Building Safety

Rachel Maclean Excerpts

Tuesday 26th March 2024 Commons Chamber

[Lee Rowley]

With the greatest respect, I do not think it does beggar belief that a line has been drawn at 11 metres. [Interruption.] The hon. Lady is chuntering from a sedentary position; I had hoped that she would listen to my answer in the first instance before making comments on it.

This is a relatively recognised and relatively long-standing position. Following the commitment given by my predecessors back in 2022, when we have received concerns about buildings under 11 metres we have taken action. We have looked at those buildings and have commissioned reports when that has been necessary, and in the overwhelming majority of cases it has subsequently been confirmed that they do not require remediation. If any Members have outstanding concerns about buildings less than 11 metres high, I encourage them to get in touch and we will happily look at them in more detail, because if the trajectory that we have seen in the cases that have been raised with us so far already is followed, it is highly likely that life-critical safety concerns will not be visible once we have done so.

[Rachel Maclean (Redditch) (Con)]

There is a complex interplay between what the Minister has said today about building safety, cladding and remediation and the agenda relating to the Leasehold and Freehold Reform Bill, which, of course, many of us in the Chamber are still right behind. Will the Minister please reassure us that the Government as a whole remain committed to this vital transformative and conservative agenda?

As the Minister himself has said from that Dispatch Box, there is no prouder word in the English language than “freeholder”. We want to see more freeholders liberated from the tyranny of the ground rent grazers and some of the deep-pocketed people in this so-called sector who are now trying to make out, if the reporting is accurate, that if we press ahead with our reforms to reduce ground rent to a peppercorn, the whole sector will be destabilised and the Minister’s vital work of remediation will somehow be affected. I, like many others, do not accept that assertion in any shape or form—it is, of course, complete nonsense—but will the Minister please reassure me, and many others, that we will continue to reform this sector and liberate the leaseholders so that they can own their properties, while also continuing to make them safe?

[Lee Rowley]

My hon. Friend is right to say that the work that has been put into the Leasehold and Freehold Reform Bill, and the measures that we have introduced in it, will be transformative for leaseholders. I know that, and I know she knows that, because she was the person who put in the work in the first place, and I pay tribute to what she did in this role previously.

My hon. Friend is also right to draw attention to the link between those who have been impacted by cladding and leaseholders in general. It is through reforms such as those in the Bill that we will be able to bring even more transparency, including on insurance, which the hon. Member for Weaver Vale (Mike Amesbury) rightly raised. That applies not just to leaseholders who are impacted by cladding remediation, but to leaseholders in general. We will ensure that they know what they are paying for and can fully recognise whether the arrangement is fair or not.

Leasehold and Freehold Reform Bill

Rachel Maclean Excerpts

Report stage
Tuesday 27th February 2024 Commons Chamber

[Mr Deputy Speaker (Mr Nigel Evans)]

To protect the last six speakers and protect ministerial time as well, there is now a five-minute limit on speeches, which will give the Front Benchers sufficient time to respond.

[Rachel Maclean (Redditch) (Con)]

It was a great pleasure to serve on the Public Bill Committee on this Bill. We had a great debate, and there was actually a lot of agreement across the Committee Room. These are deeply Conservative reforms, championed by none other than Mrs Thatcher, starting in 1965, which she continued to do throughout opposition and during her premiership.

I gently say to Opposition Members, of whatever party, that they must not fall into the trap of making this a political football. They must engage with the seriousness and complexity of these reforms, in part because, as we have heard, they did very little to advance these very significant reforms during their own time in office. I suspect that they backed away from it because of the very significant legal challenges they would have faced, as we ourselves will no doubt face. Pretending they do not exist is not a serious position. I say to the Minister and the Secretary of State, who are aware of my comments, that we must not buckle, but must continue to take this forward.

It is great to see the package of amendments laid by the Government, particularly new clause 42, which is a ban on leasehold houses. I want the Minister to think carefully about how he will address the inevitable imbalance in the creation of a two-tier system, in which some people will have the freehold of their house, but some will not. There is an additional imbalance between flats in our urban areas and new freehold houses. That point was very well made by James Vitali in a Policy Exchange report. I am slightly worried about the omission from this of retirement properties, so perhaps the Minister could return to that.

In Committee, I spoke about the need to truly move towards a commonhold system. I think the Opposition’s new clause 11 is something of that nature. I very much hope that, as the Bill goes through completing its stages, the Government—here or in the other place—can look at that suggestion. I think we do need to set out the future legislative scaffolding for our fifth term in office, and to build on the work we have done so that we can finally get rid of this leasehold system.

Other Members have mentioned a lot of the points I would have made about shared services. My hon. Friend the Member for Cities of London and Westminster (Nickie Aiken) raised that, and it is one of my concerns. My hon. Friend the Member for Harborough (Neil O’Brien) has done a fantastic job in talking about the lack of adoption by local authorities. There is also new clause 7, which I know is again an Opposition amendment, and new clauses 1 and 2. This problem is not going to go away. It is a blight on many homeowners in Redditch, and it also goes to the heart of our planning system. We really do need to look at that; we cannot pretend that it is going to solve itself.

I thank the Minister for writing to me about one of my concerns, which is litigation costs. I think new clause 3 looks at that. He has reassured me that what is in this Bill will go the distance in ensuring that leaseholders are not subject to unjust litigation costs by their landlord. That is one of the cases highlighted by Liam Spender and many others. These are hugely complex issues, but we must tackle them.

I want to see ground rents reduced to a peppercorn. It is pure extortion, and a feudal relic from medieval times when people were serfs and worked the land. We should not have this in 2024, or in any year. I refuse to believe that there is not a way, through the wit of man and the considerable intelligence of Ministers on the Front Bench, to solve the issue, perhaps where some financial assets are held in pension funds. I do not buy the pretence of that incredible con artist Mr Steve Whybrow and his outfit that somehow we are robbing pensioners. I would urge anybody with an interest in this debate to look at the genuine pensioners who are fighting for the right to have pure enjoyment of their own properties, which they richly deserve after a lifetime of working.

I will make my final remarks on forfeiture: it must go. The forfeiture of a long lease cannot be right. It cannot be right that a freeholder can hold this nuclear bomb over somebody such as Dennis Jackson, a pensioner, of Plantation Wharf. He disputed a £6,000 service charge, which led to an £80,000 legal bill, and he had his £800,000 flat forfeited during a 10-minute hearing at Wandsworth court. I thank LEASE for all the work it has done to help him. That just simply cannot be right, and we must address it. I want to see us finally finishing the job that Mrs Thatcher started when she was Opposition Housing spokesman in 1965. We must finish that job, and I thank the Minister for all the work he has done so far.

[Stella Creasy]

I feel for the Minister today, because he must be kicking himself. This is probably one of the few debates I have heard in this place recently where I have not heard a bad idea. As constituency MPs, we see time and again the problems caused by retaining this feudal system of leasehold, and I suspect that the Minister, who has been looking at this issue for some time, is kicking himself because what he would really like to do is abolish the whole thing. Indeed, today we have heard support from across the House to do just that. In the short time available, let me say again to him that he would have our support to move to commonhold. He talked about how commonhold was probably the better model, and for those of us living in the vortex of gentrification, where thousands of flats have been built in our community, this is an incredibly pressing issue. We know that the casework we have seen over the past few years will expand as a result of leasehold continuing. That is why I wish to see the Government change their mind, perhaps in the other place, about getting rid of leasehold altogether, and why I have been pressing my local authority to listen to concerns of local residents who are stuck with leasehold, and change our local plan to make commonhold the default. I hope that they have heard this debate and will rethink their opposition to that.

I support the amendments in the name of my hon. Friend the Member for Greenwich and Woolwich (Matthew Pennycook), and wish to draw the Minister’s attention to two new clauses that I have tabled on issues with the existing system and the problems that leaseholders face. With 12,000 leaseholders in Walthamstow, I know that these issues will come up time and again.

New clause 2 is about the fact that although we have leasehold legislation, it does not tally with our consumer legislation. Leaseholders pay a service charge. They have a contract with freehold management companies to oversee problems in their properties, but few residents feel empowered to access rights that exist under the Consumer Rights Act 2015 to have a reasonable service within a reasonable timeframe for repairs. Today, colleagues across the House have given countless examples of that, so let me add my own, which is where my proposed new clause has come from. I am sorry that my hon. Friend the Member for Lewisham East (Janet Daby) is not here. She talks about Leigh Court and new clause 67, but residents in Essex Brewery in Walthamstow have been without hot water and heating since before Christmas. Indeed, they are still without hot water and heating, with little sight of any change.

Essex Brewery was built just five years ago. It has become apparent that the build by Crest Nicholson was poor at best, and a downright con at worst. Until January this year, Crest Nicholson was on the management committee and made more than £100 million in profit in the year that Essex Brewery was built. It has made half that this year—possibly less—because of widespread concerns about the condition of the builds it has made. What does someone do when they have bought possibly their first home, whether through shared ownership or leasehold, as hundreds did in that development, and they find that the pipes that bring in the hot water are faulty? I am sorry to say that those resident have little redress, because the management company, Kinleigh Folkard and Hayward—another multimillion pound organisation—left them without any explanation of why it would not repair the hot water until after Christmas. What a Christmas present that was. The Grinch had strong competition.

