Leasehold and Freehold Reform Bill
Public Bill Committee, 16 January 2024.
Edward Leigh (Conservative, Gainsborough)
Before I begin, I have a couple of announcements. Hansard colleagues would be grateful if Members emailed their speaking notes to hansardnotes@parliament.uk. Obviously, electronic devices should be switched off.
Edward Leigh (Conservative, Gainsborough)
I take it that we do not need to move the motion about deliberating in private; just intimate to the Clerk or me that you want to speak, and we will proceed informally. We are sitting in public, and the proceedings are being broadcast. Do any Members want to make a declaration of interest?
Matthew Pennycook (Labour, Greenwich and Woolwich)
My wife is the joint chief executive of the Law Commission, and we are hearing evidence from it.
Examination of Witness
Edward Leigh (Conservative, Gainsborough)
We will now hear oral evidence from Martin Boyd, chair of the Leasehold Advisory Service. Before I call the first Member to ask a question, I remind all Members that questions should be limited to matters within the scope of the Bill. We must stick to the timings in the programme order that the Committee has agreed. For this panel, we have until 9.50 am. Perhaps the witness could introduce himself briefly.
Edward Leigh (Conservative, Gainsborough)
I think perhaps the Opposition spokesperson wants to start off with the questions.
Matthew Pennycook (Labour, Greenwich and Woolwich)
Q Martin, thank you for coming to give evidence to the Committee. I have two questions to start off with.
Marie Rimmer (Labour, St Helens South and Whiston)
Excuse me, Chair. Is the loop system on? No? Can we arrange to have it on, please? [Interruption.] Oh, we cannot; I understand.
Matthew Pennycook (Labour, Greenwich and Woolwich)
One of the aims of the Bill—certainly in the terms of reference handed to the Law Commission, whose recommendations frame a lot of parts 1 and 2—was to provide a better deal for leaseholders as consumers and increase transparency and fairness. In your view, to what extent does the Bill as a whole do that? Are there any specific clauses or elements of the Bill that we might seek to tighten up to further improve the experience for leaseholders as consumers? I am thinking of the fact that leaseholders are still liable to pay certain non-litigation costs and that right-to-manage companies are still liable when claims cease.
Matthew Pennycook (Labour, Greenwich and Woolwich)
Q Just so I am clear, you think there is scope to tighten the clauses in the Bill when it comes to non-litigation costs at tribunal and RTMs incurring costs?
Matthew Pennycook (Labour, Greenwich and Woolwich)
Q My second question relates to managing agents. Lots of the freeholders that leaseholders have to deal with are offshore and hard to reach. Managing agents are the first point of contact, and in many cases are the only point of contact. To what extent do you think that the Bill will function effectively without some kind of regulation of managing agents? Should we be looking to introduce that into the Bill?
Mike Amesbury (Labour, Weaver Vale)
Hello Martin, good to see you. Are there any risks in banning new leasehold houses but not flatsQ ?
Richard Fuller (Conservative, North East Bedfordshire)
Mr Boyd, I want to pick up something you said in answer to the shadow Minster, when you were talking about the treatment of property managers or managing agents in the private sector. You enumerated a list of three options: a code of conduct, which you said existed in the social sector; legislation or regulation; and also qualification, which I took to be professional qualification. Which of those three is the preferred path, in your view?Q
Richard Fuller (Conservative, North East Bedfordshire)
Q Why is it illogical? I have no qualifications to be an MP; I am supposed to look after lots of things.
Edward Leigh (Conservative, Gainsborough)
Just one more question—we have many coming up.
Richard Fuller (Conservative, North East Bedfordshire)
Q I notice in Mr Boyd’s resume that LEASE is
“to champion the rights of leaseholders and park homeowners.”
I have a number of park home owners in my constituency, as I am sure many colleagues do. Are there any provisions in the Bill, or is there anything that could be added to it, that would improve the lot of park home owners?
Richard Fuller (Conservative, North East Bedfordshire)
There is nothing that leaps out at this stage.
Barry Gardiner (Labour, Brent North)
Mr Boyd, you just spoke about the accounting of funds. At the moment, there is no requirement to show any separation between sinking or reserve funds and the normal service charges for managing the property. Many leaseholders Q have suggested that that is a problem, and that they are not clear what is happening with their sinking fund. Sometimes they believe that the moneys that were there for future capital works on the property are being raided. Would it be a good idea for the Bill to contain something that enabled leaseholders to see precisely what was happening to those reserve or sinking funds?
Barry Gardiner (Labour, Brent North)
Q Indeed. You nicely lead me to my other question, which concerns something else that was in the 2002 Act but was never brought into effect: the provision that, if the landlord had not complied with the rules around service charges and the charges were unfair, leaseholders should be able to withhold their service charge. I have no idea why that was never brought into effect, but would it be a good idea? The Bill sets out extensive obligations that have to be followed in relation to service charges. If those are not followed, should leaseholders have the right to withhold the service charge?
Barry Gardiner (Labour, Brent North)
Q So you would agree that it would be a good provision to insert into the Bill.
Rachel Maclean (Conservative, Redditch)
Mr Boyd, it is good to see you. You have talked about commonholdQ . Would you mind just being quite succinct and clear on your view about commonhold? There are proposals from various groups who are active in the sector to make it mandatory to sell all new leasehold flats as commonhold. Would that be a good idea, and if not, why not?
Marie Rimmer (Labour, St Helens South and Whiston)
Q Good morning, Mr Boyd. How will the Bill impact on your work as an advisory service and the advice that you give to leaseholders?
Marie Rimmer (Labour, St Helens South and Whiston)
Q Thank you. Will the provisions of the Bill lead to many more leaseholders seeking advice, and, if so, do you feel adequately resourced to provide that service?
Edward Leigh (Conservative, Gainsborough)
That is the end of our allotted time for this session; I think we got everybody in who wanted to ask questions. Thank you for coming to talk to us today.
Examination of Witnesses
Edward Leigh (Conservative, Gainsborough)
Good morning and welcome to our Committee. Could you briefly introduce yourselves, and then my colleagues will have some questions? You have been listening so you know the form.Q
Edward Leigh (Conservative, Gainsborough)
As usual, we will start with the Opposition spokesman.
Matthew Pennycook (Labour, Greenwich and Woolwich)
Q Gentlemen, thank you for coming to give evidence to the Committee. I could ask about a huge range of issues, but I will start with ground rents.
Various provisions in the Bill touch on ground rents. You will know, for example, that schedule 2 imposes a 0.1% cap on their treatment in valuation. Clause 21 and schedule 7 deal with existing ground rents and how we will treat those. What are your views on the fact that those provisions provide leaseholders with the enfranchisement right to buy out their ground rent under a very long residential lease, but we also have the consultation ongoing with five options? How do those provisions interact? Why have the Government specified an option in clause 21 for a particular type of very long residential lease, while we also have this consultation ongoing and, in theory, a commitment to bring forward further measures that apply to all existing ground rents? Does clause 21 in the Bill as drafted make sense to you?
