Leasehold and Freehold Reform Bill

Lord Thurlow Excerpts

Committee stage
Wednesday 24th April 2024 Lords Chamber

[Lord Sentamu (CB)]

My Lords, I remind the noble Baroness, in light of what she has just said, that it was in this place in 1215 that the barons said to the King, “This is the Magna Carta”. This principle was established and made very clear that a person’s property could not be seized by the King, except by the lawful judgment of his Peers over the law of the land. The assumption is that if you take the property, compensation must follow, even if you are taking such property because you want to convert some or all of it into leaseholds, so that they too can become owners. The Magna Carta will tell you, “Have you forgotten your history? Have you forgotten your law?” The rule of law in this country is what gives us liberty. It is not just a question of the European Court of Human Rights; it is also Magna Carta, which is really the foundation of all these things. To seize somebody’s property, even by an Act of Parliament, would go against the whole reason why Magna Carta came out and gave us the rule of law, in the end.

Let us be very careful in this Bill. If you take away somebody’s property without compensating them, those barons from 1215 will be rising up and saying, “Remember your history, remember your law, remember the tradition that it has created, and safeguard it”.

I do not think that freeholders are simply wanting to hold on to things, in the way that the noble Baroness described some of them, or are not doing any good charitable thing. I live in Berwick in Northumberland, and the duke there has plenty of other things. I have also seen some of the charity work that is being done.

Let us not use language and words because we are enthusiastic in one direction or another and ignore the Magna Carta. It is what has given freedom and liberty even to newcomers such as me. My friends, the rule of law cannot ever simply be brushed aside because of a desire to correct a particular question. The rule of law matters. The Magna Carta matters.

[Lord Thurlow (CB)]

My Lords, I support each of the three amendments in this group. I was going to say that the amendment from the noble Lord, Lord Moylan, concerning compensation, was so articulate that it really needed no reinforcement, but I was not expecting the fine history lesson just now, which has reinforced it with great skill and humour. The noble Baroness, Lady Deech, explained that she taught property law for many years. I studied property law for many years, and I am sure that, if I had studied under her—which would of course not have been appropriate at all in age terms—it would not have taken me so many years.

The expropriation is bad enough, but to add the retrospective characteristic in this legislation is shameful. My principal interest in contributing is the 80-year rule referred to by the noble Lord, Lord Howard of Rising, because that is a very sensible, intelligent compromise to the sledgehammer of absolute abolition of marriage value and hope value in the calculation being entirely reserved to the lessees. Many of the highest-value elements of this paragraph are, indeed, in central London and the south-east, and many are non-resident.

This clause would save the Treasury billions, in addition to earning it some billions, which we heard referred to by the noble Lord. There is logic to the 80 years proposed in his clause. That is the threshold below which mortgagees such as banks and building societies are very reluctant to lend on property. Lessees therefore have no choice but to negotiate an extension if they want to use borrowed money—and, of course, nearly all do. The 80-year rule is a compromise between the very long leases and those moving into the unmortgageable zone. It makes a great deal of sense to cut the pack in this way because it excludes those freeholders of over 80 years but encapsulates the value of the expiring leases. It should be supported.

[The Earl of Lytton (CB)]

My Lords, like the noble Baroness, Lady Deech, I come to this from a professional viewpoint. I am a chartered surveyor and, until recently, I was a registered valuer with my professional body. Coming from my background, I see the balance to be struck. When I was in the public sector, I was dealing with matters of compulsory purchase and compensation. Later on, after the passing of the Leasehold Reform, Housing and Urban Development Act 1993, I became the first chairman of the Leasehold Advisory Service. Although I was not a practitioner in the matter of leasehold enfranchisement, I had a very close up and personal involvement with what was happening there.

--- Later in debate ---

[Lord Bailey of Paddington (Con)]

My Lords, I want to pay tribute to Campden Charities, as I am a beneficiary of the activities of Campden Charities. I came from a community where the likelihood of one of us appearing in the Lords was next to zero, and Campden Charities is an important part of my arrival in your Lordships’ House. I point out that removing the ability of charities countrywide to provide such services would be devastating to some of the poorest communities in this country. Again, I stand here as a witness to the effectiveness of some of the work that they do.

[Lord Thurlow (CB)]

My Lords, it is not on the list but I did put my name to this amendment and I am very keen to support the right reverend Prelate. Much of the debate we have had so far this afternoon seems to be focused on the rich, greedy landlords versus the impoverished tenants. If we strip this away from the debate and focus on these landlords, those addressed in this amendment are charities; they do good. They are not bad actors. Their managing agents, in the case of their property investments, are not bad actors. They are responsible to the Church and they thoroughly deserve this exemption, as we were reminded very eloquently in the excellent few words of the previous speech. I proudly add my name to the amendment.

Leasehold and Freehold Reform Bill

Lord Thurlow Excerpts

Committee stage
Monday 22nd April 2024 Lords Chamber

[The Lord Bishop of Derby]

My Lords, I will speak in support of my right reverend friend the Bishop of Manchester, who is unable to be in his place today and who has asked me to speak to his opposition that Clause 28 stand part of the Bill. This is linked to a similar stand-part debate, in the name of my right reverend friend, relating to Clause 47, to be debated later in Committee.

I declare my interest as a beneficiary, as is my diocese, of the Church Commissioners. I thank the Minister for her engagement with the charities affected by the legislation so far: the Church Commissioners, John Lyon’s Charity, Portal Trust, Campden Charities, Merchant Taylors’ Boone’s Charity, Dulwich Estate and the London Diocesan Fund. I hope she will continue to engage with my right reverend friend to find an amicable solution.

The Church Commissioners for England are the freeholders of the Hyde Park Estate. If we are looking back a long way, the Church can look back longer than most. The Church has had a long relationship with that part of London, starting in 1550 when the Bishop of London was granted the manor. The first leases were granted in 1795, and the Ecclesiastical Commissioners became responsible for the estate in 1868. Like the other charities mentioned, the Church Commissioners have long relationships with their estate. The money generated from the estate beyond the local is used for the betterment of the whole of our society, by the levelling up of communities and the lowest income parishes across the country, including in the diocese of Derby.

Like the other charity freeholders of large estates, the Church Commissioners manage the whole area, focusing not only on the residential properties themselves but on the whole environment, for those who live in, work on and visit the area. Their freehold ownership includes approximately 100 commercial units on the estate, where independent cafés, specialist boutiques and restaurants are mixed alongside amenities for local residents. This by no means affects the Church Commissioners alone; other large freeholders across London and beyond use their mixed freeholdings to ensure that areas have what local residents need, such as a dry cleaners, a pub, a hardware store—I could go on.

I thank the Minister for her letter to my right reverend friend the Bishop of Manchester, received today. However, concerns remain that Clause 28 threatens the ability of freeholders in large estate areas to ensure mixed areas that have all the amenities that people need. If the threshold for collective enfranchisement and the right to manage claims is lowered so that more mixed blocks can initiate a claim, there is a risk of the degeneration of these areas. There is no guarantee that newly enfranchised blocks will have the wherewithal or even the desire to maintain the make-up of the estate area. Leaseholders may not even live permanently in the area, may be foreign-owned companies or may have no active stake in the community. What need would these companies or corporations have to ensure the maintenance of a community? My right reverend friend the Bishop of Manchester said at Second Reading of this Bill that:

“We would lose all the shops that really matter to those who live perhaps not just in that block, but”—[Official Report, 27/3/24; col. 737.]


in the locality.

The amendment of the noble Lord, Lord Thurlow, which would mean that right to manage and collective enfranchisement rule changes would apply only where 50% of the leaseholders are permanent residents in a block, would certainly be a step in the right direction. At least there would be a guarantee that those managing mixed blocks would have an active stake in maintaining community resources, including shops. Could the Minister tell us whether the Government could make proposals to ensure that great estate areas, such as the Hyde Park Estate and others, are not adversely affected? Nobody wants to see local shops, amenities and community hubs closing as an unintended consequence of the Bill.

