Matthew Pennycook
MP for Greenwich and Woolwich · Labour · United Kingdom
“It is a pleasure to serve with you in the Chair, Dame Siobhain. I congratulate the right hon. and learned Member for Kenilworth and Southam (Sir Jeremy Wright) on securing this debate.”
“I will address the right hon. and learned Gentleman’s specific question in due course. Before I do so, I want to put on the record the policy in relation to villages. He can rest assured that I will address the point; if he is unsatisfied, he is more than welcome to intervene again. A number of hon. Members mentioned villages.”
“I will say two things in respect to that, and I will come on to detail how the approach works in relation to decision making very shortly. In general terms, developers can make whatever claims they like about any particular site across the country; it is for the local authority to assess whether, in its view, that site constitutes grey be…”
“and learned Gentleman’s point about what is likely to constitute grey-belt land. Let me directly address his other two specific points. Is this a significant policy? Absolutely, and it has been judged as much by the Office for Budget Responsibility and other external commentators. Is it deliberate? Absolutely. We want, as the right hon.”
“Where authorities may wish to restrict development in villages for other reasons, a range of tools are available, such as conservation areas or normal development management policies. On the right hon.”
“We have to put in place policies that, through the decision-making route, allow homes still to be brought forward in that interregnum, but then we have to push heavily to drive towards universal plan coverage. At that point, the protections are in place.”
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“For a variety of reasons, commonhold failed to establish itself following its introduction in 2004. As a result, there are fewer than 20 commonhold developments in existence today and the 2002 legal framework is hopelessly outdated. The provisions in the draft Bill build on the publication of our commonhold White Paper in March last year, which confirmed the detail of our commonhold reform programme, and responded to the Law Commission’s thorough and expert review of commonhold law. The result is legislation that will reinvigorate commonhold through the introduction of a comprehensive new legal framework that will enable commonhold to be used in the widest possible range of settings.”
“Commonhold is a modern home ownership structure that is widely used around the world. It is not merely an alternative to leasehold ownership, but a radical improvement on it. At the heart of the commonhold model is a simple principle: the people who should own buildings and who should exercise control over their management, shared facilities and related costs are not third-party landlords, but the people who live in the flats within them and who have a direct stake in their upkeep. Commonhold ensure that the interests of homeowners are preserved in perpetuity. It transfers decision making to them so that homeowners have a greater say over how their home is managed and the bills they pay, as well as the flexibility to respond to the changing needs of their building and its residents.”
“The draft Bill includes the following key provisions: a new legal framework for commonhold to reform and reinvigorate this radical improvement on leasehold ownership; a statutory restriction on new leasehold flats to ensure that, in future, commonhold is the default tenure; a new process for converting to commonhold from leasehold to make conversion easier, so that more homeowners can enjoy this improved form of ownership; the abolition of leasehold forfeiture and its replacement with a fairer system of lease enforcement; the repeal of draconian powers relating to rent charges on freehold estates; and the capping of ground rent for older leases at £250 a year, changing to a peppercorn after 40 years. Let me expand briefly on each of these core measures, beginning with commonhold.”
“Today, the Government have published and laid the Commonhold and Leasehold Reform Bill in draft for pre-legislative scrutiny by the Housing, Communities and Local Government Select Committee. This ambitious piece of legislation will modernise property law, deliver a fair and efficient modern housing market and, most importantly, transform the experience of home ownership for millions of leaseholders across the country.”
“My Department always strives to ensure that the House is updated at the earliest possible opportunity. I note and appreciate fully the points you have made, Mr Speaker, and will ensure that they are passed on to my ministerial colleagues. With your permission, Mr Speaker, I would like to make a statement on the Government’s draft Commonhold and Leasehold Reform Bill. We made a clear and unambiguous commitment in our manifesto to act where previous Governments had failed and finally bring the feudal leasehold system to an end. We did so on the basis of a firm conviction that it is only by extinguishing fully the historical iniquities on which the present leasehold system rests that we can ensure that the dream of home ownership is made real for millions of households across the country.”
“The shadow Minister mentioned housing supply, but again, I am loath to take lessons from a party that torpedoed housing supply in the last Parliament by making a series of anti-supply changes to the national planning policy framework, including the abolition of mandatory housing targets. The shadow Minister’s criticism could be taken a little more seriously if his colleagues did not come to me week in, week out, objecting to housing applications, telling me how our reforms will make it more permissive in their local constituencies. We are getting on and taking forward the reforms to the leasehold system that are already on the statute book. Through this Bill, we are bringing forward the wider reforms necessary to bring that system to an end, which will be to the lasting benefit of millions of leaseholders across the country.”
“On coming into office, we immediately enacted a series of provisions on rent charge arrears, building safety legal costs, and the work of professional insolvency practitioners. On 31 October we enacted further building safety measures; on 31 January we switched on the two-year qualifying exemptions for leaseholders; in March we switched on the right-to-manage provisions; and we are working at pace to take forward the rest of the significant package of secondary legislation that was required. However, some parts of those provisions require us to make fixes to the Bill—sadly, something that the previous Government left us with.”