That was another layer of bureaucracy. KFH was appointed by the Essex Brewery management company, which was established by the freeholder, Helpfavour, to meet those obligations. KFH told the residents that because their insurance policy said that as long as they had water at all, the property was habitable and it was not going to do anything about it. That has left hundreds of residents, many of them vulnerable, for months on end without any hot water or heating in the current weather. Residents have had to boil kettles to get hot water to cleanse their babies, or pay bills that they cannot afford for extra heating through portable heaters. For those who have shared ownership it is even more complicated. Metropolitan Thames Valley states that it owns 24 of those properties and that it is prohibited by law from fixing the problem. New clause 2 is about matching consumer legislation with leasehold legislation, and giving residents the right of redress, not saying, “You’ve either got to buy out the leaseholders if you want some property control, or you are stuck with them and waiting to see.” I hope KFH hears this debate and is ashamed of its behaviour.

Amendment 1 is about leasehold tribunals. I know the Minister spoke of precedent setting, but residents across the country would tell him otherwise. I beg him to look at the Warner properties in Walthamstow, and at Y&Y management, which repeatedly rips off constituents across the country. The hon. Member for Harborough (Neil O'Brien) is not here, but he asked why people have to pay terrorism insurance. In Walthamstow that was the Warner estate company, which said that because the plane bomber lived in our constituency, 3,000 households had to buy terrorism insurance. Such cases come up time and again with leasehold and they do not get fixed in the tribunal. Amendment 1 would give precedent.

Leasehold and Freehold Reform Bill (Ninth sitting)

Rachel Maclean Excerpts

Committee stage
Tuesday 30th January 2024 Public Bill Committees

[The Minister for Housing, Planning and Building Safety (Lee Rowley)]

It is a pleasure to serve under your chairmanship, Sir Mark, and it is good to continue debating these issues this morning. I am grateful to all hon. Members who have raised such important points. I do not think that the disagreement between Members on any of the Benches is about whether there are issues; the question is rather about the technicalities of how to approach them, what to do and what is proportionate.

I will talk briefly about the amendments. Although the Government cannot accept them now, I hope that my hon. Friend the Member for North East Bedfordshire and the shadow Minister will listen to the points that I make; the broader point is that I am listening carefully and have a lot of sympathy for the underlying point, which we are all trying to solve. The question is about how we do it and whether we need to go further.

There was an extended debate between my hon. Friend the Member for North East Bedfordshire and the hon. Member for Greenwich and Woolwich. I will not try to repeat that, but not because I do not want to give due regard to everything that my hon. Friend put on record or to his underlying point. He is absolutely right that there is a problem; we all see it in our constituencies. The challenge, as I see in my constituency of North East Derbyshire, is that there is now a move towards greater estate management outside the demise of the local representation of the state. It works in some areas and for some elements, but there are specific areas and specific estates in which it clearly does not work. We have all heard the stories about the issues that are visible.

In the past, it would have been typical for local authorities to have adopted estates, but that is moving further and further away from reality. There is a question about whether there are some elements of estate management where it is reasonable to have some kind of arrangement outside the aegis of the state, but equally I accept the argument that that has gone too far in certain areas.

[Rachel Maclean (Redditch) (Con)]

I have listened carefully to the debate. I thank my hon. Friend the Member for North East Bedfordshire for his reference to the work that we did together.

I want to ask the Minister to expand a bit more on his comments, as I am sure he will. The argument has often been made that if we make clear to the people who are buying those homes what they are actually getting into, and if we give them a schedule of charges, the regime will be more acceptable. That is the heart of the issue: if customers know what they are buying, presumably they can freely choose whether to buy that property or a different type of property.

I think we all agree that there should be freedom of choice and that the buyer should take responsibility for their choices. However, does the Minister think that the current regime and framework are adequate to provide choice? My personal view is that we do not have that, and that that is at the heart of the problem. But even if we provide that choice, a fundamental philosophical problem remains. I am interested in his view on the balance of those two issues.

Leasehold and Freehold Reform Bill (Tenth sitting)

Rachel Maclean Excerpts

Tuesday 30th January 2024 Public Bill Committees

[Rachel Maclean (Redditch) (Con)]

It is a pleasure to serve under your chairmanship, Sir Edward. I wish to place on the record my support for the eventual removal of this most feudal and abusive practice—one of the worst examples in this whole system—and I look forward to hearing the Minister’s plans to eventually do that.

In response to my hon. Friend the Member for North East Bedfordshire, I just want to let him know that there is ample evidence that this abusive practice has had a deleterious impact on decent people who have bought their properties in good faith. Take, for example, the evidence from Free Leaseholders, which represents many people in this position. The organisation says,

“Forfeiture has no place in a modern housing market”

and that it gives

“the freeholder landlord complete whip hand over his ‘tenant’.”

It is a “draconian remedy” that really has very few comparators anywhere else. Unlike mortgage foreclosure, where there is a balancing payment at the end of it, someone loses all the equity in their own home. That means they could actually lose, for example, a flat worth half a million pounds because of non-payment of a £5,000 bill. The freeholder would seize that flat, take back the lease, and make a windfall irrespective of the size of the contested charge. It kicks in at just £350.

There are alternative ways of resolving these debts available in our system. For example, the freeholder could sue for an injunction. He does not need forfeiture and the windfall to enable him to carry out good management of the block. The Levelling Up, Housing and Communities Committee looked at this issue and also recommended its abolition, on the grounds that it puts the freeholders in an unassailable position of strength in disputes. Once again, it is about that power imbalance, which we have highlighted all the way through this Committee. We should absolutely take up the Law Commission’s proposals to remove forfeiture. It is true that it is relatively rare, with perhaps an estimated 80 to 90 cases every year, but it is the threat that hangs over people—people who are not legal experts, fighting a very uneven battle against these big boys with deep pockets and plenty of lawyers on speed dial.

As well as the evidence I have just referred to, I want to represent again the fantastic testimony from the National Leasehold Campaign, which I think has 29,000 members. It has described again and again the impact of this sword of Damocles hanging over its members who have bought these properties in good faith, doing their best to navigate this thicket of rules, with the debt completely stacked against them. I look forward to hearing about the pathway that I am sure the Minister will set out for us, where we can remove this element from our laws once and for all.

[Lee Rowley]

I am grateful to the hon. Member for Greenwich and Woolwich for this new clause and for the opportunity to debate it. The hon. Gentleman set me a challenge at the end of his speech. He said he hoped I would not resist the new clause out of hand—I will not resist it out of hand, but I may resist it. In all seriousness, this is an important part of the discussion and I do not disagree with what the hon. Member for Greenwich and Woolwich and my hon. Friend the Member for Redditch said—I absolutely accept it. I am happy to confirm that the Government are aware of the strength of feeling on this issue and sympathetic to some of the objectives of the amendment. It is absolutely the case that forfeiture is an extreme measure. That is why we committed on Second Reading to look at this.

On the question from my hon. Friend the Member for North East Bedfordshire, it is difficult to get numbers. As has been outlined by others, the principle is clearly a real problem. The disproportionate nature of the outcome completely outweighs the likely loss being pursued. The Leasehold Knowledge Partnership, or one of the other witnesses, suggested in oral evidence that there were 80 to 90 forfeitures a year, but the Government do not have specific data to validate that at this stage. We understand that most of the threats are defused during the process—particularly if a mortgage company is involved, it tends to, in extremis, step in and offer to put the amount of money on to the mortgage or equivalent. The evidence base is and will always be challenging, but we absolutely accept that the principle is disproportionate and unreasonable.

However, as with so many of these clauses and elements of law, there is the question of how to make something in the system better while still ensuring the ability to balance all the things underneath. That is probably one of the reasons why this place has returned to this issue so often over the decades—it is not just because the Government may not respond in time, as the hon. Member for Greenwich and Woolwich indicated. This new clause is definitely well intentioned. We are sympathetic, but we do not necessarily believe in the full abolition of forfeiture without some form of replacement for some elements of it that may still have validity—not the forfeiture itself, but a recognition that people cannot just not pay things without some form of process to address that. That is one of the reasons we cannot accept this amendment at the moment.

However, I do not condone the abuse of forfeiture. I want to be absolutely clear that we are listening very carefully to the arguments being made. We have already committed to look at this again, and we are currently looking at it. I hope we will be able to say more at future stages of the Bill. With those reassurances, I hope the hon. Member for Greenwich and Woolwich will consider withdrawing his clause.

--- Later in debate ---

[Matthew Pennycook]

I welcome the Minister’s response to the extent that he recognised the benefits of share of freehold. I am not surprised that he resists the new clause; there is no doubt that it would be a significant build-out of the Bill, as he put it. We hope that we will see other significant build-outs of the Bill and finally see a ban on new leasehold houses, as the Government have committed to, at some point. Maybe we will even get a couple of hours to debate that—who knows?

We think that this is an important provision that should be incorporated in the Bill for the reasons I have give, but mainly because—perhaps this is a point of disagreement between us and the Government—we think that we must be serious about paving the way for commonhold with the Bill and cannot leave everything to a future Government to enact. As I said, we should take some practical and specific steps to lay the groundwork for that future, which I think we all want to see. As we felt with mandatory RMCs, we feel that these two specific measures would enable us to go some way on that journey. For that reason, I will push the new clause to a vote—it will probably be the final one.

