle of builders, lorries, cranes, skips, scaffolding and so on for months—and now they face the prospect of being unable to buy the freehold of the block because development, or the possibility of upward development, adds to the value of the block and can make enfranchisement prohibitively expensive. The extra value of adding new storeys, or the compensation demanded for not developing where there is potential to add them, generates additional freeholder profits but makes enfranchisement unaffordable, yet the Leasehold and Freehold Reform Bill is all about giving leaseholders a better deal and easier access to enfranchisement.

I note that the previous Secretary of State promised to fix this specific problem through a clause in the Bill enabling leaseholders in a block to agree together that no upward extension should take place. In this way, they remove the extra value for the freeholder. It seems that in the drafting of the Bill the promised new clause, originally an option proposed by the Law Commission, has got lost. So, on behalf of the 2 million-plus lease- holders who could be affected, I strongly support the amendments from the noble Baroness, Lady Andrews, which would fulfil the Government’s earlier promise.

[Baroness Thornhill (LD)]

My Lords, I suppose I could say “#UsToo”. I support these amendments, which are simple in purpose, in the name of the noble Baroness, Lady Andrews, who summed them up thoroughly, clearly and personally. As things stand under PDR, a freeholder can add two storeys to their existing building as a matter of right, with no planning permission needed: as I look round Watford, I can see evidence of that with my own eyes. But I also know that that can have very serious consequences. As well as the inconvenience of the building work going on for as long as it takes, you also discover that the top-floor flat that you paid a premium for is now worth less as you are a middle-floor flat. Then there is the pressure on communal space and amenities, including the dreaded bin store and the state thereof.

Adding two more storeys to a presumably well-planned block of flats, for a set number of residents, is not consequence-free. But the consequences are absolutely trivial compared with the knock-on effects of such development on the Government’s own stated aim, which is to encourage more leaseholders to buy their freehold. This is an additional and often insurmountable obstacle. It significantly raises the cost of enfranchisement, as has been said. The value of the block will have gone up. The leaseholders are now required to pay more for their freehold. In many parts of the country, this takes it way out of reach, as in the noble Baroness’s case.

The noble Baroness, Lady Andrews, very thoroughly cited a positive trail of support: all the right noises from the Secretary of State in 2021, the Government’s complete recognition of the dilemma and a real promise of the ability to look into some restriction.

It is clear that there is a policy conflict here: the need for more homes, which we all agree on, versus the enfranchisement of leaseholders. As things stand, the homes policy is top trumps. Can the Minister advise on whether there will be a review of PDRs in general, including focusing on unintended consequences such as this and whether there is a way to sort this out in the leaseholder’s favour in the Bill? At the moment, it feels as if the freeholders are still very much holding all the aces and current residents have no voice at all in this significant change to their environment and, possibly, their life chances and finances.

Impact of Environmental Regulations on Development (Built Environment Committee Report)

Lord Best Excerpts

Friday 19th April 2024 Lords Chamber

[Lord Best (CB)]

My Lords, I was honoured to serve on the Built Environment Committee for this inquiry, under the distinguished chairmanship of the noble Lord, Lord Moylan. I congratulate him on a brilliant opening speech. I also pay tribute to our brilliant clerk, Kate Wallis, and her team, and to Kelvin MacDonald, our special adviser. My remarks in this debate will concentrate specifically on the impact of environmental regulations on the provision of new homes, with a particular emphasis on requirements for water and nutrient neutrality.

Environmental regulation is of course essential, but a heavy-handed imposition of rigid edicts can have devastating consequences. Most prominently, the water and nutrient neutrality requirements have led to a ban on new homebuilding in many areas at just the time when we most need a significant increase in housing production. When environmental regulation trumps the planning system, even contradicting the content of local plans, the consequences can be felt by innocent parties, not least by those who need a home: young households desperate to leave the parental home, older people needing to right-size, and all the rest. The committee argued that government should have as powerful an obligation to achieve its target of extra housing—the national figure of 300,000 homes a year is a reasonable immediate ambition—as it has to protect the natural environment.

Reconciliation between the parallel systems of environmental permits and planning consents is not impossible. Biodiversity net gain—BNG—is being introduced after proper consultation with the relevant parties, with a transition period for implementation and with government support for mitigation measures. BNG rules may need modifications, some of which are in the pipeline, but should lead to a 10% gain in biodiversity for every development, so new housebuilding can actually achieve more biodiversity.

