Levelling-up and Regeneration Bill

Lord Kennedy of Southwark Excerpts

Committee stage
Wednesday 22nd February 2023 Lords Chamber

Moved by

[Lord Kennedy of Southwark]

42: After Clause 3, insert the following new Clause—
“Levelling-up missions: leasehold reform(1) Within 90 days of the Minister of the Crown laying a statement of levelling-up missions for the first time which contains missions that relate to housing, a Minister of the Crown must publish a report in accordance with this section.(2) The report must consider whether new legislation on leasehold reform would have any effect on the delivery of the mission which relates to housing. (3) The report must recommend whether the government should introduce legislation relating to leasehold reform for the purposes of delivering the missions, including to—(a) amend the Landlord and Tenant Act 1985 and the Commonhold and Leasehold Reform Act 2002 to limit the right of landlords to recover legal costs in excess of a prescribed scale;(b) make tribunal judgments binding on all leaseholders and to require landlords to account to all leaseholders;(c) amend the Landlord and Tenant Act 1985 to prevent landlords recovering service charges where they have failed to comply with their disclosure obligations under that Act;(d) commence section 21A of the Landlord and Tenant Act 1985 insofar as it is not already in force;(e) require landlords to disclose commissions earned on insurance policies;(f) make provision requiring landlords exercising a right of forfeiture or re-entry in relation to a property subject to a long lease to account to the tenant for the tenant’s equity in that property and to hold the tenant’s equity on trust;(g) restrict the landlord’s right to legal and administrative costs;(h) amend the Landlord and Tenant Act 1985 to provide for service charges to be reduced where they do not reflect the landlord’s actual costs in providing goods and services;(i) make fixed service charges subject to reasonableness requirements.(4) If the report recommends the introduction of new legislation, a Minister of the Crown must publish draft legislation to implement the recommendations within 90 days of the publication of the report.”

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

My Lords, first, I declare an interest as a leaseholder. Secondly, these are issues that I have raised repeatedly in the House over many years, and I want to put on the record my thanks to Liam Spender, Katie Kendrick and all the Leasehold Knowledge Partnership for their great work on the campaigns here. These broader issues began to get real attention in the House, and in the country, following the tragic fire at Grenfell Tower on the 14 June 2017, which will be six years ago this June. From that, there was resultant attention on building safety. Then, we have had the building safety work done by Dame Judith Hackitt, and we of course wait for the results of the second phase of the Grenfell Tower Inquiry.

After that, attention began to focus on the problems of leasehold as a tenure in itself. These problems have been rumbling away for many years. I first of all say that there are many good freeholders and managing agents—there is no question about that. But, as usual, it is the rogues that are the problem, and we have rogue freeholders and rogue managing agents. In some cases, they are connected, but that is the problem. They see leaseholders as an easy cash cow and that is what we want to address. I hope that we would all agree that this form of tenure has had its day, and that the sooner it is abolished and confined to the history books, the better.

I know that my constant raising of this issue in the House can be a bit irritating for the Government, but for me it is the only way of getting any action. Whatever else I do or do not do, I am quite good at being irritating when I need to be. We need to raise these issues to get some real action. Over many years, I have raised issues and have engaged with the noble Lords, Lord Bourne of Aberystwyth and Lord Greenhalgh, who is in his place, and the noble Baroness, Lady Scott of Bybrook. Generally, I have received loads of support. Everyone agrees with me: “We’ve got to sort the problem out. Absolutely right, Roy, it is on the Government’s priority list; we’re gonna deal with it”, but we do not actually get much action. We sit here time and time again.

With my Amendments 42 and 43, I hope that we can get some clarity from the noble Earl, Lord Howe, and from the Government, on what we are going to do in the next Session of Parliament. I am also a bit confused; maybe it is me, but I am. We keep being told that this is going to come in the King’s Speech—“Don’t worry about it, Roy, it’s all coming”—but then we are not quite clear about what actually is coming down the track. The Government are not being clear. Is it a Bill to reform leasehold tenure of residential housing, or is it a Bill to abolish this feudal system of residential housing? I do not think that it can be both; it is either/or. We need some clarity.

I will give an example of why I think there is confusion. In a recent article in the Sunday Times, which covered the issues arising from Grenfell, Mr Michael Gove, the right honourable Member for Surrey Heath in the other place, said that he intended to abolish the feudal system for residential housing—wonderful news. On the same Sunday, he also appeared on Sophy Ridge’s programme on Sky News. He could not have been clearer. He made it crystal clear that he intended to abolish leasehold housing before the next general election. He said:

“In crude terms, if you buy a flat, that should be yours.”