[Rachel Maclean]

I want to make a brief remark in sympathy with the shadow Minister’s policy objectives. I will not be supporting his new clause, but I have had extensive discussions with the Minister, who knows that I feel strongly that we should have a pathway to commonhold in the future.

Commonhold is a system that works well. Commonhold, or a version of it, works extremely well in almost every other major developed country in the world. We are quite unique in the UK—for some bizarre reason—in having this leasehold system, which is to the great regret of me and the leaseholders who live in such houses and flats. Unfortunately, something like 1.5 million people live in leasehold houses and something like 5 million people overall live in leasehold dwellings. It does not need to be that way.

In 2002, the former Labour Government did try to legislate in this regard, but a number of those measures were not enacted—we are going back into ancient history. Nobody really seems to know why it did not happen, but we now need to seize the opportunity. This Bill has been a long time in gestation; it has benefited from the contributions of many Ministers to get it to this point. I know that the Minister is listening to me, and I think it is important that we do not miss the opportunity, even at this late stage, to introduce some of the commonhold framework measures that the Department has been looking at in great detail. I hope that the Minister has listened, and he and his officials will take that point away.

[Barry Gardiner]

The hon. Lady is absolutely right to go back to the 2002 Act. In fact, I think in a speech on its Second Reading, I said that we would have to return to that Act in six or seven years’ time to amend the deficiencies in it. I am sad to say that here we are, 22 years later, still not having amended those deficiencies, and the Minister’s response, I am afraid, has indicated that we will not amend them again under this Bill. This is urgent, and leaseholders have been waiting for far too long for the remedy that my hon. Friend the Member for Greenwich and Woolwich has proposed. That is why I feel that it is vital that I support his new clause.

Question put, That the clause be read a Second time.

Leasehold and Freehold Reform Bill (Seventh sitting)

Rachel Maclean Excerpts

Committee stage
Thursday 25th January 2024 Public Bill Committees

[The Chair]

I call Matthew Pennycook—

[Rachel Maclean (Redditch) (Con)]

rose—

[The Chair]

Oh, I beg your pardon. I did not catch you out of the corner of my eye. I call Rachel Maclean.

[Rachel Maclean]

I apologise, Mr Efford. I was not quick enough on my feet. Thank you for calling me, and it is a pleasure to serve under your chairmanship.

I thank the Minister for his comprehensive answer to the shadow Minister’s questions. My point is somewhat in the same vein, and I am very much thinking of the witnesses we had from the National Leasehold Campaign, who talked about this point in quite a bit of detail. Their concern was about having to pay to buy out the ground rent. Of course, there are a number of elements, factors and variables dependent and contingent on the outcome of the consultation. There are people who might be watching this thinking, “Well, when will I actually know how much it is going to cost me?” A year can go by and they may tip over that threshold. Can the Minister give a bit of clarification to those leaseholders who have been trapped for so long and want to see some light at the end of the tunnel? What signpost can he give on when this right will apply to them and how much they will have to pay if they want to exercise their individual right to have their ground rent reduced to a peppercorn?

[Lee Rowley]

I am grateful to my hon. Friend for raising that point. She is absolutely right that this matter is important to a number of people, and that it is important that we provide the greatest transparency at the earliest opportunity. I hope she will forgive me for not being able to answer her very valid question directly. We are dependent on an appropriate and detailed review of the consultation, which is necessary—for some of the reasons we talked about on Tuesday—given its importance to a number of parts of the sector and others. We need to allow that to conclude, hopefully as swiftly as possible, and then we need to get it through this place and our colleagues in the other place, who can often slow us down. Hopefully, that will happen as soon as possible.

--- Later in debate ---

[Lee Rowley]

I am grateful to the hon. Gentleman for raising that point. He articulates another example of good law being used in a way that is, in my view—without talking about individual incidents—both unintended and inappropriate. I am not a lawyer, and do not seek or have any desire to be one, but as I understand it, there is a concept of reasonableness within the legal domain based on an Act from a number of years ago. Hopefully that helps to answer part of his question, at least from a structural perspective. On the variable service charge side, without talking about individual instances, that kind of instance is a clear example of where those impacted would be able to go through the process of challenging it, which I think would be very sensible. If I were a leaseholder, I might be very tempted to do that, unless the charge could be justified in a different way. On the fixed service charge side, although I accept that there is the potential for these kinds of challenges, conceptually that needs to be balanced with the fact that when the contract was entered, an agreement was made to consent to that amount, for whatever reason—good or otherwise. That is why we are pursuing this. However, I take the hon. Gentleman’s broader point.

[Rachel Maclean]

This discussion goes to the heart of some practices and problems that leaseholders have experienced across the sector. On behalf of the many retirement leaseholders, mentioned by the shadow Minister, the hon. Member for Greenwich and Woolwich, I will make a point and ask for reassurance from the Minister.

What we are talking about with this amendment is different from the ground rent issue. Ground rent is a payment for nothing—nothing is being provided—whereas something is being provided for service charges. There is a service, so there is a need for a charge; that is perfectly legitimate. As Conservatives, we do not dispute the fact that there should be financial recompense for services. However, we find ourselves with a problem, the law of unintended consequences and the drivers of business models.

I would welcome if the Minister could touch on this in his response, but my fear is that if ground rents are removed and business models need to adjust to make recompense for that, the natural behaviour of unethical operators in the retirement sector and possibly elsewhere—some are unethical and do not think about the people who bought properties in good faith—will surely be to seek to load their charges, their profit and loss, back on to the service charge in some way. I am not close enough to existing contracts to know whether they will be able to do that with a fixed charge, so the discussion might be better suited to when we talk about the variable charge. The Minister can help me on that.

The broad point stands, however, in the case of someone dealing with the estate of a loved one, perhaps someone who has passed on, is in care, is suffering from dementia or otherwise does not have the capacity to deal with all this—the Minister will be familiar with such cases. They might be stuck with a property that they cannot sell, and that often applies in such cases when service charges are racking up in a way that is difficult for people to get a handle on—

[Barry Gardiner]

I agree with all the points that the hon. Lady is making. I wonder whether she is aware of the report by Hamptons last year, which said that service charges had increased by 50% over the past five years. That is an indication of just how much of the gouging she is talking about is going on. Furthermore, leaseholders paid a staggering £7.6 billion in service charges last year. Of course, much of that is for the proper renovation of the property, but it seems an extraordinary amount. In fact, 10 years ago, Which? estimated that leaseholders were being overcharged by £700 million.

[Rachel Maclean]

I thank the hon. Gentleman for bringing those figures to the attention of the Committee. I am familiar with them, as are others. [Interruption.] I do not wish to detain the Committee any longer—I can see the Whip making that plain to me. I will leave my remarks there, perhaps to continue at a later point, but the Minister may wish to respond in detail.

[Lee Rowley]

I, too, do not wish to challenge the patience of my colleague the Whip. There will be people who have existing fixed charges; that should not change. There will also be people who have choices about whether to enter into new fixed charges, whether absolute or indexed to some extent. For an inappropriate attempt to do something with variable service charges, there will be the ability to apply to tribunals. I hope that we are closing off all the options that would allow the kind of instances mentioned.

Leasehold and Freehold Reform Bill (Eighth sitting)

Rachel Maclean Excerpts

Committee stage
Thursday 25th January 2024 Public Bill Committees

[Barry Gardiner]

I am grateful to the Minister for what he has said, but the strongest protection would be to have it on the face of the Bill. Even when it was on the face of the 2002 Act, the Government never brought it into force. So this is not something we have not had previously. It is right there in legislation for a leaseholder to have access to this information, but we have never brought it in. What the Minister is suggesting is actually a regressive step, taking leaseholders further away by saying, “We’ll do it through secondary legislation now.”

I really do think it is important to have this on the face of the Bill. We know how Committees work. I know the Minister cannot accept the amendment now, but I would ask him to go away and come back on Report. If he comes back with his own amendment to achieve the objective, I will be delighted.

[Rachel Maclean (Redditch) (Con)]

Will the hon. Gentleman give way?

[The Chair]

Order. I am not surprised the hon. Lady has mistaken that intervention for a speech. It was a very long intervention—

--- Later in debate ---

[Lee Rowley]

Thank you, Mr Efford. Would my hon. Friend the Member for Redditch like to intervene on me?

[Rachel Maclean]

I thank my hon. Friend the Minister. Perhaps he would like to ask whether, given his extensive history and detailed knowledge on the subject, the hon. Member for Brent North knows why those provisions were not brought in following the 2002 Act. Or perhaps the Minister would like to update us if he has that knowledge for the Committee.

[Lee Rowley]

Sadly, I confess to not having that knowledge from back when I was at university; I probably was not studying the right things. I appreciate the point from my hon. Friend the Member for Redditch that there has been an opportunity for this to be implemented under Governments of both parties and it has not been done. I am always happy to listen to the hon. Member for Brent North, and I do appreciate the point he is making. It is this Government’s intention to move forward with this, albeit through secondary legislation, which I know he has concerns about. I am happy to put that on the record on the assumption and hope, at least on the Conservative side, that we are in government when this happens. I hope he will not press his amendment.

