Leasehold Reform (Ground Rent) Bill [ Lords ] (First sitting)

Maria Eagle Excerpts

Committee stage
Tuesday 7th December 2021 Public Bill Committees

[Eddie Hughes]

I thank the hon. Member for his support and for that question. My understanding is that the process through which leases will be regulated as part of the Bill would afford the opportunity for clarification of the informal leases to which he refers.

[Maria Eagle (Garston and Halewood) (Lab)]

rose—

[The Chair]

Order. Mr Amesbury, are you still speaking, or have you finished speaking?

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[The Chair]

So the Minister has the Floor and has given way to the hon. Lady.

[Maria Eagle]

I am grateful to you, Mr Hollobone. It is a pleasure to serve under your chairmanship. It is early in the morning, and therefore perfectly possible that I was wrong about my hon. Friend’s intention. Can the Minister clarify that the main intent of these provisions is to prevent those who perhaps used to be able to charge ground rent on new leases but who, following the enactment of the Bill, will only be able to charge a peppercorn if they wish to collect it, having a not very realistic, false way of getting around the Bill by deemed surrender and then reissue? Is that the main intent of these provisions? Obviously, if he had thought about this kind of trick being played when the Bill was originally drafted, he would have included something in that drafting, but it is always good to think again about the way in which people may seek to get around provisions. Have I got it right? Is that the main intent of these provisions?

[Eddie Hughes]

I can completely confirm that that is absolutely the main intent.

Amendment 1 agreed to.

Amendment made: 2, in clause 1, page 1, line 16, at end insert—

“(5) Where there is a deemed surrender and regrant by virtue of the variation of a lease which is—

(a) a regulated lease, or

(b) a lease granted before the relevant commencement day,

subsection (1) applies as if paragraph (b) were omitted.”.—(Eddie Hughes.)

This amendment provides that where there is a deemed surrender and regrant of a regulated lease or a pre-commencement lease, the new lease may be a regulated lease even if it is not granted for a premium.

Clause 1, as amended, agreed to.

Clause 2

Excepted leases

Question proposed, That the clause stand part of the Bill.

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[Eddie Hughes]

You are very kind, Mr Hollobone. Clause 2 will be of significant interest as it sets out those leases not regulated by the Bill. We have taken care to tightly define these, as we are aware that any loopholes might lead to abuse of the system and a monetary ground rent being charged where we had not intended it. I will consider each of the exceptions in turn.

First, subsections (1) to (3) detail how business leases will be excepted. It is important that a commercial lease that contains a dwelling, such as for a shop or other business, can continue to operate as now, and that landlords of such buildings are not disadvantaged. Businesses are also likely to prefer to pay some form of rent rather than a premium for the use of the property. However, we also need to protect residential leaseholders from any argument by a landlord that a ground rent is payable because of the possibility of a business use. For that reason, subsection (1)(a) states that the lease must expressly permit the premises under the lease to be used for business purposes without further consent from the landlord.

In our response to the technical consultation on ground rent, published in June 2019, we committed that mixed-use leases would not be subject to a peppercorn rent. The example given was a flat above a shop, where these are both on the same lease. In such instances, it would be important that a commercial rent can continue to be paid, to reflect the business use of part of the building. However, we wish to ensure that the Bill does not result in a plethora of mixed-use leases that are to all intents dwellings but where the tenant pays a monetary ground rent. For this reason, subsection (1)(b) requires that, for such leases, the use of the premises as a dwelling must significantly contribute to the business purposes.

The Bill also includes provision to make sure that both parties intend and are aware of this business-use component of the lease. Subsection (1)(c) achieves this by requiring that the landlord and tenant exchange written notices at or before the lease is granted confirming the intention to use and continue to use the premises for the business purposes set out in the lease. The form of this notice will be prescribed in forthcoming regulations. Subsection (3) defines business as including a trade, profession or employment, but not a home business as under the Landlord and Tenant Act 1954.