He went on to say that leasehold is an unfair form of property ownership.

“You shouldn’t be on the hook for charges that managing agents and others can land you with which are gouging.”


I watched that again today in my office. I agree with all of it. I was really pleased to watch the programme, and it was great to read the article in the paper. But then there was his Statement in the House of Commons, in which he did not quite say that. He talked about reforming leasehold as a tenure in the next Parliament—not abolishing it. The Statement was great and there were some really good things in it, but it was not saying the same thing. I hope to get absolute clarity: is it abolition or reform? At the moment, people are saying different things to different audiences. That is not right. We need to know what the issue is. It is great that a lot has been said about reform, but we must get this right.

I apologise that I could not be in the House this week when my Question was asked. My noble friend Lady Taylor of Stevenage asked it for me. The Minister could not have been clearer that the intention was to abolish leasehold housing. She answered the Question in about 20 words. Again, this is not what is being heard elsewhere. We need to be absolutely clear as to the intention.

My amendments in this group are intended to help the Government. Amendment 42 sets out what the Government should do within 90 days of laying a statement of levelling-up missions. It focuses on all the issues around the reform that we want, such as tribunal judgments and insurance and forfeiture. There have been scandals about insurance payments. This amendment deals with those. I hope that the Government can accept it, or at least be in discussion with us about what can happen before the next stage of the Bill.

My Amendment 43 talks about abolition. We have two choices. Let us know what it is and let us get it sorted.

I hope that the Government can accept these amendments. If they are not prepared to do so, we have a series of Private Members’ Bills on the green sheets which refer to all these issues. There is the Leasehold Reform (Reasonableness of Service Charges) Bill, the Leasehold Reform (Disclosure and Insurance Commissions) Bill, the Leasehold Reform (Tribunal Judgments and Legal Costs) Bill and the Leasehold Reform (Forfeiture) Bill. The Government could easily adopt these Private Members’ Bills and agree their stated intention without problem. I am sure that they would have the full support of the House. My amendments seek clarity from the Government: is it reform or abolition? Which do they want to do? We do not want to trundle along into the next Session without being clear. Everyone will just become upset and confused. I am sure that the Minister will respond well to this debate. Can he be absolutely clear as to what is going to happen to this Bill in the next Session? We can all then work to make sure that it is delivered. I beg to move.

[Lord Young of Cookham (Con)]

My Lords, I have added my name to the probing amendment from the noble Lord, Lord Kennedy, which he has moved modestly from the Back Benches and which presses the Government on their approach to leasehold reform. This issue was raised on Monday, as the noble Lord has just said.

I will concentrate on proposed new subsection (4) in the amendment. This requires something which I have asked for on many occasions, namely, draft legislation in advance of a Bill. We now know that the next Session of Parliament will not start until the autumn, whereas I believe that the department had been planning to introduce the Bill shortly after the State Opening in May. This Bill was originally planned for the current Session, so gestation should by now be well advanced and a draft Bill should be oven ready.

There are two consequences that flow from the postponement of the next Session. First, the next—and last—Session of this Parliament may be shorter, with less capacity to pass Bills. Bills that might have got a provisional slot in the longer Session originally planned, may drop out if the Session is shorter. This is the equivalent of legislative musical chairs when the music stops. Secondly, there is now time to publish the Bill in draft, to iron out any wrinkles and so accelerate and simplify its passage. I am sure that my noble friend is in favour of this. This would also avoid the risk of getting caught in an early Dissolution next year. I must say that I did not follow the argument deployed on Monday that publishing in draft would “slow the process down”. I would argue that the contrary is the case.

My noble friend may not recently have read the Cabinet Office Guide to Making Legislation, updated last year, which says:

“The Government is committed to publishing more of its bills in draft before they are formally introduced to Parliament, and to submitting them to a parliamentary committee for parliamentary pre-legislative scrutiny where possible.”


It goes on to say:

“While publication in draft does not guarantee a place in the following year's programme, it is a factor that the PBL Committee”—


the Parliamentary Business and Legislation Committee—“will look on favourably”. The reasons are amplified:

“There are a number of reasons why publication in draft for pre-legislative scrutiny is desirable. It allows thorough consultation while the bill is in a more easily amendable form and makes it easier to ensure that both potential parliamentary objections and stakeholder views are elicited. This can assist the passage of the bill when it is introduced to parliament at a later stage and increases scrutiny of government legislation.”