Matthew Pennycook (Labour, Greenwich and Woolwich)
Q I have two other brief questions. The Bill does not include provision to ban new leasehold houses. If the Government’s intention, as I think has been made clear, is to bring those provisions forward through Government amendments in Committee or on Report—at a later stage—what should they look like? In your view, should we look for those Government amendments to do or not to do particular things?
On the right to manage, only eight of the 101 Law Commission recommendations on right to manage have found their way into the Bill. We face the issue that Mr Boyd referred to—we could add in many more provisions to the Bill. Are there any specific RTM recommendations from the Law Commission that it would be really worthwhile to try to incorporate into the Bill?
Rachel Maclean (Conservative, Redditch)
Q Mr O’Kelly, you are one of a large number of leaseholders who has been adversely impacted by your personal situation. If I am correct, what has happened in your case is that your freeholder has used the service charges from you and others in the block to take you to court—it is an appalling situation. You have updated the APPG and others. For the Committee’s benefit, will you say how much you are out of pocket and whether the provisions in the Bill will address the issues that you have faced and will face in the future?
Rachel Maclean (Conservative, Redditch)
Sorry, I was looking at Mr Spender and I misspoke.
Mike Amesbury (Labour, Weaver Vale)
Q Is there anything else you would like in the Bill that is missing at the moment?
Edward Leigh (Conservative, Gainsborough)
Right, that is very clear.
Andy Carter (Conservative, Warrington South)
Can I just pick up your comment to Rachel Maclean a moment ago on the legal aspect that you are fighting? Can you outline to the Committee what unreasonable service costs you are fighting to recover in court?Q
Andy Carter (Conservative, Warrington South)
Q Just so I am clear, at the point that you purchased the flat, did you know that those sorts of service charges would recur on an annual basis?
Barry Gardiner (Labour, Brent North)
Q Mr Spender, I want to ask you about what I find to be one of the more complicated aspects of the Bill: the leaseback arrangements. Nominee purchasers can require a landlord to take a leaseback on certain units. Those are the units that, in an enfranchisement process, are not participating in the enfranchisement. You might have a block of 100 units, and 30 of them do not go in with the leaseholders who want to enfranchise. At the moment, they are then, in perpetuity, leaseholders, are they not? They cannot ever enfranchise because the others have already enfranchised. Should there not be a provision in the Bill to enable those locked-in leaseholders—if they have the money in future, because many times it will be because they did not have the money available at the time to participate—to buy their share of the enfranchisement?
Barry Gardiner (Labour, Brent North)
Q Grand. If I can pursue that area, at the moment, the lease is granted to the demoted freeholder—so they become the head leaseholder, perhaps, and the other leaseholders are now subject to the head leaseholder. Their contract was always with the previous freeholder, who is now the head leaseholder. Should there not be some provision in the Bill that requires those minority leaseholders, who are still in a relationship with the former freeholder, to actually pay their service charge to the new freeholder? But there is not, is there?
Barry Gardiner (Labour, Brent North)
Q But the specific question I want to probe with you is whether there is any provision in the Bill to require the minority leaseholders who did not enfranchise to pay their service charge to the new freeholder, namely the majority who enfranchised. I cannot see where that contractual obligation lies in the Bill. All I can see is that they will continue to have a relationship with the previous freeholder.
Barry Gardiner (Labour, Brent North)
Q So you think the Committee should look at that very carefully.
Edward Leigh (Conservative, Gainsborough)
Well, gentlemen, I think that is it. Thank you very much.
Edward Leigh (Conservative, Gainsborough)
Q Welcome to our Committee this morning. Perhaps you would like to introduce yourselves.
Matthew Pennycook (Labour, Greenwich and Woolwich)
Q Thank you for coming to give evidence to us. I have a general question to start. Large parts of the Bill are broadly uncontroversial and uncontentious, not least because they implement Law Commission recommendations. There is lots we could add in, but let us try to keep a focus on what is in the Bill. In your view, to what extent does the Bill deliver for leaseholders in terms of transparency, fairness, enhanced consumer rights and empowerment? What areas could we look to strengthen or tighten up?
Rachel Maclean (Conservative, Redditch)
You mentioned that you welcome the peppercorn ground rent. It has often been put to me by campaigners on the other side of this argument that leaseholders do not mind paying ground rents. What is your view on that proposition?Q
Rachel Maclean (Conservative, Redditch)
Do you agree with some of the arguments that are put forward by the freeholders lobby and organisations that abolishing ground rent will destabilise the pensions industry and mean that nurses and care workers and the good people who are toiling very hard in our public services will have their pensions destroyed? What do you say to that?Q
Mike Amesbury (Labour, Weaver Vale)
I have two brief questions. Are there any risks in terms of banning new leasehold houses but not flats? Why do you think this country is an outlier in the world and is so wedded still to this day to the feudal system of leasehold?Q
Richard Fuller (Conservative, North East Bedfordshire)
Q This is a question I will ask a number of witnesses. We do an impact assessment for legislative change to all Bills, sometimes done well and sometimes less so. This has an assessment of the total cost of the Bill, with the best estimate being £2.9 billion. That is quite large for a Bill. A large part of that—about two thirds—is a transfer of the value from freeholders to leaseholders. That is at £1.8 billion, or £1.9 billion. What are your thoughts about that transfer of wealth?
Richard Fuller (Conservative, North East Bedfordshire)
Q From that, are you implying that your view is that it has been a rip-off to date, and therefore there are monies that you should have been having for all the years you have been paying and there was no value to it?
Richard Fuller (Conservative, North East Bedfordshire)
Q I cannot remember whether it was you, Jo, or Kate—if I may call you by your first names—who works in a pension fund.
Richard Fuller (Conservative, North East Bedfordshire)
Q On the change in pension funds and investments, you may have different views about how important that is and my colleague asked you that question. However, putting yourself in the place of the people who own the freehold—some may be large overseas entities, some may be members of the peerage of the realm and there may be others—what is your view and what assessment have you made of the impact on them?
Barry Gardiner (Labour, Brent North)
Q I apologise because I came in slightly late today, Chair, so I do not know if people have declared their interest. I should say that I am a freeholder; I am not a leaseholder. I have been a leaseholder in the past, but always with a share of the freehold.
