High Streets (Designation, Review and Improvement Plan) Bill

Baroness Taylor of Stevenage Excerpts

Friday 17th May 2024 Lords Chamber

[Baroness Taylor of Stevenage (Lab)]

My Lords, I draw attention to my registered interests: I am one of the proud members of the growing number of vice-presidents of the LGA; I am also a serving county councillor on Hertfordshire County Council.

It has been an interesting debate and very helpful to hear from members of the Built Environment Committee —I am grateful for their input. I say from the outset that we will not oppose the Bill, on the basis that doing something, even something that represents a drop in the ocean, is usually better than doing nothing. However, I have much sympathy with the view of the Local Government Association, which characterises the Bill as unnecessary and a distraction from what councils really need to protect and enhance the future of their high streets. It recognises that what is really needed is a stable policy environment for high streets and planning, with sufficient resources and long-term growth and regeneration funding.

Much of my last eight years has been spent engaged with partners on the £1 billion regeneration programme for Stevenage town centre. I say to the noble Lord, Lord Horam, that it is not quite the Champs-Élysées, but our town centre in its early days was very influential in the development of Rotterdam.

We were very fortunate to have excellent advice from the noble Lord, Lord Heseltine, in the early days, and the support of the noble Lord, Lord Porter, when there were unnecessary and unhelpful roadblocks put in our way, and we have ongoing support from the High Streets Task Force. We are now well under way with our project, to the extent that the noble Lord, Lord Harrington, in his excellent review of foreign direct investment last November, used us as a positive case study, saying:

“This approach is reflected in the collaborative work between Reef and UBS (developer and funder), and Stevenage Borough Council as both Local Planning Authority and landowner, to secure a new £65 million headquarters for Autolus Therapeutics. This development is the first of its kind globally and there is no other Town Centre advanced manufacturing cell and gene therapy facility across multiple floors”.


That was a really big plus for us.

I will talk more about purposefully driving footfall in this way in a moment, but I have mentioned this because I fear that there is an element in the Bill of pointing the finger of blame at local councils, many of which are currently trying to scale some of the obstacles that we too faced. As the tumbleweed of this Government’s 14 years of economic failure rolls through our town centres, both in actual and symbolic terms, it leaves communities feeling bereft, neglected and forgotten. Just this morning, we heard that the dreadful milestone of the 6,000th high street bank to close had been reached. Too many post offices that sat at the heart of neighbourhood high streets have been closed, presumably by the same dreadful decision-makers who imposed such misery on their own sub-postmasters.

The Government seem to stand by paralysed as the rise of overseas online retailers, such as Temu, almost literally steals the clothes from our retailers’ backs, with loss leaders that are surely paid for in less than ideal terms and conditions for workers. The uncertainty of the economic climate holds back investment in our high streets, and those brave enough to try, as the noble Earl, Lord Shrewsbury, pointed out, find themselves penalised by an antiquated and inflexible business rates system and soaring energy costs. The catastrophic funding crisis facing local government, mentioned by my noble friend Lord Hanworth, the noble Baroness, Lady Bennett of Manor Castle, and the noble Lord, Lord Razzall, leaves too many councils too paralysed by pressures on adult social care, children’s services and temporary and emergency accommodation to give the necessary focus to economic development and place-making.

A combination of the impact of the cost of living crisis on our communities and a perception that public spaces feel unsafe drives people further towards online retail. I also point out that our attempts to amend the Levelling Up and Regeneration Bill to further level the playing field between online and high street retail fell on deaf ears, sadly. We cannot turn the clock back on internet shopping, but we can surely ensure that it does not continue to enjoy the very significant financial advantage it currently has over high streets.

As well as these national issues, councils will face all the issues we did over complex ownership. There are more than 60 owners of property in my town centre to be worked through, as so ably articulated by my noble friend Lord Hanworth. Then there is the challenge of how we preserve heritage and history, and the constant challenge of successive funding pots, all with different demands and constraints and draining scarce council resources to put bids together, not to mention the issue of permitted development riding roughshod over our local plans, as mentioned by the noble Lord, Lord Mair, and the noble Baroness, Lady Bennett.

We have a positive story to tell in Stevenage, but this was achieved in spite of the barriers and obstacles we encountered. Following the wise principles set out by Bill Grimsey, we started with master-planning, engaging our community, developing strong cross-sector partnerships and attracting key private sector partners, concentrating on driving footfall, with new homes, workplaces and flexible workspaces in the town centre to support existing retail and offer new hospitality opportunities. Our public sector hub, planned with colleagues from both councils, the NHS, the police and others, will soon be in the development phase and we have developed a whole culture and leisure strategy to reinvigorate our town centre, with event space, new leisure and sport facilities and green spaces. We have capitalised on our strategic transport location with a station gateway project, including the development of a new bus station and linking our 45 kilometres of cycleway to the town centre network. We are focusing on the skills of the future by bringing a new science and technology training facility into the heart of our town centre, and after several years of absence, we are delighted that Marks & Spencer is now back.

If it is the intention of the Bill to follow up the plans it implores local councils to make with funding, planning changes and powers that will enable them to happen, it will not be a bad thing. I would be grateful if the Minister could shed any further light on the mechanism for incorporating these high street improvement plans into local plans.

We all know that our citizens want to see thriving community hubs in their town centres. If my party is given the opportunity to serve in government after the next general election, our six pledges announced yesterday will make an immediate start on supporting councils to do what they need to do. We will create the necessary economic stability by modernising the business rates system so that it works equally for sole traders and small businesses as it does for huge corporates.

We will crack down on anti-social behaviour with real action on shoplifting and town centre patrols, so that people and shopworkers feel safe and are safe. We will have a blitz on planning powers, working with local government to ensure that planning helps the builders not the blockers.

There will also be new powers for mayors so they can get on with the job of regenerating our communities after 14 years of not just stagnation but going backwards. But that is for the future, whether July, September, October or whenever the Government let the country decide. In the meantime, let us hope that the Bill will help our high streets a little while we wait for the change our residents want to see.

[The Parliamentary Under-Secretary of State, Department for Levelling Up, Housing & Communities (Baroness Swinburne) (Con)]

My Lords, I start by thanking my noble friend Lord Whitby for his sponsorship of the Bill through the House, as well as the words of support from others in the Chamber—albeit some of them fairly caveated. I also take this opportunity to thank the honourable Jack Brereton MP for his leadership in the other place on this important issue.

Our high streets are evolving. In the face of challenges—such as the rise of online retail and the impact of the Covid-19 pandemic—high streets have had to adapt. However, it is clear that some have been able to adapt more quickly than others. That is why the Government are working with local communities to help them navigate the change. We have introduced measures, such as the long-term plan for towns, which will invest £1.5 billion across 75 towns to drive regeneration, as well as the £830 million future high streets fund, which has already helped more than 72 high streets across the country to recover from the pandemic. It is why we are supporting the Bill, which will ensure that local authorities are prioritising high streets in their area, as well as fully utilising the powers already at their disposal.

On the specifics of the Bill, it will make the designation of high streets and the creation of high street improvement plans a statutory requirement. Each local authority will need to designate at least one street or network of streets in their area as a high street. Local authorities will be able to designate as many high streets as they want. However, the Government have committed to funding the costs of up to three high street designations, and any designations beyond this number will need to be funded by local authorities themselves. Local authorities will then have to create plans for improving the vitality of the designated high streets, which should be reviewed at least once every five years.

Partnerships are vital for the success of high street regeneration, which is why local residents, businesses and others will have a real say on the improvement plans. Local authorities will have a requirement to consult both on the high streets they designate and on the related improvement plans. The Bill will also mean that local authorities will have to take into account high street improvement plans when exercising their planning functions, supporting already strong protections for mixed-use high streets.

Taken together, these measures will ensure that local authorities not only prioritise the health of their high streets but use their existing powers to drive forward improvements—such as Section 215 powers to require land to be cleaned up when it is detracting from the surroundings. The Government appreciate the action that many local authorities have already taken to improve their high streets, which these new requirements will complement.

Following Royal Assent to the Bill, we will be issuing guidance for local authorities on what an improvement plan should look like. We know that local authorities are best placed to judge what high street improvement plans should cover, which is why officials in my department have already begun engaging with local authorities on this matter and will continue to do so as they further develop the guidance.

It is crucial that these plans are not just a tick-box exercise but remain relevant and assist local authorities in regenerating their local area. This is why the Bill requires local authorities to update their plans at least every five years, although it can be earlier, as the noble Baroness, Lady Bennett, suggested. We believe it will provide a balance between giving the plans enough time to have an effect and ensuring that they remain useful documents.

The Government fully recognise the pressure that local authorities are currently under, which is why, as my noble friend Lord Whitby said in his introductory remarks, extra funding will be provided, so that local authorities are able effectively to deliver the measures in the Bill. Alongside this funding, my department will be working closely with local authorities to ensure that they input into the development of guidance for the Bill, ensuring that it gives local authorities the agency and discretion to determine what is best for their area.

In response to the various noble Lords who have raised it, local authorities can already use Article 4 directions to suspend permitted development rights in designated areas which allow them to protect shopping areas. We agree—

[Baroness Taylor of Stevenage (Lab)]

Can the Minister then tell us how many Article 4 directions were allowed by the department?

[Baroness Swinburne (Con)]

I will revert to the noble Baroness with a response to that when my department gives me the numbers.

I agree that it is important that we consider the effect of all these things on the high streets, which is why we can include this in the guidance to local authorities. We will certainly consider how we can build this in to assist local authorities, to make sure that they can determine what is best for their area and use all the powers that they have.

The Bill is one part of a broader strategy to create thriving high streets and town centres, building on the wider work this Government are doing to regenerate the high streets. This work includes the high street rental auctions and high street accelerators, which also work alongside the long-term plans for towns, which is backed by £1.5 billion overall to drive ambitious plans to regenerate 75 towns across the UK over the next decade. The broader levelling-up fund of £4.8 billion is already being put to work.

The Bill also complements the work of the towns fund and the future high streets fund, where we have now already allocated over £2.35 billion-worth of town deals and over £830 million of future high streets funding across 170 high streets. We hope that local communities in England will regenerate in order to help create jobs and build more resilient local economies and communities.

To conclude, the Government fully recognise the serious challenges faced by high streets up and down the country and are committed to helping them turn things around. I appreciate, as I am sure all noble Lords do here, just how crucial the health of our high streets is for local communities. For many, places that they should be proud of are currently a shadow of their former selves. The Bill, alongside wider government measures, will help to regenerate our high streets and help to create places that people are proud of.

Renters (Reform) Bill

Baroness Taylor of Stevenage Excerpts

2nd reading
Wednesday 15th May 2024 Lords Chamber

[Baroness Taylor of Stevenage (Lab)]

My Lords, I am grateful for the opportunity to open this debate for the Opposition. I thank the Minister for her comprehensive introduction, and for all the time she has taken in meeting us prior to the Bill coming to the House.

Given the expectations generated among renters that the Bill will make improvements to their situation, it is of considerable regret that the Government have dragged their heels in getting it through the other place. The Bill finished its Commons Committee stage last November, but did not return for Report until last month. In the meantime, the concessions made considerably watered down the initial potential. However, as the Bill delivers some improvements, it is not our intention to hold things up any further.

It is also very regrettable that the Government appear to have put the priorities of some grumpy Back-Bench MPs—I do not blame them for being grumpy—before the needs of millions of aspirational renters, people who simply want the secure, affordable and comfortable home that they have every right to expect. For a fifth of UK households—over 4.6 million people—who live in private rented housing in England, this Bill held out a great deal of promise that they would see much-needed fundamental reforms of the sector. As the Local Government Association put it:

“We have argued for the Bill to go further in supporting tenants’ rights and providing stronger regulatory and enforcement powers, and for government to ensure sufficient funding”


for councils to enforce these measures. However, during the Commons stages, concessions were made on a number of these key measures, and the Bill no longer lives up to its stated intention of creating a fairer and more secure private rented sector. That is from the LGA’s briefing. I apologise—I should have declared my interest as a vice-president of the LGA.

I thank the many organisations that have sent through briefings, met with us, and expressed their concerns about the Bill. There are too many to mention them all, but I particularly thank the LGA, the Renters Reform Coalition, Generation Rent, the National Residential Landlords Association, Shelter, Crisis, Citizens Advice, London Councils, Universities UK, Battersea Dogs & Cats Home, and the Law Society for keeping us informed of their campaigns and for their views on the Bill.

Unfortunately, and at the risk of my sounding like a stuck record on legislation I have dealt with in your Lordships’ House, the reforms that the Bill delivers come hand in hand with a missed opportunity to improve the situation of the UK’s growing band of renters. Of course some elements of the Bill are very welcome; it changes possession grounds, introduces compulsory periodic tenancies, extends the decent homes standard, and introduces a new ombudsman and a property portal, as well as introducing the very important right for tenants to keep a pet. We very much welcome the Minister’s comments about blanket bans; she is absolutely correct in saying that they have no place in a modern housing system.

However, other key elements have been watered down in the Commons. Absolutely critical, and of fundamental importance, are the barriers put in place to delay the commencement of the abolition of the punitive and much-abused Section 21 no-fault evictions. Recent figures show that more than 80,000 households have been threatened with homelessness and had to approach their local authority for support following a Section 21 eviction notice, since the Government’s 2019 pledge to end them. As the charity Crisis tells us, this equates to 52 households a day being threatened with homelessness.

In my time as a councillor, I saw the dreadful impact of that on families. Having to move on short notice is incredibly expensive; the Renters Reform Coalition estimates that each move costs around £1,700—that is quite a low estimate. These moves disrupt employment and education, and shatter connection with communities and family support.

Indeed, it has a particular impact on vulnerable children. Imagine spending months trying to get your child with special needs into a suitable school and then being evicted from the home near that school. It also takes a terrible toll on people’s health and mental health, with parents often feeling guilty that they are not able to provide the stability they know would benefit their children. There is a very significant economic cost of this as families present as homeless to their local council. The cost of temporary and emergency accommodation has risen to £1.74 billion and consumes around 30% to 40% of net revenue budgets for some local authorities.

It is surely time for a definitive ban on Section 21 no-fault evictions, but recent amendments made in the other place just kick the can down the road. The Bill now requires the Lord Chancellor to publish an assessment on the readiness of the courts. Of course the court system must work effectively to get decisions made in a timely way for the benefit of both tenants and landlords but, with that pledge having been made five years ago, why was this work not already under way or even thought about until the final stages of the Bill? We are now left with an indefinite timeline for court reform and, although the Minister has today given us some indication of the necessary steps, there is no clear route map to say what needs to change and how it will be done and funded, and families are left with sword of Damocles-like evictions still hanging over them. The Secretary of State repeated his pledge this weekend that this court reform would be completed before the general election. Will the Minister say which general election he was referring to? It is shameful that the Government did not have the courage to face down Back Benchers in the Commons on this and put their concerns over the trauma of eviction faced by private renters. We will try again with amendments to enact a ban on Section 21 evictions on Royal Assent of the Bill, although I suspect this too will have to wait for a Labour Government.

We have significant concerns about the introduction of what could represent a tenant trap in the Bill. One of the key purposes of this legislation was to bring the UK more into line with the longer-term tenancies enjoyed in most other parts of Europe by creating open-ended tenancies. In Germany, for example, the average length of a tenancy is 11 years compared with just over two years in the UK. We welcome these more flexible tenancy proposals but, in a move which runs completely counter to this flexibility, the Bill now extends the right to move out from within two months’ notice from the start of the tenancy to six months. This could lead to some real issues in certain circumstances—for example, if a property has been mis-sold and the renter finds themselves living in a property not fit for purpose, whether through damp and mould or other maintenance issues. Being trapped in this way for six months could be extremely damaging to their health or that of their family. Yes, there are consumer protections, but these are difficult to enforce and may not be enacted as quickly as would be necessary.

