Motion on Amendments 1 to 5 Moved by Lord Greenhalgh That the House
do agree with the Commons in their Amendments 1 to 5. 1: Clause 1,
page 1, line 9, at end insert— “(but see subsection (5)).” 2:
Clause 1, page 1, line 16, at end insert— “(5) Where there is a
deemed surrender and regrant by virtue of the variation of a lease
which is— (a ) a regulated lease, or (b) a lease granted before the
relevant commencement day, subsection...Request free trial
Motion on Amendments 1 to 5
Moved by
That the House do agree with the Commons in their Amendments 1 to
5.
1: Clause 1, page 1, line 9, at end insert—
“(but see subsection (5)).”
2: Clause 1, page 1, line 16, at end insert—
“(5) Where there is a deemed surrender and regrant by virtue of
the variation of a lease which is—
(a ) a regulated lease, or
(b) a lease granted before the relevant commencement day,
subsection (1) applies as if paragraph (b) were omitted.”
3: Clause 6, page 4, line 30, after first “of” insert “premises
which consist of, or include,”
4: Clause 6, page 4, line 39, after “period” insert “(if
any)”
5: Clause 6, page 5, line 7, after first “of” insert “premises
which consist of, or include,”
The Minister of State, Home Office and Department for Levelling
Up, Housing & Communities () (Con)
My Lords, before I turn to the Commons amendments, I will take a
moment to remind us all of what the Leasehold Reform (Ground
Rent) Bill will do. The Bill will put an end to ground rents for
most new residential leasehold properties as part of the most
significant changes to property law in a generation. The Bill’s
provisions will lead to fairer, more transparent homeownership
for thousands of future leaseholders.
Throughout the Bill’s passage, there have been helpful
discussions with Members of both Houses and with key stakeholders
in the industry and from consumer groups. This has been crucial
and has led to a number of refinements being made to this Bill
during its stages in the other place. At our last opportunity to
debate this Bill, in September 2021, changes were suggested by
noble Lords to help improve it. I undertook to ensure that these
would be made; and as promised, this was done. I hope that noble
Lords will agree that the Bill returns to this Chamber in an even
stronger position than when it left. We meet today to consider
these amendments as made in the other place, and I beg to move
that the House do agree with the Commons in its Amendments 1 to
9.
Commons Amendments 1 and 2 relate to the process known as a
“deemed surrender and regrant.” Taken together, these amendments
mean that a lease can have a peppercorn rent after it has been
regranted, even where no new premium is paid. Especially for the
noble and learned Lord, , I can confirm the
provisions in the amended Clause 6, Amendments 1 to 5, are
amended also to apply in the case of a deemed surrender and
regrant by operation of law where there is an extension of the
term of a pre-commencement lease or the addition of further
property. Commons Amendments 3, 4 and 5 are also connected to the
“deemed surrender and regrant” process. But more specifically,
they clarify the matter raised by the noble and learned Lord,
with regard to a lease
variation.
As noble Lords may remember, it was pointed out very diligently
that the legislation as drafted was perhaps not as clear as it
could be in relation to permitted rent within leases where they
replace a pre-commencement lease. The noble and learned Lord,
raised his concern that it
was unclear whether the Bill as then drafted would require that
any existing ground rent in such leases would be reduced to a
peppercorn. I thank the noble and learned Lord for bringing this
to my attention. I can confirm that the amendments made in the
other place make it clear that, where the property demised is
changed, the resulting surrender and regrant will not reduce the
ground rent on the remaining term of a pre-commencement lease to
a peppercorn. Any extension to the term of the pre-commencement
lease will be required to be a peppercorn. Crucially, this
amendment ensures that freeholders need not withhold consent for
a lease variation unnecessarily. I hope noble Lords will agree
this is a positive development.