Ms Kendrick, you said that there were things that the Law Commission report had talked about that have not been included in the Bill. One of those is in relation to shared services. Often, in a mixed development, if there is a commercial element to the block of flats, with flats above, you will find that there is a common plant room or a common car park. I welcome the provisions in the Bill that say that you can go from 25% commercial to 50%; that is a good move. However, the Law Commission actually said something specific about whether you should be allowed, if there are shared services such as the car park or the plant room, to be able to take over control, because the flats—the leaseholders—would only have control over the plant room as it related to their block. Is that a provision that you think should be introduced? Otherwise, it makes a mockery, to a certain extent, of increasing from 25% to 50% if you are still going to be precluded from gaining control of your block because of the plant room or shared services.
Barry Gardiner (Labour, Brent North)
Q And the residents having the right to manage that themselves.
Barry Gardiner (Labour, Brent North)
Q If commonhold will not be in the Bill, would you support a principle that all future leasehold flats should have to be sold with a share of the freehold?
Barry Gardiner (Labour, Brent North)
Q And that any residents’ association should be able to have the management of the block?
Andy Carter (Conservative, Warrington South)
Q I hope you do not mind if I start by congratulating you on the work you have done with the National Leasehold Campaign. I know that my constituents in Warrington South have greatly valued the assistance and knowledge you have managed to secure through bringing people together. Thank you for the work you have done there. May we just go back a little bit? Can you tell the Committee what sort of problems leaseholders have when they go to buy their freehold?
Andy Carter (Conservative, Warrington South)
Q It cost £15,000?
Andy Carter (Conservative, Warrington South)
Q Sorry to interrupt. When you were buying your house initially, did you know it was leasehold?
Andy Carter (Conservative, Warrington South)
Q So when did you find out?
Andy Carter (Conservative, Warrington South)
Q So you paid your deposit.
Andy Carter (Conservative, Warrington South)
Q I have residents in 40 or 50 homes on an estate in Chapelford in Warrington where not one of them was told about them being leasehold until they paid the money.
Andy Carter (Conservative, Warrington South)
Q Did you know that they were selling it on? Did they tell you that they were selling it on? Did they give you any notice of it?
Andy Carter (Conservative, Warrington South)
Q Can I just go back to your point, Jo? You said that it went from £5,000 to £50,000. Have they given you any rationale for the £50,000? Where did that number come from?
Matthew Pennycook (Labour, Greenwich and Woolwich)
Q A huge amount of the Bill is left to future regulations and statutory instruments. That is understandable in many cases—I am thinking of the service charge provisions and others. Are you concerned that it will take a long time to bring some of the measures into force? Is there a specific concern about the incentives that that creates in the time between them coming into force and the Bill receiving Royal Assent? As the Bill is drafted, there are some hard cliff edges, for example, on the new 999-year leases, where you have people who must extend before they come in. However, there are some potential cliff edges if the commencement dates on lots of these things are 12, 18 or 24 months away. Is that a concern?
Matthew Pennycook (Labour, Greenwich and Woolwich)
Q Some of them will not have a choice, will they?
Barry Gardiner (Labour, Brent North)
Q I want to ask you about this whole business of people being unable to sell, and, in effect, the interaction between what the Government have tried to tackle in the Building Safety Act 2022 and what we have in this Bill.
Under the Building Safety Act, the provision is to appoint a designated person—an agent—to deal with the safety of the building. Often it will be the developer who is responsible for the remediation of a building that has fire safety defects and so on, which the Government are quite rightly trying to address, but they will argue that it is not possible to do that unless they have control over the management of the block as a whole. Therefore, there is a conflict between the Building Safety Act and the provisions in this Bill to help leaseholders gain the right to manage.
You might have just enfranchised and got the right to manage your own block, yet there is now an appointed person who will be told by the court that they have the right to manage the block. Very often, it will be the person you have just liberated yourself from. You will have just enfranchised yourself from that freeholder, only to find that they are now back in control. Do you feel there is a way in which the Committee should try to remediate and address that problem when it is looking at the Bill, and do you have any ideas as to how we should go about it?
Barry Gardiner (Labour, Brent North)
It is awful.
Barry Gardiner (Labour, Brent North)
People have committed suicide, have they not?
Barry Gardiner (Labour, Brent North)
Q There is a real tension here, is there not?
Barry Gardiner (Labour, Brent North)
Q You have talked extensively about ground rent and, Ms Derbyshire, your situation with it doubling. We all know the story about the inventor of chess, who asked for a grain of rice on the first square as his reward as long as it doubled until the last square, and then there was not enough rice in the world to provide it. This is clearly inequitable. You said that you welcome the provision in the Bill to be able to get rid of ground rent—to take it down to a peppercorn. Given that we have the consultation at the moment, would it not better if the Government just did that rather than you having to pay for it, which is what is recommended in the Bill? You should not have to pay to get out of a situation that is unjust. It was unjust in the first place, and it would be much better if the Government simply moved the consultation onwards and got rid of it.
Andy Carter (Conservative, Warrington South)
Q Katie, can I just go back to your earlier point about how lots of sales are falling through? Can you just explain why that is? What is causing sales to fall through on leasehold properties?
Andy Carter (Conservative, Warrington South)
Q A final question from me: on your social media channels, you talk about the leasehold scandal as being very similar to Mr Bates—who is in Committee just over the way—against the Post Office. I mean, is that true? Is it David versus Goliath?
Mike Amesbury (Labour, Weaver Vale)
Q Can you tell the Committee about what is commonly known as “fleecehold”? Does this Bill in any way deal with aspects such as that?
Rachel Maclean (Conservative, Redditch)
Q I just want to clarify your understanding of something that Mr Gardiner said earlier. I might need to put this to the Minister later, but Mr Gardiner said that if the new provisions on ground rent go through and ground rent goes to peppercorn or zero—I might be misquoting him.
Barry Gardiner (Labour, Brent North)
You have been spot on so far.
Rachel Maclean (Conservative, Redditch)
You mentioned that in the new Bill leaseholders will have to pay to get their ground rent to zero. Can you set out what that provision is? Where is that in the Bill?
Rachel Maclean (Conservative, Redditch)
Thank you so much for clarifying that.
Alistair Strathern (Labour, Mid Bedfordshire)
I could not agree more about the challenges you set out around people finding new ways to extort homeowners and the moves towards charging for the maintenance of public space. In my constituency of Mid Bedfordshire, Q many estates suffer from this issue. Mr Fuller will have similar ones on his estates in North East Bedfordshire. I completely agree that it feels shocking for lots of people that they are essentially paying twice for services: once for council tax and once for a charge that they have little control over and where there is often little guarantee of good services.
There are many estates in my patch where you can literally see where it becomes private because the condition of the road is shocking compared to 2 feet away, or the condition of the public space completely deteriorates. What measures would you like to see added to the Bill to help address that? Would you agree that ultimately we need mechanisms to ensure that a stated object can happen in a way that everyone can have confidence in?