--- Later in debate ---

[Rachel Maclean]

In the same evidence session, we also heard Amanda Gourlay’s concern about the nature of the accounts being mandated, and she said that it is not something that she would recognise as a set of accounts because it does not have a balance sheet or expenditure. I think the Minister said that a chartered accountant will have to sign off on them. Can he reassure members of the Committee that that will address the concern raised with us by Amanda?

[Lee Rowley]

I thank my hon. Friend for her question. Yes, that is my understanding, and, as part of the response in writing, we will clarify that.

To conclude, new section 21E places an obligation on landlords to provide an annual report in respect of service charges and other matters likely to be of interest to the leaseholder arising in that period.

--- Later in debate ---

[Matthew Pennycook]

I must disappoint the Minister, because what he says does not reassure me. I rise to oppose clause 34 standing part of the Bill, and to argue in favour of new clause 3. As he has made clear, clause 34 amends the Landlord and Tenant Act 1985 and the Commonhold and Leasehold Reform Act 2002, with a view to limiting but not abolishing the right of landlords to claim litigation costs from tenants. Although the property chamber tribunal does not generally tend to shift the legal costs of the winning party on to the losing claimant, on various occasions landlords have been able to rely on contractual rights to recover costs against leasees. When that occurs, it is in essence a form of one-way cost shifting, and it is inherently unfair to the affected leasees. Previous attempts have been made expressly to limit these cost recovery provisions, notably by means of schedule 11 to the Commonhold and Leasehold Reform Act 2002, but despite those provisions, and the issue coming before the higher courts on several occasions, the ability of a landlord to recover costs incurred in litigating disputes persists.

We support the aim of scrapping the presumption that leaseholders will pay their freeholders’ legal costs when they have challenged poor practice, as outlined in the explanatory notes to the Bill, and we believe that, apart from in a limited number of circumstances, landlords should be prohibited from claiming litigation costs from leaseholders. As I have said, clause 34 does not prohibit landlords from claiming litigation costs from tenants; instead, it merely limits their ability to do so.

The clause allows landlords in certain, at present undefined, circumstances to apply to the relevant court or tribunal for an order to pass their legal costs on to leaseholders as an administration charge, or on to all leaseholders, irrespective of whether they participated in any given legal action, through the service charge. It may be that the matters that the relevant court or tribunal can take into account when determining whether to make an order on an application for costs will be defined in such a way as to protect the vast majority of leaseholders from unjust, one-way cost shifting, but to allow for cost recovery in circumstances where it is essential—for example, when the landlord is a company controlled by the leaseholders that needs to recover its reasonable legal costs via the service charge or risk going bust. However, as we consider the clause today, we have no certainty whatsoever about that, because the matters that the relevant court or tribunal can account for, as well as the application process, will be set out in regulations to come.

Even if we had certainty about what the Government will tell courts and tribunals that they can consider in determining whether to make an order, we fear that clause 34 is an invitation to litigate. Yes, regulations will prescribe the relevant matters that can be taken into account, but given the multiple Court of Appeal cases and numerous upper tribunal cases on what “in connection with” means, we will almost certainly see disputes arising about what costs are incurred “in connection with” legal proceedings, and whether they are compatible. The risk is that the outcomes of any such cases could erode the general presumption against leaseholders paying their freeholders’ legal costs that the clause attempts to enact.

We believe that it would be more prudent to implement, by means of the new clause, a general prohibition on landlords claiming litigation costs from leaseholders, and then clearly to identify a limited number of exceptions to that general rule through regulations. As I have said, such exceptions might include cases in which the landlord is a leasehold-owned company, or in which the costs are, in the opinion of the tribunal, reasonably incurred for the benefit of the leaseholders or the proper management of the building. That would cover the example that the Minister used. Amendment 8, which would simply delete clause 34, and new clause 3 would provide for that approach by leaving out clause 34 and replacing it with a new clause that provides for a general prohibition on claiming legal costs from tenants, and for a power to specify classes of landlord who will be exempted from it.

I appreciate that this is a complex argument about the best means to achieve an agreed end, but we think that clause 34 requires further thought, and urge the Government to give serious consideration to the issues raised by amendment 8 and new clause 3. As I said, the Government’s approach is a recipe for freeholder litigation, and it might mean far more leaseholders than we are comfortable with bearing the legal costs of their landlords.

[Rachel Maclean]

I place on record my concerns about the Government’s approach to this issue, based on my experience in the Minister’s role, and having listened carefully to representations made, particularly by members of the all-party parliamentary group on leasehold and commonhold reform and a gentleman called Liam Spender, who detailed his experiences at the hands of FirstPort. That was an absolutely horrific, heartbreaking and shocking abuse of a decent, honourable and hard-working person buying a flat. He described it as being treated like a “lab rat” in a laboratory maze. I will not forget the testimony that he and many others gave.

Leasehold and Freehold Reform Bill (Fifth sitting)

Rachel Maclean Excerpts

Committee stage
Tuesday 23rd January 2024 Public Bill Committees

[Matthew Pennycook]

I welcome that clarification from the Minister and look forward to any further detail that he might provide to the Committee via written correspondence.

[Rachel Maclean (Redditch) (Con)]

May I ask the Minister to confirm that clause 2(2) refers to schedule 7 to the Bill? In our evidence sessions last week, we heard from certain leaseholders who were concerned that they would not benefit from the provisions if their lease was less than a certain number of years. Paragraph 2(2)(a) of schedule 7 states that a lease will not qualify if

“the unexpired term of the lease is less than 150 years”.

There was some debate about that length. Will the Minister address those leaseholders’ concern that the period is too long and that there should not be that restriction? Or will he write to me later to address what considerations went into that provision? If we are excluding people from these welcome provisions, perhaps we should seek to otherwise widen the group of people who can benefit from having their leases converted to a peppercorn lease.

[Lee Rowley]

We will probably talk in detail about the 150-year decision—the Law Commission proposed 250 years—in relation to quite a number of areas later this morning, so I do not want to pre-empt that now. As I will explain later, the Government’s intention was that, if a lease is coming up in a reasonably short period of time, it is advantageous to align everything together, as opposed to doing just one thing, because there will be the potential for double costs and the like. I am happy to talk about that more when we get further into line-by-line consideration.

Question put and agreed to.

Clause 2 accordingly ordered to stand part of the Bill.

Clause 3

Change of non-residential limit on collective enfranchisement claims

--- Later in debate ---

[Mike Amesbury (Weaver Vale) (Lab)]

I, too, rise to support this very generous amendment from my hon. Friend the shadow Minister. It is pragmatic, and it would power up the Secretary of State, whoever that might be, to ensure that leaseholders are able to take control in hopefully larger numbers through extended enfranchisement. I hope the Minister will give the amendment very strong consideration.

[Rachel Maclean]

May I throw the general issue of collective enfranchisement into the mix? The Minister may wish to come back on it at a later point if it suits him better. Many people in this situation have raised with me the sheer practicalities and difficulties of doing a collective enfranchisement. When people live in a huge block of flats with vast numbers of flats, they do not necessarily know who the other people are and certainly do not have their contact details. That, in and of itself, presents a barrier and an obstacle for some of these claims. We have heard evidence from groups affected by this situation—most notably the Free Leaseholders group, but there are many others—who have made this point repeatedly.

[Matthew Pennycook]

The hon. Member raises a very pertinent issue. Is she minded to support our new clauses 30 and 31, which deal precisely with it?

[Rachel Maclean]

The hon. Gentleman is a very persuasive orator in this Committee, as he is in many other fora, and I will definitely listen to those arguments when they are made. We all work in the spirit of improving this Bill. I very much hope that the Government will provide the explanations I have asked for, and specifically on this issue at this point.

[Lee Rowley]

I thank hon. Members and Friends for their contributions. I will take them in turn. On the amendment, I find myself in the slightly unusual place of arguing against a Henry VIII power, as they are occasionally called and as he referred to them. As indicated, there are a number of Henry VIII powers in the Bill, and I am sure that people will have views on them when we get to them. Our colleagues in the other place often have very strong views on such powers. It is an unusual place to be, but I happily take it up.

I absolutely understand the point that hon. Members have made and the reality of what they are trying to articulate. The fact that we are making a change indicates that there are times when it is proportionate and reasonable to make changes. The reason for the Government’s not taking powers in secondary legislation—which I know, joking aside, that hon. Members would accept—is that there is a continuum for drawing or not drawing lines, and we think that this does not necessarily need to be on the line of taking powers in order to do things in secondary legislation, simply because this is a substantial change. It is being actively debated; Members are debating whether it is sufficient and, as my hon. Friend the Member for Redditch asked, precisely how it will work to improve the situation in practice. I think the Government’s preference is to keep that discussion in primary legislation. We recognise that primary legislation is always more challenging in terms of timelines and space in this place, but it is a sufficiently important change that it should be able to be debated in the way we are doing today.

--- Later in debate ---

[Matthew Pennycook]

I completely agree with my hon. Friend. I think I am justified in saying that it is frankly laughable that this has happened. We have an amendment paper that is almost—and may be, in due course—larger than the Bill itself. It reeks of a Government in disarray. Though I know that the Minister has picked up this Bill part-way through its development, I urge him not only to do what he can to ensure that when the Government publish any Bill it is broadly in the format they wish it to proceed in and see passed, but also to table any further amendments to this Bill in good time so that we can give them the level of scrutiny that leaseholders across the country rightfully expect.