Statutory lease extensions for flats are already required to be at a peppercorn rent, so we have excepted them from the requirements of the Bill in order to avoid duplication. We will come to so-called voluntary lease extensions for flats when we consider clause 6. Statutory lease extensions for houses are required by legislation to be for 50 years for payment of no premium, but for a modern ground rent, which is typically higher than a peppercorn. Were the Bill to require that rent to be only a peppercorn, we would deprive the landlord of income for the granting of the lease extension. For that reason, those extensions are exempted from the Bill. However, we intend to return to the wider question of enfranchisement in future legislation. Our changes to the enfranchisement valuation process, including abolishing marriage value and prescribing rates, will result in substantial savings for some leaseholders, particularly those with less than 80 years left on their lease. The length of a statutory lease extension will increase to 990 years, from 90 years for flats and 50 years for houses.

I will turn now to community housing leases and other specialist products that we do not want to compromise. Community housing schemes promote the supply of new housing to meet local need where residents contribute towards the cost of shared community services. The use of ground rent in those cases is very different from ground rent for long residential leases where no clear service is provided in return. As we have done throughout clause 2, we have taken care to tightly define community housing leases to ensure that that exception applies only where intended. It covers long leases where the landlord is a community land trust, or the lease is a dwelling in a building that is controlled or managed by a co-operative society. We expect that to cover all deserving dwellings. We have also made provision, should it be needed, to add further conditions to those definitions in order to close a loophole should one be identified in future.

The clause also exempts certain financial products in cases where a form of rent is needed for the product to operate as intended. Subsection (9) defines them as regulated home reversion plans and homes bought using a rent to buy arrangement. It is important that those specialist financial products can continue, maximising choice for homeowners over how they finance their property purchase.

[Maria Eagle]

I think that many people who get involved in rent to buy perhaps do not understand that they may be excluded from that provision. I notice that the Minister is securing for himself some capacity to make regulations in future in relation to those particular types of leases. Could he give the Committee an indication of what kinds of regulations he anticipates will be made under the power that the Bill will grant him in respect of those particular kinds of rent to buy leases?

[Eddie Hughes]

I am embarrassed to say that I cannot, and the reason is that we do not know what the loopholes might be. We have a clever bunch of people who seek to avoid legislation. It will be helpful for the Government to be able to make such changes as might be necessary depending on the inventiveness of the people we deal with in future.

[Maria Eagle]

I am grateful to the Minister; it is remarkably honest of him to say that he does not know. One does not always hear that from Ministers, but am I getting the sense that the intent is to ensure that there is not some kind of workaround to the regulations and to the law, and that the intention is to protect those who have taken out rent to buy plans from oppressive provisions by landlords to charge some kind of ground rent, which the Bill is seeking to get rid of generally?

[Eddie Hughes]

On the intent, there are some financial products that we have exempted because the structure of their operation is dependent on the continuation of rent payments, but the opportunity is to make regulation in the future should people, for example, pretend to be something they are not, or try to do so. If we have the opportunity to close that down, I think that will be the intention. I feel that the hon. Lady could be building a case for future interventions—we will see. I think she is gathering evidence.

Subsection (9)(a) is clear that in order to benefit from this exemption, home reversion plan products must be regulated by the Financial Conduct Authority. Subsection (10) defines a rent to buy arrangement, ensuring that arrangements such as Sharia mortgages are able to continue. It is important that the Bill enables legitimate activities that require payment of a rent to continue, which clause 2 does in a carefully considered way that has been informed by detailed consultation. The clause is drafted to enable such activities but with tight definitions, ensuring that the clause is not used by landlords to charge a ground rent by the back door.

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[Eddie Hughes]

Clause 3 prohibits a landlord from requiring a leaseholder to make a payment of a prohibited rent. Subsection (2) defines that as making a request that the leaseholder make the payment, and/or having received a payment of prohibited rent, failing to return it within 28 days. To ensure that landlords are held accountable for their actions, we have made a conscious decision to include current and former landlords in the Bill. That will ensure that our enforcement measures, which are detailed later in the Bill, can be used in circumstances where a landlord has sold their interest in the property.

