Leasehold and Freehold Reform Bill

Lord Campbell-Savours Excerpts

2nd reading
Wednesday 27th March 2024 Lords Chamber

[Lord Campbell-Savours (Lab) [V]]

My Lords, I congratulate my noble friend on the Front Bench on her very comprehensive canter around the course of reform, and I look forward to meeting her during the proceedings on the Bill, if at all possible. I too give a cautious welcome to aspects of the Bill. I say “cautious” because I believe that a lack of political courage and clarity of purpose at this stage at least to commit to the issue of enfranchisement under a more acceptable form of tenure has created a lot of anxiety. I will return to this issue later in my brief contribution.

I should confess to some experience in some areas covered by the Bill. In the 1970s, I purchased the freehold on my London home, a seamless process which worked fairly well. Also in the 1970s, on acquiring offices in a Lancashire town, I found myself in a quagmire of lease complications over leased accommodation with both office and residential leases. It seems I had inadvertently acquired a series of subleases, which I managed to dispose of to a number of grateful lease-holders at no cost to them. I have never had any desire to be a landlord.

More recently, I, along with other flat owners, after protracted and expensive negotiations and days in a leasehold tribunal, acquired the freehold to our flats outside London. The experience of sitting through days of these hearings at great expense has given me front-line experience of the process of enfranchisement. However, a far greater interest in terms of this Bill is the experience and knowledge I gained while an MP over attempts to purchase the freehold of a London flat used for attending Parliament.

In that case, over half the block concerned was owned by persons overseas, and many of these owners held their London assets in the name of nominee companies, either in tax havens or in the Far East. At that stage, there was no way to crack that wall of secrecy. The managing agents pleaded client confidentiality. In effect, they could do what they wanted. So why did we want to buy? I saw the service charge rise in 17 years, from just over £2,000 a year to nearer £10,000 today, so I just sold up. The scandal of escalating service charges is not only hitting London, it is now hitting flat resale prices in many of our great northern cities. The evidence is to be found in property auction prices at Cluttons, Nationwide and Savills, to name but a few. Escalating service charges are at the heart of arguments over the Bill, and I greatly welcome those provisions in it that provide for greater transparency.

I have always believed that transparency influences conduct. It stands at the heart of my whole approach to political life. For example, just imagine what arguments are going to break out when leaseholders learn of the percentage uplifts being added to their bills for contractual services, maintenance costs, insurance premiums and variable admin charges. I have never seen a leasehold title service charge notification which reveals top-slicing percentages. The question is: how will service charge companies compensate for their lost revenues? Will it simply fall on increased account-handling charges?

I return to the issue of title. This appears to me to be the issue of most concern in the property market. I have had some very interesting conversations on this area of thinking, as set out by Michael Gove over recent days. The letter from the Residential Freehold Association is what alerted me. I quote:

“The proposed cap on ground rents would represent a retrospective interference in the value of legitimate investments made by institutional and private investors, and could wipe out almost the entire value of investments into ground rents. The Government cannot illegitimately reduce the value of these investments without compensating the investors, who will be entitled to, and will seek, compensation for the loss of value they will suffer. Interfering with investors’ existing contractual income streams will lead to a high rate of insolvency for landlords, leaving thousands of buildings in England and Wales without a functioning landlord”.


I do not think the association has really grasped the scale of public anxiety and abuse deployed in property portfolio administration by some of its members. There is a very controversial message there, and while it may be exaggerated, it does need a response from the Government. I think it needs to be corrected. We now hear reports of ground rent investments falling. They are increasingly being offered on property auction sites, and I worry that innocent buyers are picking them up in the expectation of long-term income returns, without realising the possible long-term negative effects on their investments.

The Government are not sending out a clear message. I have been able to talk to auctioneers marketing these products, who all report a nervousness in the market, with the only real interest, interestingly, coming from those investors who lack the savvy to do their homework —primarily investors from overseas. I have also had the opportunity to talk to one investor who commands a very substantial portfolio in the area that we are talking about. It was a difficult message for me, as he described in detail his concerns over what he regarded as expropriation. He foresees the collapse of his portfolio. The question is: what are we to do with this group of investors, some of whom are ethical in their dealings, and others whose approach has been thoroughly exploitative?

I want reform and an end to exploitative leasehold practices, but, equally, I want fairness. Confiscation cannot be on the agenda, but I want reform. This is obviously a very difficult issue for the Government. I suspect it will be all left to the incoming Labour Government to sort out. I suppose, in truth, that I want a review of all forms of title. The system removes the speculative [Inaudible]. That is a tall order.

I speak in the [Inaudible]. After about 4.30 pm each day, I start believing [Inaudible]. Reliability of transmission to the Chamber is impossible in terms of participation, especially in Committee, which invariably comes later in the day on all Bills going through Parliament. I will do my best to intervene when I can, although I shall be following the whole debate, which I find extremely interesting.