[Rachel Maclean]

I will not detain the Committee for long. In response to those comments from the Opposition, I observe only that when they were last in government— in 2002, if I am correct—they had the opportunity to address the system and rectify the failures that we are now dealing with. It is now left to this Government to do it. On that note, I want to say to my hon. Friend the Minister how important it is that the community-led housing sector is excluded. I would not normally say that about any form of housing, but we have recently strengthened the national planning policy framework to encourage more of that type of housing. We know it is popular and often commands local support, while other types of housing sadly do not, and we need to see more of it built. The sector has had extensive discussions. This is a sensible amendment, which I support.

[Lee Rowley]

I thank my hon. Friend for confirmation of the importance of community-led housing, which we have spoken about previously. I absolutely agree about its importance.

I will not get into a broader conversation about the processes of government, other than to say that I note the concerns of the hon. Members for Brent North and for Greenwich and Woolwich. The intention is to give the Committee and the House as a whole as much scrutiny as possible. I am sure that the hon. Members will understand that, outside the bounds of the points that they are making, getting proposed legislation ready is often a complicated process—in particular ensuring that it is as correct as it can be. None the less, I have noted their points, but I hope to be grateful for their support for the underlying provision we are debating.

Amendment 57 agreed to.

--- Later in debate ---

[Richard Fuller (North East Bedfordshire) (Con)]

I want to speak briefly in support of the third point made by the shadow Minister, the hon. Member for Greenwich and Woolwich, in which he addressed the interaction of the Bill with the Government’s ground rent consultation. If I heard him correctly, he was asking the Government at least to be clear as to how those recommendations will affect the Bill. He was asking the Government to be clear on their position; I will not go as far as that, because I think the Government have the discretion to decide when they want to announce that or not.

However, there is another issue that the Minister could perhaps consider: the impact assessment on the valuation, which we, as Members of Parliament, are being asked to address in this Bill. As we heard in the evidence sessions, the current impact assessment may potentially omit a significant amount of value that will be taken into account as part of the ground rent reform. If it is the Government’s intention to introduce amendments on that, as the shadow spokesman was asking, it would be useful to have clarity from the Minister on that, but we should also ask the Minister whether an updated impact assessment can be presented to incorporate what the value of those recommendations would be.

[Rachel Maclean]

I rise briefly to add my support for some of the comments and, most importantly, for the ability of leaseholders to extend their leases. As we know, this is one of the most egregious features of the current system: people buy properties that they then find have short leases, after which they are whacked with massive charges coming out of the blue; they do not understand how those charges are calculated, and they end up having to pay them because they have no choice. They are completely over a barrel. I know that leaseholders will massively welcome this change, which is one of the most important parts of the whole Bill.

Having said that, it is vital that we understand when we will see the Government’s response on the ground rent consultation, as my hon. Friend the Member for North East Bedfordshire and the shadow spokesperson, the hon. Member for Greenwich and Woolwich, have said. It will, of course, affect the calculations.

I also want to raise with the Committee the number of people who have sat in front of me and asked, “When will you bring this forward? I don’t know whether to extend my lease now or wait another year or for another consultation”. It is a huge number of people. I want to make this point to everybody: if we get this right, it will affect a lot of people very beneficially.

[Barry Gardiner]

I am glad that co-operation is breaking out across the aisle. It seems that this change is one of the really big issues of the Bill. Looking through the Bill, yes, there was disappointment that it does not go far enough and there is no commonhold, but this is a real change. It is something that Members on both sides of the Committee have welcomed, and we heard evidence from our witnesses about just how important it is. It is strange, therefore, that we do not now see the meat of it in the Bill. I will not go so far as to say that it is more than strange, as my hon. Friend the Member for Greenwich and Woolwich suggested, but we do need it.

This provision will liberate a whole group of people who fear what we call the ground rent grazers. They are the ones—the freeholders—who have created a rentier structure over the past 15 years. It did not even exist 25 years ago. What people used to do 25 years ago, when the ground rent was payable, was write a cheque to the freeholder, and the freeholder would bin it. Then, three weeks later, the freeholder would send a lawyer’s letter to the tenant, saying that because they had not paid their ground rent on time, they were now being charged £625 for their legal fees in having to chase it, including the £25 ground rent. That is a bad practice that has evolved and the Government need to clamp down on it and get it sorted.

Leasehold and Freehold Reform Bill

Rachel Maclean Excerpts

2nd reading
Monday 11th December 2023 Commons Chamber

[Michael Gove]

I quite agree with my right hon. Friend. There are good landlords, and the Duchy of Cornwall has been a stand-out example, as have been the Cadogan estate, the Howard de Walden estate and so on—they are responsible landlords, absolutely—but an individual leaseholder should not have to rely on the good will and the grace of His Grace, as it were, to get the protection they need.

There is no stauncher defender of capitalism and property rights than me, but what has happened is that freeholds have become utterly torn away from the warp and weft of the capitalist system as we understand it in this country, and have become tradeable commodities that foreign entities are using to exploit our people who have worked hard and saved to get their own home. So whose side am I on—homeowners who have worked hard and saved up to secure a mortgage, or shadowy foreign entities that are essentially attempting to rip off British citizens? I am on the side of homeowners.

[Rachel Maclean (Redditch) (Con)]

When the Secretary of State is considering the evidence from the consultation he mentioned, will he adhere to his own adage of “follow the money”, and remember that those people advocating for a higher ground rent probably have a motivation for doing so?

[Michael Gove]

My hon. Friend is completely right. I will be looking at the responses to the consultation, and I am sure that some of London’s finest legal firms and most eloquent solicitors will be putting in some very thoughtful contributions, but the question will be: who is paying for them and how much are they being paid? To my mind, people can buy silver-tongued eloquence, but what is far more important is actually being on the right side of justice.

--- Later in debate ---

[Rachel Maclean (Redditch) (Con)]

I am delighted to speak on this flagship piece of legislation, which will restore true home ownership to millions, end rip-off charges and introduce fairness to the leasehold market. I am confident that it is a good piece of legislation not because I did all the preparatory work on it, but because I worked with brilliant officials, whom I thank.

We heard the testimony of so many thousands of leaseholders who struggled with blighted properties that led to blighted lives. There are too many of them to mention individually, but the strength and tenacity of the campaigners—and the organisations, such as the Leasehold Knowledge Partnership and the Leasehold Advisory Service, under the leadership of the superb Martin Boyd, which helped them—is enormously impressive. Take, for example, Liam Spender, who was able to show that leaseholders in his block had paid £1.6 million in excess service charges to their freeholder, FirstPort. Incidentally, FirstPort is one of the worst offenders I heard about in my time as Minister. Yet freeholders still had the audacity to sit in front of me while I was a Minister and claim that

“some people like the security of paying service charges”

and that there is no evidence that they oppose ground rents. Yes, truly, that is what they said. Shockingly, I understand that Mr Spender and his tenants have received nothing yet, and now the freeholders are appealing the decision with the leaseholders’ own money. I would like the Minister to set out clearly how the Bill will tackle their situation and end that scandal once and for all.

We got here because of the greed and unethical behaviour of predatory freeholders who have treated leasehold properties as a cash cow and the leaseholders as a milking machine to produce an endless stream of income for no work at all. It is the ultimate definition of rent-seeking behaviour. In its worst excesses, it is frankly disgusting. I and many others find it appalling.

[Sir Peter Bottomley]

On the case that Liam Spender has so rightly been pursuing for his fellow leaseholders, does my hon. Friend think it would be a good idea if the Select Committee considered inviting in the people he has been engaging with to ask why they did not put their hands up straightaway, settle and give back all the money they wrongly took from leaseholders, without having to have extended legal proceedings?

[Rachel Maclean]

That is an excellent suggestion from my hon. Friend the Father of the House, with which I strongly agree—as I do with everything he says about this issue.

Despite the theatrics we heard from the right hon. Member for Ashton-under-Lyne (Angela Rayner), who spoke for the Opposition, it is the Conservatives who are finally bringing in sweeping reforms. It is right that we note that Labour ducked the issue while they were in office. They could have fixed it then. They could have saved millions from misery—nearly 5 million homes, accounting for 20% of the entire housing market, are owned on a leasehold basis across the UK—but it appears they bowed to pressure from freeholders. We will never know why, but thankfully things will now change.

[Barry Gardiner]

The hon. Lady may not remember—but I do—that before the Commonhold and Leasehold Reform Act 2002 was passed, a great deal of pressure had been applied since 1999. At that stage, however, their lordships down at the other end of the building threatened to block all of Labour’s legislation if we insisted on putting through some of the measures that were ultimately taken out of that Bill. The hon. Lady is right; those measures should have been included. I lobbied and campaigned for them to be included, and made my speech in the House accordingly, but their lordships were in the majority—and, at the time, 66% of their lordships had declared in the Register of Interests that they derived most of their income from the management of land.

[Rachel Maclean]

I thank the hon. Member for the history lesson but, regardless, we are determined to fix this now.

[Mr Kevan Jones]

Will the hon. Lady give way?

