Asked by
To ask Her Majesty’s Government what plans they have to reform
the forfeiture provisions of leasehold housing.
(Lab Co-op)
My Lords, I beg leave to ask the Question standing in my name on
the Order Paper. In doing so, I declare an interest as a
leaseholder.
The Minister of State, Home Office and Department for Levelling
Up, Housing & Communities () (Con)
My Lords, I declare my residential and commercial property
interests as set out in the register. The Government believe that
forfeiture is an extreme measure which should be used only as a
last resort. In practice, forfeiture happens very rarely, and the
leaseholder may apply for relief from forfeiture subject to the
court’s discretion. We asked the Law Commission to update its
2006 review of forfeiture law, Termination of Tenancies for
Tenant Default, to account for wider leasehold reforms currently
under way, and we are considering what action may be needed.
(Lab Co-op)
My Lords, there is a desperate need for root and branch leasehold
reform. Does the Minister agree that the execution of forfeiture,
or even the threat of forfeiture of a lease on a home, to recover
a debt or deal with a dispute is totally disproportionate in
comparison with the value of the asset, and that what should be
in place is a simple procedure to recover the debt or deal with
the issue at hand commensurate with the issue or the value of the
debt concerned?
(Con)
My Lords, I agree with the noble Lord that forfeiture is an
extreme measure. We have asked the Law Commission to look into
this and it has come back not with removing forfeiture but with
simplifying the process, making it more transparent and coming up
with a mechanism that is more proportionate. We are considering
these as part of the second stage of our leasehold reform.
(Con)
My Lords, does my noble friend recall saying on 9 June last year
that it was the Government’s aim to complete the leasehold reform
programme in this third Session of Parliament? Is that still the
case, because the Bill was not in the Queen’s Speech? If it is
not, can we at least have a draft Bill in this Session so that we
can hit the ground running in the fourth?
(Con)
I always thank my noble friend for his interventions. We want to
move forward with the second stage of leasehold reform. It will
not be part of the third Session but there is a commitment to
this Parliament. My noble friend is right that we can use this
time to get a Bill drafted. We will take time so that we can get
it through Parliament as soon as possible at the beginning of the
fourth Session.
(LD)
My Lords, I look forward to the leasehold reform.
Two weeks ago, I attended a meeting of leaseholder residents in a
block of retirement flats. It will be no surprise to the Minister
that their main complaint was the exorbitant increases in
management fees, with no transparency of cost or answers as to
why the increase had in one year gone from 5% to nearly 16%. When
will the Government finally put a stop to this obfuscation and
general bad practice by regulating management companies, as
advised by the Government’s own expert working group, chaired by
the noble Lord, , back in 2019?
(Con)
Once again, the noble Baroness is right that we need to sort out
some of the practices that we see among managing agents. We are
still considering how to take forward the recommendations of the
noble Lord, , but as noble Lords know, there
is also a move to introduce voluntary codes, which I hope will
elevate this. Overall, we need to see professionalisation of
managing agents.
The Lord Speaker ()
My Lords, we have a virtual contribution from the noble Lord,
.
(Lab) [V]
My Lords, with vulnerable, low-income elderly groups in this
highly inflationary period facing unaffordable, escalating
service charges and possible loss or even forfeiture of their
homes, why not promote or sponsor a national scheme for elderly
leaseholders that rolls up service charges in the form of a
debenture against property title—effectively a rising legal
charge? The debenture holder would pay the service charge on
behalf of the resident, and then claw back
payments—interest-serviced or otherwise—on death or even
before.
(Con)
I thank the noble Lord for some exciting policy ideas. It is
important that we recognise that forfeiture is a very lengthy
process, and there are ways in which we can cover debt. In fact,
where there is an outstanding mortgage, you typically find that
mortgage companies step in and pay off any remaining amounts,
because they want to protect their financial interest in a
property that is worth far more than the debt. But it is an idea
that I will take back to the department.
(Con)
My Lords, I declare my interests as set out in the register. I
support fully the Government’s intentions for urgent leasehold
reform; I look forward to seeing the legislation. Does my noble
friend agree that it is really important to ensure that landlords
are still incentivised to let their properties? With the shortage
of housing that we have, it is important to balance the interests
of leaseholders and freeholders. There are really important areas
of reform, such as have been raised, that need attention for this
market to function much better than it does.
(Con)
I thank my noble friend for once again underlining that, when we
reform landlord and tenant law, we need get the balance of
interests right. As a Government, we have committed to a number
of ways in which we try to get that balance right and, indeed, to
move away from the idea of having leasehold as the tenure of
choice to an era where we have full-throated commonhold, which I
hope has the support of many Members of this House.
(Con)
Does my noble friend agree that there is great interest in
leasehold reform? Would not this be an ideal opportunity to take
advantage of a procedure which we have always had and greatly
valued, pre-legislative scrutiny? If, indeed, there is to be a
Bill in draft, perhaps this procedure could be used to let the
House look at this in the round, which is urgently required.
(Con)
My Lords, I thank my noble friend for raising that. I am
conscious of that way of starting the process; when you get the
Bill written, pre-legislative scrutiny is a good way of getting
broad support. In fact, that is how we started the process of
scrutiny for what is now the Building Safety Act.
(Lab Co-op)
My Lords, as we are not going to have the Bill in this Session of
Parliament, which is very disappointing, would the Minister
welcome seeing a number a campaigners to discuss the reform with
him, so as to get ready for the Bill period in the last Session
of this Parliament?
(Con)
My Lords, I reassure the House that, as the Minister with
responsibility for leaseholds, I engage regularly with campaign
groups, including the National Leasehold Campaign, and, of
course, the Leasehold Knowledge Partnership, but I am always
happy to meet other campaigners so that we get the reforms right.
This is a once-in-a-generation opportunity, and it is important
that we listen to those stakeholders.