Marie Rimmer (Labour, St Helens South and Whiston)
Q Katie, it seems to me that you and your team should be congratulated—you are the agony aunts. Believe you me, people look to these ladies and groups of people as their saviours rather than the Government. Already, leaseholders are saying, “Well, perhaps we can make this peppercorn. If we all go for this peppercorn, perhaps we can work then to get that peppercorn and get in there, and get shut of it that way.” Really, this is the opportunity. We should be listening to them—granted—and I genuinely believe there is listening going on with this Bill.
We have to tie it down and not let the situation become like the one we have seen with the post offices. It is an obstacle course. People have committed suicide. Managers have broken down. Homes have been lost. Jobs have been lost. The management charges are unbelievable, and I do not think people understand that. I have not seen it anywhere, but a leaseholder has to write if they want to change the carpet; they then get charged a couple of hundred pounds for that, they get charged for the answer, and they get charged when somebody comes to have a look at it. That is how it goes on. The management charges are as big a fear as the lease, because leaseholders do not know where they are going.
The Government simply have to step in. It is the biggest money-making racket in this country now—and it is a racket. It is said that people have sat down and designed this system, and we should not leave these people to do the fighting on their own. I genuinely believe that there is desire to do so from both the Minister and our shadow Minister. Please come forward with your thoughts; do not give up. I do not believe for one minute you will give up.
Edward Leigh (Conservative, Gainsborough)
Right, that is probably it then—[Laughter.] Thank you.
Examination of Witness
Edward Leigh (Conservative, Gainsborough)
Good morning. Would our last witness like to introduce herself?
Matthew Pennycook (Labour, Greenwich and Woolwich)
Q Amanda, thank you for coming to talk to the Committee. You have expertise in a number of areas, but I wanted to probe you on something that we have not gone into the details of—the service charge provisions in clauses 26 to 30. Lots is left to regulations, but these clauses are potentially quite transformative—particularly clause 27, as most leaseholders will experience that clause as it relates to service charge demands. In your view, looking to improve the Bill further, what are the flaws, inconsistencies, deficiencies and problems with these clauses, albeit the regulations are coming, and what stipulations might we look to put in the Bill about what those regulations must look like?
Edward Leigh (Conservative, Gainsborough)
May I interrupt?
Edward Leigh (Conservative, Gainsborough)
The point is not to make a long speech. The purpose is to answer questions. You might want to draw your remarks to a conclusion, so that my colleagues can ask you questions.
Edward Leigh (Conservative, Gainsborough)
I am a lawyer, too; I know that we manage to speak quite a lot.
Dehenna Davison (Conservative, Bishop Auckland)
Thank you for comprehensive run-down so far. I am sure there is more to comeQ .
Dehenna Davison (Conservative, Bishop Auckland)
Q We need that level of enthusiasm, and the granular information really helps us to formulate our views. You were sitting in on the previous evidence session, when we heard some strong, and in some ways harrowing, evidence from the brilliant campaigners from the National Leasehold Campaign, particularly around transparency, not just on service charges but with regard to the sale of leases, and the lack of information on that, and the increased cost for leaseholders who wish to enfranchise.
What did you make of that? Clearly, the Bill contains a number of provisions, particularly on consumer rights. From my perspective, the most interesting is around transparency. Do you think the Bill goes far enough? You have already given examples on service charge accounts, but are there other ways that the Bill could go further to improve that?
Dehenna Davison (Conservative, Bishop Auckland)
Q What would you consider a reasonable time? I mean, 24 hours would be great, but—
Barry Gardiner (Labour, Brent North)
Q I understand that you were involved in the Canary Riverside judgment just before Christmas.
Barry Gardiner (Labour, Brent North)
Q Thank you. But you are aware of the judgment that came through just before Christmas in the case.
Barry Gardiner (Labour, Brent North)
Q Were you involved in relation to the uncovering of the £1.6 million commission for insurance?
Barry Gardiner (Labour, Brent North)
Q In that case, I am probably better putting those questions to a later witness.
In relation to that case, and on the accountable person provisions and section 24 amendments in the Building Safety Act—this relates to a question I asked earlier—the tribunal decided in the Canary Riverside case that the section 24 manager cannot be the accountable person, and that risks the section 24 management order failing, and the failed freeholder coming back to take control of the leaseholders and their service charge moneys. The implications of that decision really are quite dramatic. It means that the lifeline of the section 24 court-appointed manager provision from the Landlord and Tenant Act 1987 has been removed from leaseholders, particularly those who cannot afford to buy their freehold or do not qualify for the right to manage. How should we address that problem in the structure of the Bill?
Barry Gardiner (Labour, Brent North)
Q I am sure Ms Maclean will have details from her past life. Thank you for that—it is extremely helpful. You referred to clauses 27 and 28 and said that the word “arising” was one that troubled you. Could you point us to which clause that is in, so that we can be clear about it? You will have heard the question I put to another witness about making provision in the Bill, as there had been, although it was never brought into play, in the Commonhold and Leasehold Reform Act 2002, for leaseholders to be able to withhold their service charges if all that is set out in proposed new sections 21D and 21E has not been complied with?
Barry Gardiner (Labour, Brent North)
Ah, “arising in the period”. Gotcha.
Barry Gardiner (Labour, Brent North)
Q I was thinking not so much about where there is a dispute over reasonableness but more about whether the process that is set out in proposed new section 21D had been followed—for example, someone had not laid the accounts within six months and had not gone through all the set requirements in the Bill. Rather than it being a dispute about substance, the charge would be withheld on the basis of a failure of process by the freeholder.
Barry Gardiner (Labour, Brent North)
Q Although I said at the outset that I would not pursue the insurance costs with you, I think we can probably agree that the £1.6 million commission that was ruled illegal will take out the idea of commission—but that will move to fees instead. Given what you said about “arising”, do you have similar fears that fees for work charged might also open that up to a multitude of sins in the Bill?
Barry Gardiner (Labour, Brent North)
In relation to insurance—because it will no longer be possible to charge commission, but it will be possible to charge a fee.
Barry Gardiner (Labour, Brent North)
Finally, proposed new section 21E of the 1985 Act talks about annual reports, while proposed new section 21D sets out the basis of the accounts and when they must be presented. What is your understanding of the difference between the report—as set out,
“before the report date for an accounting period, provide the tenant with a report”—
and the accounts, which have to be presented at the end of the sixth month after the period? Is there any requirement in the Bill as drafted to ensure that the information available in the accounts is greater or more detailed—indeed, in any way different—from the report?
Barry Gardiner (Labour, Brent North)
Thank you. That is extremely helpful.
Matthew Pennycook (Labour, Greenwich and Woolwich)
Q I just wanted to follow up on something, so that I am clear in my own mind in relation to Mr Gardiner’s question about the provisions in the 2002 Act that have not been brought into force, and it directly relates to what you have just said about proposed new section 21D.