[Lord Thurlow (CB)]

My Lords, I turn to my Amendment 18 in this group. I begin by declaring my interests as both the owner of two buy-to-let investment flats and the occupier of a flat, all on leases. I stand to benefit under the Bill in both situations, which is quite patently wrong.

I thank the right reverend Prelate the Bishop of Derby for articulating my amendment with greater ability than I can. I want to turn specifically to mixed-use buildings and the proposal to move from a 25% threshold for enfranchisement to 50%, and build on the comments of the noble Lord, Lord Sandhurst. Mine is a straightforward proposal: simply that lessees who are not occupiers living there as their primary residence should not benefit from the great wealth transfer that is going to take place through the enfranchisement process. It cannot be an intended consequence of the Bill.

My amendment requires that at least 50% of leaseholders should satisfy the residence occupancy condition for any collective enfranchisement to apply. I remind the Committee that I am thinking of mixed-use buildings. A very complex management expertise is required in looking after mixed-use buildings; the skills are not the same for commercial property as for residential property, and the scope for mistakes and delay is huge. The potential to improve and curate an environment through single ownership of an expansive area has been very clearly described. To expect such behaviour to continue responsibly is almost impossible under the Bill as it stands.

We have also heard that, in London and the south-east, some 50% of tenants are not residents but foreign nationals living elsewhere, with ownership registered abroad. Are they taxpayers? This group often do not want to be identified. They shroud their property in ownership interests in offshore companies, as we have heard. They are very slow to respond, doing so from time to time, let alone to offer up money when required. If the Government do not agree that 50% of leaseholders in a block should be permanent residents, can I have an informed estimate on how many billions of pounds is expected to be paid in compensation to this cohort of wealthy foreign nationals, should they pursue this new enfranchisement entitlement?

[Lord Truscott (Non-Afl)]

My Lords, I declare an interest as a long-standing leaseholder of some 30 years. I have been a leaseholder in apartment blocks in London, Kent and Somerset, and a right-to-manage director in two apartment blocks.

I support His Majesty’s Government’s Clause 28, which seeks to raise the non- residential limit on collective enfranchisement claims from 25% to 50%, as mentioned by the noble Baroness, Lady Taylor of Stevenage. I consequentially oppose the proposal of the right reverend Prelate the Bishop of Manchester and the noble Lord, Lord Moylan, to vote against Clause 28.

Your Lordships have heard how giving more say to leaseholders in mixed blocks of residential and commercial units would be a bad idea and negatively impact on investment and the effective running of these blocks. It has been said that reform would only help some foreign leaseholders and investors and would result in fewer homes being built. That is far from the case. I have lived in two blocks of mixed developments: one was controlled by a residents’ right-to-manage company, with a NatWest bank in the basement, and another contained a number of commercial units and was 100% controlled by the freeholder. I can say categorically that the right-to-manage block was run better and with cheaper service charges. The freeholder-run block exploited the residents, cross-subsidising the commercial units at their expense and giving them no effective say over how the block was run. I point out to the noble Earl, Lord Lytton, that the difference was that the RTM block was actually run by the residents, who were managing their own money, whereas the freeholder block was run by a managing company and the freeholders were profligate with the use of residents’ cash.

Let us be frank: maintaining the 25% cap is about the freeholders retaining control and not about fairness or efficiency. If anyone lives or invests in a flat in a block, they should have a say over how it is run. For that reason, I oppose the amendments in the names of the noble Lords, Lord Thurlow and Lord Sandhurst, which would restrict enfranchisement and further strengthen the position of freeholders by limiting the number of leaseholders who can vote on and manage their own blocks of residents. RTM directors are perfectly capable of managing mixed blocks of developments.

Leasehold and Freehold Reform Bill

Lord Thurlow Excerpts

2nd reading
Wednesday 27th March 2024 Lords Chamber

[Lord Thurlow (CB)]

My Lords, there is much to be applauded in the Bill before us today. However, I am concerned that in seeking their objectives the Government are using a sledgehammer to crack a nut. The law of unintended consequences shines brightly through these proposals, and I shall address some of these concerns. I declare my interests as a retired chartered surveyor, as well as other items on the register. I am also a leaseholder of a flat. I thank the Library for its excellent briefing, and others who have provided experience and expertise.

I said that there is much to be applauded in the Bill, and there is. We have heard a lot about squeezing out bad practice from managing agents—I think it misses the point. There is improving the rights of occupiers—sometimes. Reducing ground rents and their review patterns—agreed but flawed. Improving the lease extension process—agreed. That is not a good school report. There is a shortfall; there are omissions in the Bill, missed opportunities and uncomfortable Henry VIII clauses, which are highlighted in the Delegated Powers and Regulatory Reform Committee report.

First, I will look at the impact of the Bill on investors, who are the freeholders. Here I will build on the comments of the noble Lord, Lord Howard of Rising. There appears to be a misunderstanding within government that freeholders are frequently bad actors in freehold disguise. Of course, there are some of these and they need to be brought to heel, but the vast majority of freehold residential ground rents are now in the hands of institutions—life insurance companies, charities, endowments, pension funds and other legitimate investors.

We should consider for a moment why these institutions invest in freehold ground rents. They do this because they provide a certainty of income, which, crucially, matches their liabilities. Removal of this value may impact the capital adequacy of these legitimate organisations, itself attracting the interest of regulators—government through another door—and will almost certainly require significant government compensation for the loss of value these proposals will inflict. Some pensions will fall in value and some legitimate investment managers, who have been entrusted with the husbandry of those assets, risk administration.

I see nothing in the Bill offering compensation for those who will suffer this collapse in value. I look forward to the Minister’s proposals concerning compensation and find it curious that this has not been recognised and addressed. I hope it is not being left to Mugabe-style economics: simply stripping one group of property owners for the benefit of another.

I turn to the abolition of marriage value. The noble Lord, Lord Palmer, usefully defined the phrase. When valuing a property, be it residential or commercial, marriage value is calculated to apportion value-sharing between freeholder and leaseholder, which is then divided either according to formula or agreement. Abolition of marriage value does not just interfere with the division of proceeds for a lease extension, it gives the entire sum to the head leaseholder—much better for there to be a regulated sharing arrangement.

Do the Government recognise that many of those leaseholders are not the occupiers? Many investors have bought leasehold flats and houses as investments on long leases specifically to sublet them to third parties—they are very good investments. They are buy-to-let landlords—they are investors and not occupiers. As we have heard from the noble Lords, Lord Campbell-Savours and Lord Palmer, many of them are foreign nationals. Many of them buy through companies registered overseas that probably pay little or no tax. We heard some figures relating to the volumes of money that could be transferred in this direction.

For such foreign-based investors, the Bill is the Christmas present of all time. Make no mistake, smart investors, recognising this forthcoming windfall, are already buying residential short and medium-term leases precisely for this purpose. Having cheaply extended the lease, they will immediately reoffer the flat for sale with vacant possession and enjoy the big lottery win. These winners—I repeat, these winners—are not the occupiers the Bill is designed to protect; they are speculators.

The Bill provides a huge transfer of wealth at the stroke of a pen, and not enough thought has gone into how that wealth will be distributed. The assumption that it is always the occupiers who will be relieved of the pain of paying for a lease extension is simply not the case. We should be clear that the great transfer of wealth the Bill seeks to engineer is going largely to speculators and not to the occupiers. Occupiers are often sublessees, even on long leases. Does the Minister intend to introduce an amendment to ensure that it is the occupiers, and not the investors, who will benefit from this change in the law?

Regarding the right to manage, in principle giving the residents of blocks of flats the right to manage the building is fine, but in practical terms it would be much better to tighten up on the rules applying to bad managers than to make the right to manage by occupiers so straightforward. Bad property management is one of the drivers of the Bill and, without further thought, things may not improve. The process of enforcing service charges, calculating service charges, dealing with those who refuse to pay their share, dealing with building services, and more, is not easy—certainly not easy for residents unless they instruct agents.

