Leasehold Reform (Ground Rent) Bill [Lords]

Stephen Hammond Excerpts

2nd reading
Monday 29th November 2021 Commons Chamber

[Stephen Hammond (Wimbledon) (Con)]

Let me say to my hon. Friend the Minister how much I think everyone across this House supports his aim—I certainly do—of getting rid of some of the egregious behaviour that we have seen in the market in the past five years. That behaviour undermines the work done by those professional freeholders who have done a good job for leaseholders for many years.

We are right to look at the whole process of leasehold. My right hon. Friend the Member for Newark (Robert Jenrick) described this Bill as the appetiser before the main course. A lot of us will welcome the main course, in which we can look at making it easier for leaseholders to extend their leases through simplification of the extension process, which I assume will come in that very complex Bill. The hon. Member for Ellesmere Port and Neston (Justin Madders) was right to say that although progress has been not as fast as many would have liked, it is coming. I warmly welcome that.

This Bill is fairly tightly drawn: it is very much about the ground rents on future leases. I make only four points, and I would like those on the Treasury Bench to respond to them. First, a practical point: while we all welcome and recognise the work done by the Competition and Markets Authority, it is missing half the problem. On the many people who may or may not have been instructed to use solicitors recommended by the developer or their agents, those solicitors had an obligation and a duty to the client purchasing the property, for whom they were working. I strongly advise Ministers to talk to the Solicitors Regulation Authority about whether this should be looked at as a corollary of the work being done by the Competition and Markets Authority.

Secondly, I heard what the Minister said about doing away with ground rent and moving to a peppercorn that will not have to be paid. What I am not clear about—perhaps if I am on the Committee, we can explore this a bit more—is why anyone would not just transfer all the increase in ground rent to other charges. He said that there are protections in progress, but some of those will be really difficult to establish. We have talked about “excessive” admin charges, repair charges and service charges; I think that will be quite difficult for the Minister to define, and I look forward to exploring that with him. If I am not on the Committee, I hope he will meet me to talk about how we might make sure that that is more tightly defined.

My third and fourth points have already largely been made by my right hon. Friend the Member for Chipping Barnet (Theresa Villiers). If ground rents are taken to a peppercorn, freeholders are unlikely to want to be involved, so we will move to a system of commonhold in reality, rather than by legislation. That raises two issues. The first is: who will manage the blocks of flats, and how will that come into place? The hon. Member for Reading East (Matt Rodda) mentioned that there are systems in other countries, but in complex buildings—those large buildings with mixed use underneath, or large-scale blocks of flats—a number of people will not want to actively participate in the management of that building; nor will it necessarily always be possible to bring them to resolution and agreement with the rest of the commonholders. For things to work, there may have to be an obligation on the commonholders to have a management company; otherwise, a number of repairs simply may not happen. My right hon. Friend the Member for Chipping Barnet talked about Scotland a moment ago.

My other major concern is this: if that provision is not there, and we no longer have professional managing agents or freeholders, who will ensure future building safety? I am interested to hear how the Minister intends to protect complex buildings. Commonhold can easily be seen to work in smaller buildings, but there is real concern about buildings over 18 metres and large buildings. If safety standards change in the future, who will force through building safety measures? I am keen to hear a response to that from my right hon. Friend the Member for Tamworth (Christopher Pincher).