Noble Lords know that I have a particular passion for supporting victims and survivors of domestic abuse, and indeed set up our local organisation, Survivors Against Domestic Abuse. It is of great concern therefore that victims and survivors may find themselves trapped in a property in a dangerous situation, potentially even with their abuser, because of the six months’ notice period. We are also concerned that there may be other vulnerabilities, such as mental health issues, which make it inappropriate to force this fixed period on certain tenants. Does the Minister feel that there may be some scope to amend the Bill to allow for those exceptions? Domestic abuse and support charities are also very concerned that the vague definition of anti-social behaviour as a ground for eviction could lead to people being evicted on ASB grounds while still undergoing their trauma.

We have outstanding concerns about why the Government have not used the opportunity of this Bill to extend the provisions of Awaab’s law to the private rented sector. It seems nonsensical that protective provisions introduced for the social rented sector to give tenants more power to have issues such as damp and mould rectified are not available to those in private rented properties—or in Army properties, which were debated earlier today in your Lordships’ House. My noble friend Lord Khan has detailed knowledge of them and will say more later in the debate.

Like many noble Lords, I have been lobbied heavily by student bodies regarding the provision to exempt landlords of student properties from the move away from fixed-term tenancies. We understand the purpose of that but, as Universities UK has pointed out, there may be significant unintended consequences. I quote Universities UK:

“We note the government’s amendment which would see landlords serving notice between 1 June and 30 September. This is welcome as it would not be in the interest of students if landlords could evict tenants at any point in the year. However, given the increased diversity of how and when courses are delivered there will be some courses which are inappropriate for this model. The government should consult with the sector to identify where this is the case and what amendments can be made”.


Students and professionals in higher education have made the point strongly to me that there may be students who cannot live at home—care leavers, for example—and need longer tenancies than an academic year. If this measure is too rigid, it may cause significant problems for those whose study pattern is different from the traditional undergraduate pattern. Can the Minister outline what discussions have taken place or will take place with the sector in this regard?

On the appointment of the ombudsman, I know that my noble friend Lady Warwick has questions about whether there will be a process to appoint the most appropriate body. I look forward to hearing the Minister’s response on that.

We welcome the pet-friendly provisions in the Bill, including those that prevent the unreasonable refusal of pet requests from tenants. I have seen from personal experience the great health and social benefits that pet ownership can bring, and for those who live alone or who have other vulnerabilities it can be extraordinarily life-enhancing. Passing the legislation would mark a significant step forward for renters across the country who have pets, as well as those who aspire to do so. However, pet charities and organisations, including Battersea Dogs & Cats Home and Cats Protection, have asked for some strengthening of the Bill—for example, shortening the time limit within which landlords must respond to a written pet request from the current 42 days to 28 days, and giving a presumption of acceptance if no response to a legitimate request is forthcoming. I hope the Minister will give due consideration to amendments in that regard.

We have no intention of holding up the Bill as it will put in place some provisions that will improve things for renters, but we wanted to see a much more fundamental reform and have called for that for many years. Regardless of whether you are a home owner, leaseholder or tenant, we believe that everyone has the right to a decent, safe, secure and affordable home. Hopefully, a Labour Government will soon be able to build on the foundations put in place by the Bill. In the meantime, I look forward to the debate today and to hearing the Government’s response.

--- Later in debate ---

[Baroness Swinburne (Con)]

The difference, as I have just alluded to, is between one person having to get external maintenance people in, and so be at the mercy of their agenda, and maintenance crews that can be sent to those areas that need prioritising. I have a huge number of questions to get through, so I apologise for being abrupt.

Many noble Lords raised concerns about the impact of reforms on the student market. Since introducing the Bill, we have heard from across the sector that, as originally drafted, the Bill would have interrupted the student housing market, reducing the supply of vital properties in university towns and cities. We have listened to these concerns and have introduced a new ground for possession which will allow landlords renting to students to seek possession ahead of each new academic year, facilitating the yearly cycle of short-term student tenancies. The ground has been carefully designed to balance the needs of both landlords and students. It will apply to any property that is let to full-time students, as long as the landlord gives prior notice to tenants at the start of the tenancy that the ground will apply.

Regarding different dates being used rather than the traditional academic year, there is nothing to stop landlords renting properties in January to students starting their studies at that time. Most students will continue to move in line with the traditional academic year. This ground provides a backstop for the majority of students studying from September. The alternative would be to allow the ground to be used at any point in the year, which would give tenants no certainty.

[Baroness Taylor of Stevenage (Lab)]

I asked whether the Minister would talk to the universities sector about this. It has made very strong representations and knows far more about this than I do, and noble Lords around the Chamber have mentioned that as well. Will the Minister please meet the universities sector to understand properly its concerns before we go much further with the Bill?

[Baroness Swinburne (Con)]

I assure the noble Baroness that those discussions are already ongoing. The department is in intense discussions with that sector, and has been since the introduction of the Bill in the other place.

Regarding MoD accommodation, as a result of discussions in the other place we are looking to apply the decent homes standard to homes for service personnel and their families. Service personnel and their families deserve homes that are safe and decent, just like everybody else. While 96% of service family accommodation already meets the decent homes standard, it is right that we explore whether we can put in further safeguards on housing quality for this sector. However, there are features in service accommodation that mean that we must consider carefully the approach that will work best in practice. This includes the fact that significant proportions of this accommodation are located on secure military sites. The department is therefore working closely with the Ministry of Defence and local authorities to urgently explore these matters and work out how this can be done.

The noble Baroness, Lady Pinnock, and others raised local authority funding. We are fully aware that local authorities need to prioritise taking enforcement action against criminal landlords and that it is essential to the effective implementation of the reforms. We are taking steps to facilitate and resource action against landlords who flout the rules. The new property portal will support local authorities in their enforcement action. It will provide information sources to enable local authorities to take action, and we are extending ring-fenced penalties to support a “polluter pays” approach. We will also ensure that net additional costs that may fall on local authorities are fully funded, and we have already taken action to support local authorities now. Our pathfinder programme has allocated £14 million to test innovative ways to create sustainable enforcement teams that can be shared across all local authorities. In addition, our healthy homes project provides funding for local authorities to test ways of increasing the compliance of landlords in tackling damp and mould.

On pet notice periods, while I appreciate that tenants will want their requests answered as quickly as possible, 28 days seems to be too short, following discussions. A landlord could be on holiday or there may be other reasons why they have not responded within a 28-day period. Therefore, we suggest that 48 days gives reasonable time for landlords but prevents them delaying indefinitely.

Regarding affordability, the local housing allowance and rent increases, some noble Lords rightly highlighted concerns about the affordability of housing; others expressed their concern about being able to charge market rates—I will try to try cover both of those points. We recognise the cost of living pressures that tenants face and that paying rent is likely to be a tenant’s biggest monthly expense. The Government are investing £1.2 billion in restoring local housing allowances, and raising them, and that significant investment means many of these low-income households will gain a significant amount of money to help them towards their rental costs. For those most in need, discretionary housing payments are available to help meet housing costs, and the household support fund has been extended to March 2024 to help with the cost of essentials. I will check those dates for the House—I just said March 2024 and we are beyond that, so I will check and make sure we correct it.

Traveller Site Fund

Baroness Taylor of Stevenage Excerpts

Wednesday 15th May 2024 Lords Chamber

[Baroness Scott of Bybrook (Con)]

My noble friend asks an interesting question to which I do not have the answer, but it is probably very complex and there will be numerous reasons for it. Interestingly, last year the number of caravans on unauthorised encampments decreased by 21%, which gives me the feeling that those people who take this nomadic lifestyle are using authorised camps to live in.

[Baroness Taylor of Stevenage (Lab)]

My Lords, the Levelling-up and Regeneration Act was the ideal opportunity to help to address the inequalities faced by the Traveller community. Since the noble Lord, Lord Bourne, the then Minister for Levelling Up, Housing and Communities, announced a cross-departmental strategy for tackling these inequalities in 2019, no plan has been announced. When can the Traveller community expect to hear what the Government’s strategy is for improving outcomes for Travellers?

[Baroness Scott of Bybrook (Con)]

I thank my noble friend Lord Bourne for all his work when he was a Minister in my position. I do not have an update on the Bourne review, but I will certainly write to the noble Baroness and the House with an update on it.

Combined Authorities (Finance) (Amendment) Regulations 2024

Baroness Taylor of Stevenage Excerpts

Tuesday 7th May 2024 Grand Committee

[Baroness Pinnock (LD)]

My Lords, I remind the Grand Committee that I have relevant interests as a vice-president of the Local Government Association.

As we heard from the Minister, these regulations extend the provisions of the 2017 order so that it applies to the new combined county authorities. As the noble Baroness, Lady McIntosh of Pickering, said, mayoral authorities require funding to operate as organisations. However, in extending the number of mayoral authorities, as has been said, the Government failed to publicise that the consequence would be an addition to the overall council tax bill for households in those areas. Perhaps the Minister could tell us what the average mayoral precept currently is for combined authorities. She may not know, but it is all right; I have some examples, so it will be okay.

Greater Manchester’s mayoral precept, which includes its fire and civil defence authority, is £112.95 for band D. I dug further into that figure and, on its own, the mayoral precept is only £31.75. What I want to raise here is that, in the interests of transparency and accountability, that precept ought to be separated on people’s council tax bills. Currently, the council tax is set by the local authority and there is the adult social care precept, which the Government insist on. Then there is the police precept and the mayoral precept, which includes fire and civil defence authority funding. The latter should be separated out, so that there is a clear indication of what is for the fire and civil defence authority and what is for the mayoral function. I hope the Minister can assure me that that will happen or, if she cannot, can tell me what we can do to ensure that it does.

My next point is that the 2017 order, which I have found, sets the governance requirements for acceding to the mayoral precept. The Minister said that a two-thirds majority would usually be required—I wrote it down—to confirm a mayoral proposal for the precept. If it is not “usually”, what is it? I think it needs to be clearer than “usually”. The 2017 order says two-thirds, but that a three-fifths majority is required for Tees Valley alone. I think this needs to be clearer than it usually being two-thirds.

Those are my two concerns: the first is about getting transparency and the second about the governance arrangements for decision-making. Obviously, if we have combined authorities and mayors then they have to be funded, which is an additional ask of council tax payers. For most authorities, the social care precept and this would add around £250 to people’s council tax bills, so we need to know whether they will get value for money.

[Baroness Taylor of Stevenage (Lab)]

My Lords, as this is the first local government item on the agenda since the elections, I think it is right to congratulate all those who stood for election and took part in the democratic process at a local level. It just shows, again, that local government matters. My congratulations to the noble Baroness, Lady Pinnock, on her election.

Democracy was the winner on Thursday. There is no better illustration of that than the West Midlands election, which was won, in an electorate of some 3 million, by 1,500 votes. Apparently, there were 1,500 ballot boxes in that election, so, if there had been one extra vote in each of those ballot boxes, the result might have been different. That is a great illustration of why local democracy is important.

We have no intention of creating any unnecessary controversy over this straightforward SI, which extends the powers already granted to mayoral combined authorities to the more recently created combined county authorities. I am pleased to see that different geographic, social and economic issues that exist in the two-tier areas of the country are now being recognised and accommodated, and that this SI puts in place the financial mechanism to enable that.

As the Minister will be aware, during the passage of the then Levelling-up and Regeneration Bill, we had the opportunity to express our reservations regarding the governance arrangements for combined county authorities. It will take some testing of those new arrangements in practice to see whether the topics we were concerned about create any ongoing issues. For example, the lack of representation of district councils, which have the planning, housing and economic development powers, on combined county authorities has the potential to frustrate mayoral plans, if they are not used properly. I hope that enough thought will be given to the mayoral structures as they move forward to smooth this path; the noble Baroness, Lady McIntosh, referred to this issue.

That said, it is absolutely appropriate that all areas, including those with two-tier government, can benefit from the combined authority approach. How much flexibility will the Government allow to those authorities outside of urban areas to create county combined authorities that work for the geography, particularly the economic geography, of their areas? As an illustration, the inflexibility of Boundary Commission reviews can, on occasion, act as a blocker to structural arrangements that would facilitate the progress of developing economic areas. It would be a shame if people were stopped from doing that just because of an arbitrary boundary somewhere.

It would be wrong to consider any SI relating to local government finance without referring to the wider picture of the extreme financial pressures facing local government. I am sure that the Minister will have all those stats that get rolled out to us every time we mention this in the Chamber—they are the Government’s smoke and mirrors to make it look as though they are piling cash into our sector—but, of course, those on the front line know better. The increasing demand driven by costs in adult care, the increasing number of young people needing an urgent and comprehensive response to their special educational needs and the tsunami of homelessness as rents in the private sector soar ever upward, leading to mass evictions on affordability grounds—as well as the unfunded inflationary pressures across the board—are seeing councils struggle to make ends meet and, as we have seen on occasion, be unable to continue without intervention. Nothing in this SI will change any of that.

We all know that the bulk of the new funding for local government is coming from the pockets of hard-pressed council tax payers—another issue referred to by the noble Baronesses, Lady Pinnock and Lady McIntosh. The Local Government Association talks about figures

“based on the assumption that councils will raise their council tax by the maximum permitted without a referendum”,

leaving councils with tough choices about whether to increase council tax bills in order to bring in desperately needed funding at a time when they are acutely aware of the significant burden that this places on households in the middle of a cost of living crisis.

Can the Minister tell us the overall cost of the new mayoral combined authorities? The noble Baroness, Lady Pinnock, talked about individual levels of precept but do we have a figure for the overall cost for those combined authorities and county combined authorities? None of these new structures comes free. It will be interesting to see, over time, whether the economic growth that the new structures are intended to generate justifies the cost of setting them up.

The Minister spoke about transparency in combined authority and combined county authority finance, but we all know of the dysfunction there has already been in the local authority audit sector. Some 300 councils missed the deadline for audit at the end of 2022-23. Only three of them—1% of councils—were on time. Some 150 have not been audited since 2020-21; 61 have not been audited since 2019-20; 22 have not been audited since 2018-19; and 10 have not been audited since 2017-18. This is a really important reassurance for the public about how public money is spent. There is no better illustration of the importance of this than the issues that have arisen in Tees Valley.

The Government’s stated objective for setting up these new structures is to enable the levelling-up agenda. However, this year has seen the fifth one-year settlement in a row for councils, which continues to hamper financial planning and financial sustainability. Only with adequate long-term resources, certainty and freedoms can councils or combined authorities deliver world-class local services for our communities, tackle the climate emergency and level up all parts of the country. Can the Minister tell us what work the Government are doing to ensure that short-term funding settlements will not continue to hold back councils and combined authorities from achieving the ambitious aspirations that they have for their communities? Until those long-term funding arrangements are in place and designed to provide the stable, sustainable platform to deliver what is necessary, all this tinkering about is just moving deckchairs on the “Titanic”.

That said, we agree that there is a financial and democratic need for transparency in the funding of combined authorities; in granting equal powers to mayoral combined authorities and combined county authorities in this regard, this SI does the job it is intended to do. We will not oppose it but I am interested to hear the Minister’s answers to our questions.

[Baroness Swinburne (Con)]

I express my thanks to noble Lords for their contributions to the debate and for the number of points that have been made today. I will respond to as many of them as possible but I will have to respond to at least a couple of them in writing following this debate, given that they are very specific. In the time of this short intervention, there has not been time for everything to come from the Box—although a couple of answers have just come in, so I might be able to answer a couple more questions than I thought.