I ask your Lordships to consider someone living on the upper floor of a multistorey block of flats with no lift, because the right to manage has been applied and the manager cannot collect the necessary dues—they are not organised in the process of doing so—to service the lift. It can get worse—think for a moment of the disabled, unable to use the stairs. I have a close friend who is wheelchair bound and currently stranded on the upper floor of a modern block of flats because the lift has been out of service for several months. That may become the norm—a clearly unintended consequence. The right to manage needs better construction.

We have heard from numerous speakers that it would be far more effective to better regulate expert property managers and require qualifications. I fear that there will be a difficult time ahead for residents of many blocks of flats who decide to manage themselves and become entangled in a complex business that they do not fully understand, with its legal obligations. Nor will they, with all the best will in the world, have the skills to deliver—the noble Lords, Lord Moylan and Lord Bailey, clearly illustrated this. Other than for very small buildings, the right to manage should be subcontracted. This brings us back to the need for regulation and qualifications for managing agents.

Touching on service charges, I applaud the changes proposed—transparency, response times, removal of unfair practices, open reporting and penalties for non-compliance. All these and more are good. However, I do not believe the £5,000 maximum penalty proposed for bad property management behaviour is nearly enough. While it may seem high in relation to the service charge for an individual flat, it could be a very small sum of money for the firm of property managing agents which is looking after hundreds, if not thousands, of flats. This figure needs increasing to the point that it hurts, thus positively encouraging a managing agent to exercise their functions well and with the occupier’s interests in mind.

The right to manage mixed buildings has been discussed extensively this afternoon. It is hugely complex. Non-residential elements in such buildings need expert attention to an even greater extent than in blocks of flats. It is not layman’s territory. To allow residential leaseholders to manage a mixed-use building with a significant percentage of non-residential floorspace is inviting trouble, particularly when development opportunities arise. These days, such developments frequently create large volumes of housing units, helpfully adding to the Government’s targets. This will almost certainly be lost as the ownership, control and management of those properties are transferred to the residential occupiers’ management company or, in many cases, the foreign nationals and companies registered overseas who are already rubbing their hands in anticipation. That is unless, of course, the residential management team brings in the skills, but that is not without cost and it is likely to be an expensive exercise. Notwithstanding best intentions to try to exercise these functions in practical terms, it will be almost impossible, as what might have been a significant development opportunity stagnates or becomes broken up, and the critical mass required for major redevelopment is lost.

As I said at the beginning, there is much in this Bill that I applaud, but I fear it has not been sufficiently carefully thought through.

Levelling-up and Regeneration Bill

Lord Thurlow Excerpts

Report stage
Wednesday 13th September 2023 Lords Chamber

[Lord Stunell (LD)]

My Lords, on this side we are sympathetic to the intent of the amendment from the noble Lord, Lord Carrington, although somewhat doubtful about the mechanism he has proposed. I think we all want people who are subject to compulsory purchase orders to be treated in a humane and certainly human rights-compliant way. We do not want to return to the days of Crichel Down and everything that emerged from that.

Nevertheless, I think the noble Lord, Lord Carrington, made it clear that he saw the fundamental problem being one of resources and a search for a less mechanistic way of enforcing compulsory purchase regulations. I would be interested to hear the Minister respond and, I hope, confirm that purchasing authorities will be given support to make sure that they take that process through speedily, particularly the payment of compensation, and in a timely fashion.

[Lord Thurlow (CB)]

My Lords, I declare my interests as a former chartered surveyor. The current CPO guidance attempts to deal fairly with owners who are caught up in the process of having land acquired under compulsory purchase, but it remains a blunt instrument. This amendment requires the Government to provide a duty of care, which is an excellent proposal. It is also appropriate, as we heard from the noble Earl, Lord Lytton, that compensation under CPO is paid on transfer, as it is when any citizen in this country buys or sells any of their private property. I see no reason at all why it should not also be the case under compulsory purchase. I support the amendment.

[Baroness Taylor of Stevenage (Lab)]

My Lords, the powers introduced by this section amend and clarify powers and procedures for using compulsory purchase and have been extensively consulted on—unlike some other parts of the Bill. The LGA’s view is that the introduction of measures that would genuinely make the CPO process more efficient for councils is an encouraging step, as it has previously lobbied on the need to reduce the time taken to use the CPO, and it also believes that these changes will make the valuation of change in this context closer to a normal market transaction.

In fact, the LGA view is that the Bill could have gone further. It would also like to see the ability to tackle sites which have had planning permission for a long time but which have not been built out through stronger compulsory purchase powers, and the removal of the requirement for permission from the Secretary of State to proceed with a CPO, which would expedite the process for local authorities. Of course, the Secretary of State could always retain the right to call in in circumstances where it would be necessary to do so.

I listened carefully to the noble Lord, Lord Carrington, and the noble Earl, Lord Lytton, and I am sympathetic to the specific issues they raised, particularly the issue about prompt payment for purchases of land. Perhaps I have had an unusual experience of the CPO process but the conditions are already stringent, both in setting out the process for a site qualifying for a CPO and in the requirement for valuation of that site. Therefore, while I appreciate the thinking behind the amendment, it seems that there is already guidance in place—indeed, the amendment refers to it. I look forward to the Minister’s response.

Non-Domestic Rating Bill

Lord Thurlow Excerpts

Committee stage
Monday 3rd July 2023 Grand Committee

[The Earl of Lytton (CB)]

My Lords, I have four amendments in this group, of which Amendments 8, 10 and 13 relate to the matter explained by the noble Baroness, Lady Pinnock. Amendment 14 is a little different and to do with downward-only transition.

Before I go any further, I should have thanked the Minister earlier for her drop-in sessions and her willingness to engage on the Bill. To some extent, it is a joint venture between business, professions and the Government in trying to wrestle with the issues of local government revenues. I understand that.

The purpose of Amendments 8, 10 and 13 is to create an ability for the Secretary of State to adopt a shorter cycle, be it of one year or two years, but they are not prescriptive as to what that might be. That is simply because, having considered the situation and how things have bedded in, the Government should at least have the ability to do so without then seeking a legislative slot later. Although it is counterintuitive to suggest anything that might smack of a Henry VIII clause, this is a sort of Henry VIII clause that I think might be useful in this particular instance.

I pick up something that the Minister said at Second Reading, which the noble Baroness, Lady Pinnock, mentioned, namely the potential instability of more frequent revaluations. However, this does not seem to be a problem in Hong Kong or Scotland; why should it be here? The noble Baroness, Lady Pinnock, alluded to my next point, which is that the stability of the system is within the gift of the Government in terms of their wider policies. I would argue that it is the level of business rates—levied at around 50p in the pound at the assessed rateable value—that is itself the harbinger and cause of a degree of instability. Professionals and businesses just need to feel that there is a better commitment—a more bankable expression of intent—about this. That is why these amendments would serve to allow the shortening of the revaluation gap and, of course, its attendant antecedent date.

I now turn to Amendment 14, which, had I spotted it before, I might have disaggregated from this group because it relates to downward-only transition. Although the Minister made some hopeful noises at Second Reading, I have not yet persuaded her to signpost the permanence of what is otherwise a very welcome item in this Bill; namely, the removal for the next revaluation of downward transition. It always seemed to me invidious that those whose rateable values were reduced should see the benefit only by such minimal and curmudgeonly means as to deprive them of the effect of a significant reduction, not just for many years but, sometimes, for many revaluations. Now that the principle is established that the transition no longer has to equal and offset the transitional phasing of increases by those who should be paying, it is time to confine this rather dishonourable measure to oblivion, if I may so suggest.

Let us not forget that, for every measure of palpable unfairness, perceived or actual, in the business rates, there will be an unknown number of potential entrepreneurs who simply will not lay themselves open to such practices because they see the system as unfair and operating unfairly against them. To that extent, the system is not as elastic an economic function as may be supposed. That is the background to my amendments.

[Lord Thurlow (CB)]

I take a slightly different position. I support these amendments, but I want to introduce a brief note of caution. The case for a reduction in the frequency of updating rateable values has been extremely well made, but I think experts should have a voice in the proposal. I think we should wait until the three-year review process has bedded in and all interested parties should then be free to comment, before reducing that interval further from three to two years, or even one year. Clearly, the VOA has a central role—the most important role—but ordinary ratepayers have a role too. It is possible that an annual or biannual revaluation will become unworkable. That is unlikely with digitisation and the wider use of technology, but any period longer than one year between revaluations is, by definition, quickly out of date. We saw that in high relief with volatile rental markets during and following Covid.