I turn to Commons Amendment 6. Noble Lords will remember that on
Report an amendment was passed that inserted a new clause into
the Bill, the “duty to inform”. It placed a statutory duty on
landlords to inform an existing leaseholder of the changes
introduced by the Act ahead of commencement and linked this duty
to the Bill’s enforcement penalty regime, should a landlord fail
to comply. Of course, we recognise the importance of leaseholders
being aware of their rights and that they are therefore not
rushed into lease extensions before this Bill takes effect. I
thank the noble Baroness, Lady Grender, who is not in her place,
and the noble Lord, , for raising the important
matter of consumer awareness, which the Government take
seriously.
I support the principles behind the original Lords amendment. It
is vital that there is transparency in the leasehold system.
However, the Government continue to have doubts as to whether
placing a duty to inform in the Bill would be the most effective
and expedient means of meeting the objective that noble Lords set
out to achieve. We remain of the view that this can be
accomplished without the need for further primary legislation.
The reasons for leaving out the duty to inform include legal and
practical considerations that I hope noble Lords will allow me to
explain a little.
As drafted, the duty to inform, although well intentioned, is
unworkable. The original amendment placed a duty on all
landlords, even if they were not residential, and did not specify
how each landlord may satisfy their legal duties contained within
the clause. Including the clause would require the penalty
enforcement process for the duty to inform to align with the rest
of the Bill; for instance, the duty to inform clause provided no
mechanism for landlords to appeal and did not offer a concrete
explanation of the means for enforcement, such as notices and
requests for written representations. To make this clause
workable would take up further parliamentary time and cause delay
to the implementation of the new peppercorn rents that we all
want to see. Furthermore, in terms of practicality, the clause
related only to the short period between Royal Assent and the
peppercorn limit coming into effect. It would therefore place a
quite significant burden on enforcement authorities if it was
included in the Bill.
Again, I thank both the Labour Front Bench and the Liberal
Democrats’ spokesperson, the noble Lord, , for their recent engagement
on this matter. As I have said before, they can rest assured that
I agree with them on the principle behind the amendment. We all
understand how important it is to ensure that these changes to
leasehold law are publicised for the good of leaseholders.
However, I appreciate that noble Lords may want a little more. We
have looked very closely at how to achieve the objectives that
informed the original new clause, so I wanted to share some of
the detail on measures that we will take ahead of commencement to
close the gap.
We are developing a suite of communications activities, from
social media to encouraging the broader press to cover these
changes. We will work closely with our partners such as LEASE,
the body that provides free and independent advice to
leaseholders, as well as National Trading Standards and, of
course, our industry partners, to do what we can to raise
awareness of the coming changes. We will also contact our friends
in the Leasehold Knowledge Partnership. Everyone who can help to
communicate should be brought on board. We are also preparing
updates to existing government guidance for consumers and will
publish new detailed guidance for enforcement officers in
England. We expect Wales to produce separate guidance, which
should mirror any guidance that we publish for England, and we
will work closely with Welsh colleagues to ensure that we get
this right.
After Royal Assent, we will write to solicitors, legal
executives, licensed conveyancers and relevant professional
bodies, detailing the new peppercorn restrictions. We should also
contact those who represent property agents and managing
agents—ARMA—as I mentioned in our discussions. Nigel Glen has a
tremendous database, as does the Institute of Residential
Property Management, where Andrew Bulmer can also help
communicate the message.
I hope that this is reassuring to noble Lords who have raised
concerns about the importance of accurate, independent legal
advice to leaseholders. More generally, as part of the
enforcement of the Bill, National Trading Standards will assist
with advising local enforcement authorities. The department will
fund National Trading Standards’ implementation costs from our
budgets. We are in discussions with the Local Government
Association on this. As I have stated previously, I am open to
working with anyone across the House on any further activities
that they believe we should pursue.
I hope noble Lords are sufficiently reassured that the Government
are serious about raising awareness of the Bill among consumers
ahead of it coming into force and can agree that the suite of
actions we are taking represent the best course of action. On
this basis, I ask that your Lordships agree to Commons Amendment
6.