Having focused on landlords, I now turn to those we are seeking to protect. I am sure that the Committee will agree that the protective reach of the Bill should extend beyond current leaseholders who remain leaseholders when the wrongful payment is identified. A leaseholder who has sold the lease, for example, should none the less be able to seek redress if they subsequently realise that their former lease contained a prohibited rent. That is why subsection (3) ensures that the protections afforded to leaseholders also apply to previous leaseholders, a person acting on behalf of a leaseholder, and a leaseholder’s guarantor.

Clause 3 is the foundation for restricting unjustifiable rents for future regulated leases.

[Maria Eagle]

What limitations will there be on the provisions? Are we talking about the limitation in contract law? How long would a former landlord be under obligation to repay a prohibited payment that he had required, and how long would the former tenant be able to recover it? It is unusual to see a provision stating that

“references to a landlord include a person who has ceased to be a landlord”,

but there is usually some limitation to the liability. Does the Minister have an answer for that?

[Eddie Hughes]

I am worried that my candid responses to questions are going to get me in trouble, but the honest answer is that I do not know what the limitation is. I will write to the hon. Lady to let her know.

[Maria Eagle]

I am grateful.

[Eddie Hughes]

I strongly suspect, however, that the very clever team behind me will provide the answer, and that I will be able to inform the hon. Lady during discussions on a subsequent clause.

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[Eddie Hughes]

The Bill will help to ensure that new long leases granted subsequent to the Bill’s coming into force are set at a peppercorn rate—so, with no financial value associated with them.

[Maria Eagle]

Does the Minister accept that none the less the Bill, welcome as it is, does not help existing tenants who have already signed leases for which ground rent is payable?

[Eddie Hughes]

The hon. Lady is quite right. The intended purpose of the Bill, very tightly drafted as it is, is to ensure that we draw a line in the sand by ensuring that new leases in the future have a peppercorn rate. I commend the clause to the Committee.

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[Mike Amesbury]

I thank the Minister for his brief explanation. As my hon. Friend the Member for Garston and Halewood quite elaborately argued, this Bill is not about the many; it is just about the new. There are 1.5 million people who will still be in this system, many of whom write to us asking for us to advocate for them in this place. It is a particular issue in the north and north-west, and Wales. This Bill will do nothing for those people. In addition there is a plethora of complexities associated with the Bill—service charges, interesting management fees and so on—which we have spoken about at considerable length. So, while the Bill is welcome, it is narrow in scope and certainly does not deal with the situation here and now.

[Maria Eagle]

I very much welcome the intent of the Bill, which is to replace the standard charging of ground rent of real monetary value to leaseholders with a peppercorn rent. I welcome that very much; it is an entirely good and proper reform. Anybody who has had to deal with land law over the years—whether as a lawyer, or just as an MP trying to advise constituents—knows just how complicated it is to change these ancient and difficult land law provisions, which go back to feudal times in many ways and which very much have case law behind them. As we can see from this simple Bill alone, significant provisions have to be added to do the simplest things. I have every sympathy with the Minister, who has a record of trying to grapple with the complexities of English land law since he was Back Bencher. It is by no means easy.

I welcome, generally, clause 4, which reduces to a mere peppercorn the ground rent that is chargeable for new leaseholders. That is entirely to be welcomed. However, I want to set out to the Minister the difficulties that many of my constituents have. Thousands of them have in the last few years bought leasehold houses. This is particularly an issue in the north-west. As my hon. Friend the Member for Weaver Vale rightly said, there has arisen a penchant for selling newly built, often detached houses as leasehold properties. That has, and can only have been to enable the freehold—the reversionary interest—to be turned into a financial product that, over years, often decades, provides a stream of income for whoever retains the reversionary interest, who is often not the original developer or builder of the properties. It is sold on in financial markets to those who are interested in long-term investments providing a stream of income.