My amendment suggests that the Government listen to the view of the VOA, of course, but also to the RICS, the Rating Surveyors’ Association and the Institute of Revenues Rating and Valuation, together with other accredited advisory groups, before making a decision on these further reductions. I ask the Government to write into the Bill that they will listen to the voices of these experts before further reductions are agreed to.

[Lord Shipley (LD)]

My name appears on three of the amendments in this group. I think that the case made by the noble Lord, Lord Thurlow, is very strong. We have to be certain. I believe a reduction from three years to two years—and, in an ideal world, to one year—would be the right thing to do.

I should state for the Committee stage, however long that lasts, that I am a vice-president of the Local Government Association.

I am convinced that currently revaluations are too infrequent. The Government have accepted that case. We are going to three years, and that is indeed better, but to reduce appeals and to ensure a fairer system requires two years or fewer. Like my noble friend Lady Pinnock, I will be very interested to know why we cannot draw on the comparator of the Netherlands since it does a revaluation every year.

There are clearly advantages to more frequent revaluations. We will have fewer appeals because the valuation would be more accurate. It would be fairer to businesses and reduce complaints about the system. I read very carefully the letter the Minister wrote after Second Reading, but it is not clear to me that there are any administrative barriers to moving from three years to two years.

We support Amendments 8 and 10, which suggest that the Government introduce a change to two-year revaluation or to one-year revaluation by order, as long as the affirmative procedure is used. As I said a moment ago, I think the points made by the noble Lord, Lord Thurlow, matter. I hope the Government will pay particular attention to Amendment 12 because it would enable us to be certain that it would not be a mistake to move to two years. We are sufficiently open to say that we want to go to two years and would like to go to one year, but we are very happy to build in a timescale which enables that to happen securely.

--- Later in debate ---

Moved by

[Lord Thurlow]

15: Clause 10, page 19, leave out lines 4 and 5 and insert—
“(2) V must disclose the information to P without delay if requested by P.”Member's explanatory statement
This adds an obligation on the Valuation Office Agency to reveal their rental comparables/evidence used in arriving at a Rateable Value when challenged in the interests of transparency. This may satisfy ratepayer concerns at fairness early in the process and reduce the numbers resorting to appeal.

[Lord Thurlow (CB)]

I declare my interest as a former chartered surveyor. I should have done so earlier, and I apologise. I, too, join in the chorus of thanks to the Minister and her Bill team for the help and meetings a week ago. I also thank the noble and learned Lord, Lord Etherton, who is absent, for adding his name to my amendments in this group. I am sorry that he is not here to add his voice. This group of amendments is focused on the operation of the VOA and rooted in the desire for transparency for the ratepayer. It is a matter of simple public interest.

The current arrangements require registration for the check, challenge, appeal process before the VOA reveals the evidence it relied upon in assessing rental value. Amendment 15 questions why the VOA should be so secretive. There is no need for it. On appeal, the evidence is revealed, so why not admit it on first inquiry without the need for the CCA registration process? We all hope that the VOA’s figures are correct when assessing new rateable values and that its assumptions in arriving at them are well founded. It is hoped that, by the evidence being shown at the outset of any inquiry, most ratepayers would agree with the VOA’s evidence and accept its valuation. This would avoid the cost, resourcing and administration of the CCA process for the VOA and ratepayers.

With the help of the RICS, I have looked at some of the statistics for recent check, challenge, appeal numbers. In the quarter to March this year, more than 10,000 CCA notices were received. This is the first stage in the appeal process. Fortunately, 90% of them came from interested persons, and I believe that means ordinary people, not agents acting on behalf of ratepayers, so the leaseholder or the freeholder. It is a good thing in the absence of a requirement to use accredited agents, which we will come on to. But 10,000 registrations is an unusually high number. It is to some extent the result of the publication of the latest business rates revaluation. It must put great pressure on VOA resources.

If I am reading the VOA’s published data correctly, in the rating list period 2017-23, 30% of challenges resulted in a reduction. That is far too high. It suggests that the VOA may be taking a bullish view of estimated rental value, rather than an objective one. The VOA translates from estimated rental value to rateable value. This is very likely to lead to a growing trend towards challenges of the fairness of assessments, which is a concern. I do not want to overlook the fact that 70% of CCAs were found in the VOA’s favour, but 30% is still too high for successful appeals. My amendment seeks to reduce the volume of CCAs by thousands of appeals through applicants withdrawing at an early stage in the process.

My other amendment in his group is Amendment 17. It is a simple matter concerning confidentiality of information. Occasionally there is a confidentiality clause in a rent review or a new letting. There may be a means by which the VOA can obtain that detail but the ratepayer cannot. There may be other reasons for confidentiality. Why should the VOA be allowed to factor this evidence into its assessment if the ratepayer may not? It is akin to the VOA informing the ratepayer that it has information it cannot reveal which supports its figures. My amendment does not dispute the reasons for confidentiality being protected—not a bit—but requires simply that any information which cannot be shared with the ratepayer must be disregarded. The ratepayer must be empowered to challenge all the evidence used against them. I beg to move.

[The Earl of Lytton (CB)]

My Lords, I have five amendments in this group. I support the noble Lord, Lord Thurlow, in what he has just said in relation to Amendments 15 and 17. My Amendment 16 follows on from that, and for that reason I will be quite brief about it. The amendments tabled by the noble Lord, Lord Thurlow, and my Amendment 16 seek to provide a duty on the Valuation Office Agency to provide such information, subject only to data protection legislation.

This addresses something that has been a bone of contention for many years, namely that a target and tax revenue focus in HMRC seems to have affected areas of Valuation Office Agency practice to the point where—or where the appearance has been that—evidence has been withheld, right up to tribunal-stage appeals. Over the years, as I have monitored the updates from the Rating Surveyors’ Association and others, I have noted with alarm some examples—I hope these instances are few and far between—of appalling and unprofessional practice, not, as one might suppose, from rating agents of an indifferent moral persuasion and possibly no professional training at all, but from the VOA itself. I worked for the VOA’s predecessor body, the Inland Revenue Valuation Office, for nearly seven years. Then, it was held in universally high esteem for its ethical and professional principles. It would be highly regrettable if, as time has gone on, that were no longer a given—I want to stress that.

This amendment does no more than insist on the same standards for disclosure and candour from the VOA that it requires of private sector agents acting for ratepayers. If this or something similar is not agreed to, there will be not only a rising tide of criticism within the profession but some sort of backlash from the First-tier Tribunal and Upper Tribunal, which will ultimately force the issue. We need to deal with that at this stage.

I move on to Amendments 18 to 20 in my name. Again, I can deal with these quite briefly. All three interlinked amendments try to remove the requirement for an annual return. The principle is that the requirement for notification arises only when there is a change in that status requiring the notification. At Second Reading, there was some consensus that the proposed volume and frequency of making returns to the Valuation Office Agency in relation to changes was misconceived. We heard that it would bring into scope some 700,000 hereditaments on which an additional return-making duty will fall—we are talking about a return per hereditament, not a blanket return per operator. If you are, for instance, an outdoor advertising company—that trade body has been in touch with me, as it has with many other noble Lords—with thousands of billboards, or an operator of cashpoints, this starts to matter. I do not know whether the latter is a good or bad example.

I accept that, if we move to two-yearly or yearly valuation, the real-time provision of data capture becomes that much more important. But why, in all logic and seriousness, if a return is required for a change within 60 days after the event, is it also necessary to make an end-of-year return in addition for the same hereditament, especially as a form of return can be requested at any time by the VOA? To put it another way: the desire for real-time notification and coherence of VOA record-keeping cannot be a justification for unnecessary duplication of duties on the ratepayer. I really do not think that this should be a matter for negotiation; it is a matter of straightforward common sense.