In contrast, the water and nutrient neutrality decision came as a bolt from the blue. It stopped housing development in many areas, even though this adds only a tiny fraction to the pollution going into our rivers. It failed to address the vastly more significant pollution from intensive farming practices and, as we all know, so much of the underlying reason for river pollution lies in the failure of the ineffectually regulated water companies to fulfil their obligations and invest in water treatment.

Moreover, the SME housebuilders, and we need more, not fewer, of these, are taking the biggest hit. They are often ill-equipped to deal with the plethora of planning and permit requirements. Unlike the major housebuilders, they cannot afford specialist consultants to assist in completing all the necessary—and sometimes quite unnecessary— assessments and form-filling. They cannot switch production to a different area because they operate only locally.

What our Select Committee’s report advocates is a balanced approach which considers the underlying causes of environmental problems and seeks to address these fairly, openly and consistently. The Department for Levelling Up, Housing and Communities and Defra, with its agencies, must act jointly and not in opposition. Perhaps the forthcoming national land use framework will help bring things together. At the local level, local planning authorities must have the central role, despite cuts in planning department budgets. Increased planning fees coupled with more efficient models, as in Warwickshire, for sharing expertise and the necessity of having up-to-date local plans can all help. But responsibility comes back to central government and its agencies to engage with all the relevant stakeholders, to provide clear guidance, to introduce new measures only with proper transition periods and to ensure mitigation schemes are in place so that, at the end of the day, environmental improvements work hand in hand with securing much-needed new homebuilding.

Property Agents: Regulation

Lord Best Excerpts

Thursday 18th April 2024 Lords Chamber

[Baroness Swinburne (Con)]

I appreciate the time delay and am exceedingly grateful to the noble Lord, Lord Best, for the report from him and his working group, which included more than 50 recommendations cutting across different housing tenures. We are developing key primary legislation to address the fundamental power imbalance that exists in parts of the housing market. Through the Renters (Reform) Bill and the Leasehold and Freehold Reform Bill, we are taking forward specific recommendations from the noble Lord’s report, and we will keep the question of further regulation for the sector under review.

[Lord Best (CB)]

My Lords, did the Minister see the excellent report from your Lordships’ Industry and Regulators Select Committee, which thoroughly endorsed the need for a regulator? It took evidence both from those representing the consumers—that is, tenants, leaseholders and people buying and selling properties—and from those who would be regulated, the agents themselves, who felt at least as passionately about the need for a regulator. If we cannot have a fully-fledged regulator because time does not allow, could we at least go half way and introduce some mandatory training and qualifications so that the people handling property agency work know what they are talking about and we weed out some of the rogues?

[Baroness Swinburne (Con)]

I thank the noble Lord for his comments and for his work, which I have acknowledged. I am grateful also to noble Lords on the committee for their recent work on this important topic. Ministers are considering its recommendations and will respond in due course. Training programmes are currently available, and. I suspect that this question will come up time and again. In respect of the legislation that we are currently talking about, I have no doubt that I will be having those conversations with the Minister, my noble friend Lady Scott, in the coming days and weeks.

Leasehold and Freehold Reform Bill

Lord Best Excerpts

2nd reading
Wednesday 27th March 2024 Lords Chamber

[Lord Best (CB)]

My Lords, the Bill before us contains some very welcome reforms but also some omissions. It is silent on one overarching issue: the need for a regulator of property agents.

Any reform of leasehold needs to consider the arrangements for the sale of leasehold property and for the ongoing management of leasehold flats. A good agent, providing an effective service at a fair price, can enhance the quality of life for the residents, and a bad agent, demonstrating poor service, incompetence or misconduct, can make life miserable for leaseholders. Sadly, there are all too many examples of mis-selling, exorbitant service charges, lack of transparency and accountability, and overpriced leasehold management. In a survey by the Property Institute, no less than 62% of those who have bought leasehold homes maintain that they were given misleading or insufficient information. I suspect that most of us speaking in this debate have been sent tales of abysmal management and excessive fees, as illustrated by the noble Baronesses, Lady Taylor and Lady Thornhill. Yet in most cases leaseholders cannot change their managing agent and escape this trap.