In some senses, many of the new requirements in this section are covered by the enforcement measures in clause 30. Is proposed new section 21D the only example, or are there other examples, of where that power in the 2002 Act might be considered necessary for a leaseholder to use, because the enforcement provisions do not cover the full gamut, if you like? I suppose that I am trying to get to where the enforcement clause is lacking. Is Mr Gardiner correct in specifying that there are circumstances in which you would want to withhold because the non-payable enforcement clauses do not bite in the relevant way?
Matthew Pennycook (Labour, Greenwich and Woolwich)
Q I suppose what I am getting at is that you would not need to withhold if the enforcement clause properly covers all the requirements therein.
Richard Fuller (Conservative, North East Bedfordshire)
Q Ms Gourlay, I just wanted to go to part 4, which is about the regulation of estate management charges. You talked at the outset about bringing everything together in the process and we have heard a lot about people saying how it is all a bit of a David and Goliath process, so I wanted to get your views on how effective you think some of the measures in the Bill are when it comes to trying to help David in his battle against Goliath. We should always remember that David actually beats Goliath; I do not know why or whether that is a bad thing.
You talked also about the provision of information and how important it is that people have access to annual reports and so on. In clause 49, there is a provision whereby the failure to provide things such as annual reports will carry a charge, with a maximum charge of up to £5,000. Then in clause 51, which addresses other aspects of what should be provided—in this case, charge schedules; you said how important they were—there is a maximum charge of £1,000. Does that sound like a sufficiently large sling from which a shot may be fired, or is it just a cost of doing business?
Richard Fuller (Conservative, North East Bedfordshire)
Q Not in this section.
Richard Fuller (Conservative, North East Bedfordshire)
Q However, I think you have given some view about how you think it should be assessed.
Edward Leigh (Conservative, Gainsborough)
We have four more people who want to ask questions, so we need quick answers.
Richard Fuller (Conservative, North East Bedfordshire)
Q The other part is that bringing a lot of this together will mean that the first-tier tribunal has a lot more work. Do you think that people may want to get justice, but that it will be denied because the first-tier tribunal is going to be overwhelmed?
Mike Amesbury (Labour, Weaver Vale)
Q Would commonhold being the default position make your job less complex?
Andy Carter (Conservative, Warrington South)
Q Having heard from some of our other witnesses, and from the casework that I see in my office, it strikes me that there is a lot of bad practice in the sector. We heard from one of our first witnesses this morning about recurring charges not being disclosed at the point of sale. Does the Bill address that sufficiently? Would it be more sensible to have a clause stating that if recurring charges are not disclosed when the transaction is complete and you purchase the property, they are not paid?
Andy Carter (Conservative, Warrington South)
Q It is one thing knowing that you have a service charge—when you buy a flat, you know that—but it is quite another when you do not know about it and it suddenly hits you after you have signed on the dotted line. To me, that is more of a problem, but thank you very much.
Edward Leigh (Conservative, Gainsborough)
We have just three minutes left, as we are bound by the programme motion. We will hear questions from Rachel Maclean and then Barry Gardiner, and we will finish by 11.25, as per the programme motion.
Rachel Maclean (Conservative, Redditch)
Q Have you ever acted for freeholders against leaseholders? Have you ever found that the leaseholders have been egregious, rather than the other way round?
Barry Gardiner (Labour, Brent North)
Q You referenced the damages under proposed new section 25A of the Landlord and Tenant Act 1985, which “may not exceed £5,000”. The tribunal does not have to award £5,000; it is a ceiling, rather than a floor. Often a single leaseholder will go to the tribunal and get an award, but they are representative of problems that all the other leaseholders have. Rather than saying that damages under the proposed new section may not exceed £5,000, would it make sense to say that damages to each leaseholder may not exceed £5,000?
Barry Gardiner (Labour, Brent North)
Q Thank you. Will you send me a full report on the details that you did not get a chance to share?
Edward Leigh (Conservative, Gainsborough)
That is fine. Do not worry.
Caroline Dinenage (Conservative, Gosport)
Q Good afternoon, everyone. Lovely to see you all. We will now hear from Professor Nicholas Hopkins, the law commissioner for property, family and trust law. We have until 2.30 pm with this witness. Will the witness please introduce yourself for the record?
Caroline Dinenage (Conservative, Gosport)
Will Members please indicate whether they would like to ask a question of the witness? We will start with Matthew Pennycook.
Matthew Pennycook (Labour, Greenwich and Woolwich)
I again put on the record my declaration of interest that my wife is a joint chief executive of the Law Commission, which Professor Hopkins is representingQ .
Professor Hopkins, thank you for coming to give evidence to us. I have two questions, perhaps three if we have time. My first relates to those clauses that implement options or recommendations made by Law Commission reports. Parts 1 and 2 of the Bill implement not all but a subset of those recommendations. I expect that the Law Commission will have had a dialogue with Government about what the clauses look like, but ultimately what goes into the Bill is a political choice for the Government. With a view to strengthening the Bill, I will be grateful if we can get a sense from you whether any of the clauses that draw on those options and recommendations is in any way problematic? Do they contain flaws? Are there omissions that mean they will not work in the way that the Law Commission intended them to?
My second question is related to the Law Commission’s reports as a whole. My understanding is that they were meant to work as a complete package. In drawing on only a subset of recommendations, is there a risk that some of the underlying rationales for the options and recommendations that you made will be blunted or limited by the fact that others have not been included?
Matthew Pennycook (Labour, Greenwich and Woolwich)
Q To ensure that I have understood you correctly, do you expect some technical amendments, whether minor or not, to come to clarify the provisions?
Matthew Pennycook (Labour, Greenwich and Woolwich)
And on the package as a whole working?Q
Matthew Pennycook (Labour, Greenwich and Woolwich)
On what is not there, the Government have chosen to include none of the recommendations on commonhold. We very much think that commonhold should be the default tenure going forward. Without enacting all of the 121 recommendations Q on commonhold, are there any that could be included in the Bill fairly easily, and in a way that would pave the way for commonhold in the future?
Mike Amesbury (Labour, Weaver Vale)
Do you think that it is a missed opportunity not to take those recommendations on commonhold forward?Q
Mike Amesbury (Labour, Weaver Vale)
Q Have the Government spoken to you about why they have seemingly rowed back on the direction of travel on commonhold?
Marie Rimmer (Labour, St Helens South and Whiston)
Good afternoon, professor. You have provided several recommendations to the Government on leasehold enfranchisement. Do you believe that the provisions in the Bill will make it easier and cheaper to buy a freehold or extend a leaseQ ?
Marie Rimmer (Labour, St Helens South and Whiston)
Q Is it fair to say that you are content with the provisions that the Government have put in the Bill?