I move on to Amendment 21 in my name. It seeks to ensure that ratepayers do not receive retrospective increases in their rating liabilities where the Valuation Office Agency has not acted promptly on the receipt of ratepayer-provided information. It is to prevent retrospectivity where there is delay in acting on the ratepayer’s provision of information on a notifiable event. Its intention is to cover all situations where the rateable value is likely to be affected, including entering a new hereditament into the rating list. I think it is basically self-explanatory, but it is the counterpart to the duties on the ratepayer to furnish information in a timely manner and, of course, the penalties for failing to do so—about which more in due course.

--- Later in debate ---

[Baroness Scott of Bybrook (Con)]

We will be in touch.

[Lord Thurlow (CB)]

I thank all noble Lords who have taken part in this group. I thought that the reference made by the noble Earl, Lord Lytton, to a timely VOA response was particularly apt, and I was grateful for his support just now on Amendment 17 on confidentiality. I thank the Minister for the offer to follow up.

The comment from the noble Lord, Lord Shipley, that the amendments in this group are simple common sense was one of the most powerful pieces of oratory that I have heard this afternoon, and I hope that it materialises very soon. I admired his well-made comments about the rogue agents, and once again I thank the Minister for her comments in that regard, as to how the Government intend to protect the public. I thank the noble Baroness, Lady Hayman, for identifying a number of concerns over the VOA’s resourcing, which tie in directly.

--- Later in debate ---

The final review I ask for, in Amendment 35, is simply for an impact assessment. Do these changes actually incentivise improvements to business premises? Will business benefit from more frequent valuations? The amendment asks the question about devolving more powers over business rates to local authorities. These are important changes. Reform and review are at the heart of the amendments, and I look forward to hearing how the Minister will respond, especially to Amendment 36 in the name of the noble Lord, Lord Thurlow.

[Lord Thurlow (CB)]

That was an impressive introduction. I apologise for bringing this up so late. I was not going to table it, as it was too difficult, but I just could not not do so. I give great thanks to the Table Office for drafting and help.

This group is listed as reliefs and reviews, and I feel strongly that we should dwell more on reviews than reliefs. While injustices should be addressed in the short term with financial relief, the non-domestic rating system is broken, and it seems that the attempts to fix it have become too difficult and it has become easier to throw taxpayers’ money at reliefs than to review it. I believe that the attempts to resolve the injustices in the system have simply been considered too difficult—as I did until last night, or Friday—and have been kicked into the long grass. I would like nothing more at all than to hear from the Minister that action is expected very soon.

One particular injustice, perhaps the most trumpeted, is that of the small high street retailers we have heard about, struggling to survive against the onslaught of internet shopping. In ordinary business terms, the free-market economy dictates the survival rate of businesses, but in this case there is an important further dimension—so much more important—which is the public interest case for healthy high streets. They provide a social necessity to our communities, a valuable asset in the social fabric. We know the subject is complex. A number of high street retailers and major supermarkets have websites; some SMEs may rely on them. These and other good reasons simply complicate the matter; they do not make it impossible.

There is a fiscal irony here. The growing turnover and profitability of internet retail is directly felt in the high street by falling demand. Falling demand translates as falling rental value. It follows that the rateable value will fall. Without this amendment or something similar to it, net tax receipts will also fall. Introducing fairness to the rates paid by internet retailers will go some way—possibly a very long way—to making up for the loss of high street rate contributions.

The solution lies in a new property use class for the purposes of assessing NDR—not to overlap with use classes in the planning Acts; I would run a mile from that. This would be purely for rating. It would correct the current major imbalance between retailers paying warehouse rates and high street retailers paying high street rates. Warehouse rates are a fraction of high street equivalents. Internet retailers know this, and their profits swell by the artificial discount the system supports.

The amendment proposes that the Government conduct a review to make recommendations for a new rating use class. It would harness expertise from the commercial property sector. The amendment gives the Government 12 months to bring a new Bill before Parliament with recommendations to correct this widely recognised injustice.

[The Earl of Lytton (CB)]

My Lords, I support the amendments in this group. At one of my meetings with the Minister and her Bill team I was told that it was not HMRC—or they may have said Treasury—practice to produce an impact assessment as such, and I was directed to a series of notes in lieu. But business rates have an impact on business, employment, entrepreneurial activity and the health of our high streets, and have long seemed a substantial tipping point in decisions about taking on premises, where the tax levied is 50% of the determined market rental value. That puts into shade the collective cost of things such as insurance service charges and other occupational outgoings.

There is a basic imbalance here; I have said so on many occasions in the House and elsewhere. Upfront impact assessments and post-legislative review are exactly what is missing here. I agree with the noble Baroness, Lady Pinnock, that small business relief and small business exemptions are almost an admission of the failure of the system we have.

Turning to Amendment 36, tabled by the noble Lord, Lord Thurlow, I totally agree with its underlying principle that the tax base for local government finance needs to be broadened, with proportionately less of a burden falling on what we might call the traditional business rate payer. This is becoming an impediment. What are termed fundamental reviews have been a great deal less fundamental than they ought to have been. The system has been creaking for some time and one should take notice when things start to creak; it usually means that something is wrong. I very much relate to these amendments, and I look forward to the Minister’s comments.

Non-Domestic Rating Bill

Lord Thurlow Excerpts

2nd reading
Monday 19th June 2023 Lords Chamber

[Lord Thurlow (CB)]

My Lords, perhaps I may introduce my remarks with the fact that I am floating high on a cocktail of painkillers, in advance of dental surgery tomorrow. If I start mumbling, dribbling or reading out the order of business by mistake—or indeed, if I keel over—I apologise in advance, and please move on gracefully to the next speaker.

I declare my interests as on the register. I am a former chartered surveyor and responsible for property that is subjected to non-domestic rates—but it is in Scotland, which is out of scope.

I fear that the Bill is a missed opportunity. I believe that it passed quietly through the other place, as the noble Lord, Lord Shipley, explained, so it had little scrutiny there. Yet the current system is not fit for purpose: it is clunky, out of date and difficult for ratepayers to navigate. It is also inequitable, because some people pay too much and some too little. The Bill is a start in a number of ways, but why not finish the job? How many more non-domestic rating Bills can we expect?

The Bill addresses some of the concerns but the focus of what is substantially a technical Bill fails to consider major current injustices, which the Government seem reluctant or unwilling to grapple with. I am going to address just four of these headings quickly today. In doing so, I thank the RICS for its help and the Minister and her Bill team for the briefing conversations last week.

My first point is on transparency. The subject of valuation for rating is quite a dark art. Rateable value is assessed by the VOA, as we have heard, and is meant to reflect the estimated rental value of commercial property. Yet, on receiving one’s rating assessment, one sees no reference whatever to the evidence upon which that assessment is based. To probe this opaque state of affairs, where all the cards lie in the hands of the state, it becomes necessary to lodge an appeal—an expensive and time-consuming process. There are thousands of appeals in the queue. Further, small businesses simply cannot afford the cost of an appeal. As we have heard already, they are unlikely to understand the process and will simply accept the assessment. In these difficult times, this pushes their businesses nearer and nearer to closure. As we just heard from the noble Baroness, Lady Thornhill, 47 businesses are going bust in the high street every day. There should be clear transparency as to the evidence used by the VOA.

My second point is about rogue advisers. I beg your Lordships’ pardon; it is on public interest. Small businesses are the backbone of the rural economy, encouraged in so many ways by the Government. The simple example is high street shops. In the hundreds of smaller market towns throughout this country, those small shops now compete with Amazon and others in a fight that they cannot win, certainly not when they are paying rent twice, or certainly another 50%-plus in commercial rates. High streets are the heart of these small communities. Combining shopping with social contact is really the essence of a thriving small society. People bump into each other; they stop to chat, and might go and have a cup of coffee together. This is a vital antidote to loneliness and the mental health risks that are so trumpeted by government. Rates are pushing these small shops out of business. Retailers can control so many of their costs: their labour costs, their inventories and supply lines, their energy use and opening hours. They cannot control rent or rates—but they can negotiate with their landlord.