Let me begin by covering a few things. The noble Baroness, Lady McIntosh, asked about implementation. This SI is specific to the new combined county mayoral authorities rather than to combined authorities. In the immediate future, these new regulations will apply to the east Midlands, in particular; they will also then apply to all mayoral combined county authorities as they have been established in England. The Government’s devolution deal for the east Midlands has been in place since 30 August 2022, so this will be the first time it is used. Two further deals were announced alongside the 2023 Autumn Statement and, if implemented, will result in two further combined authorities: one for Lancashire and a mayoral one for Greater Lincolnshire.

This SI applies to them but, with regard to the noble Baroness’s broader comment about the way in which the spending works and how we generally feel the precepts are being set, we believe that the current method is working. Local authorities participating in it and the mayors who have been running it have told us that it is working. From that point of view, we have some confidence that this is the way to go and, therefore, should work. I will get back to the noble Baroness on grants, which is not in my folder; I suspect that it is covered by a different team to the one I have behind me. I will also come back to the noble Baroness on her specific transport inquiry.

With regards to the transparency of the mayoral component of the precept, it is already a requirement that that is broken out. It can be displayed as one number but it needs to be transparent somewhere as to what that number is. With the police and crime element of that, it is obvious how it is broken out. I will go back in my own time and check what is there, but we would certainly expect transparency to be something that every mayor would want, because it is in their interests to be honest with their electorate as to what they are paying for and how much it is.

Tees Valley Combined Authority: Best Value Notice

Baroness Taylor of Stevenage Excerpts

Thursday 2nd May 2024 Lords Chamber

[Baroness Swinburne (Con)]

To assist the House, let me say that best value notices are similar to the Department for Education improvement notices, which are issued following an Ofsted inspection and are a step before statutory intervention. A best value notice is issued to a local authority exhibiting indications of future best value failure. The notice is posted on GOV.UK and outlines the Government’s concerns with the authority and the clear expectations of the actions needed to ensure continuous improvement. The examples given are a clear way in which those non-statutory instruments can be used. With regards to Tees Valley, it has just undergone a major independent review with 28 recommendations; we will see in six months’ time if it has been conformed to.

[Baroness Taylor of Stevenage (Lab)]

My Lords, the Minister has just said that not only will the Government not ask the NAO to come in to do the review, but the mayor is not doing what the review indicated. The Minister has responded to previous questions about requesting that the National Audit Office carry out a detailed forensic review of deals that have been done there by saying that it is not appropriate. Can I therefore ask her what outstanding questions she believes there are in relation to value for money for the people of Teesside? If we are not going to have a best value notice or a National Audit Office review, what steps will the Government take to examine the ongoing questions?

[Baroness Swinburne (Con)]

As the noble Baroness and others in this House will know, whether people are doing what they say they are doing and whether we are achieving best value for money is under constant and ongoing review. The role of the National Audit Office is not to audit or examine individual local authorities, and its power would not normally be used for that purpose. We have already an independent review, and people have accepted its findings; we need to ensure that all 28 of those recommendations are implemented and delivered.

Leasehold and Freehold Reform Bill

Baroness Taylor of Stevenage Excerpts

Committee stage
Wednesday 1st May 2024 Lords Chamber

[Baroness Thornhill (LD)]

The noble Lord has hit on a point; in some estates, you build one building that might just meet the requirements, and then more and more are built, and it expands the problem. I agree with a lot of what he said. I was trying to point out that we tend to say it is all on the developers, but I think this is a systemic failure of a series of accountable people. That is what I am trying to say.

Ultimately, I am saying that, sadly for democracy, this is yet another state failure—like WASPI, blood contamination and Windrush, to name but a few. The harsh reality is that the impact of this is felt every day by some people, and is growing: when a leaseholder decides that they want to reinsure or somebody decides that they want to sell, suddenly they are faced with, “Wow, I didn’t realise that there was all of this”. Therefore, the number of people affected is actually growing.

I will end on what my noble friend Lady Pinnock always says: leaseholders have done nothing wrong and everything right. Excellent campaigning from groups such as End Our Cladding Scandal and the non-qualifying leaseholders group has helped us achieve the progress we have made on remediation support. We owe it to them to keep pressing the Government on making sure that all leaseholders are protected from the costs of a situation they did absolutely nothing to cause.

[Baroness Taylor of Stevenage (Lab)]

My Lords, I add my tribute on the sad and sudden passing of Lord Stunell. We worked very closely with him on the levelling-up Bill, and he was such a great asset during the passage of that Bill. Looking at his record over the years, his was a life dedicated to public service, to both national and local government. I hope the noble Baroness will take our condolences back to the Liberal Democrat group, and we will pass them on to his family as well.

The noble Earl, Lord Lytton, is right to call this issue a sorry tale of shame. It is clear from the number of building safety amendments in this group and this Bill, and previously in the levelling-up Bill, that there appears from our debates to be a cross-party consensus from most of us, except the Government Front Bench, of such deep dissatisfaction with building safety in general and the glacial progress on remediation in particular. It was carefully calculated in the recent Times article by Martina Lees, referred to earlier, to show that only 8% of buildings in need have been remedied, not the 21% that the Government claim, and which was mentioned by the right reverend Prelate the Bishop of Lincoln.

As important is the huge number of non-qualifying leaseholders whose dreams of property ownership have turned to nightmares, as the horror of their uncertain financial position, the escalating costs of remediation and the impossibility of selling homes—I have seen evidence of this, as valuers are currently placing values at zero or negative—snatch away their aspirations and leave behind only extreme anxiety. Numbers vary, but the Times estimates the number of affected homes to be up to 1.5 million and, as other noble Lords have said, upwards of 4 million people are affected.

An excellent briefing from the National Residential Landlords Association points out that data remains lacking and estimates that there are approximately 1.3 million leaseholders in buildings less than 11 metres in height and 400,000 leaseholders, referred to by the noble Baroness, Lady Thornhill, in high-rise buildings who are non-qualifying because of other eligibility criteria. Many leaseholders are unaware of their non-qualifying status or are alerted to it only when they receive an invoice for remediation works or attempt to sell their property. It is important to remember that many leaseholders are understandably reluctant to speak out on this issue for fear of further devaluing what they thought was going to be a very valuable property asset.

The scale of this problem is eye-watering. I agree with comments made previously by Members of your Lordships’ House that, unless this is addressed urgently, as more and more leaseholders discover their liability, another enormous injustice scandal will unravel, which will scar whole generations of home owners. The noble Earl, Lord Lytton, referred to the fact that this will escalate over time to the detriment of freeholders and leaseholders, but with the balance of personal financial risk sitting with leaseholders.

The system the Government put in place, which was subject to an update in your Lordships’ House at the end of March, may have made some progress, but as a spokesperson for Grenfell United said:

“Government’s shockingly slow progress towards remediation shows a complete lack of political will to keep people safe in their own homes”.


Giles Grover, of the excellent group End Our Cladding Scandal said:

“The majority of unsafe buildings across the country still don’t have plans in place to fix all issues”.


The 7,283 mid-rise buildings that the Government have estimated to be unsafe are missing from any plan for remediation as they are deemed non-qualifying, and the unbearable pressure of remediation is falling on the ordinary people who make these flats their homes. While the Government have brought forward legislation and statutory instruments to deal with this situation, progress has been slow because issues are being dealt with piecemeal as they arise. Even when legislation has been considered, such as the Building Safety Act 2022, which should have been a comprehensive solution, too often amendments were rejected with serious impacts and consequences for leaseholders only now becoming more apparent.

The noble Earl, Lord Lytton, proposes a comprehensive and detailed framework to encompass the whole situation around building safety remediation that would give more structure to the current piecemeal approach. While I understand that the level of detail that he proposes in this scheme will almost certainly not be greeted by the Minister with the wholehearted approval that it probably deserves, I hope the principle of having such a framework in place and the thorough approach set out by the noble Earl will at least be a matter for reflection and future consideration as the Bill progresses.

Amendments 96 and 97, tabled by the noble Lord, Lord Young of Cookham, his Amendments 99 and 100, to which I have added my name, and Amendments 105E and 105F, tabled by the noble Earl, Lord Lytton, are aimed at ending the iniquitous distinction between qualifying and non-qualifying leaseholders. We cannot simply allow the nightmare that many non-qualifying leaseholders are enduring to continue.

We totally support the aim of Amendment 102, in the name of the noble Baroness, Lady Pinnock, in terms of holding the Government to account for the building safety remediation programme. The reporting mechanisms so far do not appear to have accelerated progress on remediation, although it has to be said that the bringing to justice of some of the worst developer offenders, such as those involved with Vista Tower in Stevenage, is welcome. I hope the Government will accept this amendment and bring regular updates before your Lordships’ House, but it would be even better if there could be target dates for outstanding work to be completed. The fact that remediation has dragged on for so many years is a cause of great frustration, anxiety and financial hardship to those affected. Do the Government have a view about a projected end date for these works to be completed? A deadline, even if it is not met by everyone involved, is great for concentrating the minds of those involved in remediation.

In response to the points made by the noble Baroness, Lady Thornhill, and the noble Lord, Lord Empey, I agree with the noble Baroness that it is not just developers who are responsible for this issue. But a big problem here has been the deregulation of the building control function, taking it away from local authorities and allowing developers to pick and choose who their building control inspectors will be. That has been greatly responsible for some of these issues.

Our Amendment 105 is simple and straightforward in its aim. It would bring the beleaguered non-qualified leaseholders, who are in desperate need of remedies for their building defects, within the remit of the Building Safety Act 2022. Surely, if we are concerned about ensuring that people feel safe and are safe in their homes, we can all support that. It remains our position that it should not be the responsibility of leaseholders to suffer the financial consequences of defective building. Amendment 105C in the name of the noble Earl, Lord Lytton, has a similar aim.

I support my noble friend Lord Rooker in his campaign to highlight the danger of—I was going to call them electricity surges, but I had better not now because I will get into trouble with him—neutral current diversion. I want to come back to the case that Martina Lees quoted of Viv Sharma and his Ukrainian wife Julia, who had to leave their nine-storey block when the fire service deemed it unsafe. It had more than 17 defects, caused by the original developers, which should never have been approved by building control. They have been offered less for their property than they bought it for 15 years ago, and they have had to pay for temporary accommodation. Julia has said:

“I’m now 50. How am I supposed to rebuild my life?”


That situation—which is morally wrong, as the noble Lord, Lord Young, said—remains in place. Such situations should have been remedied by the Building Safety Act but were not. We now have another opportunity to put things right, so I hope the Government will do so by accepting the amendments before us today.

[The Parliamentary Under-Secretary of State, Department for Levelling Up, Housing & Communities (Baroness Scott of Bybrook) (Con)]

My Lords, I first add my tribute to Andrew, Lord Stunell. I have sat opposite him for many hours in this Chamber and in Committee, being challenged by him in a detailed but always good-humoured way. I am going to miss him. I did not know where he was this week to begin with, and I asked questions. He will be sorely missed, particularly on the issues that we talk about as a group of Peers. I send his family, friends and colleagues our best wishes. May he rest in peace.

I thank noble Lords for the amendments on building safety and for this thoughtful debate. It is an important issue. I will take all the amendments in turn and put the Government’s view. I thank the noble Earl, Lord Lytton, for Amendments 93B and 107. Their aims were debated extensively during the passage of the Building Safety Act 2022 and the Levelling Up and Regeneration Act 2023. I thank the noble Earl for his years of important campaigning on building safety, and for tabling these amendments again and speaking to them in such a detailed way. We continue to consider his arguments and are always willing to listen carefully to the ways in which we could improve the current regime. That is why the Government tabled several clauses in the other place to clarify and extend the protections in some particular areas of this Act.

However, I reiterate that implementing a new building safety remediation scheme would reverse what has been achieved by the regulatory regime set out in the Building Safety Act. Creating a system which mirrored the existing regime would delay essential remediation already being carried out. It would also create uncertainty for leaseholders across the country. The responsible actors scheme, the developer remediation contract, remediation orders and remediation contribution orders are already delivering many of the noble Earl’s objectives, requiring developers to fix problems that they have caused.

--- Later in debate ---

[Lord Hacking (Lab)]

My Lords, I do not want to jump in front of my Front Bench, but this is not a Bill that I have followed in detail. I did not take part in the Second Reading, and I have not taken part so far in Committee, but I was in the House this afternoon, and that is why I am standing up to very briefly address your Lordships on Amendment 94, which should be fully supported. I declare a personal interest, and your Lordships will see how I can link that to supporting this amendment. My wife and I are both freeholders and leaseholders of five flats, which are in an adjacent house to our own house. We personally manage them and know all the tenants well, and we try to deal with all their needs and circumstances, but the time will come when we have to sell. It is that stage that I am worried about, to ensure that these leaseholds are properly managed under the auspices of the regulator.

[Baroness Taylor of Stevenage (Lab)]

My Lords, it is a great pleasure to take part in this debate and to hear from such eminent experience across the Committee on this issue. On one of the points made by the noble Baroness, Lady Thornhill, about how far back this goes: one of my very first jobs in the early 1970s was at an estate agent. It was a family business run by somebody who had trained as a journalist and had a career in journalism, but he did, at least in that case, have the grace to train as a chartered surveyor as he carried on his business as an estate agent. You would have thought that things would have changed a bit over the subsequent years—it is quite a long time ago now—and it is ridiculous that it can still happen that people with little experience or qualification can be in charge of huge sums of other people’s money and property, and I hope that we can move matters on, at least in that respect.

Leasehold and Freehold Reform Bill

Baroness Taylor of Stevenage Excerpts

Committee stage
Monday 29th April 2024 Lords Chamber

Moved by

[Baroness Taylor of Stevenage]

64: After Clause 50, insert the following new Clause—
“Power to establish a Right to Manage regime for freeholders on private or mixed-use estatesIn Section 71 of the CLRA 2002, after subsection (2) insert—“(3) The Secretary of State may by regulations make provision to enable freeholder owners of dwellings to exercise a right to manage in a way which corresponds with or is similar to this Part.(4) A statutory instrument containing regulations under subsection (3) may not be made unless a draft of the instrument has been laid before and approved by a resolution of each House of Parliament.””Member's explanatory statement
This new Clause would permit the Secretary of State to establish a Right to Manage regime for freeholders of residential property on private or mixed-use estates.

[Baroness Taylor of Stevenage (Lab)]

My Lords, the amendments in this group concentrate on yet another aspect of the regime that fleeces home owners with unexpected and extortionate charges, but in this case, they are levied on residential freeholders living on private and mixed-tenure estates.

I had one or two such encounters as a councillor. In one case, there was a five-year battle to get an estate through-road adopted as a public highway because the residents were facing extraordinary and unaffordable costs for highway repairs; and in another, a series of children’s play spaces were abandoned by developers as soon as their sales were completed, with no provision made for maintenance, health and safety checks or upgrading to meet the latest safety standards. But it was not until I campaigned for my honourable friend Alistair Strathern, now the excellent MP for Mid Bedfordshire, that I saw the volume of housebuilding that had gone on with the assumption that new residents would be responsible for a wide range of maintenance to highways and public spaces, and other exceptional costs that had clearly not been set out in a transparent way at the time of purchase.

As my honourable friend put it,

“Across the country, homeowners in a state of adoption limbo are being left exposed to exploitative and often unaccountable management companies. Despite their warm words, sadly the Government did not take any of the actions that the Competition and Markets Authority urged them to take in order to end the issue of fleecehold once and for all”.—[Official Report, Commons, 4/3/24; col. 631.]


My honourable friend pointed out that residents of estates across the constituency are trapped in extortive relationships with unaccountable private management companies, while their estates go unadopted.

