Leasehold and Freehold Reform Bill

Lord Borwick Excerpts

2nd reading
Wednesday 27th March 2024 Lords Chamber

[Lord Borwick (Con)]

My Lords, I first declare my interest in my home, which is a long-leasehold property in London. It would not normally be declarable, but in the case of this Bill, this should be an exception. I also declare interests in the register in property companies, some of which are developing and have developed houses.

I have been puzzled by this Bill as it seems to be determined to solve a problem that I do not think generally exists. The problem is presented as a moral problem of the existence of leaseholds, using words such as “feudal”. I hesitate to challenge noble Lords to find bigger or more urgent moral problems to discuss on the last day before a recess. We could be here for weeks, and we would not agree with each other anyway. But I bet that few, even my noble friends on the Front Bench, would put leasehold tenure anywhere near the top of their list.

The freeholders have been upset that this Bill will force them to sell something that they do not want to sell, and I can see their point. Even though that horse bolted many years ago, I do not believe that anybody who has freely entered into a contract with another well-advised party should be forced to change its terms by the Government. This Bill makes that mandatory if the leaseholder alone wants it. This is the case now, so there is no change there except for the price.

The Bill is described as making it cheaper and easier for the leaseholder to buy. Why is it cheaper than before? It is partly because of the abolition of marriage value in the calculation of Schedule 4, but mainly because the price is likely to be lower. How much lower? The trouble is that we cannot tell, because the discount rates to be used in the calculation will be laid out in the statutory instrument when it is published in many months’ time. It is impossible for a tenant to know for certain that he is getting the purchase cheaper until that rate is announced. The Government have said that the rate will be a market rate, but a fixed rate, even though market rates constantly vary. How can there be a fixed rate that is also a market rate?

There is a trend in legislation for Bills to get longer and more complex. We have seen this in several recent Bills. This trend makes it more expensive for the citizen to obey and for us to legislate. This Bill, with 234 pages, is a distressing example. There is a separate trend that the consideration in another place has become more trivial than it was in prior years. I fear that our friends in another place may have passed this Bill with the cheerful feeling that we will study it. I am not sure that we can study it with the diligence that they expect when we cannot hope to find out what the most important rate in the calculation is until next year.