Leasehold Reform (Ground Rent) Bill [Lords]

New Clause 1

Ground rent for existing long leases

“Within 30 days of the day on which this Act comes into force, the Secretary of State must publish draft legislation to restrict ground rents on all existing long residential leases to a peppercorn.”—(Mike Amesbury.)

I beg to move, That the clause be read a Second time.

With this it will be convenient to discuss the following:

Amendment 1, in clause 2, page 3, line 16, at end insert—

“Retirement developments where some leasehold residential flats have already been sold prior to commencement but others remain unsold

(12) A lease is an excepted lease if it is a lease of a retirement home in a development, where—

(a) other residential flats within the development have sold and completed on a long leasehold before the relevant commencement day under section 26(4) but it is a flat within the development which remains unsold, and

(b) the development commenced prior to 6th July 2021.”

Let me begin by thanking all colleagues who have helped this short but important Bill through its stages so far, including our friends in the other place. In particular, I thank those who joined the Minister and me in scrutinising the Bill in Committee. Let me also begin with an apology to the Minister. I told him on the occasion of our final meeting in the Committee that that would be my last outing in respect of housing, having handed over the portfolio to my capable hon. Friend the Member for Greenwich and Woolwich (Matthew Pennycook), who is sitting behind me. I was wrong to say that, and I am very pleased that I was wrong. I stand here today ready to continue to raise an issue which matters hugely to me, to many of my constituents, and to leaseholders across the country—and, indeed, to the Minister himself.

Although the Bill is short, many important issues in it have already been covered extensively, first by our colleagues in the other place and then by Members here, in Committee. I do not wish to repeat too much of what has already been said, but the two new clauses tabled for Report are an opportunity for Members on both sides of the House to raise again two important aspects of the Bill.

New clause 1 would require the Government to produce draft legislation within 30 days to reduce ground rents to a peppercorn in existing long residential leases. The antiquated feudal system of leasehold is unjust for the many and not just the new. People in England and Wales have been trapped in that relic from the past for far too long. I urge the Minister to set them free, level up their life chances and support the new clause.

New clause 1 proposes that the narrow scope of the Bill be simply widened to improve the lives of leaseholders—the 4.5 million people trapped in this feudal system. Some 1.4 million of them are in houses, many in the north, the north-west and Wales, and may be experiencing high ground rents on top of other exploitative terms built into their leasehold contracts.

We are all united in wanting to stamp out abusive practices with ground rents, but is the defect of the hon. Gentleman’s amendment not that it amounts effectively to a confiscation of existing property rights? That in itself has fairness issues, but it also deters future investment in our building stock. That future investment is needed, for example, if we are going to insulate against climate change and turn our buildings into more carbon neutral ones for the future.

A feudal system of kings and barons needs to be kicked into touch. It is unjust and it is unfair. I am sure the right hon. Member will make an informed decision when it comes to the Division Lobby, but I know whose side I am on.

The Levelling Up, Housing and Communities Committee looked at the leasehold issues in some detail and produced a report that led to the Competition and Markets Authority conducting its investigation. We looked at the issue of property rights and took advice and evidence from leading property lawyers, who said that where there is a general public interest, it is perfectly reasonable under the European convention on human rights to go down the road being suggested, and that even for existing properties, the ground rent system and other leasehold issues could be changed to reflect the fact that currently they are simply unfair.

I thank my hon. Friend for that intervention and all the work he and the Select Committee have done to move the matter forward. Together with the Select Committee and many others, I certainly want to see this system kicked into history.

I reaffirm that campaigners have waited long enough for change, and we should not keep them waiting any longer. A former Secretary of State, the right hon. Member for Newark (Robert Jenrick), referred to the Bill as the “appetiser” before “the main course”. Again, I affirm that what we need is an all-you-can-eat buffet of reform here and now.

Amendment 1, tabled by the right hon. Member for New Forest West (Sir Desmond Swayne), would prevent some retirement properties from being bound by the legislation. Unfortunately, we are not able to support the amendment. In fact, in Committee I tabled an amendment that would have done quite the opposite. Those who buy retirement properties should have been able to benefit from this new legislation and be put on par with everybody else. Justice is justice. The right hon. Member has certainly been consistent, but consistently wrong on this matter.

Has it occurred to the hon. Gentleman that for many purchasers it will be in their interests to pay a lower purchase price and pay a ground rent, rather than to have to pay a very much higher price at the outset?

I will agree to disagree. The Government have proposed a compromise, giving a longer transition phase for retirement properties, and we will support that approach, as was stated in Committee.

I find that the concerns of retirement community developers do not outweigh the need for those buying retirement properties to be treated fairly as consumers. Given the notice that the retirement community has had about the change, the transition period is generous enough. Many in the industry have done the right thing and already moved away from this income stream model, and I ask that their colleagues do the same.

In conclusion, the Bill marks another milestone in the slow journey to put the feudal system of leasehold into the history books. I thank all those campaigners who have educated legislators and the Government to secure change. The investigation and intervention from the Competition and Markets Authority have shone an authoritative light on the leasehold scandal. Developers have been exposed and are now responding by ditching the practice of doubling ground rents every 10 years. I urge Ministers to strengthen the Bill for all leaseholders and back new clause 1.

I draw your attention, Madam Deputy Speaker, and the attention of the House to my entry in the Register of Members’ Financial Interests.

I am deeply embarrassed about the way that the retirement living industry has been treated over the past few years in the progress to this Bill. In recognition of the significantly greater capital costs of building developments that have communal areas, which have traditionally been funded through an income stream of ground rent, the industry was granted an exemption, or an assurance that it would be exempt from the provisions of the Bill, back in June 2019. That exemption was then withdrawn in January 2021. I understand that the decision to withdraw the exemption was made almost a year earlier, in February 2020, and that discussions about revoking the assurance of exemption had actually begun in August 2019. Throughout all that period, the industry continued to be reassured that the exemption was good and would hold, and it was not.

Throughout that period, the industry continued to raise capital on the basis of the model with which they had been told they could continue. The amendment goes one tiny little bit towards trying to remedy the damage that has been done. It accepts that the practice will have to end, but it asks for one tiny concession, namely that, when the provisions of the Bill bite in March 2023, properties that are part-sold can continue to sell the residual remaining flats or properties on the basis of a continued ground rent. Without that, what we will have is some properties within a development being worth significantly more in terms of the purchase price than others, and some properties paying a ground rent and others not. It will be hugely complicated and divisive. Therefore, the amendment merely asks for that to be addressed. At the most, if the provision were to pass, we anticipate that this would account for about 2,000 properties. I ask the Minister to reflect on this, and, even at this late hour, accept the amendment.

I rise to speak in support of new clause 1, tabled by my hon. Friend the Member for Weaver Vale (Mike Amesbury).

To respond to the previous speaker, the right hon. Member for New Forest West (Sir Desmond Swayne), on the issue of ground rents, it is clear that service charges are for communal areas. Indeed, McCarthy Stone’s website says very clearly—