The role of a new regulator of property agents would be to encourage and support the good, raise standards, and drive out the bad. The regulator would require agents to be suitably qualified and to engage in continuous professional development. The regulator would require adherence to codes of practice, probably with one overarching code and then specific codes for each specialism within the sector. Only those individuals and firms meeting the regulator’s criteria would be given a licence to operate. The regulator would have powers to discipline those who breached the relevant code, including the power to withdraw their licence.

I declare my housing and property interests as on the register and would add that I chaired the Government’s Regulation of Property Agents Working Group, which presented its report to government back in July 2019. The working group comprised representatives of the sector and consumers, and it was unanimous in strongly recommending the establishment of a regulator of property agents—estate agents, lettings agents and managing agents, not least of retirement accommodation. Over recent weeks your Lordships’ Committee on Industry and Regulators, of which I am a member, has been revisiting the working group’s 2019 report. Its conclusions were put to Secretary of State Michael Gove last week, and received widespread publicity. The Select Committee endorsed in all respects the earlier report, adding some extra emphasis for engagement by a new regulator with the consumers—the tenants, buyers and leaseholders. The Lords committee noted the strongly held views of those representing the consumer, with powerful advocacy from Generation Rent and the Leasehold Knowledge Partnership, but there was also unanimity of view from the relevant professional bodies and industry stakeholders.

In the briefings for our debate today, regulation of the sector is the number one issue for both the Property Institute—previously the Association of Residential Managing Agents and the Institute of Residential Property Management—representing 6,000 property agents, and Propertymark, incorporating the National Association of Estate Agents and the Association of Residential Letting Agents, with some 18,000 member agents. That is the industry’s top ask, as we consider amendments to the Bill. Indeed, the urgency for regulatory reform has increased now that the Building Safety Act 2023 has meant managing agents handling huge sums of leaseholders’ and public money to ensure that remedial work is carried out. It is more important than ever that only reputable and qualified professional agents are in charge.

It seems curious that, with support from all sides, and the obvious popularity of raising standards and rooting out bad practice in this sector, the Government have failed to include the creation of a regulator of property agents among their reforms to the leasehold sector in the Bill. Is it not necessary? None of the Select Committee’s expert witnesses or the relevant consumer bodies has claimed that the industry does not need this change or that self-regulation is sufficient. The preparation of a voluntary code of practice by an industry group convened by the RICS and chaired by the noble Baroness, Lady Hayter of Kentish Town, has paved the way for a regulator to determine the content of a statutory code. But all parties are agreed that a regulator with independence from the sector and real teeth is essential.

Too late? No one can say that the proposals for a regulator have come too late to be included in the Bill: the Government have had the Regulation of Property Agents report, the RoPA report, for nearly five years.

Too costly? It cannot be argued that the cost would be unduly burdensome. For example, some £15 million a year could be raised by a levy of £3 per annum for every leasehold property under management, Clearly, this would not add significantly to overheads or deter new entrants to the sector.

An ombudsman instead? Could a more powerful ombudsman scheme achieve a similar outcome more simply than by creating a new regulator? A regulator and an ombudsman perform complementary but distinct roles, as demonstrated by the financial services sector and the social housing sector. The ombudsman—and a single ombudsman service is certainly to be preferred to the current situation with two competing redress schemes that can cause confusion—can respond only to complaints by individuals, and the ombudsman’s powers to insist on codes of practice and sanction offenders are necessarily limited. By contrast, a regulator has a wide brief; can specify required qualifications; can take account of information from many sources, for example, from neighbouring agents who notice abuses, from press reports, from whistleblowers within firms, et cetera; and can have the flexibility to act accordingly.

The property agency sector has a vital role to play in keeping people safe and well, providing a valued service for owners and landlords, as well as for leaseholders and tenants. Good agents ought to be held in high regard. Bringing the industry into a properly regulated framework would professionalise the whole sector and give it the status and prestige it deserves. I therefore say to the Minister that there is still time to introduce an enabling clause into the Bill to empower the Secretary of State to create a regulator of property agents. This would be greeted with acclaim by all parties involved, especially by the leaseholders suffering at the hands of badly performing agents. Let us put this key component into the Bill while we can: who knows when the opportunity will arise again?