On rogue surveyors, which has been touched on already, the Bill is changing dramatically the system of non-domestic rates. The resulting fear and misunderstanding from SMEs will almost certainly lead to a major opportunity for these rogue agents. Rating is a very specialised, professional skill and it is essential that those seeking advice do so from the right people. These people should be, as we heard from the noble Earl, Lord Lytton, from the RICS, from the Institute of Revenues Rating and Valuation or from the Rating Surveyors’ Association. That is what they do. What efforts will the Government make to ensure that rogue surveyors are sidelined from this process? Those organisations I mentioned provide standards and governance to their members. There is no point in chasing a rogue surveyor for bad advice. There will be thousands of appeals, possibly tens of thousands.

Finally, I would like to mention the internet threat. Why, oh why, have the Government ducked this issue? It is the elephant in the room in any non-domestic rating discussion. The phenomenal growth and success of the low-cost internet sales model is rendering traditional retailers uncompetitive, as is well known. They of course must evolve too, but not against unfair odds. The Bill does nothing to address the valuation imbalance between these two very different business retailing models. It is almost as though the Government deny that this threat exists. The Bill is the perfect opportunity to deal with this and make it fair. Our high streets are dying and the Government know it. Yet they are missing the golden opportunity to right this wrong, and to improve the rating system to meet the user changes taking place in commerce today.

Many SMEs are too big for the small business reliefs, yet too small to have cash reserves or access to competitive sources of capital. I conclude by reminding the Government that simply throwing taxpayers’ money at the SME sector does not fix the problem. I believe it is some £2 billion a year at the moment, which does not even address the problem. This is a great opportunity missed—so much for the fundamental review. We will return to these subjects in Committee.

Levelling-up and Regeneration Bill

Lord Thurlow Excerpts

Committee stage
Monday 22nd May 2023 Lords Chamber

[Lord Etherton (CB)]

My Lords, I draw attention to my amendment, co-signed by the noble Lord, Lord Thurlow—and I am very grateful to him for doing so. The amendment is to Clause 178(4).

Clause 178 is dealing with the vacancy condition, which is one of the conditions for permitting letting or rental auctions by local authorities. My question is probing, to do with certainty. Clause 178 (4) mentions

“Occupation by … a trespasser, or … a person living in premises that are not designed or adapted for residential use”,


but goes on to say that

“this is not to count for the purposes of this section”.

Since the section deals with both what is occupied and what is not to count as occupation, it is unclear what that means. I ask the Minister to make it clear.

I think the intention must be that where a trespasser is in occupation or there is

“a person living in premises that are not designed or adapted for residential use”,

the premises are not to be treated as unoccupied for the purposes of Clause 178(1). That is my understanding. If that is incorrect and it is intended that they should be treated as unoccupied, the amendment provides that if a landlord has taken possession proceedings, they are not to be treated as unoccupied. It is really a question of clarity as to what Clause 178(4) is meant to do here. If the Minister can give a clear explanation from the Dispatch Box, that would help me and may be the end of the matter.

[Lord Thurlow (CB)]

My Lords, I am grateful to the noble and learned Lord, Lord Etherton, for identifying what I believe to be an unintended consequence in connection with the proposed forced auctions of high street property. I am pleased to add my name in support of Amendment 418.

Following many years of practice as a chartered surveyor, specifically in the commercial property market, I am well aware that one of the most difficult challenges that landlords of vacant property can face is that of the unauthorised or illegal occupation of their premises. Securing legal and legitimate possession from an occupier who refuses to leave is expensive and time-consuming and can easily—and unfairly—add to the long list of bad landlord stories.

If that unauthorised occupation involves residential property, the problems of cost and delay can increase significantly. I appreciate that the clause we are referring to does not refer to residential occupation, but commercial shops are frequently let to sole traders who use an upper floor storage space informally as residential accommodation. It is outside the terms of the lease, but it may remain a fact, so it is worth pointing out that residential occupation comes into this amendment.

Amendment 418 is designed to protect a landlord from enforcement by the local authority of the auction process when they are already doing their very best to secure vacant possession. They are trying to get rid of an unauthorised occupier. Without this possession, it becomes impossible to let the property. Who would conceive of signing a lease for a shop as a tenant with an illegal trader already in place? Surely it is wrong to penalise the landlord who is keen to let their property but is unable to do so. While legal action is under way, that landlord receives no rent and is probably paying interest on a commercial mortgage. They are likely in breach of their rental income covenants with the bank, so may be verging on defaulting on that loan, and are likely employing costly solicitors to pursue legal action for recovery of their property. Yet, by this Bill, they could be accused of keeping a property vacant.

The clock should not start on the period defined as “lying vacant” until the property is vacant and is in the landlord’s gift to be let to a tenant. I do not believe that it is the Government’s intention to auction off commercial premises that are the subject of legal action to recover possession, so I ask the Minister to ensure that, while legal proceedings are under way to secure possession, the landlord does not inadvertently fall into the trap of effective confiscation by the authorities.

This amendment is not a matter of policy or principle. It does not dispute the intention of Clause 178. It is simply a practical matter that, unamended, will lead to confusion and conflict between vested interests, which, I am sure, is unintended.

[The Earl of Lytton (CB)]

My Lords, I rise to speak to Amendment 426 in my name. I start by declaring an erstwhile interest as a former property manager of retail premises. It had a high street address, but the main shopping area had ceased to be in the high street some 30 years prior so, when we talk about high streets, it requires a little care in what one is actually referring to.

I pay tribute to the British Property Federation, which the noble Baroness, Lady Hayman of Ullock, mentioned in her excellent and substantial introduction to this group of amendments, but I must stress that these views are mine and not those of the BPF.

I observe that 27 clauses and a schedule is a lot of stuff to have in a Bill of this sort for something that I am advised is a really quite narrow application. However, I am looking in the direction of the noble Baroness, Lady Thornhill, because I suspect that she may have other views on this matter that she will doubtless enlighten us on.

The Government seek to attract overseas inward investment at scale, and UK real estate is one of those attractive asset classes across the world which has a great deal of further potential. I am told by the chief executive of Savills that commercial property investment in the UK runs at about £60 billion annually, about £30 billion of which comes from overseas, so this is a matter of considerable moment. However, we risk serial policy interventions, with a potential adding of burdens, increasing uncertainty and raised investor risk, which threaten to undermine this success story. Commercial rent collection moratoriums were one such thing. While I recognise that they were essential in the circumstances, they did not help.

High streets and retail properties are particularly challenged by the burdens from business rates referred to by the noble Baroness, Lady Hayman, and from floor space oversupply, loss of important anchor tenants, major shifts in shopping habits and general changes in work/life balance. Many properties in regions with the highest vacancies suffer from historic business rates levels, with instances of rates liability being in excess of 100% of the rent. That makes tenancies as unattractive as private sector investment and must be addressed.

Any measure that threatens investment should be looked at critically. As far as the retail investment sector is aware, according to the information that I have from the BPF, there is little pressure across the country to introduce these auctions, and the Government admit that they will be relevant in only a minority of cases to deal with empty properties. I appreciate that if a property is creating a particular problem, it must be dealt with, but given what we are being asked to put into this Bill, I wonder whether we are not using a very large sledgehammer to crack a small nut. The BPF tells me that the likely costs of each high street rental auction to a local authority alone would exceed £6,000. At a time when strained local authority finance is prevalent, this is unlikely to make them a priority. That figure, if correct, is just the local authority’s cost—never mind the other costs for the other parties.

The Bill proposes a scheme which I find complex, with exacting compliance criteria and where decisions of local authorities in their own cause appear to be incontestable, such as a refusal of consent under Clause 184(1). Appeals under Clause 187 would be to the county court, which has its own problems of delay and cost, and may not stop there. Therefore, a potential liability to pay compensation assessed by the First-tier Tribunal on top of that makes this look like quite a chancy operation. None the less, if Ministers wish to press ahead with this measure, the Bill should better distinguish between those property owners seeking a tenant but who have been unable to find one, having used all reasonable endeavours, and those who are just being plain unco-operative, where I can see that there is a perfectly good explanation. I pay tribute to the points made by the noble and learned Lord, Lord Etherton, and the noble Lord, Lord Thurlow, in that respect.