Of course, this sharp practice is not limited to Bedfordshire. The Conservative MP Neil O’Brien has written of this:

“Across the country many people are moving into new build homes, only to discover something nasty which they didn’t expect.


Often the first they know of it is when a large bill comes through the door, from an obscure company they’ve never heard of.


The bill demands that they pay a large sum for the maintenance of their new estate, and warns them that they could lose their house if they don’t pay up.


These bills can be of a scary size, and the bills often escalate sharply over time.


To add insult to injury, residents often find that the work they are paying for isn’t actually done, and then find that trying to get any redress is impossible: the firm sending the bills is opaque and uncontactable. People are sometimes billed for baffling things”.


Mr O’Brien went on to look at the large numbers of those affected. The estimate is about 20,000 housing estates, so this could affect up to 1.5 million home owners. The Competition and Markets Authority has examined this in great detail, and commented on the fact that

“over the last five years 80% of the freehold properties built by the 11 largest housebuilders … are likely to be subject to such charges”.

Our amendments in this group seek to address the fleecehold issues still outstanding, which we believe the Bill must address to avoid a continuation of this escalating trend, which is simply providing another method of extorting money from hard-pressed home owners, effectively making them leaseholders of the public space on their estates. As my honourable friend the shadow Secretary of State for housing said in the other place,

“Underpinning all those issues of concern is a fundamental absence of adequate regulation or oversight of the practices of estate management companies”.—[Official Report, Commons, 13/7/23; col. 193WH.]


and the fact that residential freeholders currently do not enjoy statutory rights equivalent to those held by leaseholders.

There was cross-party support for the fact that this situation is untenable, so I hope the Minister will be able to respond positively to amendments in this group so that we can make some progress. Our Amendment 64 would give residential freeholders on private and mixed-tenure estates the same right to challenge the reasonableness of estate management companies and their charges as leaseholders have. As Matthew Pennycook said in Committee:

“We also believe that it is right in principle that there is parity between residential leaseholders and freeholders when it comes to the right to manage”.—[Official Report, Commons, Leasehold and Freehold Reform Bill Committee, 30/1/24; col. 436.]


Our Amendment 87 would prevent developers building to a lower standard. The government amendment would remove estate charge costs that should be borne by local authorities, and then expect private management companies to pay for them themselves, as they can no longer pass the costs on to the occupants. However, this would motivate developers to leave degradation of buildings rather than repairing them. Further, our amendment would put the onus on the developer to ensure high standards are in place from the moment they pass the estate over.

Amendment 93 asks the Government to carry out a review of such non-standard terms and charges included in freehold deeds, including those relating to estate management companies. The alternative is that the Government implement the recommendations so clearly set out in the report of the Competition and Markets Authority.

We support the other amendments in this group tabled by the noble Baroness, Lady Thornhill, which are essentially driving at the same issue of tightening up on those dreadful fleecehold practices. The amendments in the name of the noble Baroness, Lady Finn, relate to the kind of issue I mentioned earlier, when developers sometimes provide public amenities that are not of an adoptable standard. It is not reasonable for leaseholders to be required to make up the difference. The noble Baroness’s second amendment refers to the money-for-nothing culture of leaseholders being charged for services that they do not receive. We would support both of those amendments, and we look forward to hearing from the noble Baroness, Lady Thornhill, and the noble Baroness, Lady Finn, and to hearing the Minister’s reply. I beg to move.

[Baroness Finn (Con)]

My Lords, it is a pleasure to follow the noble Baroness, Lady Taylor. I shall speak to Amendments 87A and 87B, in my name. The first amendment seeks to prohibit future freehold “fleecehold” estates, where freehold home owners can be tied into expensive maintenance costs for public amenities and open space, without recourse. I recognise and welcome the provisions in the Bill that currently provide additional redress for people trapped in fleecehold, but it is important to make sure that no more people become accidental fleeceholders. Fleecehold has become prevalent not because of any policy decision by an elected Government but rather as a way for developers and managing agents to make more money at the expense of unsuspecting home owners. My honourable friend Neil O’Brien has spoken out many times about the fleecehold estate scandal. He has compared it to the Post Office scandal, in that it is an injustice that has ruined so many people’s lives, yet nothing has been done.

The way that the fleecehold system works is now well known. In recent decades, the builder would normally build a new estate, make sure that the roads and other facilities were up to spec and pay a Section 106 charge, and the council would then take over the running of it. Under the fleecehold model, however, the developer agrees to hand over the company to another company, which it may or may not own, to run many parts of the estate, such as roads, open spaces, play areas and even sewers. The developer thus pays less in Section 106 charges and the council abdicates the responsibility to maintain the road and other amenities but not, of course, council tax. The developer and council, in essence, split the profits while the residents and new tenants get the bill. This is not only collusion between the council and the developer but an extremely inefficient way to run things. Many of the people on these estates end up with a huge bill to sort problems that have arisen because the amenities were not sorted properly in the first place.

--- Later in debate ---

[Baroness Taylor of Stevenage (Lab)]

My Lords, I listened carefully to the Minister’s response, and I am grateful to her for going through each amendment in detail. However, having spent many hours in this Chamber debating what is now the Levelling-up and Regeneration Act before this Bill, we hear the same refrain again: things are either too complex to deal with, they are the subject of another Bill or they need further work.

Today’s debate has indicated yet again—and I am sure there will be later debates in a similar vein—that these types of Bills need very effective pre-legislative scrutiny so that the great expertise contained within this Chamber can be used to make the Bill better before it comes to the House. It would mean that we are not faced with being told something should be in another Bill or needs further work. The subject of this Bill has been a manifesto commitment of the Government since 2017, so there has been plenty of time to do the other work before the Bill came before the House. That said, I beg leave to withdraw the amendment.

Amendment 64 withdrawn.

--- Later in debate ---

[Baroness Thornhill (LD)]

We fully understand the passion expressed by the noble Lord, Lord Bailey of Paddington, about criminality and having a last resort. We must think of it in regard to the worst rogue landlord offences, of which there are many, and I am sure several noble Lords have seen things worthy of that description. While we do not entirely go along with the noble Lord, we are interested to understand why the Government are using the Leasehold and Freehold Reform Bill to do away with a long-standing leaseholder right to bring a private prosecution against a landlord who has refused service charge and accounts transparency; it is surely a sign that they are trying to hide something.

The Government are bringing forward a new regime for service charges, under which landlords’ failure to comply with the requirement will be subject to damages of no more than £5,000 per leaseholder, which to us feels too low. Why does this policy have to strip leaseholders of a right to pursue a persistently abusive landlord with a private criminal prosecution? If the right was poorly drafted in the first place, surely it should be retained and made effective in the Bill?

We agree to a certain extent with the amendment’s attempt to bring local authorities into scope. As we know from past tragedies, local authorities are often treated far too leniently by leaseholder legislation, receiving exemptions from basic requirements. We broadly agree, but I look forward to the Minister’s response to the amendment.

[Baroness Taylor of Stevenage (Lab)]

My Lords, I thank the noble Lord, Lord Bailey, for his passion on this matter, as the noble Baroness, Lady Thornhill, said. It is appropriate to bring a probing amendment on this, to seek out some clarification from the Government about their intentions. It is clear that service charge accountability sits right at the heart of much of the Bill, and we would not want to do anything against that. It does seem a little odd that part of the Bill’s intention is to remove that right of private prosecution, so I look forward to the Minister’s reply.

The other point raised by the noble Lord was that we are going to have a hiatus when the Bill is passed, because it is not going to come into force until 2025-26. Can the Minister comment on what leaseholders can resort to in that interim period, in order to get matters justified if they have a persistent rogue landlord? Otherwise, we will have a gap where the original provisions are repealed and these ones have not yet come into force.

I agree with the noble Baroness, Lady Thornhill, about council leaseholders. There are other protections in force for council leaseholders. The health and safety Act and its provisions should sit there to protect council leaseholders from any poor landlord practice from councils—I know they have not always done so, but they should.

I am interested to hear the Minister’s response to this very good probing amendment.

[Lord Gascoigne (Con)]

I thank my noble friend Lord Bailey of Paddington for Amendment 76A, which seeks to retain the existing enforcement provisions concerning a landlord’s failure to provide information to leaseholders. I am grateful to other noble Lords who took part in this very brief discussion.

I fully agree with my noble friend that it is important to have effective enforcement measures in place where a landlord fails to provide relevant information to leaseholders. The existing measures, including the statutory offence under existing Section 25 of the Landlord and Tenant Act 1985, have historically proven to be ineffective. Local housing authorities, as the enforcement body, are reluctant to bring prosecutions against landlords, and the cost and complexity of doing so are a significant barrier to leaseholders bringing a private prosecution. That is why we are omitting Section 25 and replacing it with the more effective and proportionate proposals set out in Clause 56 of the Bill. Therefore, I am afraid that we cannot accept the amendment. Not only does it require—

--- Later in debate ---

The costs faced by leaseholders is also the subject of Amendment 103, tabled by the noble Baroness, Lady Taylor of Stevenage, which would impose a cap on the charges that can be passed on to leaseholders as a result of the Building Safety Act. The Act introduced important changes to the regulatory framework, but it has had a knock-on effect on the charges leaseholders face. As my noble friend Lady Pinnock has said time and again, it is the leaseholders, who have done nothing wrong, who are paying the price of this crisis. We welcome amendments that would protect leaseholders from those costs, and we look forward to assurances from the Minister that the Government are taking action to ensure that all leaseholders affected by the building safety crisis get the support they need—sooner rather than later.

[Baroness Taylor of Stevenage (Lab)]

My Lords, I shall speak to our Amendment 103, and comment on others in this group. I thank the noble Earl, Lord Lytton, for his careful and thoughtful consideration of how we might use the Bill to rectify some of the glaring building safety omissions that are an unfortunate legacy of the Building Safety Act. His proposals on building trustees warrant close consideration, especially as he has carefully set out how they might be funded. Taken together with proposals in later amendments for a property regulator, this could deal with a number of the loopholes that have caused an overall descent into property chaos, which has been the subject of much debate in this House, by matching independent local oversight with a national property regulator.

The noble Earl set out in his customary forensic way his justification for the amendments. I respect his professional expertise in this area, and I do not think I need to say any more than to welcome the issues he has covered. As the noble Baroness, Lady Thornhill, said, those could have been subject to pre-legislative scrutiny—but sadly, they were not. As was said earlier today, it is a mark of how your Lordships’ House can contribute to legislation that we have them before us today. It is a shame they could not have been incorporated at an earlier stage, because it is late now to debate such detailed proposals. I look forward to the Minister’s response, and I hope she will, as she always does, take the amendments seriously and tell us what the Government are going to do when they consider them.

Noble Lords would have received the excellent briefing, as I did this morning, from the National Residential Landlords Association. It says that “it is more critical than ever, in the context of the Government’s Leasehold and Freehold Reform Bill” that the building safety remediation scheme “is implemented without further delay to resolve the failings of the Building Safety Act’s leaseholder protections”. The noble Earl, Lord Lytton, said that he is not particular precious about this structure but, if we do not have it, what will the Government put in its place to do that?

We are now seven years on from the dreadful tragedy at Grenfell. It is shameful that so many leaseholders are still living with the fear of fire risks and the unbelievable pressure from the uncertainty around the financial commitments that they will face for their building remediation. It is the most terrible indictment of this Government’s failure to recognise the unconscionable impact on the lives of those affected, let alone the issues raised so many times in this Chamber of those who live in non-qualifying buildings but, nevertheless, have the leasehold sword of Damocles hanging over them.

The noble Baroness, Lady Thornhill, already mentioned the excoriating article in the Times this weekend. Martina Lees gives an incredibly thorough and well-researched account of the impact of the cladding scandal. Her investigation points out that

“15,000 residents have been forced to leave homes due to fire or fire safety defects”,

and that escalated last year with the evacuation of at least 21 buildings. She also says:

“Despite £9.1 billion of government grants being set aside to help fix homes, only £2.1 billion has been spent. The building safety crisis has trapped 700,000 people in dangerous homes and left almost three million owners with flats they cannot sell. Almost all are properties built or refurbished since 2000, with defects such as flammable cladding systems, combustible balconies and faulty fire barriers”.


I am familiar with faulty fire barriers from Vista Tower in Stevenage. She also points to government manipulation of figures, in that they

“cite a total of 4,329 buildings or 248,000 flats over 11 metres high with unsafe cladding. Of these, 23 per cent have been fixed”.

However, as Ms Lees points out,

“previous government data added up to 375,000 flats over 11m, making the number fixed just 8 per cent. The new total excludes more than 1,000 buildings where the developer must pay for repairs but does not know whether work is needed. It also precludes hundreds of blocks that did not get taxpayer help because they had the wrong type of fire risks … or were deemed below 18m … It leaves out up to 7,283 mid-rise buildings that the government had previously estimated to be unsafe”.

I am sure that the Minister will tell us that she does not respond to press stories in the Chamber, but the headline issues raised here are that affected leaseholders continue to endure this misery, with some having to pay rent for properties that they have been evacuated to, on top of the thousands of pounds of service charges that they face. Amendments in this group would at least provide some longer-term solutions to these issues.

My Amendment 103 seeks to recognise that financial pressure and ensure that there is at least a cap on the charges that leaseholders are expected to bear. Our preference going forward would be that developers are held ultimately accountable for any fire or other safety defect remediation in the buildings. In future, we hope that even greater consideration is given to how that might be achieved.

We also support the amendment of the noble Lord, Lord Foster; it is surprising only in that it is not already the case that buildings with electrical defects cannot be sold. If that is the case, surely this should be urgently rectified through the building regulations regime. I hope that we do not have to wait another two years to implement that.

Amendment 101 is in the name of the noble Lord, Lord Young, although he did not speak to it. It seeks to impose a deadline of June 2027 for remediation of fire safety defects. That is not an unreasonable target, as it would mean that an entire decade had passed since the Grenfell tragedy.

The noble Baroness, Lady Fox, made a very powerful case for the unintended consequence of the removal of the Section 24 manager. Her amendment and that of the noble Lord, Lord Bailey, seek to improve accountability. As this is one of the stated aims of the Bill, we look forward to the Minister’s response to their proposals.

[Baroness Scott of Bybrook (Con)]

I thank noble Lords for their various amendments on building safety and for the debate. I will respond to the amendments in turn.

I thank the noble Earl, Lord Lytton, for his amendments relating to a building trustee. Amendment 82C requires some buildings to have a building trustee, while Amendments 82D to 82M cover the process of appointment, duties, rights to information and how these trustees will be funded. The building safety trustee will either replace or complement the functions carried out by the landlord or a managing agent. I fully agree with the view that landlords and managing agents must manage and maintain buildings for which they are responsible and provide a good-quality service to tenants. However, I believe that this proposal would create additional complexity with little relative gain. The proposed mechanisms for funding these trustees increase the risk of pushing more landlords into escheat and it is hard to see how the levy proposals can be delivered. Secondly, we consider that there are better ways to deliver the desired outcome. As I have previously mentioned, we are bringing measures forward in the Bill that will drive up the accountability of landlords and their agents, so we do not agree with the noble Earl’s amendments.

I thank the noble Lord, Lord Foster of Bath, for his amendment, which seeks to improve electrical safety standards in buildings by identifying whether there is an electrical defect prior to sale, and for his continued interest in this very important issue for housing safety. This amendment would require a specified person to acquire an electrical installation condition report or electrical installation certificate prior to marketing the property, unless it is being sold for demolition or a full electrical rewire has been completed in the last five years. This is an important issue; we know that improving electrical safety is paramount to helping prevent fires and making sure that occupants feel safe in their homes.