Housing: Young People

Lord Best Excerpts

Thursday 14th March 2024 Lords Chamber

[Lord Best (CB)]

My Lords, I thank the noble Lord, Lord Young of Cookham, not just for securing this debate and getting it off to a brilliant start, but for his decades of highly distinguished policy action in addressing key housing issues. As usual, I agree with his words of wisdom so eloquently delivered today.

This debate is very timely: the housing crisis for those with nowhere to go represents a national emergency that demands our urgent attention. It is gratifying to hear just how much we all agree on the urgency of the situation. I declare my housing interests, as on the register. Currently, I chair the Devon Housing Commission. Noble Lords may think that acute housing shortages are a problem for London and the big cities, but they could hardly be more extreme than in the beautiful county of Devon. Fewer and fewer young people brought up in the county are finding it possible to buy a home of their own—and, over recent months, they have found it almost impossible to secure a rented home they can afford. The numbers of young households having to be placed in unsuitable temporary accommodation have increased by 100% and more over the last couple of years. Nationally, the dire situation is replicated in every locality, and there are now over 140,000 children in insecure, often highly unsuitable, temporary accommodation. This is becoming an increasingly significant part of the financial troubles afflicting so many local authorities.

A fortnight ago, many of your Lordships expressed support across party lines for a national strategy to get us out of this mess, as was championed in the Church of England’s report last year. A national strategy would set a broad vision for ending the housing crisis. It could be brought together and sustained over time by a statutory national housing committee, along the lines of the Climate Change Committee. The new committee would hold government—and, no doubt, a succession of Housing Ministers—to account.

In supporting this call for creating and monitoring a long-term housing strategy, I suggest that policymakers must prioritise the housing needs of younger households in two overarching ways: first, of course, by increasing supply overall and, secondly, by ensuring that the supply reaches those with modest incomes. Supply is the problem—

[Lord Lilley (Con)]

I am grateful to the noble Lord for giving way. Will this body dealing with a long-term strategy also consider the demand for housing? Will it have any control over the massive increase in demand coming from abroad? If not, what purpose will it serve?

[Lord Best (CB)]

Is this a debate about immigration or housing? There are two debates here. We are dealing with people who live and breathe and need a home, whom we face and talk to and meet on a daily basis. We are doing something for them, and questions of immigration are for a different debate.

It is unsurprising that there is not enough to go around when the Centre for Cities has found Great Britain to have a housing deficit of 4.3 million homes, compared with the European average. Our current arrangements for achieving a sufficient supply—at least meeting the Government’s target of 300,000 homes a year—have failed. The model used for the last 30 years has relied on a handful of volume housebuilders. These developers, irrespective of the delays caused by ridiculously underresourced planning departments, will build out only at a pace that ensures that prices need never be reduced. This means cutting production now, when higher interest rates have curbed price rises, just when we need to ratchet up supply.

We are all familiar with the well-known flaws of the housebuilder model: poor design and quality; betrayal of promises for affordable housing, green spaces and amenities; building on greenfields and avoiding brownfield sites; failing to train the workforce or to innovate; et cetera. The most recent Competition and Markets Authority report is the latest voice to support the quite different approach promoted by the Letwin review. Sir Oliver advocated that, to speed up and deliver the homes we need, local authority-owned but arm’s-length development corporations should be created, with CPO—compulsory purchase—powers to assemble and buy land on reasonable terms. These corporations would adopt a comprehensive master plan, borrow privately, fund the infrastructure and parcel out sites to social landlords, SME builders, specialist players and so on. In other words, to boost the quantity and quality of supply, Letwin recommends establishing publicly accountable development bodies that take back control from the oligopoly of major developers.

Let me turn to the ways of ensuring that the supply of new homes benefits those on average and below-average incomes—the half of the population who currently can access only a fraction of new housing supply. Top of the list comes direct development of so-called “social rented housing”: this part of the housing mix has been in decline for years. Social housing is down from 34% of the nation’s homes to just 17% because of sales of council housing and the low-level programme of new build.

On 6 February, when Secretary of State Michael Gove appeared before the Lords Select Committee on the Built Environment, he said:

“We need to aim to have a net addition of 30,000 for social rent every year”.


He noted that some would regard this as unambitious, but it sets a far higher target for social rent—for the housing associations and councils—than has prevailed in recent years. What is needed is government investment to actually make this happen.