[Rachel Maclean]

No, because I need to make progress. Perhaps I will allow the right hon. Gentleman to intervene a little later.

The key factor here is choice. At present, leaseholders do not have a choice, or they have a fake choice. The Bill will give them a genuine choice when it comes to how they manage and own their homes. However, while I warmly welcome these measures, we can and must go further. May I draw the attention of the Secretary of State and the Minister to a few of my suggestions?

The measures in the Bill will clearly be of enormous benefit to individual leaseholders, making it easier and cheaper for them to buy freeholds or extend leases, but of course this is a very complicated area, and I know it will be difficult for many leaseholders to understand exactly how much they will benefit financially. My first suggestion, therefore, is the provision of an easy-to-use digital calculator enabling people to see what the Bill means for them.

Then there is the issue of commonhold fixes. I know that the focus here is on ensuring that leaseholders cannot be exploited and can take control of their homes, but there is a clear Conservative and free-market rationale for accepting the Law Commission’s recommendations on reforming commonhold so that more developers choose it, rather than leasehold, for new blocks of flats—not because they are forced to do so, but because it is the best option for their business model. Can the Government look at that again? All the work has already been done.

I strongly welcome the Government’s consultation on capping ground rents. As I said in an intervention earlier, the Secretary of State must look at who is making the representations, and bear in mind the old adage, “They would say that, wouldn’t they?” when people oppose such caps. We know that ground rents are sheer exploitation. Let us call a spade a spade: this is money for nothing. Can the Minister assure me that there will be time to get a cap into the Bill once the consultation has closed?

We have all heard of too many sad cases involving a hard core of truly exploitative and dodgy freeholders—the bad apples—ripping off and exploiting leaseholders. We know that there are some freeholders who treat people properly, but the others know that going to court will be too much hassle for most people, and indeed that the odd tribunal defeat is just part of the cost of doing business. We must do something to ensure that there is a real cost to those unscrupulous companies and their directors.

[Ruth Cadbury (Brentford and Isleworth) (Lab)]

I thank the hon. Member for the work that she has been doing on this issue. However, she implies that the rip-off merchants constitute only a certain proportion of freeholders. Is she not aware that these people have been working in cahoots over the past 10 years, attending conferences, identifying the weaknesses in the law, sharing information and forming links with professionals such as agents and solicitors in order to rip off innocent leaseholders? This is a consistent, organised scam that has been growing over 10 years, which is why there are so many more problems now than there were, say, 15 or 20 years ago.

[Rachel Maclean]

Of course I am aware of that. When I was privileged to hold the position of Housing Minister, I strongly supported the relevant legislation, because those people sat in front of me and cried crocodile tears, telling me that if we went ahead with it we would destabilise the pensions industry and leave lots of little old ladies with no pensions—which is obviously complete and utter nonsense, as I am sure the Secretary of State and the current Housing Minister, my hon. Friend the Member for North East Derbyshire (Lee Rowley), will be able to tell me on the basis of the analysis that they have conducted.

We also need assurances about section 24 managers. I note that, in recent weeks, at least one freeholder has tried to wrest control of a building back from a court-appointed manager—a so-called section 24 manager—claiming that it is incompatible with the Building Safety Act 2022. That is obviously nonsense. If a freeholder has been found not to be managing his building properly, it shows some cheek to try to ditch a court appointee on such spurious grounds. I hope that the Minister will take the opportunity later to give us the Government’s view.

I welcome the Government’s intention of introducing building safety measures to ensure that remediation continues to accelerate, and to make it easier to ensure that the right people pay, but may I press the Minister for a little more detail? I know that, even as we speak, people are making serious decisions about their own finances.

My constituents in Brockhill, especially those in the Persimmon Homes development, have faced innumerable issues relating to freehold estates, and I must press the Minister on what measures he will introduce to help them and, most importantly, when he will do so. I know that the Government intend to introduce a right to manage for freeholders, and to challenge arrangements and charges through the first-tier property tribunal. However, I urge him to read again the Hansard report of the Westminster Hall debate in which I responded, on behalf of the Government, to my hon. Friend the Member for North East Bedfordshire (Richard Fuller), who had told a story about one of his constituents who had had to pay thousands of pounds for one lamp post. This is an outrageous state of affairs, and I want the Government to introduce measures that will tackle it and many others. Currently, throughout the country, people’s new dream homes are turning out to be a nightmare. They are being ripped off by small-print clauses that turn into big bills, and they have no redress. That must be fixed.

Finally, there is a need for regulation of the property management sector more broadly. I recognise that the Bill was not the right vehicle for it, but I urge the Minister to continue to push ahead with a reform that must happen, if not on this side of a general election, then on the other side.

We Conservatives believe that the opportunity to own one’s home is sacrosanct, and the Bill takes another important stride towards the creation of a true property-owning democracy. While, as we have made clear, we stand firmly on the side of fairness and those who want to own a home, we are still none the wiser when it comes to where Labour Members stand. One week they are on the side of the builders, not the blockers—or so they say. The next week, they are blocking our proposals to build 100,000 new homes that first-time buyers and young families would desperately want to possess. While they decide whose side they are on, we are taking important steps to improve the lives of millions up and down the country. I look forward to working with Ministers on the Bill as it goes through the House to strengthen some of its measures, particularly those on commonhold and freehold estates, and to ensure that we deliver on the promise that it holds.

Let me end by wishing my hon. Friend the Minister better luck than I had in his tenure of this important role. I especially hope that he can remain to finish the vital job of leasehold and freehold reform and restore true property ownership to millions. He will have my full support in the Lobbies.

Draft Town and Country Planning (Fees for Applications, Deemed Applications, Requests and Site Visits) (England) (Amendment) Regulations 2023

Rachel Maclean Excerpts

Wednesday 25th October 2023 General Committees

[The Minister of State, Department for Levelling Up, Housing and Communities (Rachel Maclean)]

I beg to move,

That the Committee has considered the draft Town and Country Planning (Fees for Applications, Deemed Applications, Requests and Site Visits) (England) (Amendment) Regulations 2023.

Good morning, Mr Robertson; it is a pleasure to serve under your chairmanship. Laid before the House on 20 July, the draft regulations amend the Town and Country Planning (Fees for Applications, Deemed Applications, Requests and Site Visits) (England) Regulations 2012 and, by increasing planning application fees by 35% for major applications and by 25% for all other applications, will provide much-needed additional income to local planning authorities. Importantly, the regulations introduce, for the first time, an annual inflation-related increase, so that fees retain their value in the future, year on year, and they give local planning authorities greater certainty.

The measures in the regulations are widely welcomed by the industry. They are designed to boost the income to local authorities. We expect local authorities, in turn, to invest that income in their planning services to improve the speed and quality of their decision making.

To state the obvious, it costs money to run the planning application service. At the moment, the cost of the service is more—by an estimated £225 million across England—than the income from the fees charged. That means that local taxpayers have to contribute to dealing with the shortfall, while those who stand to benefit the most could be paying a greater share. Planning fees have reduced in value over the five years since the last increase, in January 2018, while the costs and demands on local planning authority budgets have increased. The regulations will address the issue by ensuring that applicants for planning permission contribute a higher proportion of the estimated £675 million cost of the application service, reducing the burden on the local taxpayer.

As well as reducing the shortfall, the regulations will create greater sustainability for local planning authorities when the annual increase comes into effect from 1 April 2025. Local planning authorities will be able to use the additional income to procure more resources, including planning officers and other specialists, which will enable them to provide an improved service to applicants. That will benefit the whole of society as good planning decisions are made more quickly, enabling development to proceed without unnecessary delay.

Respondents to our consultation on proposals to increase fees were generally supportive. They acknowledged that local authorities needed more funding, and supported higher fees, with the important caveat that that should lead to improvements in planning performance.

I will now turn to the details. First, the regulations introduce a much-awaited national fee increase of 35% for major applications and 25% for all others. The maximum fee for a large planning application will be £405,000, up 35% from £300,000. Fees for householder applications will rise from £206 to £258, an increase of 25%. The regulations also introduce an annual inflation-related increase in fees from 1 April 2025. That will be at the rate of the consumer prices index from the previous September. To prevent the annual increases from becoming too onerous, they will be capped at a maximum of 10%. This measure will ensure that fees do not lose their real-terms value.

In addition, the regulations remove an existing fee exemption that allows applicants, in certain circumstances, to submit a second application without having to pay another fee—colloquially known as the “free go”. The removal of that exemption will enable local planning authorities to charge for repeat applications, which will help to fund their costs for dealing with the applications, which we know are a demand on their resources.

Furthermore, the regulations reduce the planning guarantee period for non-major applications from 26 weeks to 16 weeks. That means that, in most cases, if their application is not determined after 16 weeks and no extension has been agreed, the applicant will be entitled to a full refund of their planning fee. That measure is intended to encourage faster decision making, which applicants will expect as a result of paying higher fees.

Lastly, the regulations introduce a new prior-approval fee of £120 for the permitted development right for development by the Crown on a closed defence site. That right was introduced through an amendment to the general permitted development order in December 2021 and requires that a fee be paid for prior-approval applications.