Schedule 16, which sets out the grounds on which landlords might have to appeal against a local authority’s final letting notice, should therefore be amended to include a new Clause 8, as set out in my amendment. It provides a facility for the landlord to demonstrate reasonable attempts to market the property at or below what might be described as a reasonable market rent for at least a nine-month period. That is to provide a safeguard against any capricious approach to the matter. We know that there are difficulties on the high street, and in dealing with certain types of shop premises—their shape, their configuration, their position in the high street, and other things that are going on at any given time, possibly to do with planning policy.

--- Later in debate ---

I conclude, as have the previous two speakers, that Clause 213 is unnecessary, undesirable, inappropriate and capable of generating more damage than it procures benefit. It is discriminatory in that it singles out the RICS for special treatment in circumstances where nearly every one of its areas of activity has at least one other participant body or organisation over which the RICS has no member regulatory function. Whether this makes it a hybrid Bill is something I have pondered; but I am not expert on this, and it is difficult for me to pronounce on such a matter. Like this Parliament, much is held together by conventions, mutual trust, and the wish to share information and to transact other than through letters of the law. The RICS certainly needs to consolidate its reputation. It has been through a period of turmoil—let us make no mistake about that; that is a matter of common knowledge—but it is on the road to putting things in order, and, with the aid of my noble friend Lord Bichard, I have every confidence that it will achieve that. However, Clause 213 is capable of much wider mischief, which will not, ultimately, be in the power of the Secretary of State to put right, if, as I suspect, it goes wrong. So I support the noble Baroness, Lady Hayter, that the clause has no beneficial purpose in the Bill and should be removed.

[Lord Thurlow (CB)]

My Lords, I declare my interest as a former chartered surveyor—I was one for some 35 years; I resigned when I left private practice—and my comments now, which will be brief, are entirely my own.

Why do the Government want to interfere with an independent professional body? I do not believe that architects, civil engineers, solicitors, doctors, nurses or any of the other many noble professions have this sword of Damocles hanging above their professional organisations as is proposed here. The noble Baroness, Lady Hayter, and my noble friend Lord Lytton have mentioned the worldwide influence of the RICS. I was slightly involved with it many years ago; it is extensive and has done ground-breaking work across the world in bringing together the numerous different property-related organisations in the advisory field to try to create common standards internationally. This is the stuff of soft power; it has a royal warrant.

I accept that the RICS has had its own internal issues—pretty serious ones—but it instigated robust, independent reviews and accepted all recommendations. Why does His Majesty’s Government want this power? It is inappropriate. As we have heard, the Bill has all the characteristics of a hybrid Bill anyway, so what on earth is this clause doing in the Levelling-up and Regeneration Bill?

[Baroness Hayman of Ullock (Lab)]

My Lords, I start by thanking my noble friend Lady Hayter for her very detailed and clear explanation of the concerns felt by a number of noble Lords about why this clause is in the Bill at all. I thank the noble Earls, Lord Caithness and Lord Lytton, for their very detailed knowledge and perspective from their professional point of view; that was extremely helpful and I think this is a very important debate.

I added my name to the clause stand part notice because we are also extremely concerned by the wording of Clause 213 as currently drafted. As we have heard, it provides a power for the Secretary of State to instigate a review of RICS at any time and with very few limits in terms of scope, rationale or process. At the same time, it fails to set out any related statutory protections for RICS or for the chartered surveying profession more broadly. Our concerns stem from the fact that this seems a very significant step for a Government to take—to actually create powers to instigate reviews of an independent, member-funded institution, which does not itself, as we heard, exercise any statutory powers. Noble Lords have said they are concerned that this could risk creating a perception of RICS’s inability to act independently and in the public interest. As the noble Earl, Lord Lytton, said, it has nothing to do with either levelling up or regeneration and could set a highly unusual precedent for any other royal chartered body in the future.

We have heard about the independent review by the noble Lord, Lord Bichard, and the previous review mentioned by my noble friend. She went into the detail of what the independent reviews have said. Also, recommendation 14 of the report by the noble Lord, Lord Bichard, required an independent review of RICS to take place every five years. My noble friend said that it has agreed to do that even more frequently, every three years, so I do not really understand what the Government’s concerns are. It strikes me that, despite the concerns the noble Earl, Lord Lytton, laid out about recent issues within RICS, it has taken concerns raised extremely seriously, has accepted the recommendations in this report and is amending the RICS charter and by-laws to reflect the recommendations in full, subject to the approval of the Privy Council.

So my first question to the Minister is: why do the Government feel the need to interfere in this process? RICS itself, having accepted the recommendations in the review, is looking to ensure that it is held accountable in a transparent, orderly and appropriate manner, so I genuinely do not understand why the Government feel they need to legislate, as other noble Lords have said. It would be extremely helpful if the Minister could properly explain.

I also found it very concerning to hear from my noble friend Lady Hayter that there do not seem to have been any recent meetings between RICS and the Government. Can the Minister confirm that and explain what meetings have been held to discuss this and when? It does seem quite an extraordinary step. We support either the removal or the amendment of this clause so that it aligns with the wording of recommendation 14 of the review of the noble Lord, Lord Bichard, if it is going to stay in here. Surely the regulation of professions should be overseen by independent governance and decision-making that uphold the public interest and also guard against any risk of improper interference. Can the Minister explain why this clause is in the Bill? Will he also comment on the suggestion of hybridity, because this is extremely concerning?

Levelling-up and Regeneration Bill

Lord Thurlow Excerpts

Committee stage
Thursday 18th May 2023 Lords Chamber

[Baroness Taylor of Stevenage (Lab)]

Madam Deputy Chairman, we spoke to our amendments in the previous session, so we move on to the debate on the other amendments.

[Lord Thurlow (CB)]

In the absence of my noble and learned friend Lord Etherton, I will begin this debate with specific reference to Amendments 332, 333 and 341.

[The Deputy Chairman of Committees (Baroness Bull) (CB)]

I remind the Committee that we are still debating the group beginning with Amendment 313, if any noble Lord wishes to speak on amendments within that group.

--- Later in debate ---

[Lord Etherton (CB)]

My Lords, I will speak to my Amendments 332, 333 and 341. I am extremely grateful to the noble Lord, Lord Thurlow, for co-signing them. I entirely agree with much that the noble Lord, Lord Best, said. A whole variety of the amendments in this group are aimed at the same principle: how best to increase decent and affordable housing, particularly social rented housing, for those who so badly need it.

Amendments 332 and 333 concern the setting of infrastructure levy rates under new Section 204G of the Planning Act 2008, to be inserted by Schedule 11 to the Bill. Currently under that provision the only requirement in setting the infrastructure levy rates is to have regard to the desirability of ensuring that the level of affordable housing funded and the level of funding provided by developers is not less than before. That is simply not good enough.

As we all know, there is a critical shortage of affordable social housing. The Minister acknowledged this, most recently when answering a Question in the House on 25 April concerning the National Housing Federation’s report, Overcrowding in England, published on 19 April, particularly its finding that one in six children lives in overcrowded conditions. Shelter has reported that over 1 million households are waiting for social homes, and that last year 29,000 social homes were sold or demolished and fewer than 7,000 were built. It also says that there are now 1.4 million fewer households in England in social housing than there were in 1980. These are shocking facts and statistics.

Amendment 332 provides, as noble Lords will see from the Marshalled List:

“A charging authority must prepare and publish a Strategic Housing and Market Assessment specifying what affordable housing is needed within the area of the charging authority … The charging authority must publish a new Strategic Housing and Market Assessment every three years”.


Amendment 333 provides:

“A charging authority must set rates of IL at a level which, in conjunction with the exercise of such other powers as it possesses, is likely to provide not less than the amount of affordable housing specified in its Strategic Housing and Market Assessment over a three year period”.


The Bill would then continue as it currently does, ensuring that there is no lesser level of funding than before. I have specified a period of three years but would be very happy to discuss with the Minister and others whether that would be appropriate.