Rachel Maclean (Conservative, Redditch)
Thank you for all your work. Can you remind the Committee how many recommendations you made in totalQ ?
Rachel Maclean (Conservative, Redditch)
Q And how many did you make on commonhold?
Rachel Maclean (Conservative, Redditch)
Q You had to go through a long process. When did you start your deliberations on the commonhold provisions?
Rachel Maclean (Conservative, Redditch)
Q So you started your work in 2017.
Rachel Maclean (Conservative, Redditch)
Q Without going through all the work that you have just described, what is the risk if the Government adopt policies or measures such as making commonhold the default position?
Rachel Maclean (Conservative, Redditch)
Q Thank you for that clarification. As a follow-up, if any Government adopted a policy on commonhold such as has been talked about sometimes, but without doing the legal fixes, what would be the risk?
Barry Gardiner (Labour, Brent North)
First of all, let me thank you for the Law Commission’s work, which was extensive and hugely helpful. I am conscious that the recommendations on structural dependency rules have not been adopted by the Government in the drafting of the Bill. Even those leaseholders who are going to benefit from the uplift of 25% to 50% of the non-residential limit in the Bill may still be disqualified, because of the shared plant room in underground car parksQ and so on. Do you believe it would be preferable and helpful to introduce into the Bill at Committee stage some of the recommendations that you made on that?
Barry Gardiner (Labour, Brent North)
Q I totally agree. It is certainly beneficial that there is the uplift from 25% to 50%. However, if one were to adopt the view that the commission take on structural dependency and those shared services, some groups would be prevented from benefiting unless we adopt the terms that you have recommended.
Barry Gardiner (Labour, Brent North)
Q Of course, commonhold is not within the scope of the Bill. Indeed, the way in which the Government framed your remit meant that your report was closely constrained in what it could say about recommending that as a tenure. Following on from what the hon. Member for Redditch said, do you think it would be helpful to move to a system where all new build flats had a share of freehold and that that was the only tenure going forward? In effect, that would give us a foretaste, and all the caveats that you outlined to the hon. Member for Redditch could gradually be put in place around that.
Barry Gardiner (Labour, Brent North)
Q Indeed. Currently, a leaseholder who has three or more flats in a development is instantly disqualified from participating in an enfranchisement claim. The Law Commission concluded that that regulation should be scrapped because it is hard to enforce and can be easily gamed by what I think you called sophisticated investors. You said that the practical effect of that 1993-era policy is to deprive leaseholders of the ability to buy out the freehold and to enfranchise. Are the proposals we are talking about ones you would be pleased to see introduced in Committee to get rid of that barrier?
Barry Gardiner (Labour, Brent North)
I am delighted; that is what I wanted you to say.
Barry Gardiner (Labour, Brent North)
Q Improve the lot of leaseholders, yes. At one point slightly earlier, you seemed to give the impression that we were—I think this is the polite way of saying it—polishing an excrescence in this Bill. Is that broadly your view, and should we just get on with commonhold eventually?
Barry Gardiner (Labour, Brent North)
Q One way of tackling this would surely be to enable all leaseholders ultimately to gain the benefits that freeholders, or people who have a share of the freehold, currently have, by enabling them to convert to commonhold.
Barry Gardiner (Labour, Brent North)
Well, it has been with us for a very long time, hasn’t it?
Richard Fuller (Conservative, North East Bedfordshire)
Can we talk a little about discount rates? I think there are two, but there may be more. There is the capitalisation rate and the deferment rate. Could you explain how, if at all, the Bill changes either of those discount rates and what the rationale for that change isQ ?
Richard Fuller (Conservative, North East Bedfordshire)
Q What is the merit of allowing politicians to fix the rate? Does that not that create other hazards?
Richard Fuller (Conservative, North East Bedfordshire)
Q Well, we do not allow politicians to set interest rates any more, because we realise that that was subject to political whimsy and error, so we gave that to the Bank of England—which of course is always right. I am just wondering, does there not seem to be some hazard here? I understand the point about trying to get the rate fixed and the imbalance in individual discussions, but why is it not in the Bill that it would be based on market conditions or prevailing rates? Why not go for something like that, which everyone can see and is transparent—you can feed it into a calculator—rather than allowing politicians to have that role?
Richard Fuller (Conservative, North East Bedfordshire)
Q If I may, I have another question. We always do an impact assessment on Bills. This one has quite a large impact assessment, which is in the billions of pounds—£2.984 billion is the present value for costs. I looked in detail at that, and the vast majority is about a transfer of value from freeholders to leaseholders; it is not about benefits from more efficient systems. If I look at the first section, £2.8 billion is transfers and £400 million is benefits. Is there a particular reason why it is so heavily weighted to transfers?
Richard Fuller (Conservative, North East Bedfordshire)
Q And that was the Law Commission’s objective.
Richard Fuller (Conservative, North East Bedfordshire)
That was very helpful; thank you very much.
Caroline Dinenage (Conservative, Gosport)
Mindful of the fact that we will be drawing this to a close at half-past, I call Matthew Pennycook.
Matthew Pennycook (Labour, Greenwich and Woolwich)
May I press you a bit further on valuation? This is a phenomenally complex area to understand, and the standard valuation method in schedule 2 is extremely technical. The Law Commission set out options—it did not make recommendations—but the Government have chosen to allow the Secretary of State to prescribe the applicable deferment rate.
In all your work, did you wrestle at all with the fact that there may be some leaseholders who do not benefit from a fixed rate, in the sense they could have negotiated higher and more favourable rates in certain circumstances? Is that potentially a risk? Related to that, will it be the case that the Government need to set multiple rates to account for regional variations? Is a single fixed rate going to be an issue?
Caroline Dinenage (Conservative, Gosport)
Order. I apologise for interrupting you. I am afraid that brings us to the end of the time allotted for the Committee to ask you questions. I thank our witness very much on behalf of the Committee.
Caroline Dinenage (Conservative, Gosport)
We will now hear from Matt Brewis, director of insurance at the Financial Conduct Authority. We have until 3 pm for this next session. Will the witness please introduce himself for the record?
Matthew Pennycook (Labour, Greenwich and Woolwich)
Thank you for coming to give us evidence, Mr Brewis. The FCA published a report in September 2022 on insurance for multi-occupancy buildings. In a general sense, on the basis of the recommendations and potential remedies you outlined, to what degree do clauses 31 and 32 faithfully enact those recommendations? Furthermore, it would be useful to know whether the FCA might have any ongoing role in the arrangements that those clauses will introduce. Finally, in that report, the FCA made a recommendation about a pooled risk insurance scheme. Could that be introduced into the Bill as an additional means of providing leaseholders with protection?
Matthew Pennycook (Labour, Greenwich and Woolwich)
Q For a very long time.