As the noble Lord said, the Government have already taken firm action in the private rented sector by requiring PRS landlords to acquire an EICR at least every five years and to organise remediation works where necessary. We have also consulted on equivalent electrical safety standards in the social housing sector through our 2022 consultation and call for evidence. Here, we examined proposals to require social landlords to obtain an EICR for their rental tenants at least every five years and then to carry out remedial works within a set timescale. Our call for evidence also explored extending the proposed requirements to owner-occupier leaseholders within social housing blocks, so that the whole block is subject to these increased standards. We are aware of the noble Lord’s concerns about the sector that we have not yet hit—the owner-occupied sector. The Government are still considering responses to the consultation and the call for evidence, and we will update this House in due course.

I thank the noble Baroness, Lady Fox of Buckley, and the noble Lord, Lord Bailey of Paddington, for their Amendments 104 and 105B—I will also speak to Amendment 98, although my noble friend Lord Young of Cookham is not here—relating to changes of the definition of accountable persons under Section 72 of the Building Safety Act 2022 and other changes protecting the position of managers appointed under Section 24 of the Landlord and Tenant Act 1987.

I trust that noble Lords will understand that the Government cannot accept the proposed amendments. First, defining a Section 24 manager as an accountable person would move financial and criminal liabilities away from the existing accountable person to the Section 24 manager. It was the intent of the Building Safety Act that financial and criminal responsibilities for certain aspects of maintaining the building should always remain with the accountable person, and the accountable persons cannot delegate this responsibility to a third party. As drafted, the amendments could also mean that Section 24 managers would not be able to recover funds from the accountable person for the incidents of remediation works. I assure noble Lords that the Government are looking closely at this issue and at options to ensure that Section 24 managers can take forward building safety duties and get funding, where needed, from the accountable persons.

--- Later in debate ---

[Baroness Thornhill (LD)]

In the interests of time, I shall be very brief. I agree with much that has been said by the noble Baroness, Lady Fox, and, of course, by the noble Lord, Lord Best, who has, as always, put his finger right on the key issues with his considerable expertise. We look forward to the task force report he mentioned. Successive Governments have, quite rightly, promoted downsizing: the freeing up of a house for families who desperately need a larger family property. However, we have not done anything like enough to investigate the state of retirement housing in this country and certainly not yet got policies right.

Many of the problems in the retirement housing sector have already been mentioned: high service charges and management fees actually hit elderly residents hardest. They are also suffering withdrawal or reduction of the in-house resident manager, who is frequently now off-site. Their property is more difficult to sell because prospective buyers are obviously a smaller target group, but mainly because of the so-called exit fees or event fees charged when the house is sold. So people can find themselves in a position where a retiree’s heirs are locked in to paying for the flat years after their parent has died, because they simply cannot sell it. Ultimately, all this is related to the iniquities of leasehold tenure, which should and must be abolished.

[Baroness Taylor of Stevenage (Lab)]

My Lords, I agree with the noble Baroness, Lady Thornhill, that this will not finally be resolved until we get rid of this leasehold regime. Some of the most heart-rending cases I dealt with as a councillor were from older leaseholders, often on fixed incomes and subject to the most extraordinary hikes in service charges, ground rents and all sorts of other charges that were imposed on them. I have cited cases in previous debates in your Lordships’ House. The experience of the 90 year-old cited by my noble friend Lord Khan earlier today was from Hitchin in my local area.

Affordable Housing: Supply

Baroness Taylor of Stevenage Excerpts

Thursday 25th April 2024 Lords Chamber

[Baroness Taylor of Stevenage (Lab)]

My Lords, I add my welcome, or croeso, to the noble Baroness, Lady Smith of Llanfaes, and thank her for her excellent speech. I do not share her youth, sadly, or her hair colour —I may have done back in the day—or Doc Martens, but I did grow up in a council house, as she did, and I share her strong passion for housing. I think that she will find quite a good cross-party housing coalition in your Lordships’ House and I look forward to working with her on that. I thank my noble friend Lord Chandos for bringing such an important debate before your Lordships’ House today and all noble Lords who have spoken. My noble friend gave an excellent, thorough and cogent introduction to this very important debate.

I start by emphasising the words in the Motion, “genuinely affordable housing”, as did my noble friends Lord Whitty, Lord Griffiths and Lady Warwick. Unfortunately, the term “affordable housing” has become widely misused in recent years. For example, in my Question for Short Debate last week on right-to-buy receipts and how they should be used—in my view, entirely to replace the social housing from which they accrue—the Minister seemed to use the terms “affordable housing” and “social housing” as though they were interchangeable; they are not. That is particularly so given the rather dubious definition of affordable housing used by this Government, which includes six categories of housing, only one of which would be affordable on average wages in my area.

Shelter tells us that the focus for the definition of affordable housing should be on social housing, which is the only housing with rent pegged to local incomes, is resilient to local fluctuations in house prices and is usually the most affordable type of housing. It also provides secure tenancies, which enable people to secure employment and establish themselves in communities.

Let me say, by the way, that I in no way intend to be personally critical of the Minister in my comments. I have met many of the succession of Housing Ministers we have had since 2010—I think that there have now been 16, which does not help—and this conflation of affordable and social housing happens more often than not. I know that she is committed to using her time in housing to improve matters where she can.

The Government definition means even a private house selling for over £300,000 can be designated affordable. For residents in my area, with an average wage of about £35,000, that is absolutely not affordable. Homes now cost eight times the average salary. The average three-bedroom, private-rented home in my area costs £1,400 a month; that would mean almost 60% of average income being used for housing costs—no wonder we have a cost of living crisis. In contrast, a three-bedroom council home in my area costs £524 a month.

My noble friend Lord Chandos is right to point out that the extraordinary stranglehold that this Government have put on local government has hollowed out both planning functions and housing development teams. We know that the building of social homes has fallen off a cliff. Last year, 29,000 social homes were sold or demolished, including over 10,000 right-to-buy sales, and only 7,000 were built. We have 1.2 million on housing waiting lists and 1.4 million fewer families in social housing than there were in 1980. The cost of this falls significantly on the taxpayer in housing benefit and, secondly, on council tax payers, with £1.7 billion for the cost of temporary and emergency accommodation last year. The outstanding report by Cebr for the National Housing Federation and Shelter, flagged the impressive £51.2 billion benefit to the economy that would accrue from building 90,000 social homes and also pointed to the social benefits of stable, secure tenancies in relation to employment, healthcare, helping people out of the vicious cycle of temporary and emergency accommodation, lower crime and the education benefit for children and young people.

This crisis in social housing delivery is just one of the factors impacting the affordability of housing—I agree with my noble friend Lord Davies that good housing should be a human right. As we have heard, there are many others, including: housing supply, which was not helped by the Government caving in over housing targets at the end of last year; the imbalance of demand; the planning system and its failure to deliver against housing need; quality and sustainability; and the need to meet higher environmental standards, which we welcome but is causing a slowdown.

In the excellent Church of England report, Homes for All, published this week and mentioned by the noble Viscount, Lord Chandos, the noble Lords, Lord Best and Lord Whitty, and the noble Baroness, Lady Warwick, the need for a comprehensive housing strategy with a vision for the next 20 to 30 years is set out very powerfully—and I agree with it. The failure to have a vision for housing and a clear plan of how it should be implemented is at the heart of this issue, and reflects many of the recent discussions in Parliament. It is why we have ended up with a Bill to ban leasehold that ignores 70% of leasehold properties in this country, which are flats, and neither does it scrap the scandalous money-for-nothing regime of ground rent. We will shortly have a Renters (Reform) Bill, which was intended to ban Section 21 evictions but will not do so because, in spite of being years in the planning, the mechanisms are not in place to make the change. There can be no greater indictment of 14 years of Tory housing policy than 142,000 children in temporary and emergency accommodation.

After the Second World War, there was a Labour Government with a real vision for housing, especially when it came to replacing the slums and other housing that had been destroyed across the country with new developments designed to support communities, and with all the facilities that they would need. My town, Britain’s first new town, was the first post-war manifestation of that vision, which built on the tradition of the pre-war Garden Cities. I will not pretend it was easy; the tradition of the nimby goes back a very long way—in fact, I found an example from 1539, but I will leave it for now. Poor John Silkin, the Housing Minister in 1946, arrived in the small market town of Stevenage—population around 6,000—to tell them, at a very noisy public meeting, that the new town would add 60,000 homes. He found that the railway sign for Stevenage had been replaced with one that said “Silkingrad”. Let us hope that better consultation and collaboration can avoid such situations in the future.

It is time to be bold and visionary again. It is time to get Britain building to enable millions to plan their lives, start families, and build a future for themselves and their kids. It is time to meet the needs of those who aspire to own their home and those for whom social housing will be the only affordable option. It is time to make sure that key workers can live wherever they work, across the country—they are our heroes, as the noble Viscount, Lord Chandos, said—and have the high-quality housing that they deserve. It is time to get the economic benefit that can come from reinvigorating construction and development, giving investors the confidence they seek by focusing on the builders, not the blockers, and ensuring that SME builders get the support they need.

That is why my party has set out our vision to get Britain building again, with a package of reforms to the planning system. The aim is to build 1.5 million homes over the next Parliament, alongside our five golden rules. I will take no lessons from the Green Party, who say one thing in this Chamber while its councillors block building all over the country.

Our plan includes a housing recovery plan, a blitz of planning reform to quickly boost housebuilding for homes to buy and rent, and delivery of the biggest boost to affordable housing in a generation. We will ensure that local people have a say in how housing is built, with communities confident that the plans they have worked on will be delivered. We have plans for the next generation of new towns—“Hurrah!”, says this new-town girl—which will be new communities with beautiful homes, green spaces, reliable transport links and bustling high streets. We will work with the local development corporations described by the noble Lord, Lord Best. We will unleash mayors, with a package of devolution with stronger planning powers and control over housing investment.

There will be a planning passport for urban brownfield development, with fast-track approval and delivery of high-density housing on urban brownfield sites. We will prioritise those poor-quality and ugly areas of green belt, so that they become grey belt, which will protect the nature-rich, environmentally valuable land in the green belt. The plans for the grey belt must have a target of at least 50% affordable housing. There will be first dibs for first-time buyers, and support for younger people by giving them the first chance at homes in new housing developments, with a government-backed mortgage scheme.

I end with a quote from the preface of Homes For All:

“What could that vision look like? An end to the stress and worry of being locked out of home ownership. Everyone having a safe, warm home that supports their health. Homes for all that release the constraints of poverty. All of us going into our later years with the sense of comfort and dignity that comes from a secure place to live. Every child having the stable foundation they need to thrive”.


Whoever is entrusted with the confidence of the British people at the general election will have a huge amount of work to do, and some of it will have to be done as a matter of urgency. Let us have the election and get on with it.

[The Parliamentary Under-Secretary of State, Department for Levelling Up, Housing & Communities (Baroness Swinburne) (Con)]

I thank the noble Viscount, Lord Chandos, for introducing the debate on the topic of more affordable homes. I reassure the noble Lord, Lord Griffiths, and others, that I am not concerned about my personal career, on the basis that I am covering my noble friend Lady Penn’s six-month maternity leave while she spends some time with her newborn son, and therefore I will be leaving this position in September.

I welcome the noble Baroness, Lady Smith of Llanfaes, to your Lordships’ House, and I congratulate her on her maiden speech. Croeso i’r Farwnes Smith o Llanfaes i Dŷ’r Arglwyddi a llongyfarchiadau ar eich araith—that was awful, and my mother will not forgive me for my pronunciation. I thank all other noble Lords who have spoken in this afternoon’s debate. They raised important points, which I hope to address in my response.

We all agree with the need for more affordable, high-quality homes in this country, to meet growing demand. The Government recognise the real pressures facing the housing market right now. As noble Lords, including the noble Lord, Lord Griffiths, and the noble Baroness, Lady Taylor, have said, full-time workers in England expect to spend some eight times their annual earnings buying a home. Private sector rents have also increased by an average of 8% over the last 18 months. We also recognise that housing providers are facing a more challenging financial position. The Government continuously work with their delivery agencies to ensure that the affordable homes programme can still deliver effectively, in the light of this.

All this underscores the need for more homes of all tenures: homes to rent, homes to buy and homes to part-buy. Affordable homes that the average working family can comfortably live in is the ambition that underpins the £11.5 billion affordable homes programme, launched in 2020. This represents a significant investment in affordable housing by the Government, and a clear commitment to deliver tens of thousands of affordable homes, for both sale and rent, throughout the country.

I will briefly outline how, and why, they have been broken down, and how the affordable homes programme in different tenures gives us the results. I start with homes for social rent. We recognise, as do many in this House, that these are the vital homes that we need to build to maintain thriving communities. As was so eloquently stated by numerous noble Lords, homes for social rent are a fundamental part of our housing stock—indeed, they are a lifeline for those who would struggle to secure and maintain a home at market rates. With that in mind, it was right for us to bring social rent homes into the scope of the affordable homes programme, which the Government did in 2018. Since then, we have affirmed our commitment to increase the supply of social rented homes in our levelling up White Paper, while improving the quality of housing across the board, in both the social and private rental sectors. We have also changed the parameters of the affordable homes programme to support this commitment, enabling further increases to the share of social rented homes that we are delivering.

Furthermore, the affordable homes programme is committed to funding a mix of tenures, enabling developers to deliver mixed communities. For that reason, we have kept a commitment to delivering homes for affordable rent as part of the programme. Whereas social rent is calculated using a formula, which takes into account regional earnings, homes for affordable rent is where rent is capped at 80% of the market rate—or lower, in London. This is an important way to support mixed communities with different tenures in new developments. It enables the programme to build more of the affordable homes that this country needs, because they need less subsidy than homes let at social rent.

Although social rent and affordable rent are clearly key elements of our approach, we also support aspiring homeowners to take their first step on the housing ladder. We understand what a difference that increased sense of security can make in all aspects of someone’s life and the lives of their family. That is why home ownership continues to be a fundamental part of the affordable homes programme offer. We will continue to deliver a significant number of homes for shared ownership.

This builds on our record to date of helping hard-working families to buy homes under shared ownership and build real capital in their properties. Between 2010 and 2023, we have delivered 156,800 new shared ownership homes, and our ambition is to build tens of thousands more as the affordable homes programme gathers pace. Since 2010, we have delivered over 696,000 new affordable homes, including over 482,000 affordable homes for rent, of which 172,600 are for social rent. To put this into perspective, the overall number of new homes during this period has been 2.5 million.

Local authorities are a critical part of delivering on the levelling up White Paper commitment to increase the supply of social housing over time. We are empowering them with flexibilities to make locally led decisions that deliver the best possible deal for their communities. In 2022-23, local authorities delivered over 8,900 affordable homes, representing 14% of the overall affordable housing delivery and the highest recorded number of local authority completions since 1991-92. To support continued delivery, in March last year we announced that local authorities will now have access to a new concessionary Public Works Loan Board interest rate for council house building from June this year.

Affordable housing is not delivered just through our affordable homes programme; around half of all delivery each year is through the planning system. As noble Lords will be aware, the Levelling-up and Regeneration Act gives the Government powers to create the new infrastructure levy, which aims to capture even more land value uplift than the current system, continuing our drive to deliver more affordable housing.

I reassure the noble Viscount, Lord Chandos, that the Government are committed to the delivery of onsite affordable housing through the new levy, and to delivering more affordable housing than the current system of developer contributions. Under the existing system, negotiation of Section 106 planning obligations can cause significant delay and uncertainty, which often means less affordable housing for communities and uncertainty about when key infrastructure is going to be provided. The new levy will be mandatory, non-negotiable change. It will be clear to developers what they are expected to pay, and this change can be used to secure the delivery of onsite affordable housing as a non-negotiable in-kind contribution, which offers significant protection of affordable housing delivery over the present system.