Currently, the sector faces headwinds from higher interest rates, building safety remedial work, the decarbonisation and upgrading of older stock, and management and maintenance costs rising by more than rents. But this country now has a highly professional social housing sector that is very fully regulated and can respond to the opportunities whenever government comes forward with the necessary resources.

Increasing supply by building new homes is going to take decades to achieve availability and affordability for all. In the meantime, we need a shortcut both to tackle the temporary accommodation emergency and, over time, to enlarge the social housing pool. The Affordable Housing Commission recommended a national housing conversion fund for the purchase and modernisation of run-down, privately rented accommodation. This fund would pay for itself by avoiding the huge costs of temporary accommodation in the private sector and, in the long term, would help a rebalancing between the much-diminished social sector and the greatly expanded private rented sector. I detect signs that the Government are recognising the value of this approach: a fund mostly for refugees is operating on this basis.

Investment in social housing—including the regeneration of some existing council estates and older properties—has a big payback in reducing health inequalities, alleviating fuel poverty, saving housing benefit and homelessness costs, cutting carbon emissions and supporting education and employment objectives. The National Housing Federation’s latest report shows how investing in a really major expansion of social housing is self-financing in a relatively short timescale, so boosting affordable social housing—largely ignored in the Budget—does represent incredible value for public money.

All this is not to say that the desire of younger households for home ownership should be ignored. Owner occupation means a secure home where you can put down roots and do your own thing. Acquiring and accumulating a capital asset for your later life is a big bonus, but, most significantly, your housing costs as an owner will reduce over time as your mortgage is paid off, whereas, as a renter, your housing costs will keep rising inexorably. No wonder the Department for Work and Pensions is expressing alarm at the prospect of a massive increase in housing benefit payments when a much bigger proportion of renters retires and their incomes fall, while rents keep going up.

How can the drop in home ownership levels be reversed so fewer people fall on the wrong side of the dividing line between tenants and home owners that can last a lifetime? This inequality in life chances is particularly unfair for those young people who are paying rents in excess of the cost of a mortgage but who cannot also afford to raise tens of thousands of pounds for a deposit without parental funding.

Shared ownership—with some important tweaks—provides one solution. Government mortgage guarantees can be effective and are almost cost-free, although the latest arrears figures, following interest rate rises, show some concerning increases. To underpin first-time buying in these difficult times, restoring the safety net of support for mortgage interest to its former, more generous position would be sensible.

Meanwhile, there are huge advantages for young people of planners requiring a proportion of new homes to be designed for older people. By addressing the pent-up demand for attractive, affordable homes for downsizers—“right-sizers”—two goals are met. First, older people can move to warm, accessible, convenient and companionable accommodation, achieving huge savings for the NHS and for adult care services. Secondly, this triggers a whole chain of moves, making family homes, not least precious social housing for families, available for the next generation, helping the young people with whom we are particularly concerned in this debate.

Polls tell us that almost two-thirds of 18 to 34 year-olds say that they are more likely to support a political party that invests more in affordable and social housing. Manifesto writers, take note. Let all of us in this House recognise the crisis facing younger people today and resolve to be part of the solutions we all want.

Housebuilding

Lord Best Excerpts

Wednesday 28th February 2024 Lords Chamber

[Baroness Scott of Bybrook (Con)]

As I have said, we will carefully consider all the recommendations and findings from the report. Our National Planning Policy Framework means that councils must have local plans in place to deliver more homes in the right places and of the right type that are required in that particular community. As part of the recent consultation on changes to the National Planning Policy Framework, we have committed to review our approach to assessing housing need, once the new housing projections data based on the 2021 census is released next year.

[Lord Best (CB)]

My Lords, the excellent report from the Competition and Markets Authority shows why depending on a small handful of volume housebuilders does not produce either the quantity or the quality of homes that we need. Has the Minister thought about taking off the shelf the Oliver Letwin report, which is quoted in the CMA report very favourably? It calls for development corporations with master plans and compulsory purchase powers which could take the place of some of these volume housebuilders and get what we actually deserve.

[Baroness Scott of Bybrook (Con)]

The noble Lord has some interesting ideas in this area, particularly about the large housebuilders, which seem to have controlled the market. That is why we are putting a lot of support into small and medium-sized housebuilders. As for the Oliver Letwin report, we will look at everything once we have got this report and when we start to work on it, and we will be bringing out further information in due course.