Finally, on timing, the guidance says:

“Draft bills should be published in time to give the committee carrying out scrutiny at least three to four months (excluding parliamentary recess) to carry out its work and still report in time for the department to make any necessary changes before the bill is introduced.”


So we have plenty of time.

Against this recently stated government policy of publishing Bills in draft, the Government have under- performed. They have published one draft Bill for the current Session—the draft mental health Bill—compared with an average of 5.6 Bills per Session for the previous 17 Sessions. It published only two Bills in each of the preceding two years.

The House will excuse my lack of modesty when I say that, in 2012-13, when I was Leader of the House in another place, we published 13 Bills in draft. Here we have not just an opportunity to get this Bill right, but to improve on the less than impressive record on draft legislation. Indeed, not publishing the Bill in draft is contrary to government policy, as I have just explained.

I turn briefly to the substance of the proposed new clause. On 6 December 2022, my noble friend Lady Scott held a round-table meeting on leasehold reform, which was attended by officials and a number of noble Lords. I am very grateful to my noble friend for holding that meeting. We were asked what our expectations of future legislation were. I handed over a very long shopping list. It included existing commitments, such as on collective enfranchisement, but also many of the items in the amendment from the noble Lord, Lord Kennedy, such as banning forfeiture and additional measures of consumer protection.

Can my noble friend confirm that the Bill will enact all the commitments that the Government have made in this area—both in their manifesto and subsequently? Can he confirm what the Secretary of State has said that it is the Government’s intention to abolish the outdated feudal leasehold system? In other words, after a given date, will it be illegal to sell a property on leasehold, so all sales will have to be on commonhold?

We need clarity soon, and a draft Bill would give that. Leaseholders thinking of extending their leases need to know whether to wait and take advantage of any new rules on costs of extension, or to play for safety, extend now and then possibly regret it. The same applies to collective enfranchisement. There is an element of blight on the market until such time as the Government can shed light on their proposals.

I hope that my noble friend will reconsider the decision not to publish a draft Bill and show as much ankle as he is able this evening on the Government’s proposals for this Bill.

--- Later in debate ---

[Lord Greenhalgh (Con)]

My Lords, I declare my residential and commercial property interests as set out in the register. I am also proudly now a vice-president of the Local Government Association—finally.

I rise, as I naturally do, in support of the noble Lord, Lord Kennedy of Southwark, who is flanked by his formidable wife, the noble Baroness, Lady Kennedy, who sticks up just as doggedly for Generation Rent. I am very pleased to support this amendment. It is a grand coalition, if you like, of the noble Lord, Lord Kennedy, my noble friend Lord Young—who I used to describe as part of the awkward squad, but obviously I am on the Back Benches now so that is irrelevant—and the noble Baroness, Lady Fox of Buckley, who are poised to ensure that this is taken really seriously by the Government. That is why, as a former Leasehold Minister, I join and add my voice.

I want to summarise each of these individuals in one word, which is hard, but I have thought about it for about five minutes. The noble Lord, Lord Kennedy, is dogged—I can remember that there was not a single week when I was a Minister when he would not pop up, and probe, and cajole, and gently swipe, to get stuff done on behalf of all those poor leaseholders when it came to leasehold reform, and to ensure that we got the Building Safety Bill that we needed; that is a truly great contribution and I recognise that.

But I am going to answer some of the points that he raised, because unfortunately I am a bit immersed in the policy detail. There was some action by this Government. When I was the Leasehold Minister, we brought in the first stage of leasehold reform that removed escalating ground rents from the equation, which was the fuel that generated the whole business of leaseholders being exploited by very tricky freeholders. It was the first part of the LKP model—the Leasehold Knowledge Partnership model—of reform, so we got stage 1 done. Now we are set for stage 2 that brings in very important measures for existing leaseholders to enfranchise and get a share of the freehold.

Equally, I chaired many a session of something called the Commonhold Council. I am a commonholder in France and I know that you can be a commonholder in Scotland. It is a tenure that I support and it is something that we want to see widespread adoption of. But we have got to recognise that we have to kill this exploitative business for the future, and that has been partly done by the first stage of leasehold reform. We have got to set a direction that encourages people to have a share in their freehold, and also do what Labour failed to do—I am sorry to be party-political here—under someone called Tony Blair and get it right this time to see the widespread adoption of commonhold.

So the noble Lord, Lord Kennedy, is dogged, and I turn to my noble friend Lord Young, who for me is forensic. There is no element of parliamentary procedure that has not been read by my noble friend Lord Young: he reads everything. The message to the Government is, “Publish the Bill”—which is what the Law Commission advised as well. So I say to my noble my friend the Minister, “Publish the Bill”. We can then start the pre-legislative scrutiny in a constructive way, reaching across the aisle and working together to make this the best possible Bill before we run out of parliamentary time.