The technical consultation to inform the design of the levy regulations closed at the end of the year, and we are currently analysing consultation responses. The Government are committed to consult again on the design of the infrastructure levy and I hope that, with the passing of the Levelling-up and Regeneration Act, we will actually get this working to deliver more homes.

Finally, it is worth noting that councils continue to benefit not just from the £11.5 billion affordable homes programme that we have discussed today, but from the scrapping of the housing revenue account borrowing cap and greater flexibility in how they can use receipts from right-to-buy sales. I strongly urge councils to make full use of these measures, so we see more homes being built in the places where they are needed the most.

I turn to a number of questions—

[Baroness Taylor of Stevenage (Lab)]

I rise to make a brief intervention. The Minister is once again using the term “affordable homes”. Does she mean under the current six definitions of affordable homes—five of which are not affordable to anyone where I come from—and can she confirm that we will continue to have a permitted development regime that does not deliver any affordable homes at all?

[Baroness Swinburne (Con)]

I will bring forward the question that I was about to answer in response to both the noble Baroness, Lady Taylor, and the noble Lord, Lord Whitty, who asked how I define “affordable”. The Government do not prescribe a definition of affordability. We recognise that the fundamental purpose of social housing is to provide affordable, safe and secure homes to those who cannot afford to rent or buy through the open market.

The purpose is reflected in the definition of affordable housing in the National Planning Policy Framework. This defines affordable housing as:

“Housing for sale or rent, for those whose needs are not met by the market”.


So, to fall within the definition, homes must meet one or more other conditions: for example, affordable housing for rent must have rents that are set in accordance with the Government’s rent policy for social or affordable rent, or, alternatively, have terms that are at least 20% below the market rate. It is a very broad definition because there are lots of tenures and lots of people providing this housing for the different audiences that require it.

With regard to planning reform, which noble Lords—including the noble Viscount, Lord Chandos, the noble Lord, Lord Best, and the noble Baroness, Lady Taylor—have mentioned, the Levelling-Up and Regeneration Act 2023 creates a simplified and strengthened plan-led system. The Act puts local people at the heart of development. This, we hope, will deliver more homes in a way that works for more communities.

Turning to questions put to me by the noble Lord, Lord Best, I would like to reassure him that the social housing stock has grown by 151,000 since 2010, compared with the previous 15 years, when it fell by more than 420,000. So we have a big gap to make up and we are aware of that.

With regard to the affordable homes programme, this currently allows for 30% of the homes in the programme to be delivered through acquisitions. In practice, this tends to be the conversion of new homes that would otherwise have been sold on the open market to alternative affordable tenure types.

I turn now to temporary accommodation, which many noble Lords have mentioned. Indeed, when it comes to this, the Government are committed to reducing the need for temporary accommodation by preventing homelessness before it occurs. However, the current global context and the significant economic challenges we are facing are making our objectives on homelessness more challenging. We remain committed to preventing homelessness where possible and helping people to stay in their homes. Since 2022, we have provided £104 billion in cost of living support, an average of £3,700 per UK household, helping those most in need while acting in a fiscally responsible way. Where homelessness cannot be prevented, temporary accommodation is an important way to ensure that no family is without a roof over their heads.

However, we appreciate that it is not ideal and needs to be temporary. The £1.2 billion local authority housing fund enables councils in England to obtain better-quality temporary accommodation for those owed a homelessness duty, providing a lasting, affordable housing asset for the future. Indeed, between 2022 and 2025, we are providing local authorities with over £1.2 billion through the homelessness prevention grant.

With regards the concerns of the noble Baroness, Lady Smith, there are mechanisms by which social housing tenants can receive housing support to help pay their rent. For these tenants, the costs of rent increases are met by their housing benefit or the housing element of their universal credit. Discretionary housing payments can be made to those entitled to housing support who face a shortfall in meeting their housing costs.

In respect of social rent levels, they typically are at between 50% and 60% of market rent, set in accordance with government rent policy for social rent, using a formula that accounts for relative county earnings. Indeed, 90% of the stock is done through social rent. As to affordable rents, they make up some 10% of the rental stock, and they are actually available at 80% of the market value—although the 80% number is much lower in parts of London. So we are talking about the difference between some £98 a week under social rent and £143 a week, although all the social benefits and the DWP benefits are not specific to the tenure.

Turning to the right to buy, in response to the noble Baroness, Lady Bennett, and the noble Lords, Lord Birt and Lord Davies, the Government believe that the housing market should work for everyone. We believe that those who want to rent their homes should be able to rent their homes, but those who wish to buy them should also be allowed to do so. We remain committed to the right to buy. This, since 1980, has helped more than 2 million social housing tenants become homeowners. We want to support councils to continue to deliver new and existing supply plans, and there is a requirement for replacement homes to be put in place as these are sold.

To help councils deliver more replacement homes in the current economic context, the Government have frozen the cap on acquisitions. Councils will be able to continue to deliver up to 50% of their right-to-buy replacement homes as acquisitions each year until 2025, with a focus on the purchase of new-build homes. From 1 April 2024, the Government are also increasing the percentage of the cost of replacement affordable homes that can be funded from the right-to-buy receipts, from 40% to 50%. We have listened to calls from councils to increase this cap, which some have said is making some build schemes unviable due to higher build costs.

With regard to the statistics that the noble Baroness, Lady Bennett, asked for, in 2022-23, local authorities sold 10,896 homes; they built 8,900. With all sources of affordable homes considered, there was a net increase of 14,680 affordable homes for rent.

Turning to the speech of the noble Baroness, Lady Warwick, I agree that we need to do more. All measures to increase the rate of housebuilding for the provision of affordable homes should be considered, and we are including things such as the preferential borrowing rate for council house buildings from the Public Works Loan Board, which we have extended to June 2025. We have tried to allow them to retain, on a temporary measure, 100% of their right-to-buy receipts for 2022-23 and 2023-24, and indeed we have therefore allowed them to increase their capital buffer to provide more homes in the short term. Abolition of the housing revenue account borrowing cap, alongside the £11.5 billion affordable homes programme, I hope means that local authorities and housing associations are supported to maximise the delivery of new homes, and we strongly urge them to mobilise and utilise these flexibilities in order to do it quickly.

I have another question, from the noble Baroness, Lady Warwick of Undercliffe, who asked me about the skills set with regards to construction. The Government recognise that there are challenges in the sector due to skill shortages in the housebuilding workforce and construction more broadly, which will become a greater challenge without active work to augment skills development. We are therefore committed to ensuring that the right skills and training are available for apprentices and others considering a career in the construction industry. For example, the Government are currently reviewing the work of the industry training boards and will be publishing the findings of these reviews along with any recommendations later this year. The Department for Education is improving training routes into construction, creating opportunities for workers to retrain, and the Government are increasing the funding for apprenticeships across the sectors, including construction, to £2.7 billion in the 2024-25 period.

On the report from Women’s Aid, which I believe came into all our inboxes earlier this week, it is critical that victims of domestic abuse get support, especially when they are in a housing need. The Domestic Abuse Act 2021 has given those who are homeless as a result of being a victim of domestic abuse priority need for accommodation secured by the local authority. Statutory guidance encourages local authorities to make exceptions from any residency requirements.

I will also no doubt be having numerous discussions at this Dispatch Box over the coming weeks as we bring the private Renters (Reform) Bill to this House. I understand that we will have that on Tuesday next week, so I look forward to discussing the details with many of your Lordships then.

In closing, I thank your Lordships for prompting this important debate. It is clear that, although we may disagree regarding different approaches, all of us here agree on the underlying mission: to drive up affordable housing supply—truly affordable housing—for those who need it. This is a clear part of our mission to level up the country; indeed, it was a key tenet of our levelling up White Paper. The figures I have outlined today—more than 632,000 affordable homes built since 2010—show that we are making real progress towards it. However, I agree that more needs to be done.

Today we have also discussed the wide-ranging challenges that are facing us, and indeed the changes the Government continue to make to boost the social housing numbers over the medium to long term. Of course, through our Levelling-up and Regeneration Act and the simplified infrastructure levy, these will take time, but I hope your Lordships will work with me and the rest of government to ensure that this issue cuts across party-political lines. It is an issue I am certainly committed to working on with noble Lords across this House, as I said earlier this week at the launch of the Church of England’s report. I am confident that, working together, we can get the right homes built in the right places for the people who need them most.

Leasehold and Freehold Reform Bill

Baroness Taylor of Stevenage Excerpts

Committee stage
Wednesday 24th April 2024 Lords Chamber

Moved by

[Baroness Taylor of Stevenage]

55: After Clause 45, insert the following new Clause—
“Abolition of forfeiture of a long lease(1) This section applies to any right of forfeiture or re-entry in relation to a dwelling held on a long lease which arises either—(a) under the terms of that lease, or(b) under or in consequence of section 146(1) of the Law of Property Act 1925.(2) The rights referred to in subsection (1) are abolished.(3) In this section— “dwelling” means a building or part of a building occupied or intended to be occupied as a separate dwelling, together with any yard, garden, or outhouses and appurtenances belonging to it or usually enjoyed with it;“lease” means a lease at law or in equity and includes a sub-lease, but does not include a mortgage term;“long lease” has the meaning given by sections 76 and 77 of the Commonhold and Leasehold Reform Act 2002.”Member’s explanatory statement
This new Clause would abolish the right of forfeiture in relation to residential long leases in instances where the leaseholder is in breach of covenant.

[Baroness Taylor of Stevenage (Lab)]

My Lords, our amendments in this group go to the heart of one of the current serious injustices relating to leasehold: that of forfeiture. It is quite simply anachronistic, wholly disproportionate and complete imbalance in the relationship between leaseholders and landlords. In some circumstances, a debt of a few hundred pounds can trigger the ability to take possession of the property. What my honourable friend the shadow Minister for Housing in the other place called

“the chilling effect that results from its mere existence”.—[Official Report, Commons, 27/2/24; col. 203.]

puts landlords in a nearly unassailable position of strength in disputes with leaseholders, as I hope I illustrated in my earlier quote from an elderly leaseholder. Unfortunately, the threat of forfeiture is too often used routinely by landlords as a first resort when seeking to recover alleged arrears in payments from leaseholders, and so often invoked to deter leaseholders from disputing any unreasonable costs and defending claims.

Our first amendment is reasonably straightforward: it is basically a matter of disproportionality and consistency. A real estate solicitor summed it up very neatly in his evidence to the Commons committee. He said:

“It is extremely welcome to see the government’s proposed clause 59 and amendment NC4 relating to the abolition of remedies relating to rentcharges. It is also very welcome to see the proposed amendment NC1 which would abolish forfeiture in long residential leases, which is long-overdue. However, there is a key point that does not seem to be addressed: forfeiture in relation to rentcharges. Rentcharge deeds often reserve a right of forfeiture for non-payment which operates in the same manner as a forfeiture clause in a lease. The Committee clearly recognises that the expropriation of somebody’s property as a remedy for breaches of a lease on an extra-judicial basis is entirely inappropriate and unfair. Therefore, it should equally concern the Committee that the same remedy is available in many cases in relation to rentcharges. Therefore, I would ask that the Committee either add to proposed amendment NC1 or propose an additional clause to abolish any right of forfeiture under a rentcharge”.


This amendment would ensure that leaseholders are in no worse a position than anyone else subject to a challenge to ownership would come under. So, while we accept the principle that legal remedies should be available, we do not believe that forfeiture provides adequately for leaseholders to challenge or defend themselves from repossession.

Our other amendments are a bit more complicated on paper, as they would replace Clause 111, which currently provides remedies for arrears of rent charges where the rent charge remains unpaid for a period of 40 days, one of which is the ability for a rent charge owner to take possession of a freehold property in instances where a freehold homeowner fails to pay a rent charge. But in essence it is very simple. It would simply mean that debts have to be sued for, as you would for any other kind of debt. In short, the 1925 Act provides for the power to seize freehold houses for non-payment of a rent charge, even if the arrears are merely a few pounds, and allows the rent charge holder to retain possession or render it, in effect, worthless by means of maintaining a 99-year lease over it.

In our view, the remedies provided in the 1925 Act are a wholly disproportionate and draconian legacy of Victorian-era property law. The 1977 Act prohibited the creation of new rent charges and provided for existing rent charges to be abolished in 2037, but 13 years from now is still a long time away and any lease granted prior to the abolition will remain in force. Rent charges are therefore an area of law in respect of which legislative reform is long overdue and the need to protect rent payers from what amounts essentially to a particularly severe form of freehold forfeiture as a result of the relevant remedies provided by the 1925 Act is pressing.

We understand that the Minister in the Commons called this argument “reasonable” and implied that it could be revisited if the Government were able to consider the potential consequences of such a change, so I press the Minister that, if we are asked to withdraw our amendment today, she will at least consider whether the Government can deliver the effect we all want to see via a government amendment. We feel very strongly about this issue and I hope it will not be necessary to continue to press this point through to Report. I beg to move.

[Lord Truscott (Non-Afl)]

My Lords, I wish to address the issue of forfeiture and support Amendment 55 in the name of the noble Baronesses, Lady Taylor of Stevenage and Lady Pinnock, and Amendment 95 in the name of the noble Baroness, Lady Taylor. I absolutely agree that leaseholders should not be subject to forfeiture in the case of a debt of a few hundred pounds or a temporary breach of covenant. Indebtedness can be dealt with by the county court and bailiffs. For that reason, I support Amendment 95 in the name of the noble Baroness, Lady Taylor of Stevenage. However— I know this may be controversial with some noble Lords—I am concerned that a blanket ban on forfeiture would remove an effective deterrent preventing some leaseholders persistently and wilfully breaching their leases by, for example, anti-social behaviour.

Let me give three practical examples I have come across in my years as a leaseholder. The first concerns a landlord who was letting out his flat on Airbnb, in breach of his lease. He knew he could make more money doing this than letting it on a long lease. As noble Lords know, Airbnb can cause a serious nuisance in blocks of permanent residents, due to excessive noise, wear and tear and lack of security impacting on quiet enjoyment. The landlord/leaseholder in question stopped only when threatened with forfeiture for breaching the lease.

The second involved a leaseholder putting a hot tub under a neighbour’s window, in clear breach of the lease, as only patio furniture was allowed to be displayed on the terrace, and threatening their quiet enjoyment. When challenged, their approach was dumb insolence. “What are you going to do about it?” was their approach. The threat of forfeiture ensured its removal.

The third example is more personal. My wife was attacked in our own garden by a neighbour’s tenant’s large dog, which was in a flat in breach of the lease. The gardens are open, with no boundaries, so dogs wandering around under no control are a problem. Let me be clear, I am a dog lover—I had two dogs as a child—but I am also conscious that there has been a massive increase in dog attacks in recent years. Official NHS figures reveal that, in the year to March 2023, there were 9,277 hospital admissions in which the patient had been bitten or struck by a dog. The number of people killed by dogs has also risen dramatically. In the last 20 years or so, the number of fatal dog bites has averaged about three per year; however, by 2022, it had risen to 10 fatalities and is still climbing. These cases are horrific and worrying.

Many blame the owners, not the dogs. Too many owners seem unwilling or unable to control their dogs and this behaviour is unfortunately widespread, as I have witnessed myself on a number of occasions. The dog in our block stayed, but when the leaseholder/landlord tried to introduce another tenant with another large dog, after the first attack, again in breach of the lease, it was only the threat of forfeiture that resolved the situation. Dogs may be appropriate in many surroundings, but in others they are excluded in leases for a reason.