Many of my constituents, trapped in such leases, had no idea when they bought the houses that that would be the case, and that they would owe obligations for decades to whoever held the reversionary interest. They had absolutely no idea that the person who held the reversionary interest could change, and that it would be traded on financial markets and bought by people who wanted to exploit to the maximum the provision for income generation over years. The Bill, unfortunately, does not help any of my constituents who are stuck in such provision.

I am entirely in favour of changing that provision by means of the Bill, which I welcome, but there is an argument to say that the Bill actually makes things startlingly worse for those already trapped in such leasehold provisions that have ground rent and sometimes accelerated ground rent. It makes starker the fact that it is anomalous. I have many constituents on a number of estates across my constituency of Garston and Halewood who are finding it difficult to sell their properties. They have suddenly realised that they do not own a house, as they thought they did, but that they are renting it.

I am extremely anxious that the Minister does not rest on his laurels, having got this complicated piece of simple legislation through the House and on to the statute book, but that he realises that there is so much more to do to assist those who are stuck—particularly in my constituency and in the north-west—in newly built houses that they now find they do not really own. They are being financially exploited by remote owners of a reversionary interest that will endure for perhaps 99 or 999 years.

[Lilian Greenwood (Nottingham South) (Lab)]

Does my hon. Friend agree that the Bill, by doing the right thing for new houses, will actually make the situation even worse for those who are in existing houses, because potential entrants into the housing market will choose to buy a new leasehold house that is covered by these provisions, rather than a house that her constituent may wish to sell that is under the existing provision?

[Maria Eagle]

That is the very concern that I have. It not only shines a light on the dilemma and the problems of current leaseholders, who will not be covered by these provisions, but sets theirs up as an anomalous set of arrangements. Until the Minister comes back with legislation to change more thoroughly what has happened in existing cases, which I know will be difficult, these people will be in a more difficult position than they currently are. Not only will they have the ongoing financial burden of the exploitative provisions that have grown up, particularly in the north-west of England, but they will find themselves left behind. The danger is that the Minister may have to move on to other legislation of concern in his Department, and may find that doing something for existing leaseholders is very difficult in land law terms. I know it is difficult to change existing leases by statute.

[Mike Amesbury]

On Second Reading, my right hon. Friend the Member for Alyn and Deeside (Mark Tami) highlighted the issue that could arise where, within a single development, on one side of the road would be properties built in its first phase, under the current arrangements, and on the other side of the road properties built in the next phase, under the new arrangements. It is simply inequitable. When people come to market, which property will they purchase? The Minister is familiar with these issues, and my hon. Friend the Member for Garston and Halewood is right that they need tackling, despite the difficulty.

[Maria Eagle]

I have every sympathy with that point because I know of examples in my constituency. In the past few years, as these egregious excesses were coming to light and before legislation could be drafted, the Government have tried to impress upon developers that they should not do this kind of thing, and there have been voluntary arrangements. House builders have made voluntary arrangements, sometimes midway through the completion of a phased development, such that some buyers of properties built in the early phases of a development have had to pay ground rent, or accelerating ground rent, service charges and some of the other things that have not been dealt with in this legislation, but in later phases that has not been the case; so there is a difference between properties—even those built to the same design in different phases of one development.

One could say that caveat emptor is the basis of land law in England. It is indeed: “Let the buyer beware.” However, I have a lot of sympathy with constituents of mine who were rushed into buying a property so that they could access Help to Buy, who were first-time buyers, who had not done a degree in English land law before they sought to become homeowners—which, let us face it, is most people—and who relied upon the advice they were given. I have many criticisms of the legal profession and the solicitors—even conveyancers—who advised some of my constituents, because it seems to me that there has been a potential failing, in some cases, there.

In any case, the Minister has come to this, wanting to do something about it—indeed he has drawn a line in the sand, as he said—but he must not forget those individuals that, in drawing the line, he has not helped, and who may in fact find their predicament more starkly highlighted, and may find it more difficult to move on and sell the property that they now have than they would have done without this legislation.