3.45pm
Commons Amendment 7 is a further clarification, in response to
concerns raised by the noble Earl, , about the impact that the
newly created definition of a premium would have on properties
with a repairing covenant. I thank the noble Earl for raising
this on Report. As noble Lords will be aware, we previously
amended the Bill to make it clear that it applied only to leases
where a premium was paid. This was to ensure that the legitimate
practice of longer leases on a rack or market rent could
continue.
The noble Earl, , questioned whether that
initial amendment might still risk properties let on a full
repairing lease at a rack rent being subject to the peppercorn
rent requirement. The risk could arise where repairing covenants
might fall within the definition of a consideration for a
“money’s worth” of repairs. This is not, and never has been, the
intention of the legislation. We therefore removed the words
“money or money’s worth” from the definition of premium and
substituted them with “pecuniary consideration”. This phrase is
preferable as it is broadly any consideration expressed in terms
of money and will not capture the actual worth of repairs for
such covenants.
Amendment 8 is a standard amendment that removes the privilege
amendment inserted in the Lords. The Government made one further
amendment to insert “Welsh Ministers” into paragraph 12 of the
schedule. This has enabled any proceeds of a financial penalty
that have not gone towards legal or administrative costs to be
paid to Welsh Ministers in respect of enforcement for leases of
premises in Wales.
In conclusion, I hope that noble Lords will accept all the
amendments made in the other place, and I beg to move.
(LD)
My Lords, I rise to speak on the amendment in my name, which
refers to Amendment 6, to which the Minister has just spoken. I
hope I am fully in order to do that.
The Deputy Speaker () (Con)
If I could interrupt the noble Lord, the Question to the House
was that we agree Amendments 1 to 5 en bloc. We will then come to
Amendment 6.
Motion agreed.
Motion on Amendment 6
Moved by
That the House do agree with the Commons in their Amendment
6.
6: Clause 8, leave out Clause 8
Amendment to the Motion on Amendment 6
Moved by
Leave out “agree” and insert “disagree”.
(LD)
My Lords, I rise to speak on Amendment 6. I should start by
saying that I am the joint owner of a leasehold property, but we
got our lease extension some seven or eight years ago—outside the
scope of the Bill. Also, both now and earlier the Minister has
been very generous with his time in discussing the progress of
the Bill. I very much thank him for that and for the great
courtesy and good humour he has always shown in doing so.
Clause 8 is a duty to inform the tenant. I was very disappointed
to find that the Commons, led by the Government, thought that
that was an appropriate safeguard to take out of the Bill. I have
listened carefully to what the Minister said by way of a
substitution and I will cover that in my further remarks.
First, the Minister has accepted the evidence that the noble
Baroness, Lady Grender, among others, brought forward in
Committee: that there really is a loophole and it needs to be
tackled. The loophole is one that may be exploited by
unscrupulous landlords—a minority of landlords, certainly, but
ones who are well practised in being unscrupulous. It is a
real-world issue. Of course, they are often aided and abetted by
their in-house or tame lawyers who are helpfully acting for both
parties and do not necessarily spend too long explaining what the
hapless leaseholder is being invited to sign.
We hope very much that the Bill will outlaw that practice, but it
will not do so immediately. The purpose of the original amendment
that your Lordships sent back to the other place was to
effectively freeze the imposition of any such unfair terms
meanwhile. The Minister has understandably exaggerated the
difficulties of Clause 8, but it actually requires that, when a
tenant and landlord are about to commence negotiations, the
landlord has a duty to inform the tenant of the existence of this
Act and the fact that, in a short period of time, they would
essentially be able to carry out their transaction for free,
whereas in the intermediate period they would do so under the
existing regulations, where it is commonplace for escalation
clauses and so on to be built into a lease, which would then be
an enduring one. There is clearly a temptation for the
unscrupulous to do that. You can see the marketing pitch: “New
lamps for old”—or rather “New leases for old”—an offer of a VIP
lane to leasehold extension, with legal fees waived if you do it
by 31 July. Unwary leaseholders could well fall for that, perhaps
prompted to go for it by the knowledge that they have only, say,
20 more years on their lease, and perhaps overlooking the fact
that it would essentially be free if they waited until 31
July.