We estimate that the fee increase will raise an additional £65 million for local planning authorities in the first year. In future years, from 1 April 2025, income will increase further, as the annual inflation-related rises take effect. That will provide much-needed income to local authorities. Some may consider that this is not the time to be increasing fees, since there are considerable financial pressures on businesses and householders, but if we do not increase fees, the planning application service will continue to deteriorate, to the detriment of applicants and the wider economy.

We need to find a way to get more resources into the system. The fairest way is for applicants, who stand to benefit the most from planning decisions, to contribute more toward the costs to local planning authorities of delivering the service. We consider our approach to be proportionate, with the greater burden falling on applicants for major developments, who, as I said, largely welcome these measures and are considered more likely to be able to bear a larger increase. That leaves householders and small businesses, who are more sensitive to higher fees, with a smaller increase. Together, the increases will provide additional income for local planning authorities.

The regulations do not introduce any new fees for applications for which there is currently no charge, such as applications for listed building consent, and they retain the existing exemptions, including for alterations to homes to provide facilities for a disabled occupant. I can reassure hon. and right hon. Members that we estimate that, in most cases, the cost of the planning application will still be less than 1% of the overall development costs, so we do not consider that it will be a burden or deter development.

The regulations do not contain any requirements for the additional fee income to be formally ringfenced. Hon. Members will note that we proposed in our consultation to ringfence the increase, and that proposal was strongly supported by some respondents. However, the primary legislation—section 303 of the Town and Country Planning Act 1990—requires a fee to be charged so that local planning authorities can perform the function of determining planning applications. As there is no surplus to planning fee income, there is logically no underspend that could be used to cross-subsidise other services. The Committee will note that there may be cases where other services are ringfenced. That is usually because they make a surplus; it is a different category of funding in this case.

We have made it clear to all local authorities that they are expected to retain the income from planning fees for direct investment in their planning services, and we will reiterate that expectation after the regulations are made. We recognise that the circumstances of each local authority are different. In line with our general approach to simplification of funding, which is widely welcomed by local authorities, we believe that our approach strikes the right balance.

[Valerie Vaz (Walsall South) (Lab)]

On a point of clarification, how many responses did the Government get to their consultation, as a percentage?

[Rachel Maclean]

I thank the right hon. Member for that point. I will have to write to her about that, if she will allow me.

As I was saying, local authorities have made it clear that they want and need this income so that they can build up the capability and capacity of their planning services and improve their performance. We expect them to do so, and we know that that is what applicants will expect in return for paying higher fees.

We need a planning system that supports appropriate development and functions effectively. The regulations will provide a welcome financial boost to local planning authorities, on top of the additional spending that we have already awarded to them through our planning skills delivery fund and other measures. These measures will generate additional income year on year. Local authorities will be able to invest the extra money in their planning services, including in staff and in digitising the service to make it fit for the present day and to improve their performance. Local authorities will be able to budget with more certainty and build up their capability and capacity.

I hope that Members will join me in supporting the draft regulations, which I commend to the Committee.

--- Later in debate ---

[Rachel Maclean]

I thank Members for their contributions to the debate, and I will respond to the questions raised.

I can tell the right hon. Member for Walsall South that the consultation received 495 responses.

The hon. Member for Greenwich and Woolwich asked me about ringfencing. I set out in my opening remarks how we have approached this matter. We believe that our approach is the right one. As I said, the response we have had from local authorities on our overall strategy of funding simplification indicates strongly that local authorities want to see a simpler picture for funding the essential services that they provide to their residents and businesses. That is why we have taken this approach. As the hon. Gentleman acknowledged, primary legislation already requires a fee to be charged so that local planning authorities can perform the function of determining planning applications. There is no surplus to planning fee income, so there is logically no underspend that could be used to cross-subsidise other services, which means that ringfencing is not necessary.

We have been very clear with local authorities that they are expected to retain the income from planning fees for direct investment in their planning services, and we will reiterate that direction once the regulations are made. It is worth observing that in my considerable engagement with local authorities, the Local Government Association and others, they have all been very clear that they need this funding, they must spend it on planning and they intend to do so. That is the clear expectation.

[Valerie Vaz]

I have two points to make. First, I would like the percentage of the number of consultations that were returned—was it 1% or 100%? Secondly, how will the Government monitor whether local authorities are actually using the fees for the purposes intended?

[Rachel Maclean]

I will be happy to respond to the right hon. Lady on that point, but can I clarify what she means by the percentage? I am not quite clear on her question.

[Valerie Vaz]

The civil servants have helpfully given the answer that there were 495 responses to the consultation. What was the percentage of returns? Was that a 1% return of the total number of people who were consulted, or was it 100%? Is it 495 of 495? What is the percentage?

[Rachel Maclean]

I think what the right hon. Lady is asking is whether it was a binary choice either for or against ringfencing. Is that right?

[Valerie Vaz]

No. There are two separate points. The point about the consultation is that there were 495 responses, but how many people were consulted? What is the percentage—was it a 1% return or a 50% return? On a separate point, the Minister helpfully said that local authorities have to spend the fees on planning and planning officers. How will the Government monitor whether they are doing that? The intention and the direction are there, but how can the public—my constituents—be reassured that that money will not be used for other purposes?

[Rachel Maclean]

I will respond to the right hon. Lady’s second point, as I understand that question very clearly. I think it is better if I write to her on the first question. My understanding is that there were 495 responses, but I do not know how many people were actually asked. I think she is asking for a response rate—

[Valerie Vaz]

indicated assent.

[Rachel Maclean]

We may be able to provide a further breakdown and further detail on those responses, and what they were in favour of and against. I am sure we can provide that information to the right hon. Lady and any other Committee member who is understandably interested in that.

The point about planning performance is really important. It is feedback I always hear from industry and householders, as my hon. Friend the Member for Central Suffolk and North Ipswich has mentioned. Planning performance is an issue that is raised time and again. My overall conclusion and response is that when people are applying for these services, although they expect to get a good service, they have not always had that, which has led to overall dissatisfaction with the system. It also has a knock-on effect on the public’s confidence in the planning system more generally, which leads to a lot of the other issues that we see time and again. I am sure all Members have messages in their inbox about these sorts of issues, which are common across the country.

We recognise that the current metrics on planning performance, including the use of extensions of time, do not adequately reflect the performance of local authorities. We recognise that they do not capture the consumer experience either. We have therefore recently consulted on proposals to measure performance across a broader set of quantitative and qualitative measures, providing greater transparency of service delivery and enabling early action where local authorities are not performing. We will come forward with further details on those measures in due course.

Separately to that, my Department and civil servants in the relevant team have very granular information on local authorities’ performance in this area—as well as a number of other areas, of course—on which they regularly report to me. On that basis, other Ministers and I are able, where necessary, to exercise our functions and powers to intervene and to remove planning powers from local authorities, although we obviously only want to do that as a last resort. However, we do expect local authorities to be providing these services to their residents, which we monitor.

Before I come to my hon. Friend the Member for Central Suffolk and North Ipswich, I will address the point about funding raised by the hon. Member for Greenwich and Woolwich. As he rightly said, we have made available to the profession additional capacity funds, amounting to £54 million, to enable more planners to come into the profession. Also, on the back of the Secretary of State’s long-term plan for housing announcement this summer, we made £24 million available to the planning skills delivery fund. Local authorities will be able to use that fund to speed up planning applications and ensure that services flow faster, and that any backlogs are dealt with.

[Dr Poulter]

I remember bringing forward statutory instruments quite a few years ago. If we had a statutory instrument to improve performance, it was customary to introduce it at the same time as the SI that allocated extra funding for that improvement. I ask the Minister to reflect on the point that it is bad legislating to do what she is doing today—to bring forward one SI, but fail to bring forward another that is linked to it that has to do with an ambition for the future.

[Rachel Maclean]

I thank my hon. Friend for his point, and the feedback is noted, but what I was talking about regarding planning performance is a policy decision that we are in the process of making. I am sure that further legislation will come forward in due course.

[Matthew Pennycook]

Will the Minister give way?

[Rachel Maclean]

I will, briefly, but then I want to make progress.

[Matthew Pennycook]

I appreciate the Minister’s giving way. She has provided some useful additional clarity on performance and funding. May I press her on greater transparency, and the Department’s monitoring of how the increased planning fees are used? Does it monitor how fees are generated and used by planning authorities across the country? If not, will it start to, and will it actively track whether the increased fees are contributing to the improved performance that we all want?

[Rachel Maclean]

Yes, I can assure the hon. Gentleman that that is one of the core activities that I carry out in my role, with the assistance of my civil servants and various teams that feed into this. I have already spoken about our powers to intervene where local authorities are not performing. On top of that, we expect that the additional funding that we are giving through the separate funding pots that I referred to, and this new broader funding, will be spent, and we can track performance. Notwithstanding the challenge put to me by my hon. Friend the Member for Central Suffolk and North Ipswich, we intend to bring forward details of how we will track performance. I know that every Member in this House is very interested in how their local authority performs on planning applications, because we are often the first to receive complaints when they not performing well.

My hon. Friend has indicated his concerns about the disproportionate impact of the fees. I obviously take that on board, and we have considered that carefully; that is why the fee for householders will rise only from £206 to £258. We consider that to be proportionate, given the need. Planning services do not make a profit from fees; the services are still subsidised through wider funding. It is not a cost-recovery fee. Applicants still benefit from what they pay, even with the increase. He raised the point about people making modifications for disabled residents of a property. They will still be exempt. The current set of exemptions will still apply, so people in that situation will rightly not be charged; he is right to say that.