[Margaret Greenwood (Wirral West) (Lab)]

My hon. Friend is making excellent points. Does she agree that there is a real human cost to this? I know of people living in my constituency who have properties elsewhere in the country, predominantly in the south, who decided to move back to Wirral because that is where they are from, only to discover that they are struggling to sell their properties. Quite often such moves are to look after an elderly family member or for similar reasons, so time is of the essence. Does she agree that we have to remember the human cost?

[Maria Eagle]

I very much agree with my hon. Friend. I have come across many instances myself. Perhaps a young couple, just starting out in life and on the housing ladder, wanting to be able to trade up in time when they start their family, suddenly find that they cannot because their home—their leasehold home—is of pariah status and they find it difficult to persuade somebody else to buy it. I worry that this legislation, welcome though it is—it is a good step: I emphasise that to the Minister—shines a starker light on the predicament that these people are in. It is therefore incumbent upon the Minister and the Government, who have been talking about this issue for a number of years—I am trying to be kind, Mr Hollobone—to come back swiftly with effective and challenging legislation that will do something for the people who are already stuck in this mess.

What we cannot do is say, “Oh, it’s all too difficult.” It is difficult, but as lawmakers, we are here to solve these problems. I will give every support to the Minister if he can come back, ignoring the lawyers who tell him that it is all too terribly difficult and nothing can possibly be done that would not tear up our entire English land law system of trading land. Something can and must be done. He will have my support if he comes back with much fuller legislation to deal with the existing problems of those who are already caught in this situation. Peppercorns are great. Perhaps we can have retrospective peppercornery.

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[Eddie Hughes]

The hon. Member for Garston and Halewood referred to my previous interest in this subject as a Back-Bench MP. It is an incredible privilege to have championed changes in this area and now to be the Minister responsible for it. I can assure her that my enthusiasm for greater reform is not diminished in any way by my having the opportunity to, at least, begin the legislative process now.

I have a huge degree of sympathy with the cases that have been raised by hon. Members on both sides of the room. It is incumbent upon us, as a Government, to ensure that we do not rest on our laurels, but continue to push and be bold with legislation in the future. Certainly, that has been the case with regard to things that have been said by our previous and current Secretaries of State. The current Secretary of State is determined to be bold and ambitious in all things for which he has responsibility, and I would like to think that we will have further discussions about this subject early in the new year.

[Maria Eagle]

I am glad to hear it. Does the Minister expect more legislation in this Session?

[Eddie Hughes]

It is above my pay grade to make those sorts of decisions, but I will be working very closely—

[Maria Eagle]

Go on.

[Eddie Hughes]

Perhaps one day they will make me Secretary of State and I will be able to make those decisions myself, Mr Hollobone—don’t laugh. As I said, it is our intention to come forward with proposals, so we will be talking again in the new year and discussing this in detail.

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[Eddie Hughes]

I can say nothing other than that I completely agree with my hon. Friend’s comments.

[Maria Eagle]

rose—

[Eddie Hughes]

I will give way, but I think we need to make progress.

[Maria Eagle]

We have to have proper scrutiny. There has been a general hope expressed by the hon. Members for Penrith and The Border and for Cities of London and Westminster that this legislation, rather than highlighting the difficulties existing leaseholders have and putting them in a more difficult position, may promote better behaviour towards existing leaseholders from those who are in a position to exploit them. We hope that that will be the case. Do the Government collect any figures that they might publish to enable us to see whether there is the positive impact hoped for by Conservative Members? Does the Minister have any figures that show that is the case—or are we just crossing our fingers and hoping?

[Eddie Hughes]

The figures are already publicly available.

Question put and agreed to.

Clause 4 accordingly ordered to stand part of the Bill.

Clause 5

Permitted rent: shared ownership leases

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[Mike Amesbury]

The evidence out there grows by the week. There is a genuine fear that landlords, freeholders and developers will look for other opportunities in response to the legislation. We already see those service charges up and down the country. I know it is a particular issue in London and the south-east, but every city across the country has seen some interesting non-transparent service charges—that includes estates and houses.