I have chosen that date purely for illustration, because the fact
is that the Minister has not told us when the new provisions will
become operational; I hope he will be able to enlighten us on
that point shortly. The window of opportunity for this
unscrupulous behaviour to carry on is between now and the moment
when this provision comes into force. I want to hear exactly what
the Government intend to do to shut that window at the earliest
possible opportunity.
What is being offered instead? Superficially, it certainly sounds
very plausible, and I hope that it will turn out to be as robust
as the Minister hopes it will be. I hope that it will reach every
leaseholder, because what is being substituted is an intention in
Clause 8 that is a transactional one that would come into play
only if a particular lease was going to be extended or was
thought likely to be extended, for a general one—so we have a
popgun firing at every leaseholder rather than simply providing a
provision for landlords to act on at a time of leasehold
extension.
I am very pleased to hear about what the Minister had to say
about getting in touch with legal firms and those who represent
leaseholders and others. I find that a very satisfactory part of
his reply.
I would say that a couple of press releases in the ordinary
course of business are unlikely to be very effective. The
Minister might perhaps like to emphasise how this communications
plan will take place. Is there a budget for it? Is it a real-life
thing or just a piece of ministerial gloss? I know that the
Minister does not go in for ministerial gloss, but I would like
an assurance that we will see a real effort made to make sure
that this is closed.
When exactly will it be closed? Clause 26(2) says that this will
come into force
“on such day as the Secretary of State”
determines. Is that soon, shortly, in the summer, this year, next
year, sometime or never? The longer the window stays open—the
longer the gap between now and when the Bill’s provisions come
into force—the more the risk and the more difficulty there
is.
So I would like to hear an assurance from the Minister. Can he
give us a date on which this provision will come into force so
that we can hold him accountable? Perhaps he could also comment
on whether we will get the second leasehold Bill, which he spoke
of frequently, in the forthcoming Queen’s Speech? I look forward
to hearing what the Minister has to say in respect of this and
will listen carefully. I beg to move.
of Ullock (Lab)
My Lords, I have not previously spoken in the debates on this
Bill, but I will be brief. I start by thanking noble Lords who
have done a lot of work to improve this much-needed legislation.
The amendment in the name of the noble Lord, , is a welcome reminder that
the Bill lacks any obligation for landlords to alert leaseholders
in advance of changes relating to ground rents and leasehold
extensions. We fully support the noble Lord’s amendment, which
seems to be an entirely proportionate measure and in no way
presents an obstacle to the core provisions of the Bill.
The Government have been unable to bring forward any safeguards
to address this specific power imbalance at the expense of
leaseholders. Without it, we believe that the legislation remains
flawed. The relationship between leaseholders and landlords
should be defined by the principle of transparency and
accountability—as, in fact, the Minister agreed in his opening
remarks—but this is simply not possible without provisions such
as these. So I ask the Minister, even at this late stage, to
provide further assurances that have not previously been
forthcoming to allay the concerns from across the House.
(Con)
My Lords, I am not sure whether we have moved all the amendments
up to Amendment 9—because then I can wind up, so to speak. I can
appreciate the—
The Deputy Speaker () (Con)
If I may interrupt the noble Lord for a moment—we have moved only
Amendments 1 to 5. We are now discussing Amendment 6, and we will
then come to Amendments 7, 8 and 9.
(Con)
Okay. I am just getting used to this process. On Amendment 6, it
is really helpful that the noble Lord, , raised the issue of timing.
Of course, in order to start the gun, if you like, we need Royal
Assent, and then there needs to be a commitment around
commencement, which means having all the regulations in place. So
let us get this Bill on the statute book as quickly as possible.