[Dr Poulter]

The issue going forwards is that fees will be linked to inflation. That is of concern, because with compound increases, fees can rapidly escalate for people making modest modifications. Will people making smaller applications, such as single households making an application for an extension, now have to pay repeat fees if they have to go back and forth with the planning authority, and submit a second, third or even fourth application, as often happens if a house is in a conservation area?

[Rachel Maclean]

The changes that we are making have removed the “free go”; we debated that in the House in proceedings on the Levelling-up and Regeneration Bill. We made that change because the free go placed a disproportionate burden on planning departments, and added to their overall workload.

It is really important to look at this small increase in the round. We are talking about increasing capacity and providing a better service across the board. I have recent experience of making a planning application to my local authority, so I know how much work is involved. When people pay a fee, they want to get a good service. If we resource the system as a whole to a greater extent—I hope Members will be reassured, both by this instrument and by the other grants that we have mentioned, that we are doing that—small householders building an extension will see a better service overall, and that should minimise the need for repeat applications. The idea is to capture everything up front.

It is also important to note that we are embarking on an ambitious programme to digitise the whole system. Members will know how paper heavy the system is now. That is where mistakes creep in and things need to be repeated. By improving the whole system overall, we will remove the need for repeated applications and, I hope, provide a fairer service.

My hon. Friend the Member for Central Suffolk and North Ipswich asked me about flooding, so I will touch on that before I wind up. We have all seen the recent events, which I know have affected his area greatly. All our sympathies are with the people affected, and I hope that they can be back in their homes soon. He will know that the national planning policy framework—the planning system more broadly—already takes account of flooding. Work has been done on this matter by my colleagues in the Department for Environment, Food and Rural Affairs, particularly in setting up the Flood Re scheme and making sure that planning applications and local plans are made with flooding in mind.

We will be going further. My hon. Friend will know of the work that we have done through the national development management policies; we debated again yesterday on the Floor of the House when considering the Lords message how the planning system responds to climate change, of which flooding is one manifestation. We have been clear that we intend to strengthen our approach, to give planners and the country the reassurance that the planning system can respond adequately to climate change and help us achieve our net zero objectives.

[Matthew Pennycook]

The Minister has missed out one of my questions. Will we see the planning skills strategy that was promised in the policy paper that accompanied the Levelling-up and Regeneration Bill?

[Rachel Maclean]

I understand the hon. Gentleman’s eagerness to see that, and we will bring it forward in due course. If he will allow me, I will write to him with more details on the timeline.

I thank Members for their interest in this matter. I must reiterate that it is critical that we have well-resourced, effective and efficient local planning services so that development is not delayed. We need to build the right houses for our country, in the right places, and planning is critical to that. The regulations will contribute to that by delivering much-needed additional resources. As I hope I have said multiple times, we are clear that local planning authorities must invest the additional income from the increase in planning application fees in their planning service. Improvements will enable speedier delivery and the economic growth that our country needs. I hope the Committee will welcome these important and necessary regulations.

Question put and agreed to.

Resolved,

That the Committee has considered the draft Town and Country Planning (Fees for Applications, Deemed Applications, Requests and Site Visits) (England) (Amendment) Regulations 2023.

Levelling-up and Regeneration Bill

Rachel Maclean Excerpts

Consideration of Lords message
Tuesday 24th October 2023 Commons Chamber

[The Minister of State, Department for Levelling Up, Housing and Communities (Rachel Maclean)]

I beg to move, That this House disagrees with Lords amendment 22B.

[Mr Deputy Speaker]

With this it will be convenient to consider the Government motion to insist on disagreement to Lords amendment 45, and Government amendment (a) in lieu.

[Rachel Maclean]

As we know from proceedings on this Bill in this place, the Levelling-up and Regeneration Bill is important to this country’s future. It will ensure that this Government and future Governments set clear, long-term objectives for addressing entrenched geographical disparities. It will devolve powers to all areas in England where there is demand for that, allowing local leaders to regenerate their towns and cities and restore pride in places. It further strengthens protections for the environment, so that better outcomes are at the heart of planning decisions.

In the course of the many debates on local authority remote meetings during this Bill’s passage, the Government have consistently expressed our strong view that councillors should be physically present to cast their votes and interact in person with citizens. Our position on this matter has not changed. Therefore, the Government cannot support Lords amendment 22B, which would enable any Government in future to go as far as allowing all local authorities to meet virtually at any and every opportunity.

Turning to climate change, I reiterate that the Government agree that the planning system must support our efforts in meeting our legal net-zero commitments by 2050 and tackling the risks of climate change. However, we have heard the strength of feeling in both Houses about making sure that national planning policy supports our efforts in tackling the risks of climate change. Therefore, the Government have now gone a step further in tabling an amendment that will require the drafting of policies that are to be designated as national development management policies to

“have regard to the need to mitigate, and adapt to, climate change”,

taking into account the range of climate scenarios and risk relevant to the policies being developed.

I will conclude my brief remarks by again expressing gratitude to my colleagues here and in the other place for their continued and dedicated engagement with this complicated and complex Bill during its parliamentary passage. I am sure that hon. and right hon. Members will agree that the Government have shown that we have listened carefully to the views of Members from all parts of the House as we seek to improve this nationally important piece of legislation.

--- Later in debate ---

[Mr Deputy Speaker (Sir Roger Gale)]

With the leave of the House, I call the Minister.

[Rachel Maclean]

I thank all right hon. and hon. Members for their contributions to the debate today and for their contributions throughout the passage of this important Bill. I will address briefly the points made by Members. First, let me turn to the comments made by my hon. Friend the Member for Waveney (Peter Aldous). He has spoken with his customary good sense and practical bent, as have others, including the hon. Member for North Shropshire (Helen Morgan), who speaks for the Liberal Democrats, and the hon. Member for Airdrie and Shotts (Ms Qaisar), who speaks for the Scottish National party, about the real problems faced by people who wish to take part in local democracy without being excluded because of where they live, because they do not have a car or because of other barriers. This is important, and the whole House recognises those barriers and supports that admirable objective. We need our politics to be as inclusive as possible.

However, I have also heard loud and clear the comments of my hon. Friend the Member for West Bromwich West (Shaun Bailey), who alerted us to the problems that could exist if we were to accept Lords amendment 22B. It is right that we consider all the possible consequences, and it is the Government’s view that the amendment goes too far and is too expansive. It would allow any future Government to allow any local authority to meet virtually at every opportunity, which is not something the Government can accept. It is a long-standing principle that local democracy should take place face to face.

I agree with some of the shadow Minister’s comments, and we are looking very carefully at how we encourage more engagement from the community, particularly on planning applications. We can do a lot of that through technology and wider reforms to our system, and it is right that we continue that work.

[Bob Stewart (Beckenham) (Con)]

What is the Government’s view on how effective such arrangements might be? Is remote working more effective or less effective? Do the Government have a view on that?

[Rachel Maclean]

I thank my right hon. and gallant Friend for that point. He will know that, with this Bill, we are pushing power down to local people, local areas and local councillors, who are elected to represent their communities. As I said, the Government have a very clear view that local democracy should take place face to face. Through our levelling-up work, we are in the midst of a once-in-a-generation devolution of power to allow local areas, such as the one he represents, to make the best decisions for their local communities, notwithstanding this particular point, on which the Government have strong views.

The vital issue of climate change was raised by my hon. Friend the Member for Waveney and my right hon. Friend the Member for Chipping Barnet (Theresa Villiers). It is important to stress that the planning system already has considerable systems for taking account of climate change and further work is under way, as my hon. Friend knows. He specifically asked about how to bridge the gap in planning policy. I make it clear that, as part of our proposed changes to the planning system and as we committed to in the net zero strategy, we were the first Government to legislate for net zero. We stand by those commitments both in the planning system and elsewhere, and we intend to do a fuller review of the national planning policy framework to ensure it contributes to climate change mitigation and adaptation as fully as possible, following Royal Assent of the Levelling-up and Regeneration Bill.

Last but by no means least, I turn to my right hon. Friend the Member for Chipping Barnet. She reiterated what is a vital issue: the Government’s commitment to publishing the response to the NPPF consultation after this Bill, with Godspeed, receives Royal Assent. We remain committed to doing that, and I reiterate that it remains the Government’s policy to ensure that we identify and build on urban brownfield areas such as the ones she mentioned in Docklands, Beckton, Silvertown and elsewhere. We need to see housing delivered there. We have seen 30-year record highs in housing delivery under this Conservative Government, and we intend to continue delivering the right houses in the right places, supported by local communities. I want to take this brief opportunity to put on record, as my right hon. Friend the Member for Chipping Barnet did, my thanks to councillors who represent my communities in Redditch, Wychavon and Worcestershire, and to all the frontline services involved in the responses to the floods—to the emergency services, the Environment Agency and others. We all wish everybody to be back in their home soon.

I hope that all Members, having seen that the Government have listened and responded to their concerns, will feel able to support our position. Our amendments are effective and proportionate, and I hope that they are agreeable to all. I commend them to the House.

Question put, That this House disagrees with Lords amendment 22B.