[Maria Eagle]

Does my hon. Friend agree that it is important that the Committee prevents the inclusion of loopholes in the Bill that could be widened by clever lawyers and then exploited by developers and those with a financial interest in keeping things as they are? His proposals are trying to prevent loopholes from being left in this admirable but small piece of legislation.

[Mike Amesbury]

I concur. That is exactly my point. I know that a similar amendment was tabled in the other place, as the Minister will be aware. We certainly need reassurance. There are lots of good intentions from the Minister and his Department with regard to this legislation, but we need to look at every opportunity to close those loopholes. I would like to have further discussions as the Bill continues its parliamentary journey—it is a conversation we need to continue. However, in that spirit, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

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[Eddie Hughes]

Earlier, we considered amendments 1 and 2, which relate to disapplying the premium requirement for a lease where there is deemed surrender and regrant. This set of amendments is also connected to the deemed surrender and regrant process, but more specifically, they clarify the matter raised by Lord Etherton with regard to a lease variation.

As currently drafted, it was not clear, where there was a pre-commencement lease where a demise was changed, whether such leases would be captured by clause 6. It was raised in the other place that, if not, any existing ground rent in those leases would be reduced to a peppercorn. We recognise that that might make some landlords reluctant to agree to such changes, thereby disadvantaging their leaseholders, which is not the Bill’s intention. The amendments make clear that the demise of a lease can be changed and the resulting surrender and regrant will not reduce the ground rent on the balance of the term of the pre-commencement lease to a peppercorn.

Any extension to the term of the pre-commencement lease will be required to be a peppercorn, in the same way as for voluntary lease extension. By clarifying that ground rent in pre-commencement leases can continue in this way, the amendment ensures that freeholders need not withhold consent for a lease variation unnecessarily. It also ensures that there is a consistent approach towards existing leaseholders throughout the Bill. As with amendments 1 and 2, the amendments are designed to avoid unintended consequences.

[Maria Eagle]

I just want a little clarity from the Minister about the circumstances in which this extensive clause would apply. Is the amendment seeking to exclude just the issue of a voluntary lease variation? One might argue, quite plausibly, that any kind of leasehold is entirely voluntary, because the parties to the lease voluntarily sign it—caveat emptor and all that. One can say that any signature of a lease is voluntary in that sense.

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[Mike Amesbury]

I thank the Minister for his explanation. If we look at the evidence provided by the National Leasehold Campaign and the Leasehold Knowledge Partnership, and take our mind back to the Select Committee call for evidence, I think in 2018, which I know he had a keen interest in at the time, there was a real concern about access to tribunals. Decisions seemed to be weighted against leaseholders. On the worry about access to, and supported provided to, tribunals, what reassurance can he give that the situation can improve as a result of the changing legal landscape?

[Maria Eagle]

I wish to ask the Minister a question. I apologise to him; obviously we have not yet reached the debate on the commencement provisions, but he might be able to enlighten us on the Government’s intention. Clearly, it is entirely welcome that clause 7 would simply replace the unfair term in the lease that asks for real money for ground rent rather than the peppercorn, which the legislation is intended to outlaw, but the commencement provisions are not totally clear about when that provision will be commenced.

My understanding is that there will be a regulation-making power for the Government to bring into force the Act on the day that they wish to do so. My concern about not being clearer about when clause 7 comes into force is that there may be a gap between when the Bill is passed and when the clause is commenced by the Government, because they will have to make a regulation to do so. Does that leave a space for unscrupulous landlords to continue to have unfair contract terms in their leases after Royal Assent but before the commencement of the legislation?

I wonder whether the Minister could assuage concerns by making it clear that it is the Government’s intention not to have a big gap between Royal Assent and commencement such that a loophole could be created in which clause 7 has not yet been commenced, preventing unscrupulous characters who may want to induce potential tenants into leases with contract terms that would be outlawed by the Bill from doing so. A simple commitment from him that there will be no such gap would satisfy me entirely.

[Eddie Hughes]

We are here to help. Lord Greenhalgh has already said in the other place that that gap would be no more than six months.