I have already made a commitment—which perhaps goes beyond where
I should have gone because I am, perhaps, a little naive—that,
within six months of Royal Assent, we will have commencement. So
we know what the window is, effectively, because I made that
commitment at the Dispatch Box and I do not want to let anyone
down. That is the timeframe: let us get Royal Assent and then,
within six months, we will have commencement—and that is the
period of time we should be concerned about.
We have very genuinely tried to respond to the issues that have
been raised to ensure that the greatest number of people are
aware of the dangers and the risks of carrying out a lease
extension in that window in a way that would be detrimental to
their interests. That is why we have that suite of communications
measures. I hope, therefore, that with that and a better
understanding of the timeframe, the noble Lord, , will withdraw his
amendment.
On the timing, I have now been in post and responsible for
leasehold reform for nearly two years—I have survived one
reshuffle—and it is fair to say that both Secretaries of State,
particularly the right honourable gentleman in the other place,
are absolutely committed to the second wave of leasehold reform,
which will be far harder than this modest ground rents Bill. I
cannot give a commitment about what will appear, but my
expectations are that leasehold reform will be front and centre
around his ambition for a wider reform of housing.
The Deputy Speaker () (LD)
My Lords, the Motion is that this House do agree with the Commons
in their Amendment 6. As many as are of that opinion will say
“Content”. ?
(LD)
Well, if that is the Motion being put to the House, that is fine.
I beg leave to withdraw my amendment—although I do so a little
grumpily and I shall be keeping a very sharp eye on the
Minister.
Amendment to the Motion on Amendment 6 withdrawn.
Motion agreed.
Motion on Amendments 7 to 9
Moved by
That the House do agree with the Commons in their Amendments 7 to
9.
7: Clause 23, page 14, line 13, leave out “consideration in money
or money’s worth” and insert “pecuniary consideration”
8: Clause 27, page 15, line 25, leave out subsection (2)
9: Clause 27, page 19, line 16, leave out from “paid” to end of
line 17 and insert—
“(a) where the penalty was imposed in relation to a lease of
premises in England, to the Secretary of State, and
(b) where the penalty was imposed in relation to a lease of
premises in Wales, to the Welsh Ministers.”
Motion agreed.
4.00pm
(Con)
My Lords, I have a few words in conclusion to thank everybody who
has worked so hard to get the Bill to this stage. I thank
particularly the noble and learned Lord, , who has been helpful in
tidying up this Bill, the noble Earl, , with his knowledge as a
professional surveyor, and my noble friends and , who have been
extremely insightful.
I probably should put on record, because I forgot to do so until
the very last moment, my residential and commercial interests. I
want to make sure that I have declared them, although they are
properly set out in my declaration of interests.
I also thank the Benches opposite. I have had to deal with
changes and am sorry to have lost the noble Lord, Lord Kennedy,
who I believe has gone off to be Chief Whip. Then Labour sent the
noble Baroness, Lady Blake of Leeds, from Yorkshire. and now we
have the noble Baroness, Lady Hayman of Ullock, who has an
incredible reputation in the other place for being fair-minded
and constructive. It is marvellous to work with her.
It has been great to work with the Liberal Democrats as well. I
will even thank the noble Baroness, Lady Pinnock; she described
herself as a Yorkshire terrier, which is why my ankles seem to
get bitten quite a bit when she intervenes; she does so on behalf
of the interests of leaseholders and fighting their corner, which
is appreciated.
The noble Baroness, Lady Grender, who is not in her place, raised
the issue of the gap in the first place. I know the noble Lord,
, is representing her, but she
raised an important matter, and it is to her credit that the
Government have responded to those genuine concerns. I thank
everybody—the Opposition Benches, the Liberal Democrats and the
Cross Benches—for a very constructive approach to the Bill.
No Minister should ever leave the Dispatch Box without thanking
the officials, many of whom are in the Box and have been simply
tremendous in supporting me. We should all be proud of what this
House is putting forward in legislation, which is much improved
because of the contributions of noble Lords. I commend the Bill
to the House.
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