Thus there are occasions when the mere threat of forfeiture, rarely used in practice, is useful to ensure compliance with lease obligations. Other legal routes can be extremely costly, lengthy and ineffective. So I ask the supporters of a complete ban on forfeiture how they propose to enforce compliance with leases and prevent breaches in the future if this proposal is carried.

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[Lord Kennedy of Southwark (Lab Co-op)]

I am not saying they are not positive. At the end of the day, to make progress we need a government amendment, or an amendment that somebody else tables that the Government will support, at the next stage. That is progress; that is what I am trying to push. I know the Minister is very generous with her time, and wants to get this right, and wants to meet colleagues. I am just trying to get it on the record, that is all. I know the Minister has been good every time that colleagues have raised this issue in the House, and I have a Question on it again on, I think, 22 May. I thank her very much.

[Baroness Taylor of Stevenage (Lab)]

My Lords, I thank the Minister for her response. I thank the noble Baroness, Lady Pinnock, for supporting these amendments and the noble Lords, Lord Truscott, Lord Kennedy and Lord Bailey, for their comments.

In relation to the Minister’s comments about the time it takes to do this, I repeat that the Conservative Party has had this in its manifesto since 2017, so there has been quite a lot of time to think this through and have a look at this. It is a bit disappointing that we are in Committee in the House of Lords with some of these key issues still unresolved.

I ask your Lordships to reflect on, first, the example I gave in the earlier debate, of the elderly couple who told me they have a dispute with their landlord and are being threatened with forfeiture. They potentially have a £15,000 bill for the costs. If they pay that charge it is taken as agreement, but failure to pay it means that the landlord can invoke forfeiture, so where do they go? That is an awful position to put people in.

My second example is a young lady who I was out with the other day doing our political work. She lives in a leasehold flat; she put a political poster up in her window and then, almost immediately, received a letter from the landlord threatening her with forfeiture because that breached the terms of her lease. That seems an onerous way of dealing with a relatively small issue.

I listened carefully to the noble Lord, Lord Truscott, and he is right that there needs to be some form of resolution to this that means it does not need to go to the High Court—but it should certainly not be forfeiture, which is totally disproportionate. There may be a need to consider remedies other than the big sledgehammer of the High Court. Threatening to repossess people’s homes is certainly not an answer to technical breaches of lease.

Regarding rent charges, they will still be in place until 2037. We have to look at this and see whether we can find some way of getting rid of them before then.

As the noble Lord, Lord Kennedy, said, if we have to bring this amendment back again, we will, but I would rather the Government did so. That said, I withdraw the amendment.

Amendment 55 withdrawn.

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Moved by

[Baroness Taylor of Stevenage]

60: Clause 48, page 57, leave out from line 23 to line 23 on page 58
Member's explanatory statement
This amendment would leave out the proposed new section 87B of the Commonhold and Leasehold Reform Act 2002 and so ensure that RTM companies cannot incur costs in instances where claims cease.

--- Later in debate ---

[Baroness Taylor of Stevenage (Lab)]

My Lords, our amendment in this group refers to the fact that the Bill currently makes an exception to litigation costs being borne by landlords in the case where right-to-manage claims have been withdrawn or otherwise ceased early and the right-to-management company has acted unreasonably in bringing the right-to-management claim, allowing the landlord to apply to the tribunal for any reasonable costs.

The key arguments for the amendment are that, first, leaseholders should not be put at risk of having to pay costs simply for exercising statutory rights, in this case the right to seek to acquire and exercise rights in relation to the management of premises in which one has a leasehold interest. There is also concern that unscrupulous landlords might use the rights provided for in new Section 87B of the Commonhold and Leasehold Reform Act 2002 as a means of recovering costs from right-to-manage companies that act reasonably and in good faith and, by implication, that it would discourage right-to-manage companies from initiating a claim because of the financial risk it still entails for individual participating leaseholders. Put simply, the fear is that new Section 87B will incentivise unscrupulous landlords to fight claims on the basis that they are defective in the hope of recovering costs by means of it. Our main concern regarding Clause 48 is that the use of the words “reasonable fee” and “reasonable costs” would not allow either of the above situations to occur. I ask the Minister: who will determine the definition of “reasonable”, and how?

I will comment on other amendments. We think that the amendments tabled by the noble Lord, Lord Bailey, are very reasonable, and we support his aims here. In fact, colleagues in the other place submitted similar amendments in Committee.

I also look forward to hearing the noble Lord, Lord Moylan, introduce his amendments, which would incorporate local authorities and their properties, both within the HRA and without, but I ask whether he had discussions about this proposal with the Local Government Association or local authority stockholders. Most good local authority landlords already have substantial arrangements in place for liaison with leaseholders and tenants around the management of property, and there is certainly no issue with improving that through more effective right-to-manage arrangements. However, as much local authority property will be occupied by a mixture of local authority tenants and leaseholders, it would be important to ensure that there were no unintended consequences. I urge that that level of consultation takes place before any proposal such as this proceeds further. The noble Lord, Lord Moylan, will forgive me if he has already done that consultation, but it was not clear from the amendments. With that, I beg to move Amendment 60.

[Lord Moylan (Con)]

My Lords, it is a privilege to speak after the noble Baroness. I will come to answering her question. To give a blunt answer, I have not undertaken the consultation that she refers to, but I will explain when I get to that part of my introduction why I think that this stands on its own.

As I said at Second Reading, I strongly support those parts of the Bill which facilitate the exercise of the right to manage on the part of leaseholders in residential blocks. There are several measures in the Bill which do that. The right to manage is, in some ways, the crucial key to unlocking the levels of dissatisfaction which some leaseholders have with the way in which their blocks are managed. I strongly support it.

There is a particular issue which the Bill does not address. As a consequence of my general support for this—contrary to my remarks in earlier debates— I hope that the Government will give me a softer and more welcoming answer. As a result of my proposal, perhaps my noble friend on the Front Bench will even give me one of those answers which invites me to attend a meeting. In fact, I have had a meeting with my noble friend about this, though she may not recall it. We met last summer to discuss this issue with officials, and she was very sympathetic to it. That gives me additional reasons for thinking that this might be a welcome amendment.

The amendment arises from a particular case, but it raises questions of general importance. I shall refer to the case later, but I want to address the question of general importance first. When the right to manage was introduced through the Commonhold and Leasehold Reform Act 2002, certain exceptions were placed on it. The Government intend to ease some of those restrictions, and I welcome that. One restriction was that the right to manage did not apply where the landlord of the building was a local housing authority.

I have tabled two alternative amendments—this is my point about consultation. Both amendments would reverse that assumption. One would eliminate it entirely. It would bring within the ambit of right to manage all blocks where the local housing authority was the landlord, including those within the housing revenue account. The noble Baroness, Lady Taylor of Stevenage, said that this could raise certain difficulties in cases where a block had so many long lease holders that it could exercise the right to manage but would be left with certain local authority tenants in the block. I have experience of local government, as does the noble Baroness. I recognise that she is correct in saying that there might be certain sensitivities about this. I think it could be managed. Indeed, it would be liberating for all the tenants of the block in many ways. The local authority tenants would also have a say in the management of the block. They would not be excluded from it simply because they were local authority tenants.

Recognising that this is a slightly daring proposition, I have suggested an alternative which would simply take out of the provision local housing authority-owned blocks where they were owned simply as an investment. I have left it vague as to whether that is a commercial investment or one held in the local authority’s pension fund. These are probing amendments. I should be happy to discuss these issues with my noble friend the Minister.

I come now to a particular case. There are blocks where local authorities have acquired property as an investment. Doing so immediately extinguishes the right of the long lease holders to exercise their right to manage—there are no local authority tenants. I think that is wrong. The case I am thinking of concerns a block acquired by a London local authority from a commercial property investment trust, bought at market value as an investment. The local authority, the new owner, was dissatisfied with the accounts inherited from the previous manager—it had their own manager for the block. As a result, it has not been able to put satisfactory accounts together for the last three years. As a consequence, it has not had the legal standing to issue invoices to its tenants for its service charges. It has been running the building’s operating costs out of the capital sums that had been set aside as a sinking fund to pay for future improvements to the building. It is all very unsatisfactory.

That is a classic situation in which long leaseholders would normally exercise the right to manage but, completely arbitrarily, are precluded from doing so. That is wrong. We should facilitate this.

At the very least, my noble friend should welcome my second amendment, Amendment 62, and say that where a local authority acquires a property for commercial purposes—not for the housing of its tenants but as an investment, either in its own name or as part of its pension fund—the right to manage would be restored. The financial interests of the local authority would be preserved, as they are under the current arrangements. It is simply that the right to manage the building would be taken over by the long leaseholders, as elsewhere, and they would manage it in just the same way as in all the other right-to-manage arrangements we are so much in favour of.

I will stop at that point because I have simply made my case, but this is a strange omission from the current arrangements, and one that we now have an opportunity to correct. I would be very happy to attend the meeting.

--- Later in debate ---

[Baroness Taylor of Stevenage (Lab)]

My Lords, I am grateful, as ever, to the Minister for her responses. It seems she is going to be very busy over the next few weeks, having all these meetings with all of us. I thank the noble Baroness, Lady Thornhill, for reminding me that, had the right reverend Prelate been here, I too would have objected strongly to the proposals he was making on Clause 47, because they would simply have opened the door to retaining the 25% limit, virtually across the property sector. I believe that would have gone against the intentions of the Bill, so she was right in what she said there and I thank her for her support for my amendment.

From this side of the House, I say to the noble Lord, Lord Bailey, that we welcome belligerent interventions from either side, but especially from the Benches opposite, so just keep going with those. We particularly agree with his Amendment 65B. If his meeting does not achieve the desired effect and he chooses to pursue this, he will certainly have our support.

I thank the noble Lord, Lord Moylan, very much for his explanation. I had not realised that these were either/or amendments, but I understand his point about property owned as an investment by a local authority or pension fund. I agree with his point about the principle of right to manage being extended as far as possible. That is absolutely right, although anything affecting local authorities needs to have some consultation with the sector, because we just do not know what any unintended consequence of that might mean. I hope he will consider that if he chooses to pursue this amendment, but perhaps the meeting with the Minister might allay his concerns in that regard. That said, I beg leave to withdraw my amendment.

Amendment 60 withdrawn.

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[Baroness Taylor of Stevenage (Lab)]

I am sure the Minister understands that this has dragged on and on, and we are now at a very late stage of a Bill that has already gone all the way through the Commons. Quite frankly, the degree of uncertainty and instability that is being caused to leaseholders—and to freeholders, to be fair to them—is unacceptable. Yet again in this Chamber, we hear the phrase, “in due course”. I do not know what that means; it can mean anything from tomorrow to in three years’ time when we get round to sorting it out. That is not acceptable either.

We had a very detailed report from the Competition and Markets Authority, which roundly condemned the use of ground rents as a mechanism. We have heard in this Chamber over and again that this is money for nothing and that it has resulted in the most dreadful exploitation. The example I gave in Committee on Monday of an elderly couple virtually being held to ransom by the freeholder is absolutely shocking. That will be going on in millions of homes across the country. This is just not acceptable any longer. I hope that the Secretary of State will very rapidly make up his mind as to what he is going to do about this, stop being bulldozed by freeholder interests in his own party, make a decision and get rid of ground rents, once and for all. This would let people sleep easy in their beds, which they have not been able to do while this debate has been going on.

[Baroness Scott of Bybrook (Con)]

I think there was a question there, and my response is that we went out, quite rightly, to consult, and the consultation did not finish until towards the end of January. This is a complex issue. If we do it badly or wrong then we will make mistakes and these people will potentially be in a more difficult situation. From the end of January to April is not a long time. We are doing it as fast as we can, and we will come back to the House with further details.

Leasehold and Freehold Reform Bill

Baroness Taylor of Stevenage Excerpts

Committee stage
Wednesday 24th April 2024 Lords Chamber

[Baroness Thornhill (LD)]

My Lords, I suppose I could say “#UsToo”. I support these amendments, which are simple in purpose, in the name of the noble Baroness, Lady Andrews, who summed them up thoroughly, clearly and personally. As things stand under PDR, a freeholder can add two storeys to their existing building as a matter of right, with no planning permission needed: as I look round Watford, I can see evidence of that with my own eyes. But I also know that that can have very serious consequences. As well as the inconvenience of the building work going on for as long as it takes, you also discover that the top-floor flat that you paid a premium for is now worth less as you are a middle-floor flat. Then there is the pressure on communal space and amenities, including the dreaded bin store and the state thereof.

Adding two more storeys to a presumably well-planned block of flats, for a set number of residents, is not consequence-free. But the consequences are absolutely trivial compared with the knock-on effects of such development on the Government’s own stated aim, which is to encourage more leaseholders to buy their freehold. This is an additional and often insurmountable obstacle. It significantly raises the cost of enfranchisement, as has been said. The value of the block will have gone up. The leaseholders are now required to pay more for their freehold. In many parts of the country, this takes it way out of reach, as in the noble Baroness’s case.

The noble Baroness, Lady Andrews, very thoroughly cited a positive trail of support: all the right noises from the Secretary of State in 2021, the Government’s complete recognition of the dilemma and a real promise of the ability to look into some restriction.

It is clear that there is a policy conflict here: the need for more homes, which we all agree on, versus the enfranchisement of leaseholders. As things stand, the homes policy is top trumps. Can the Minister advise on whether there will be a review of PDRs in general, including focusing on unintended consequences such as this and whether there is a way to sort this out in the leaseholder’s favour in the Bill? At the moment, it feels as if the freeholders are still very much holding all the aces and current residents have no voice at all in this significant change to their environment and, possibly, their life chances and finances.

[Baroness Taylor of Stevenage (Lab)]

My Lords, I am very grateful to my noble friend Lady Andrews for the collaborative way in which she has prepared and worked on her amendment, and drawn the attention of the House to what seems to be an omission from the Bill. We believe this needs to be rectified and my noble friend has not only set out, with her usual thorough approach and eloquence, exactly what the issue is, but has also proposed a straightforward and elegant solution, which we support.

My noble friend describes the Law Commission report as adopted by the Government in January 2021. Indeed, the government press release of January 2021 indicated that the Bill would strongly take account of this government commitment to release leaseholders from the straitjacket of hope of future development value. I quote from that press release:

“Leaseholders will also be able to voluntarily agree to a restriction on future development of their property to avoid paying ‘development value’”.


This is based on a Law Commission suggestion, which clearly indicates the direction of travel and which we believe the Government have accepted. To quote from the Law Commission recommendation:

“Premiums would be reduced at the date of the freehold acquisition claim. If leaseholders subsequently decided that they wanted to develop, they would pay a portion of any profit received on a subsequent development to the landlord, rather than (as at present) having to pay development value in respect of a speculative future possibility of development”.


The Law Commission also set out clearly the principle that leaseholders should not need to have to negotiate on a piecemeal basis for this restriction but should be granted it by right. The commission refers to leaseholders of flats acquiring the freehold to their block and states that,

“as they would not be required to pay the landlord an additional sum to reflect the potential to develop their properties, leaseholders would no longer be required to negotiate with the landlord to create such a restriction; rather, they would be entitled to demand such a restriction be included”

and

“disputes, negotiation and litigation about development value would be reduced”.

The Law Commission clearly believed that the election to take a restriction on development outweighed the disadvantages put forward by other consultees and that such an election was eminently possible to implement where there was agreement among leaseholders.

I also point out that this issue arises, in part, from yet another unintended consequence of the permitted development regime—a point mentioned by the noble Baroness, Lady Thornhill—on which I have made my views clear in your Lordships’ House in the past. I am not an unequivocal fan of PD. Permitted development removes the step of local accountability through the planning system, often the contribution to local community infrastructure and almost always the contribution to local affordable housing which would be required through traditional planning applications.