[Maria Eagle]

That is quite a long time.

[Eddie Hughes]

Given the pace at which legislation moves, that feels to me quite quick. With regard to the concerns of the hon. Member for Weaver Vale about the tribunal, I guess time will tell. We will need to monitor the situation closely, to ensure that people have access to tribunals. We are expecting the number of cases covered by this legislation to be relatively small. Given that the Government have signalled their intent, we have already seen reactions in the market, but I would look forward to working closely with the hon. Member, should concerns arise in future, in order for us to address them collectively.

Question put and agreed to.

Clause 7 accordingly ordered to stand part of the Bill.

Clause 8

Duty to inform the tenant

Question proposed, That the clause stand part of the Bill.

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[Eddie Hughes]

Mr Hollobone, I apologise sincerely for that small confusion on my part.

Clause 8 imposes on landlords a duty to inform whereby they are required to inform an existing leaseholder of the changes introduced by the Act, but only if those provisions in the Act have not yet come into force. This amendment was passed in the other place, and I support the principles behind the Lords amendment. It is vital that there is transparency in the leasehold system. However, there are doubts as to whether the amendment is the most effective means of achieving that objective. As drafted, it places a duty on all landlords. The amendment does not specify how—

[Maria Eagle]

Does the Minister mean the clause? I cannot see an amendment to clause 8.

[The Chair]

Order. What we are debating now is that clause 8 stand part of the Bill. No amendment has been moved to clause 8. We are debating whether clause 8, as inserted by the noble Lords, stays part of the Bill.

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[Mike Amesbury]

I thank the Minister for his explanation. He referred to the fact that I and a considerable number of other Members spoke about this matter on Second Reading and have done so throughout the campaign to reform the feudal leasehold system. I cannot quite understand the objection to the clause, given that the lack of transparency has been a major factor in the leasehold landscape—we have referred to the CMA investigation and mis-selling by solicitors. The clause would help to improve the landscape and improve the situation for leaseholders. It makes perfect sense to include provisions on transparency of information in the Bill that the Government are arguing for and which we are scrutinising and challenging. We support clause stand part.

[Maria Eagle]

I have some concerns about the Minister’s suggestion that we should not keep clause 8 in the legislation, partly because of the exchange that we just had on clause 7. I expressed a little sedentary shock that six months may pass between Royal Assent and the commencement of clause 7. A lot of leases can be signed in six months, which I consider an extended period, and clauses that will become prohibited may not be at the time.

Leases are difficult enough to read as a layperson without having to be aware that the law has been changed to prohibit a particular clause and that a rent set out in a lease should be replaced with a peppercorn rent. One would have to follow Hansard reports of Bill Committees carefully, as well as the commencement of legislation, to have an understanding that there was a prohibited clause in a lease that one had just signed. Even then, one must understand the legal language in leases, which is not the easiest thing for lay people, perhaps first-time buyers. It is extremely useful to have a provision such as clause 8 in the legislation to make it clear that there is an obligation on landlords to inform tenants of this interim period of time.

If the Minister had said in our debate on clause 7 that the delay was going to be a week or two weeks, then perhaps I would not have risen to support this clause, but we are talking about six months. Many leases have clauses that are to become prohibited later on, but the tenant who signed them may not understand that. We wish that were not the case but there are some landlords out there who wish to induce people to sign leases with charges attached that are shortly to become unlawful. Perhaps then there will be some money paid over, and it is more difficult to get that back than not to pay it in the first place.

Given that there is likely to be a period of up to six months between Royal Assent and commencement of the legislation, clause 8 is a valuable provision to keep in the Bill. I cannot understand why the Minister wants it removed. I would be happy if he were to tell me that commencement of the legislation would take place within a week or two of Royal Assent. I would not then be so concerned about this gap. I am concerned that we are creating or allowing too many loopholes that enable our constituents who are signing new leases to fall into traps that those who wish them to sign leases want to induce them into. The fewer loopholes, the better. Clause 8 is an important provision to leave in the Bill and I would vote for it to stand part of the Bill.