I am going to describe the noble Baroness, Lady Fox of Buckley, as philosophical—we have got dogged, we have got forensic and we have got philosophical. What we have before us—a brilliantly crafted amendment —is the opportunity to level up home ownership, and that is why I am here in support of this grand coalition.

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

I accept entirely that when the noble Lord was a Minister, we got that first stage of ground rents through, and that was very good to do. The problem of course was that I could not persuade him on the next stage, but hopefully it is coming soon. But the noble Lord certainly got the first thing through, and I am very grateful for that.

[Baroness Pinnock (LD)]

My Lords, good debate. I agree.

--- Later in debate ---

[Earl Howe (Con)]

My Lords, we fully understand the desire for urgency in this area. The Minister, my noble friend Lady Scott, has made this clear at this Dispatch Box previously. As I hope my noble friend Lord Young knows, her department is working very hard indeed on this policy area.

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

Can the noble Earl confirm whether there is a draft Bill? That would be useful. Can he also maybe give us a bit more on the definition of “urgent”?

[Earl Howe (Con)]

I do not think I can add to what I have already said. I shall endeavour to ascertain the state of play on the drafting of the Bill. I will gladly tell the noble Lord if there is any further information on that, but I do not have it to hand.

Given the extent of government action on these priorities set out elsewhere in policy, and the approach I have outlined to setting a clear, systematic and long- lasting framework for levelling-up missions, I hope that for now this provides the noble Lord, Lord Kennedy, with sufficient assurance to enable him to withdraw Amendment 42.

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

My Lords, I thank everyone who has spoken in this debate. I also —I should have done this when I spoke originally—thank the noble Lord, Lord Young of Cookham, the noble Baroness, Lady Fox of Buckley, and the right reverend Prelate the Bishop of St Albans for signing my Amendment 42. I am very appreciative.

In his excellent speech, the noble Lord, Lord Young of Cookham, highlighted the problems of the opaqueness of the Government’s actions. It is all still a bit grey, and that is an issue. He also raised a very important point. We do not know whether the Bill is there yet, but apparently there is something there. If it appears in the King’s Speech, the other risk is that it will be the last Session of this Parliament and we all know that things drop off at the end and do not happen. The noble Lord made that point well, and the Government should take note of it. We would not want to get a Bill but then see it disappear because, “Sorry, we’re now going to the general election and we’ll have to come back to it afterwards”. That would not be a good place to be at all.

The noble Baroness, Lady Fox of Buckley, made the point that many leaseholders were first-time buyers and often live in areas where the Government want to level up. In this levelling-up Bill we would hope to do something for those people and help them level up. In the worst cases, people are treated appallingly by rogue managing agents and rogue freeholders. There was a very good article in the Financial Times recently. There is a huge insurance scandal coming down the track with what has been going on with managing agents and leaseholders. It is absolutely outrageous; they are just ripping people off.

I thank the noble Lord, Lord Greenhalgh, for his support and welcome him to the cause. It is good to have him on board. If we ever meet in future, we will make sure we invite him. I was delighted to learn that he is now a vice-president of the Local Government Association. I should probably declare that I am as well. I look forward to us working hand in hand on this in the coming weeks and months.

I thank the noble Lord, Lord Thurlow, for his support on this. These are probing amendments, but it is important that we air these issues here and ensure that we get the Government to be absolutely clear where they are. I thank the noble Baroness, Lady Pinnock, for her support as well—it is much appreciated—and my noble friend Lady Hayman.

I thank the noble Earl for his response, but I was hoping for a bit more. I have been in this House for nearly 13 years and have always been very impressed by him, so I was hoping for a little more. Maybe we will come back to this again.

I am still not quite clear where we are on reform or abolition. What we are going to do here is still a little vague. Maybe that is why we are not yet getting the draft Bill that may or may not be produced. At the moment, some leasehold campaigners think the Government are going to abolish leasehold and are saying, “What a wonderful thing to do; it’s really great news that the Government are going to do this”. Another group thinks the Government are going to reform it. They are not doing both, clearly, and they are not being clear about what they are going to do. They are going to disappoint quite a lot of people before the next election, and I think they should reflect carefully on that. They need to be much clearer what their intention is. As the noble Lord, Lord Young of Cookham, said, if they have the draft Bill, they should just publish it and help everybody.

I will leave it there. I beg leave to withdraw my amendment.

Amendment 42 withdrawn.