Matthew Pennycook (Labour, Greenwich and Woolwich)
Q But it would not necessarily require primary legislation—or would it, in your view, in terms of how you would implement such a recommendation?
Rachel Maclean (Conservative, Redditch)
Q Mr Brewis, thank you for coming here. Is it within your remit or do you have any helpful information for the Committee to understand a point that has been put to me and that I am seeking to test with you, which is that when some of these freeholds have been sold off in the past, the insurance obviously is then sold off—sorry, let me start again; it is very complicated. The contention is that in the past some leaseholds have been sold off or converted, so now the freeholder, which may be an insurance company or a pension scheme, does not have that income stream that it used to have, and there is a consequent risk on insurance companies or pension funds that have previously been reliant on that income stream to make the returns to the pensioners. Is that something that you recognise? Do you have any powers to update us on it? Do you have any powers to investigate it? Do you have any thoughts on it?
Rachel Maclean (Conservative, Redditch)
Q Okay, but do you recognise that as an issue, if I can put it that way? It is a fact that in the past some leaseholders have been able to buy out their freeholds, so the freeholder then would not have the income stream from the insurance—
Rachel Maclean (Conservative, Redditch)
Q That is really helpful, although it was not quite what I was trying to get at. If you are a freeholder, you may also be an insurer. A lot of big freeholders are insurers, and pension funds and so on, that are underwriting the pensions of many people in the country—in the NHS and so on. The claim that they have made is that in the past some of the leaseholders have bought out their freeholds. I might have slightly misunderstood the situation, but it has been put to me that, now that this flow of insurance is no longer coming to the insurers—or, to put it another way, now that the service charges and so on that are paid by the leaseholder to the freeholder are no longer coming to the insurance industry—that will somehow destabilise the insurers’ balance sheets and make them unable to meet their commitments. Is that something that you recognise, from your industry perspective? I am not talking about the individual leaseholder.
Mike Amesbury (Labour, Weaver Vale)
Q In September, Sheldon Mills, an executive director at the FCA, issued a strong statement:
“Insurance firms must now act in leaseholders’ best interests and ensure that their policies provide fair value.”
Now I will give you a live case, which happens to be in a neighbouring constituency to mine. It is called The Decks. They have a remediation day and Taylor Wimpey has accepted responsibility, yet insurance premiums are going up again—poor value and high cost, as I think was cited in the review. New year was going to be a new broom to intervene and shape the market, yet you have got insurance companies like this, and many more up and down the country, laughing at people in this room—key stakeholders such as yourselves. What are you going to do? What powers have you got to intervene? Also, we have discussed insurance. Are clauses 31 to 33 in part 3 sufficient to deal with the issue?
Andy Carter (Conservative, Warrington South)
This morning, we heard from the founders of the National Leasehold Campaign about some of the poor practices that their members had told them about. Do you think that provisions in this Bill make it easier for consumers? Do they address the challenge of transparency and the ability to obtain information from freeholders in a way that will be noticeable to owners of leasehold properties?Q
Andy Carter (Conservative, Warrington South)
Q With regard to the redress element, again, it is a small, individual leaseholder taking a ginormous freeholder, managing agent, or whatever, to court. There is an imbalance there.
Andy Carter (Conservative, Warrington South)
Is that suitably addressed in this legislation?
Andy Carter (Conservative, Warrington South)
Q So are there no other ways that the balance of power could be shifted to make it easier for the small homeowner who is facing the challenge of dealing with something that is far, far bigger than themselves?
Andy Carter (Conservative, Warrington South)
No, that is helpful. Thank you very much.
Barry Gardiner (Labour, Brent North)
Q Mr Brewis, I think we all welcome the FCA’s work to try and make things more equitable for leaseholders, so thank you for your endeavours there. I am sure you will be familiar with the Riverside case from before Christmas, in which it was discovered that an FCA-regulated broker could not provide a written contract of the insurance to the first-tier tribunal. Do you find that strange?
Barry Gardiner (Labour, Brent North)
Q Okay. Should there be a case in which an FCA broker is unable to provide a written contract to a first-tier tribunal, would you find that strange?
Barry Gardiner (Labour, Brent North)
Q Thank you. After a three-year campaign, that poor leaseholder managed to find out, through the leasehold tribunal, that £1.6 million had been paid to her landlord for the insurance services. You will be aware that this Bill outlaws commission as a permitted charge for landlords to charge. However, you will also be aware that, in that first-tier tribunal case, it was not regarded as a commission. In fact, it was accounted for as a fee, which is chargeable under this proposed legislation. How will that leaseholder know that this legislation does not allow her to be ripped off in exactly the same way as she was ripped off before?
Barry Gardiner (Labour, Brent North)
Q How do you do that if you cannot get a written contract?
Barry Gardiner (Labour, Brent North)
Q But that is not actually here in the Bill, is it? Would it be helpful if, under clause 31 or at another appropriate place, we were to say that a written copy of any insurance contract must be provided to all leaseholders? Then they can at least see what it is they are supposed to be benefitting from.
Barry Gardiner (Labour, Brent North)
Q But the Bill does not.
Barry Gardiner (Labour, Brent North)
Q No, sorry; there is a distinction here. You are talking about the broker providing it to the landlord; I am talking about the landlord providing it to the leaseholder. If you want transparency here, surely that also has to be part of that transparency? Ultimately, we know that it is not the landlord paying for the insurance services—it is the leaseholder. Indeed, in the case that you cannot particularly talk about, it was the landlord getting £1.6 million of a kickback for the privilege.
Barry Gardiner (Labour, Brent North)
Q To be absolutely clear: a leaseholder can write to the insurer—the insurance company—to obtain a copy of the contract that their landlord has, which insures their property?
Barry Gardiner (Labour, Brent North)
Q Does that rely on the landlord telling the leaseholder who the contract is with?
Barry Gardiner (Labour, Brent North)
Yes.
Barry Gardiner (Labour, Brent North)
Q Because at the moment, there is no compulsion on the landlord to do that, is there? It is certainly not in this Bill.
Barry Gardiner (Labour, Brent North)
Q Then the leaseholder has no access to the contract.
Barry Gardiner (Labour, Brent North)
Q We have made legislation on the basis of optimism before, and it has not proved successful.
Barry Gardiner (Labour, Brent North)
Q Of course, those fees for insurance services are chargeable under clause 31, in proposed new section 20G of the Landlord and Tenant Act 1985, but there is nothing in the Bill that says they have to be reasonable. The Bill says that excluded insurance costs have to be
“not attributable to a permitted insurance payment”,
but not that they have to be costs that are reasonable. There is a difference between a permitted insurance payment and a reasonable permitted insurance payment, is there not?
Barry Gardiner (Labour, Brent North)
Q God bless the Secretary of State! So we are waiting to see whether the Secretary of State introduces the word “reasonable”—or would it not be better to have the word on the face of the primary legislation?