At its worst, permitted development drives a coach and horses through local plans, resulting in residential property in inappropriate areas and buildings, and in taking buildings out of commercial use where it may not be appropriate to do so. In the case of the subject of this amendment, its very existence can create an added financial pressure on those wishing to exercise their enfranchisement rights. That is another reason why we believe that the solution proposed by my noble friend Lady Andrews delivers an equal and justifiable right to leaseholders.

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[Baroness Pinnock (LD)]

My Lords, I thank the right reverend Prelate the Bishop of Manchester for drawing our attention to the fact that when you make complex changes, the consequences cannot always be predicted and may not be ones we would wish to support.

The issue is one I hope the Minister will be able to help us resolve. The right reverend Prelate cited the balance between justice and simplicity. He said to always come down on the side of justice, and so would I. However, in this case, we have competing justices. The principle being advocated throughout the Bill is the justice of rebalancing the rights and responsibilities between freeholders and leaseholders to the benefit of leaseholders—a principle most of us support. The difficulty is that the justice we support has a consequence we would not support: reducing the funds available to charities whose income is based on freehold property. So, there is a conundrum for us.

The right reverend Prelate listed the charities that he thought were affected by these changes. I noted they were all London-based, no doubt because of land values in London. It is important for us to know whether this is a more extensive problem, or a London-based one. The first question we need to ask is, what other charities will be affected?

I do not have an answer to the next question: is there a workaround that mitigates the effect of the principal changes the Bill seeks to implement? I am sure the bright young things in the department could come up with a way of mitigating the outcome, so that charities do not lose their income, which is in nobody’s interest. I am confident that somebody will come up with a great way of overcoming this problem, while retaining the other justice: fairness towards leaseholders.

So, there are questions but no answers, and I look forward to hearing what the Government might be able to do.

[Baroness Taylor of Stevenage (Lab)]

My Lords, this debate has again outlined what a huge benefit it would be to have proper, detailed pre-legislative scrutiny of Bills such as this. I hope that will take place when we get a commonhold Bill, whoever brings it forward.

In principle, I am in much of the same mind as my noble friend Lord Truscott when it comes to special pleading on marriage value. I fear that the amendments in the name of the right reverend Prelate the Bishop of Manchester are in danger of being an almighty sledge- hammer to crack not a very big nut, and my comments are made on that basis.

First, I thank the right reverend Prelate and Lynne Guyton, from John Lyon’s Charity, for meeting me yesterday to explain the issue in more detail. The issues set out by the right reverend Prelate affect a very small number of charities, such as the ones in central London that he has outlined. They have been in place for centuries and, as was explained to me, use marriage value on lease extensions as a critical contribution to the funding of their charitable work. The leaseholders of these properties are largely offshore companies or non-residential wealthy owners, so the argument put forward by the charities is that, in this case, the benefit of marriage value has what the right reverend Prelate described as the “reverse Robin Hood effect”. The benefit currently accrues to the beneficiaries of the charity, such as youth clubs, arts projects, emotional well-being initiatives, supplementary schools, parental support schemes, sports programmes, academic bursaries and similar projects. I thank the noble Lord, Lord Bailey, for his personal testimony in this respect.

The fear is that, after the Bill has passed, the benefits will then accrue to the said wealthy offshore companies and leaseholders. I believe the Government have been in conversation with the charities concerned and have promised to look at what can be done to ensure that a very limited exception is considered. However, it is our understanding that this has not been forthcoming, and I hope the Minister will tell us where the Government have got to. Have the Government carried out any impact assessment of the way the Bill will affect charities that have long-standing property endowments solely for the purpose of enabling their charitable aims?

However, as with group 2, these amendments would amend Schedule 4, which is where the market value element of the premium for any enfranchisement claim is determined. The second amendment tabled by the right reverend Prelate the Bishop of Manchester has also applied it to the later section on loss suffered, in paragraph 32, which refers back to assumption 2. Straightforwardly, these amendments would disapply assumption 2 for charities, and thereby include marriage and hope values in determining market value.

As I said during the first Committee sitting on the Bill, we genuinely appreciate the intention behind supporting what is argued to be the unique circumstances of this small group of charities. However—and it is a big “however”—the amendment as drafted is almost certainly far too broad to encompass only their very unusual circumstances. Perhaps the Government will continue to work with right reverend Prelate and the charities concerned to see what can be done to support them; otherwise, we fear that a general amendment such as the one tabled could open a big Pandora’s box and encourage those wishing to avoid the new system of enfranchisement—which we support, of course—and there may be plenty who wish to do so, to misuse charitable status for that purpose.

The noble Earl, Lord Lytton, referred to exemptions created for the National Trust, which the Government felt were justified. Presumably, the Government feel that some exemptions are justified.

While we do not feel that the amendment as tabled would avoid some of the obvious pitfalls of creating a loophole in the stated aims of the Bill—with which we agree—I look forward to the response of the Minister about whether any progress can be made in this respect.

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Moved by

[Baroness Taylor of Stevenage]

47: Clause 37, page 33, leave out from line 12 to line 6 on page 34
Member's explanatory statement
This amendment would leave out the proposed new section 19C of the Leasehold Reform Act 1967, and so ensure that leaseholders are not liable to pay their landlord’s non-litigation costs in cases where a low value enfranchisement or extension claim is successful.

[Baroness Taylor of Stevenage (Lab)]

My Lords, we welcome the new costs regime provided for by provisions in the Bill, because, as things stand, there is no balance of power: the playing field is tilted very much in favour of landlords rather than leaseholders, and that needs to be addressed. Under the current law, leaseholders are required to pay for certain non-litigation costs incurred by their landlord when responding to an enfranchisement or lease extension claim. That obviously does not reflect normal practice in residential conveyancing, where each party bears their own costs. I hope that noble Lords will forgive me for explaining our rationale for this amendment in a bit more detail than is customary for me, but it is a point of real principle, and some technical detail is warranted.

Noble Lords will remember that I quoted from a letter I had received from elderly leaseholders on the first day of Committee. I have received further representations in relation to excessive charges for non-litigation costs, which I will read out as they are a perfect illustration of the problem these amendments seek to address. I appreciate that this example relates to a ground rent dispute, but it would be the same issue for an enfranchisement or extension claim.

“After the Freeholder asks a ridiculous sum in increased ground rent with their ground rent review (every 4 years) this causes the leaseholder to then employ both a Solicitor and Surveyor to counter this high valuation which incidentally had no calculations to back it up. Therefore so far this year having paid £3,000 for a surveyor to dispute this figure and a lawyer costing so far £3,600, the freeholders haven’t even tried to justify their huge increase and valuation. Now after 4 months having passed and the 3-month negotiation ended and the Freeholders have made no effort to take part, negotiate or even contact our surveyor they now say this increase is NOT agreed …


If we lose with the third-party surveyor’s estimate and the increase is even only minimal we still have to pay the third-party surveyor’s fees plus the freeholder’s lawyer’s fees and our own lawyer’s fees, therefore it could end up costing as much as £15,000. Plus if they look to backdate the increase over the past 6 years’ Ground Rent charges this could amount to who knows what?


Even if we win we still lose a great amount of costs and fees plus we cannot look forward to a reduction in Ground Rent as the lease states an ‘Upward Only Revision’. Therefore freeholders know they can put in totally unrealistic figures for rent increase of whatever they want as the leaseholders are on a hiding to nothing … until they throw in the towel.


Additionally, to lodge a dispute at the 1st Tier Tribunal for any high unreasonable charges it is necessary to not pay the bill in question otherwise it is deemed you have agreed to this payment but then withholding payment runs the risk of forfeiture”,


which we will discuss later today. My correspondent goes on to plead that the issue of ground rent increases finally be resolved by the Bill, but their case illustrates the financial and legal minefield that leaseholders face.

The argument for imposing non-litigation costs has always been that, in enfranchisement or lease extension claims, a landlord is being forced to sell his or her asset, which would justify a departure from the practice in open market sales of residential property. However, when it comes to lease extensions or freehold purchases, a landlord is obviously not simply being compensated for the value of the asset they are being compelled to sell. They are instead securing, through the payable premium, a share of the profit to be made from selling to the leaseholders in question. In addition, as things stand, through capitalised ground rents, they are extracting funds from leaseholders over long periods—often decades —prior to securing that profit share, for no explicit services in return.

The valuations of lease extensions and freehold acquisitions under the existing statutory regime rely on prices agreed via an open market transaction, but those valuations do not account for the fact that leaseholders are expected to pay their landlord’s non-litigation costs. Therefore, landlords in enfranchisement or extension transactions receive the price for the asset being sold, which reflects the market rate without non-litigation costs factored in, and their reasonably incurred non-litigation costs on top.

In its 2020 final report on enfranchisement, the Law Commission is very clear that the effects of law and current market practice are that

“the landlord is over-compensated for the non-litigation costs that he or she has had to incur in order to transfer the interest to the leaseholder”.

In addition, many of those who are better resourced could use the fact that such costs are borne by leaseholders as leverage in negotiations on the price of the lease extension or freehold acquisition, confident that the expense of challenging those costs in a tribunal would dissuade many leaseholders from doing so.

The Opposition are clear that freeholders should not receive compensation in respect of non-litigation costs. A landlord selling his or her asset and receiving a share of the profit as a result is not sufficient justification for departing from an arrangement in which reasonable non-litigation costs are factored into the ultimate price. The decision to enfranchise or extend a lease is often not discretionary; it is often a requirement brought about by the fact that a lease is due to expire, because the payable premium is rising as the lease shortens, or as a result of the decision to move or remortgage.

We therefore fully support the intention in the Bill to provide for a new regime based on the principle that leaseholders are not required to pay the freeholder’s non-litigation costs in these circumstances. We note the Law Society’s concern that landlords are being asked to bear their own non-litigation costs, despite the fact that the proposed standard valuation method provided for by Schedule 2 will lead to payable premiums below full open market value because it caps the capitalisation rate. However—and this point touches on one of our previous debates—political decisions set the rules of the game for market competition. In our view, it is simply not the case that there is some kind of inherent market value for premiums entirely independent of legislation in this area. Every sale of a flat and every lease extension process relating to a flat since 1993 has been undertaken against the backdrop of the 1993 Act, which reduced ground rents to a peppercorn.

The market value for premiums is shaped by the laws that the House passes. It is right in principle that, to achieve the Bill’s objectives of making it cheaper and easier for leaseholders in houses and flats to extend their lease or buy their freehold, leaseholders do not pay non-litigation costs in addition to the payment of a premium, as determined by the new method proposed in Schedules 2 and 3. We believe that leaseholders should not be liable for these costs as a result of an enfranchisement or lease extension claim on principle, irrespective of the method by which the premium is calculated. That is why we take issue with the clause as drafted, because it does not protect all leaseholders from liability for costs incurred.

The clause as drafted entails only a selective extension of rights in this area, because it does not ensure that all leaseholders will no longer have to pay their freeholder’s costs when making a claim. Instead, it makes exceptions to the general rule, whereby the price payable for the freehold or extended lease is below an amount to be prescribed in regulations.

We understand the rationale—namely, that leaseholders should pay a freeholder’s non-litigation costs in such circumstances, so that low-value claims do not cost the freeholder money. The Minister has been very clear that the Government believe that this must happen to ensure that the process is fair for both sides. We also appreciate that there are risks in prohibiting a landlord from passing on non-litigation costs to leaseholders in cases where they would be required to spend more in carrying out the transaction than they received for the asset. The Law Commission highlighted a number of those risks, including the incentive created for landlords not to co-operate with a claim, or for them to transfer the low-value freehold into the name of a shell company and then liquidate the company.

However, we are concerned that exempting claims below a certain value will create a different set of practical problems. These include costly and time-consuming disputes in cases in which the price payable is close to the level of the non-litigation costs in question for low-value claims, and the potential for landlords to game the system by arguing for a price payable below the threshold in order to secure both it and associated non-litigation costs because of the burden of disputing the amount.

Taking a step back, we fail to see the logic in the Government’s position. On the one hand, they seem to be ignoring the Law Commission’s recommendations in relation to costs; they have chosen to provide for a general rule that leaseholders are not required to make a contribution to their landlord’s non-litigation costs, but have not chosen to adopt a valuation methodology that seeks to reflect open market value, which was the commission’s stated prerequisite for such a rule. On the other hand, they are following strictly the commission’s recommendations in respect of low-value claims.

Put simply, we believe that, by means of this Bill, we should take the political decision to remove any exception to the general rule that leaseholders are not required to pay the freeholder’s non- litigation costs in such circumstances. I hope the Minister will give this careful consideration; otherwise, this section of the Bill has the potential to undermine the stated aim to increase, simplify and reduce the cost of enfranchisement. I beg to move.

[Baroness Thornhill (LD)]

My Lords, when we started the debate today, I felt like I was wading in mud. I feel I am still in the mud—it has got thicker, and the fog has come down. This is a complex and complicated Bill. I have really enjoyed listening to the arguments and the debate; I have already learned a lot. Report will be a lot better—certainly for me.

I will try to keep my remarks short and my questions simple in order to seek clarification. The noble Baroness, Lady Taylor, has, in her own style, ably illustrated the issue and set out the case for her amendments in great detail. I will not repeat those—some paragraphs have already been knocked out of my speech.

The newly inserted Sections 19A and 89A set out the general rule that neither a current nor a former tenant is liable for any costs incurred by another person because of enfranchisement or a lease extension claim. However, new Sections 19C and 89C set out the exceptions to this rule. The debate is around whether these exceptions are justified. We are seeking the Government’s justification for this variance. Amendments 47 and 48 from the noble Baroness, Lady Taylor, would delete these exceptions, so that leaseholders would not be liable to pay their landlord’s non-litigation costs under any circumstances. We agree. Each side should pay its own costs; we are unsure as to why this is not the case.

When this was debated in the Commons, the Government argued that, while the main aim of the changes to the costs regime was to address the imbalance of power that has existed between the landlord and tenant, they had a desire to ensure fairness on both sides. Sections 19C and 89C prevent the landlord incurring a net financial loss when leaseholders exercise their rights to enfranchisement and lease extension, thus acknowledging that this really is a balancing act. We look forward to the Minister’s comments as to how the Government have managed to keep the scales level.

I agree with the comments made in the debates on the last two groups. Some of the problems are because much too much is being left for later regulations, in either guidance or SIs. I believe that we should have had a clear government position on issues as important as landlord costs, deferment and capitalisation rates. This is still too vague. Such uncertainty is bad, not only for the leaseholders but for us parliamentarians who would hope to scrutinise and improve the legislation. However, I note the explanation from the Minister in the last group.

The Law Commission’s report highlights that the current law means that the landlord is overcompensated for these non-litigation costs. We support the Government in saying that costs should be balanced. It has to be said that these amendments raise important questions as to whether new Sections 19C and 89C undermine this aim. The noble Baroness, Lady Taylor, has made a good case to that effect.

--- Later in debate ---

The exception for low-value claims is a necessary provision to protect landlords from unfair costs and, as has been noted, it implements the Law Commission’s enfranchisement recommendation 84. I kindly and respectfully ask the noble Baroness not to press her amendments.

[Baroness Taylor of Stevenage (Lab)]

I thank the noble Lord for that reply to my amendments. I am grateful for his reassurance about the costs relating to the difference between the low-value claim and where it ends up. That is a useful clarification. However, we will think through the possible implications of this before we get to Report. It seems iniquitous that the leaseholder is taking all the burden of any reduction in the value of the property and in the value of the lease, while the freeholder is exempted from that because they will then get their costs paid if that happens to be the case when the transaction takes place. We will give that some more thought before Report, but for now I am happy to withdraw my amendment.

Amendment 47 withdrawn.