Leasehold and Freehold Reform Bill

Lord Sentamu Excerpts

Committee stage
Wednesday 24th April 2024 Lords Chamber

[Baroness Fox of Buckley (Non-Afl)]

My Lords, the noble Lord, Lord Truscott, explained very well what I would have liked to say, so “hear, hear” to that. I was beginning to worry that the debate might be getting a bit dull—until the noble Lord, Lord Moylan, spoke. He so infuriated me that I feel I have to say something. I am not able to stay for the rest of the evening, but I wanted to clarify a number of things.

It is true that there are some people who own lease- hold flats who are not poverty stricken, but the characterisation of the 5 million leaseholders in this country as wealthy is ludicrous. The main reason why people—certainly me—are forced to buy leasehold flats is that they are cheaper than non-leasehold flats. As I will indicate in an amendment to be discussed on the next day in Committee, very few of us were originally aware of what a leasehold meant. We thought that we were entering into the housing market and buying a house, having saved up very hard to do so, without realising that we were, in effect, pseudo-tenants with very few rights. That has all been discussed often in this House.

The other thing that I wanted to clarify—I hinted at it, and it will come up again—is the notion that any charity that is a freeholder is doing good in the world; that strikes me as at least open to question. Many of the problems that leaseholders face are due to their being local authority—local authorities are not charities, but there are real problems with local authority flats. Also, housing association leaseholders have endured incredible problems with how the leasehold is set up. It is not appropriate to assume that, because charities say that they are doing charitable work, they are not accountable for some of the uncharitable consequences of the fact that they are, in effect, freeholders making a huge amount of money out of leaseholders.

In that sense, what really wound me up was the idea of this being a limitless expropriation scheme. Leaseholders have felt for some time that they are on the receiving end of a limitless expropriation scheme. The reason why this Bill is here and why people across the political parties, from right to left and in between, are so committed to tackling leasehold is that the inequity is in that capacity to expropriate, via the service charge, ground rent and so on. It means that leaseholders feel there is no way to defend themselves against a freeholder who can just take, take, take. Having paid quite a lot in service charges, I know that you do not necessarily get a service and there is not very much you can do about it, which is what the Bill is trying to address. I am pleased that the Government are addressing this, although they are not going far enough.

This is whipping up a climate of fear, and the notion that mad socialists are going around stealing property from freeholders is absolutely mythical. It is very important that we do not allow myths to emerge in the midst of this discussion, and that we have a proportionate sense of how to respond. I do not think that all freeholders are evil, but the system is iniquitous. I mentioned before that it has taken a few years of me being here to hear so much enthusiasm for feudalism, but it seems to be coming up again. It might make it difficult to untangle the law—as the noble Baroness, Lady Deech, explained, this goes back many hundreds of years—and I am not trying to be glib, but there have been a lot of commissions looking into this. However, it is not appropriate to sing the virtues of feudalism, either. Feudal property rights are not in the interest of modern democrats, whether they are on the left or the right. The idea that this is the equivalent of the difficulties of expropriating from Putin does not make any sense.

As to the European Court of Human Rights: the irony of the position of Conservative Peers! By the way, I am one of the people who would leave the ECHR— I know everyone here will hiss and boo when I say that —because I do not think it should determine the decisions we make in this or the other House. But Conservative Peers, who would otherwise say that the European Court of Human Rights is unreliable, defending it for hedge fund managers is ludicrous. Freeholders are not necessarily virtuous, benevolent, benign landowners; some are, but most are money-making rentiers. It is actually a criticism of the failures of capitalism that the only way anyone thinks they can make money is by ripping off leaseholders—and then describing them as rich, just because they have got a decent flat. Noble Lords get the gist.

[Lord Sentamu (CB)]

My Lords, I remind the noble Baroness, in light of what she has just said, that it was in this place in 1215 that the barons said to the King, “This is the Magna Carta”. This principle was established and made very clear that a person’s property could not be seized by the King, except by the lawful judgment of his Peers over the law of the land. The assumption is that if you take the property, compensation must follow, even if you are taking such property because you want to convert some or all of it into leaseholds, so that they too can become owners. The Magna Carta will tell you, “Have you forgotten your history? Have you forgotten your law?” The rule of law in this country is what gives us liberty. It is not just a question of the European Court of Human Rights; it is also Magna Carta, which is really the foundation of all these things. To seize somebody’s property, even by an Act of Parliament, would go against the whole reason why Magna Carta came out and gave us the rule of law, in the end.

Let us be very careful in this Bill. If you take away somebody’s property without compensating them, those barons from 1215 will be rising up and saying, “Remember your history, remember your law, remember the tradition that it has created, and safeguard it”.

I do not think that freeholders are simply wanting to hold on to things, in the way that the noble Baroness described some of them, or are not doing any good charitable thing. I live in Berwick in Northumberland, and the duke there has plenty of other things. I have also seen some of the charity work that is being done.

Let us not use language and words because we are enthusiastic in one direction or another and ignore the Magna Carta. It is what has given freedom and liberty even to newcomers such as me. My friends, the rule of law cannot ever simply be brushed aside because of a desire to correct a particular question. The rule of law matters. The Magna Carta matters.

[Lord Thurlow (CB)]

My Lords, I support each of the three amendments in this group. I was going to say that the amendment from the noble Lord, Lord Moylan, concerning compensation, was so articulate that it really needed no reinforcement, but I was not expecting the fine history lesson just now, which has reinforced it with great skill and humour. The noble Baroness, Lady Deech, explained that she taught property law for many years. I studied property law for many years, and I am sure that, if I had studied under her—which would of course not have been appropriate at all in age terms—it would not have taken me so many years.

The expropriation is bad enough, but to add the retrospective characteristic in this legislation is shameful. My principal interest in contributing is the 80-year rule referred to by the noble Lord, Lord Howard of Rising, because that is a very sensible, intelligent compromise to the sledgehammer of absolute abolition of marriage value and hope value in the calculation being entirely reserved to the lessees. Many of the highest-value elements of this paragraph are, indeed, in central London and the south-east, and many are non-resident.

This clause would save the Treasury billions, in addition to earning it some billions, which we heard referred to by the noble Lord. There is logic to the 80 years proposed in his clause. That is the threshold below which mortgagees such as banks and building societies are very reluctant to lend on property. Lessees therefore have no choice but to negotiate an extension if they want to use borrowed money—and, of course, nearly all do. The 80-year rule is a compromise between the very long leases and those moving into the unmortgageable zone. It makes a great deal of sense to cut the pack in this way because it excludes those freeholders of over 80 years but encapsulates the value of the expiring leases. It should be supported.