Barry Gardiner (Labour, Brent North)
I think the law has done a pretty good job of that over the years.
Matthew Pennycook (Labour, Greenwich and Woolwich)
Q To further explore Mr Gardiner’s point about fees, not commissions, what is your understanding of proposed new section 20G of the 1985 Act, which defines these excluded insurance costs? What would that cover? Or is that something for the secondary legislation as well? In which case, what should it cover, to fully protect leaseholders from all types of insurance costs that might be passed on unreasonably?
Matthew Pennycook (Labour, Greenwich and Woolwich)
Q In general terms, do I take from that that we should seek to define excluded insurance costs fairly widely, beyond a strict definition of commission, to ensure that we are broadly protecting leaseholders from the problems that you outlined in your September 2022 report?
Caroline Dinenage (Conservative, Gosport)
Thank you. If there are no further questions from Members, I thank the witness. We will now move on to the next panel.
Examination of Witnesses
Caroline Dinenage (Conservative, Gosport)
We are now going to hear from our seventh panel, which is Harry Scoffin, founder of Free Leaseholders; Karolina Zoltaniecka, founding director of Commonhold Now; and Cathy Priestley and Halima Ali, co-ordinators of the Home Owners Rights Network. We have until 3.40 pm for this session. You are all welcome. Would you please introduce yourselves for the record?
Caroline Dinenage (Conservative, Gosport)
We are very grateful that you are here, Cathy. Thank you very much. I call Matthew Pennycook to start us off.
Matthew Pennycook (Labour, Greenwich and Woolwich)
Q Thank you all for coming to give evidence. I have two questions—one for Harry and Karolina and then one for Cathy and Halima.
Harry and Karolina, we heard earlier from Professor Hopkins from the Law Commission, which had 121 recommendations on commonhold. It is clearly not feasible to add all those to the limited Bill we have in front of us at Committee stage. Professor Hopkins says there is a risk of partial commonhold legislation that might create unintended consequences. Are there any of those recommendations that we can reasonably add in that might make things easier in the future and pave the way for commonhold? That is my question to both of you.
Cathy and Halima, clause 59 in part 4 of the Bill seeks to amend the Law of Property Act 1925. Would you agree that section 121 of that Act needs to be done away with? Are we attempting to, if you like, ameliorate an historic law that should really just be freehold forfeiture and should be done away with? On part 4 generally, we have sought to introduce by amendment an RTM regime for private estates. Are there any other tweaks to part 4 that we could reasonably look to make?
Matthew Pennycook (Labour, Greenwich and Woolwich)
Q Halima and Cathy, on part 4 and rent charges—unless you have something to say, Karolina. I am leaving it to you to self-police.
Matthew Pennycook (Labour, Greenwich and Woolwich)
Q Thank you. Halima and Cathy on part 4, please?
Matthew Pennycook (Labour, Greenwich and Woolwich)
Q I agree with you about the underlying point, and we may seek to address that, but if we have to work with this new regulation of estate management regime, are there any ways you would like to see it strengthened or tightened?
Caroline Dinenage (Conservative, Gosport)
I am mindful of the fact that we will have to bring this session to a conclusion at 3.40 pm and five more Members have indicated that they would like to speak, so you can time yourselves accordingly. I will start with Andy Carter.
Andy Carter (Conservative, Warrington South)
Q I will be brief. Cathy and Halima, can I pick up on your point about estate management? Do you have any examples of members of your forum who are paying fees on a regular basis, but there is no delivery of management? Do you have examples of where things are just not happening?
Andy Carter (Conservative, Warrington South)
Q Can you tell us what is not happening?
Andy Carter (Conservative, Warrington South)
Q What should be happening?
Andy Carter (Conservative, Warrington South)
Q Yes, but tell us what you would expect to be happening.
Andy Carter (Conservative, Warrington South)
Q So they are not cutting the grass and they are not tidying—
Andy Carter (Conservative, Warrington South)
Q Have you talked to the council about its ability to be involved in this?
Andy Carter (Conservative, Warrington South)
Q What did the council say?
Andy Carter (Conservative, Warrington South)
Q The problem we will find, if we are not careful, in putting through legislation that allows the right to manage is that there is still no route to get somebody to make things happen if you have a council that does not want to get involved. Who is the ultimate person that you can say—
Barry Gardiner (Labour, Brent North)
Q Halima and then Cathy, let me pick up this business of the fleecehold estates, as you refer to them. They are a relatively new thing in leasehold; they were not there in the same way 20-odd years ago when we were passing the Commonhold and Leasehold Reform Act 2002. They have been seen as a revenue stream for developers. Do you think that it would make sense for local councils, when they sell public land for housing development, to insist that that public land should not be used for a private estate model in this way? Developers can of course build the homes and you can buy them, and they can make their profit from the payments that you make to buy those homes, but they should not then have an ongoing source of revenue from the substandard management, as you described it, of the estate.
I have one estate in my constituency where they were charging residents for the management of land that they did not even own. It took us months to get the documentation to prove that they did not own that land. The fence that they had mended had actually been mended by the council. Other things like that are going on, but if that restriction were put in place in the first place, they would not be able to do it, would they?
Barry Gardiner (Labour, Brent North)
Q I understand what you are saying, but I am referring specifically to when a council makes available land that has been publicly owned by it to developers for development and puts that restriction in place.
Barry Gardiner (Labour, Brent North)
Q Mr Scoffin, you talked about this issue having wasted six years of your life; I think it has only wasted about 25 years of mine, since before the 2002 Act. You spoke about future development. What would actually make it better for existing leaseholders? There are things in the Bill that I think do improve the lot of existing leaseholders, but how can we make it even better?
Barry Gardiner (Labour, Brent North)
Q Was forfeiture not part of the 2002 Act?
Barry Gardiner (Labour, Brent North)
Q Sorry, can I just ask you to amplify what you were saying about the 50%? I understand the difficulty, if you have 900 people in a high-rise block, to co-ordinate to get 450 plus one to do it, but surely many of those apartments will be buy to let, so you may not ever be able to meet or get in touch with the actual leaseholder. You are going to be able to do that only through a subtenant, and that makes it almost impossible, doesn’t it?
Barry Gardiner (Labour, Brent North)
Ms Ali wants to come in.
Barry Gardiner (Labour, Brent North)
Q Unfair? Unjust? Inequitable?
Barry Gardiner (Labour, Brent North)
Q It is the imbalance of power.
Rachel Maclean (Conservative, Redditch)
Q Harry, can I just ask you a couple of things? On the forfeiture point, is it your view that there is absolutely nothing in the Bill to prevent the forfeiture issue?
Rachel Maclean (Conservative, Redditch)
Do not worry: I know what to say to them. That is fine.