Levelling-up and Regeneration Bill

Lord Young of Cookham Excerpts

Committee stage
Wednesday 22nd February 2023 Lords Chamber

[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 ---

[Earl Howe (Con)]

My Lords, as we have heard loud and clear from the noble Lord, Lord Kennedy, in his introduction to this group, Amendments 42 and 43 relate to leasehold reform in the context of the levelling- up housing mission. They provide me with a good opportunity to bring the Committee up to date on the Government’s plans for reform in this policy area, and the action that we are taking now. However, I should first declare my interest as set out in the register as the beneficial owner of a freehold property that is subject to a long lease.

At the end of January, my right honourable friend the Secretary of State for Levelling Up set out his intention in Parliament to bring, as he put it, the “outdated and feudal” leasehold system to an end. The Government wish to extend the benefits of freehold ownership to more home owners, and that is why we have committed to end the sale of new leasehold houses and to reinvigorate commonhold so that it can finally be a genuine alternative to leasehold. It is why we have limited the charging of ground rent, as my noble friend mentioned, in most new residential leases, which takes away the incentive to build leasehold. It is why we will make it easier for leaseholders to purchase the freehold of their building and take control of their building management by enhancing enfranchisement and the right to manage.

Leasehold and commonhold reform will support the mission to level up home ownership and promote true home ownership for all by fundamentally correcting the power imbalance at the heart of the leasehold system and putting the power into the rightful hands of home owners. The Government’s reform package is advancing this agenda by building on the Leasehold Reform (Ground Rent) Act, which aims to make home ownership fairer and more transparent for thousands of future leaseholders by preventing landlords under new residential long leases requiring a leaseholder to pay a financial ground rent.

Furthermore, thousands of existing leaseholders have already seen a reduction in their inflated ground rent costs as part of the ongoing Competition and Markets Authority investigation into potential mis-selling and unfair terms in the leasehold sector. The Government are encouraging developers of all sizes to come to the negotiating table if they have not already.

The noble Lord, Lord Thurlow, referred to insurance. There are several issues around insurance, as I am sure he is aware. One of them is that leaseholders are often unable to gain visibility of the costs that make up their premiums, and nor do they have useful routes to challenge these. We will act by arming leaseholders with more information and will ensure that leaseholders are not subject to unjustified legal costs and can claim their legal costs back from their landlord.

The Government are committed to delivering the second phase of their major two-part leasehold reform within this Parliament. I am afraid the noble Lord, Lord Kennedy, will have to wait for the detail of the Bill but, as he has pressed me on the question of reform or abolition, I can do no better than refer him again to my right honourable friend’s words. He made clear his intention to bring the system of leasehold to an end.

As part of these reforms, the Government remain committed to better protecting and empowering leaseholders, first, by giving them more information on what their costs cover, as I have alluded to, and, secondly, by ensuring they are not subject to any unjustified legal costs and can claim their own legal costs from their landlord.

My noble friend Lord Young of Cookham sought to press me on pre-legislative scrutiny. At this stage I can simply say that the Government welcome the work and engagement of noble Lords and other parliamentarians to date on leasehold and commonhold reform. We will of course consider how best to involve Peers, Select Committees, Members of Parliament and wider stakeholders in the development of any future legislation.

[Lord Young of Cookham (Con)]

Would the best way to achieve the ambition my noble friend has just set out not be to publish the draft Bill?

[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.