[Eddie Hughes]

Clearly, six months is the limit that we have set. I am sure that people will be working assiduously to try to ensure that that period is minimised. The suggestion that the hon. Member for Garston and Halewood made—that she would be reassured to hear that it would be a week—is nigh on impossible. We will continue to work hard to limit that period. During that time, we will communicate regularly with professional bodies to ensure that all solicitors are informed of and understand the changes that are coming.

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[Mike Amesbury]

My only concern is the obvious one about resources. I refer to my declaration in the Register of Members’ Financial Interests, as I am a vice-president of the Local Government Association. Over the last 11 years, resources have been somewhat depleted as a result of austerity and Government cuts. Although there is the control and skill capacity locally to be the foot soldier for enforcement, it is a matter of having the people and resources to carry that out and implement it.

I notice that on the Bill’s journey in the other place, a reference was made to future local government settlements. The last 11 years have not been good if we use them as an example of potential resources. I would be interested in the Minister’s reply on that important and vital matter.

[Maria Eagle]

It is good to see that there is some provision about enforcement because there is often a gap in legislation, so the law is made and practical enforcement is not set out. I find it quite an interesting approach to enforcement to say that local trading standards or weights and measures authorities in England and Wales “must enforce” in their own area the standard statutory obligation of such an authority but

“may enforce…elsewhere in England and Wales.”

I may be wrong, but that seems a fairly novel approach to enforcement. I am not saying it is bad, but I would like the Minister to set out in a little more detail why the clause is worded in this manner and whether there are any precedents in respect of other enforcement arrangements that have been drawn on to set out the provision.

Subsection (2) says:

“A district council that is not a local weights and measures authority may enforce section 3 in England (both inside and outside the council’s district).”

We have the prospect of roving entrepreneurial weights and measures departments perhaps thinking that they can go and levy fines of up to £30,000 for a breach somewhere else entirely. I think I have read somewhere that they get to keep the proceeds, so this is quite an interesting tax farming idea—perhaps going back to old England, whereby the collector is given a percentage of the takings. Like my hon. Friend the Member for Weaver Vale, I was going to ask what provision the Government will make to enable a local authority’s trading standards department to search out such breaches. Perhaps they intend to enable trading standards from elsewhere in the country to come galloping in.

[Ian Byrne (Liverpool, West Derby) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Hollobone. On the point raised by my hon. Friends the Members for Garston and Halewood and for Weaver Vale, Liverpool has lost £465 million of funding since 2010, and another £34 million of savage cuts are mooted for the upcoming budget. How does the Minister expect a council such as Liverpool City Council to finance a trading standards team that can actually carry out what the Bill proposes under what we are experiencing through austerity?

[Maria Eagle]

I agree with my hon. Friend about the savage reduction in available resource that the Government have visited on Liverpool. I am interested to hear from the Minister about the intention of this formulation and whether he anticipates that trading standards from out of area will be galloping around the country doing enforcement work in the manner that the clause lays out, because it is not something that I have seen before in legislation. I may be wrong, but it is not something that I can recall seeing.

[Mike Amesbury]

Perhaps there will be a VIP fast lane for the new hit squad that goes across the country.

[Maria Eagle]

I will be interested to see whether there is any kind of entrepreneurialism undertaken by trading standards around the country, but I would like to hear what the Minister has to say.

[Nickie Aiken]

I thank the Government for including effective enforcement in the Bill. There is no way that the Bill will work, and landlords will not be held to account, unless there is proper enforcement. Having been the cabinet member for public protection at Westminster City Council, which trading standards came under, I know at first hand the brilliant work that trading standards officers do day in, day out in Westminster and across the country. I would really appreciate it if the Minister could give assurances that trading standards teams across the country will have the funding to carry out the extra workload. I certainly think it is important that we ensure they can do so, because we do not want to be giving leaseholders any false hope, and I certainly welcome the ability for local authorities to keep the proceeds of any fines that they may be able to extract from a landlord.