It would then be necessary to amend new Section 204N, which requires the charging authority to apply the infrastructure levy in funding

“the provision, improvement, replacement, operation or maintenance of infrastructure”,

which is a term defined to include a wide variety of things, from schools and medical facilities to open spaces and the mitigation of climate change. Those are all very worthy causes, but affordable housing is only seventh out of the 10 matters in the definition of “infrastructure”. There is no provision for prioritising one type of infrastructure over another, while the greatest need is plainly for decent and affordable social housing. To have the right and ability to live in a decent home is one of the most basic human rights. Giving priority to the need for affordable housing—more particularly, affordable social housing—is the purpose of Amendment 341, which would introduce into new Section 204N a cross-reference to new Section 204G as we propose that section should be amended.

[Lord Thurlow (CB)]

My Lords, I add my voice to Amendments 332, 333 and 341 from the noble and learned Lord, Lord Etherton, concerning affordable housing, which lies at the root of the Government’s responsibility to their citizens. As we have just heard, it is the duty of government to provide safety and security to its citizens and a roof over their heads. That responsibility includes, at the very top of the list, the needs of the homeless. It is important to remind ourselves that the definition of homeless here includes many of the most vulnerable in our population. They are citizens too, but current circumstances may cause them to question that.

Successive Governments have repeatedly failed to replace council houses sold into the private sector, and this reducing inventory of low-cost housing, however defined, continues against a background of increasing homelessness and need. The Government must somehow finance more affordable housing. These amendments, taken together, will assist in that objective.

--- Later in debate ---

Finally, Glover gives this amendment a strong following wind, and the Government’s own response to the Landscapes Review does so too. I hope the Government are therefore sympathetic to this amendment.

[Lord Thurlow (CB)]

I thank the noble Lord, Lord Hodgson, for letting me add my name to his Amendment 471 concerning rights of way.

I have never been able to understand why the Government wanted to apply a guillotine to registering long forgotten and rediscovered public rights of way. The noble Baroness, Lady Scott of Needham Market, made a number of interesting points but one in particular stood out for me. No one is attempting the equivalent of a land grab here; there is no rights grab going on. There are no compulsory purchase order-type approaches over land. Rights of way are simply a public asset, and that really is the focus of my short remarks this afternoon.

The Government are keen to open up the countryside to the public. The noble Earl, Lord Clancarty, just used the wonderful phrase “taking nature to your doorstep”. Farmers are finding their subsidy linked to the greater good rather than acreage. Access to the countryside is increasingly and frequently cited as a provider of mental health benefits to urban dwellers, and rights of way are one of the very few means of rural access available nationwide. Rights of way have already been levelled up.

The Government have agreed to delay the cut-off date for registering public rights of way to 2031, a token extension, but there seems to be reticence to action their promise to repeal the deadline once and for all. The Bill offers the perfect opportunity for the Government to make good their promise. I would like to know who is prevailing upon the Government behind the scenes to create this anti-social interference with the existing rights of the public, and what entitles the Government to quash the revelation of former rights of way as they are brought to light. We are not requesting new rights of way, simply confirming those which may have existed for centuries. They may have disappeared from the record, but, if verified, have always been there. Surely it is the Government’s duty to protect these public rights.

The key to rediscovering ancient rights of way lies in long-forgotten archives or seldom-accessed archives belonging to public libraries, local authorities, the Church and similar institutions, and to folklore. In addition, they may be found on the ancient maps on the walls of estate offices on large estates. These important ancient rights will inevitably be revealed slowly as the evidence is discovered. Society should rejoice as the network quietly grows, granting greater public access to green spaces. Inevitably, this process of discovery will quietly continue over many years, indeed decades, and to close an ancient right of way is to remove a precious public asset. It is ironic that the Government should be in place to protect public rights, yet willing to abandon them.

As we have heard, there are already thousands of rights of way claims awaiting processing. Some have been in the works for years, and thousands of miles of unrecorded routes need further research. Why do the Government stand in the way of this public service, rather than welcome it? Lift the cut-off date, I urge the Minister, and make good the Government’s promises by supporting the amendment.

[The Duke of Montrose (Con)]

My Lords, I offer support to my noble friend Lord Randall on protected landscapes. We need to know where we are going on this. We are trampling through the devolved competencies. Luckily, Scotland is adopting green policies with even more enthusiasm than local authorities in England, but we always need to bear in mind that the original legislation was the National Parks and Access to the Countryside Act, and originally, and even today, some see the second part as more important, as we were hearing from the noble Baroness, Lady Bennett, and the noble Earl, Lord Clancarty.

I live in a national park in Scotland, and the Scottish Government are providing millions of pounds every year to staff it and provide facilities for the public. On my land, they have just provided £800,000 to improve a footpath. When we think of the value of national parks for nature, it is worth recalling that for a body called the International Union for Conservation of Nature, our park qualified only for level V, because the only limit they had in law was to preserve the topography. We need to make up our mind what level of nature conservation we desire.

A dedicated percentage of land for conservation and marine conservation areas was announced recently, and the Scottish Government have taken it up and announced a timetable for extension of their marine protected areas. This has brought a sense of desperation, particularly to the crofting counties on the west coast, because they see it as a hammer-blow to the crofting way of life, which requires buying livestock, cutting peat, fishing, weaving and crafts. This is a whole culture which could be lost. There are areas where we want to preserve the way of life, as well as nature. I hope that my noble friend Lord Randall’s efforts will point the way.

Levelling-up and Regeneration Bill

Lord Thurlow Excerpts

Wednesday 3rd May 2023 Lords Chamber

[Baroness Scott of Bybrook (Con)]

I completely understand my noble friend’s issue and, as I have said, we are very happy to have a meeting to look at what can be done in the existing system. We know what is going on with the proposed system, but I understand the issues and we will meet further on this with the emergency services.

Turning to Amendments 331 and 346, I thank the noble Lord, Lord Shipley, for speaking on behalf of the noble Baroness, Lady Pinnock, and my noble friend Lord Greenhalgh for tabling these amendments. I agree that ensuring that development is accompanied by the timely provision of the right infrastructure is important to local communities where development is taking place. However, requiring a full payment of the levy up front would impact the viability of development and result in fewer homes, and therefore fewer affordable homes, being delivered. Large developments can be built out over periods of a decade or more, and it is not necessary for all mitigating infrastructure to be delivered in the early stages of that development.

[Lord Thurlow (CB)]

The viability of development, particularly larger schemes, does not put the developer’s position at risk. The increased costs of—in this case—the infrastructure levy come out of the value of the land: in other words, the landowner, who, at the stroke of a pen in a local authority, has seen their agricultural field, for want of an example, rise from £4,000 or £5,000 an acre to £750,000 an acre. That is where the loss of value will occur—in the simple viability of a large development.

[Baroness Scott of Bybrook (Con)]

I thank the noble Lord for that. As I said, large developments can take a decade or more to build out and we do not want to build infrastructure, only for it to stand idle for a long time. This would increase costs for developers, reducing the amount of money that can therefore be put towards other infrastructure and affordable housing, without generating additional benefits for the communities. I agree that infrastructure must be delivered in a timely way, but that means neither too early nor too late. I will turn in a moment to the powers in the Bill that will allow this.

Levelling-up and Regeneration Bill

Lord Thurlow Excerpts

Committee stage
Wednesday 22nd February 2023 Lords Chamber

[Baroness Pinnock (LD)]

My Lords, good debate. I agree.

[Lord Thurlow (CB)]

My Lords, I was concerned that, after quite a sky-level discussion of missions and strategy and things, Amendment 42 was going to be very specific and granular. We have had some outstandingly worthwhile speeches in the last few minutes, and I congratulate all those who sponsored the Bill and who have spoken so far.

I was going to speak in a granular sense as well about insurance, proposed new subsection 3(e) in the nine small but specific letters of this amendment that we are forcing the Government to address, if it is adopted, in the event that a report says that this should be done in the interests of levelling up. We have had such a good exposition on insurance scams from the noble Baroness, Lady Fox of Buckley, that I am not going to say what I was going to, which would only repeat much of what the noble Baroness said—but I do hope that we can get into the granular level of these injustices for leaseholders as the Bill progresses.