Oral answer (Lords) on Housing: Leasehold - Jan 5

Wednesday, 6 January 2021 08:45

Asked by

Lord Truscott
To ask Her Majesty’s Government whether they plan to implement the recommendations in the report by the Law Commission Leasehold home ownership: buying your freehold or extending your lease, published on 21 July 2020; and if so, when.

The Minister of State, Home Office and Ministry of Housing, Communities and Local Government (Lord Greenhalgh) (Con)
My Lords, first of all I point out my residential and commercial property interests as set out in the register. The Government are committed to promoting fairness and transparency for homeowners and are taking forward a comprehensive programme of reform to end unfair practices in the leasehold market. Last year, the Law Commission published reports on enfranchisement, commonhold and right to manage. We will announce details of how the Government will take forward reform in this area as soon as possible.

Lord Truscott (Ind Lab) [V]
Among England’s 4.3 million leaseholders, owning a leasehold property can be a nightmare for many. The whole feudal system, unique to England and Wales, is designed to protect the interests of freeholders, and their professional acolytes, at the expense of leaseholders. Even appreciating the pressures of the current Covid crisis, will the Minister and Her Majesty’s Government please get a move on and treat leasehold reform with the urgency it demands? No more delay, please.

Lord Greenhalgh (Con)
I assure your Lordships that leasehold reform is coming. A lot has been announced and, subject to the vagaries of the Downing Street grid, more will be announced shortly.

Lord Young of Cookham (Con)
My Lords, is the noble Lord, Lord Truscott, not right to say that leasehold as a form of tenure is a relic from a feudal age that exists nowhere else in the world? Instead of trying to patch it up, should we not be actively replacing it with commonhold for new developments and much easier enfranchisement for existing ones?

Lord Greenhalgh (Con)
I thank my noble friend. There is no doubt that in this country we are unique in having leasehold. We need to focus on reform, which will take this forward to a position similar to that in Scotland or on the continent, where people are co-owners of their property.

The Lord Speaker (Lord Fowler)
The noble Baroness, Lady Warwick of Undercliffe. No? I call the noble Lord, Lord Shipley.

Lord Shipley (LD) [V]
My Lords, five years ago the Leasehold Knowledge Partnership warned the Government of the pending ground rent and leasehold scandals. At the time, the Government promised legislation by the summer of 2018. It is now 2021. Why has it taken them so long to bring forward legislation?

Lord Greenhalgh (Con)
All I can say is that there is a real commitment to drive forward reform. I am now the Minister responsible for leasehold, and the noble Lord will see action.

Lord Kennedy of Southwark (Lab Co-op)
My Lords, does the noble Lord agree that any mechanism to enable leaseholders to acquire the freehold of their property should include all parts of the property, as recommended by the Law Commission, so that we do not end up in a situation where a leaseholder acquires the freehold of their flat and then another freeholder owns the communal staircase and the roof? In that case, you would have all sorts of problems in the future. If we are to have reform, we need to reform it properly.

Lord Greenhalgh (Con)
My Lords, the noble Lord is a very wise man. I cannot give him any particular position on enfranchisement today, but it is important that we take these points into consideration before we adopt a formal policy position.

Lord Bourne of Aberystwyth (Con) [V]
My Lords, I declare my interests as set out in the register. I very much welcome the Government’s commitment to acting in this area and I hope that it happens soon. As part of that action, will the Government also look at existing ground rent charges, some of which are set at unconscionable levels?

Lord Greenhalgh (Con)
My Lords, I assure my noble friend that some of the “fleecehold” practices that we have seen around ground rent escalations are absolutely abhorrent. That is one of the things that the Competition and Markets Authority is looking at, and I take my noble friend’s point very seriously indeed.

Baroness Jones of Moulsecoomb (GP) [V]
My Lords, can the Minister confirm two things: first, that reform of leasehold means moving towards commonhold, and secondly, that the reforms will exempt community land trusts, which use this system in a very productive way?

Lord Greenhalgh (Con)
My Lords, I will not make such a statement today in the House but a statement will be made very shortly. Community land trusts are a separate policy matter. I agree with the noble Baroness that community land trusts are a way forward—not always the right way but one way to use land for the benefit of a particular community.

Lord Hain (Lab) [V]
What does the Minister’s commitment to carry out reforms “as soon as possible” mean in time terms, and will the Government end the current system of ridiculously expensive lease extensions, escalating ground rents and absurd service charges?

Lord Greenhalgh (Con)
My Lords, there is no doubt that you need to turn to lawyers to know how long it will take to turn these things round quickly. We need primary legislation. I have been told by Professor Hopkins, who was in charge of the Law Commission work, that the preparations to get primary legislation ready for consideration by noble Lords will take approximately one year, so we are probably talking about the third Session.

Baroness Scott of Needham Market (LD) [V]
My Lords, as the noble Lord, Lord Young, said, commonhold is often a much better option than the current leasehold system. However, despite that, many mortgage lenders are reluctant to lend on a commonhold basis. What discussions have taken place with mortgage lenders to try to unblock this?

Lord Greenhalgh (Con)
Commonhold exists today but the noble Baroness is absolutely right that this will require change, which is always difficult. Never underestimate the power of the status quo. Discussions have happened and will continue to take place with interested parties such as the lenders, which are so important to making this a success.

Baroness Altmann (Con) [V]
My Lords, I am delighted that my noble friend has confirmed that the Government will act on these excellent reports, and the sooner the better—as far as I can glean, it may well be coming. Might my noble friend comment also on the Government’s position on the “right to manage” elements of the various reports, which make it easier for tenants with difficult freeholders to manage their properties in their own interests?

Lord Greenhalgh (Con)
My Lords, I have just looked at the index of things that we are working on. That policy is still in development, but it is important that we get it right—it is a tricky area.