Leasehold Reform (Ground Rent) Bill [HL]

Lord Kennedy of Southwark Excerpts

Monday 24th May 2021 Lords Chamber

[Lord Kennedy of Southwark (Lab Co-op)]

My Lords, I refer the House to my relevant interests as set out in the register, namely as a vice-president of the Local Government Association, a non-executive director of MHS Homes Ltd and chair of the Heart of Medway Housing Association.

The Minister will have heard the speeches of all noble Lords who have taken part in the debate today. I think it is fair to say that everybody welcomes the Bill as far as it goes. I entirely accept that progress is being made and it is welcome, but—there is always a “but”—the issue that noble Lords have mentioned is the pace of reform, which is slow. In fact, it is really, really slow, and it is regrettable. This Bill could do so much more than it is doing.

My noble friend Lord Berkeley asked whether this Bill is doing the easy bits. Sadly, it is doing exactly that. The Government have form here. On a lot of legislation, they like doing the easy bits and making announcements about what will come down the track, but in many cases we are still waiting for what is coming down the track. I am reminded of the Housing and Planning Act 2016—a dreadful piece of legislation. Thankfully, Theresa May got rid of most of it, but regarding the rogue landlord database, which the noble Baroness, Lady Grender, just mentioned, the Act was passed in 2016 and five years later we are still waiting for the legislation to make that publicly available. I hope that we get some progress and are not just kicking the can down the road.

Perhaps the Minister can give us some more detail about when we can expect the more substantial legislation dealing with the real issues, such as the 4.5 million people today who are struggling with unsatisfactory leases. Leaseholder problems are nothing new and neither is the call for the reform. However, the problems have got worse. The Bill’s major failure is that, if you have problems with your leasehold property today, there is nothing here to help you.

The noble Lord, Lord Hammond of Runnymede, made a very fair point about conveyancers and the advice that they gave to leaseholders. I hope that the Minister responds to the noble Lord’s points.

The noble Earl, Lord Lytton, raised the issue of the consultation flaws. I have raised issues about inadequate consultation many times. Again, I hope that the Minister responds to those questions.

The noble Lord, Lord Blencathra, in a most enjoyable speech, set out why the Government must act urgently. We got it all: the Romans, the Normans, the Doomsday Book, the Peasants’ Revolt, Wat Tyler—the only one missed out was Lord Mayor Walworth. However, although it was enjoyable, the noble Lord’s serious point was that reform is desperately needed and long overdue. This goes back so many years. I hope that the Minister takes that on board. We must ensure that this leasehold type of property ownership has had its day and that the Government are marking that, and that this is the start of the process to end that. If that is what we will hear from the Minister, I will be very pleased, because if you are a leaseholder, you can be trapped in very unfair terms and must go on waiting for that leasehold reform, which is unacceptable.

Many noble Lords have described the Bill as “timid”. The Bill is good as far as it goes, but it could do so much more. Why is it so timid and what is the time scale for a more substantial piece of legislation? When will we see it in this House? It would be good for all of us to know, because this Bill is a missed opportunity, and in that sense it is a failure. The noble Baroness, Lady Ritchie of Downpatrick, made these points.

My noble friend Lady Andrews pointed out the huge problems that people face when they buy a leasehold property and then see their ground rent double, as well as other onerous charges. We have heard several times of people being “ripped off”, which is totally unacceptable.

I will be pursuing several issues in Committee and on Report. I hope to persuade the Minister and the Government of the merits of my case, and I am sure that the Minister will want to do the same, but if not, I am happy to divide the House on Report regarding certain issues. Here are some of the issues that I will be interested in looking at. We will be exploring whether we can remove the ground rent from existing leaseholders and put into the Bill a requirement for the Government to begin that work and get a timetable for it to go forward.

There is also the issue of unfair terms and conditions beyond ground rents, which is not addressed anywhere in the Bill. I am talking about unfair terms and conditions such as transfer fees imposed by freeholders on the sale of a leasehold property, which are totally unfair and unjustified.

Another issue is leasehold forfeiture, which has been talked about already today. That is a process whereby somebody can lose their property for a small debt, which is totally unacceptable and needs to be dealt with. The concept is disproportionate in relation to the potential debts involved. The Bill could have been used to stop that practice and put in place a more proportionate system to address issues of debts owed, but it does not do that.

I am also not convinced that the penalties in place to deal with rogue freeholders who seek to illegally charge leaseholders a fee beyond the peppercorn go far enough. Is the maximum fee of £5,000 the right amount? Should there not be an extended sliding scale for repeat offenders?

One of the clauses refers to getting the fee back that has been charged to a leaseholder illegally. If the fee has to be paid back, that is good but I would like to see some interest and compensation for the leaseholder if it was charged to them illegally. I would also want to see larger-scale fees charged to companies that do that, because they probably need to be deterred. If their fee is only ever £5,000, they might well get away with it in some places and think, “Actually, this is worth taking the risk.” We need a much larger fee to deter people from behaving like that.

Another problem the Bill does not address is what people and companies will seek to do to get around this ban on ground rents. By that, I mean a whole new raft of additional fees, special provisions and other charges—generally, rip-off revenue streams which freeholders might seek to place on the leaseholders. These types of fees will be of no benefit to the consumer or leaseholder; it is unfair if they are just cash cows. What will the Minister do to stop this becoming a reality? Let us be clear: some of these organisations have lots of clever people. Their lawyers will sit down and say, “Right—this has been banned, but what can we do to get around it by doing something else?” What are the Government going to do about this? Otherwise, we will be here in a few months’ time saying, “That’s great, but what about these charges?”, and people would be no better off. The noble Lord, Lord Stunell, referred to this in his contribution.

The noble Baroness, Lady Wheatcroft, rightly highlighted the problem of service charges. I have spoken to many leaseholders over the past few months who have been asked to pay a really unfair level of service charge. I often wonder how much these charges reflect actual work done and how much they are a sort of management fee, where they do not get a lot for them. Again, we are not dealing with that and it is disappointing, as the Bill could have dealt with those things as well.

The noble Lord, Lord Bourne of Aberystwyth, highlighted the permission fees. Again, that is another example of leaseholders being ripped off and seen as cash cows.

The noble Lord, Lord Best, spoke about the risk of rogue property agents and others acting in an unscrupulous manner. Often when we legislate in this House, it is not to deal with the good people who play by the rules but to deal with the rogues—the people who just push their luck and pull strokes. How are we going to deal with that, when it is really important? It is not about good businesses but the rogues who will behave badly. The noble Lord, Lord Young of Cookham, mentioned those points in his contribution as well.

This has been an excellent debate with lots that we can generally agree on. There is also a lot to get our teeth into during our Committee and Report stages. I hope the Bill will be given three days, or maybe a bit longer. As we can see from this debate, lots of issues will need addressing. I hope that the Minister will have an open mind—I am sure he will—and want to engage with the House. I think we all want the same thing here; we know there is a problem and are trying to sort it out. It is just that we are a bit more frustrated and maybe want to get it done a bit quicker. We have raised serious points that need to be addressed in the Bill, even given its narrow provisions, so we ensure that when it becomes an Act it is a good one and does what the Government seek to do. With that, I look forward to the Minister’s response and our deliberations in the next stages.