“I note the initial positive tone from the shadow Minister in welcoming the draft Bill. I am slightly reluctant, on what is usually a matter of cross-party consensus, to be too critical of him, but it is a bit rich to criticise this Government, given that the previous Government cherry-picked reform in a way that was at odds with the Law Commission’s recommendation to treat all three of its reports as a holistic package, and left us with an Act that we will have to make a series of changes through primary legislation to fix so that we can implement the remaining provisions. I will, therefore, not take any strictures on ambition from the shadow Minister when it comes to leasehold reform. I say plainly to the shadow Minister that we have switched on a number of the 2024 Act’s provisions already.”
“We cannot do everything in this Bill; hon. Members who have had a chance to look will have seen that is has a large number of clauses already. But we are committed to enacting those remaining recommendations relating to leasehold enfranchisement and other things over the course of the Parliament. On implementation, different provisions will come into effect at different times. For example, we aim to switch on the rent charge provisions I described soon after Royal Assent. Other measures will require secondary legislation. We expect the ground rent cap to be in place in 2028. We will work with the Committee to ensure that it can do the fullest and most robust job possible when it comes to giving the Bill the enhanced scrutiny it deserves.”
“I thank my hon. Friend, the Chair of the Housing, Communities and Local Government Committee, for those fair and pertinent questions. I will answer each of them in turn. We published a whole series of documents at 7 am, including a copy of the draft Bill. That also included a policy document setting out our rationale for the £250 per year ground rent cap, but we will make available to the Committee other information, evidence and documentation as needed and at the earliest possible opportunity. As for the other recommendations made in the three reports from the Law Commission, the Leasehold and Freehold Reform Act 2024 implemented a significant number of the Law Commission’s enfranchisement recommendations, a small number of its right-to-manage recommendations, and none of its recommendations on commonhold.”
“It is a huge cost-of-living intervention, and I hope the House can get behind it as the most just and proportionate way of addressing unregulated and unaffordable ground rent terms. The hon. Member for Taunton and Wellington (Gideon Amos) will know that we ran a consultation last year on how we can standardise service charges and increase their transparency to ensure that leaseholders can better challenge the reasonableness of service charges at tribunal. However, we do not intend to bring forward a cap, not least because doing so could harm leaseholders, particularly those in enfranchised buildings, who may need to raise sums beyond the cap to carry out essential maintenance works on their buildings.”
“It is clear that an immediate peppercorn cap would carry significant risks, including some that might impact on leaseholders. The Government also recognise that there is a significant difference between regulating the creation of new leases, and intervening to affect existing contracts and investments. On the functioning of the cap itself, I want to make clear that it is a maximum cash cap. If someone’s lease is below £250 and does not include escalating clauses, their ground rent will not rise to £250. If someone’s ground rent is over £250, at the point that the measures are brought into force they will see an immediate reduction. That will benefit millions of leaseholders across the country.”
“I thank the Liberal Democrat spokesman for those questions. He often mentions Lloyd George, and I share his passion for Lloyd George’s radicalism on property law and other measures. I will address the specific points that he raised. During the passage of the Leasehold and Freehold Reform Act 2024, I was clear that my instinctive preference when it comes to ground rents was for a peppercorn cap, fully eliminating ground rents. The changes that we are making ensure that, after 40 years, that change occurs. Having considered all the analysis and advice available to me as a Minister, including the evidence gathered in response to the previous Administration’s 2023 consultation, I believe that we have set out the right policy.”
“Friend—who embodies this herself, so she is well aware—that taking on vested interests that are opposed to change that will bring about improvements in the lives of working people is what Labour Governments do.”
“I thank my right hon. Friend for her kind words. She was an incredible champion of the reform agenda for this legislation when she served as Secretary of State. She raises the matter of vested interests. I hope that the House—and you, Mr Speaker—will take from the Government’s robust defence to the legal challenge brought against the 2024 Act by a group of claimants who are owners of freehold and other arising interests of dwellings that we will robustly defend the legislation. The High Court, incidentally, comprehensively dismissed that challenge, allowing us in due course to take forward the relevant provisions. I simply say to my right hon.”
“I want to be clear, though, that we are talking about how and not whether we take those measures forward; I want to see them brought forward at the earliest possible opportunity, because we absolutely know the impact that high and rising service charges are having on leaseholders across the country.”
“I have a lot of respect for the hon. Gentleman and his service on the Select Committee. He has a lot of expertise in this area. I would say two things in response. First, we published two consultations on the home buying and selling process to try to modernise that process, and we are looking at some of those issues as part of that. Secondly, on service charges, one reason we had to hold quite a complicated and technical consultation on the implementation of the 2024 Act’s service charge provisions is precisely the complexity and the number of factors to deal with. We received incredibly useful feedback in response to that consultation, and that will shape how we take those measures forward.”
“We are clear, though, that that consultation and the measures within it are not the final step in the regulation of managing agents, and we will continue to reflect on the various other recommendations made in Lord Best’s report.”
“We did see a considerable amount of deregulation under the coalition Government and their successors. I will give the previous Government credit, as I have done before, for bringing forward the 2024 Act; it does include some limited relief for leaseholders and some new rights and protections. However, we need to take it forward and finish the job, as I made clear in opposition that Labour would. As I said, we are consulting on changes to increase protections over service charges—incidentally, that same consultation included a number of proposals recommended by Lord Best in his 2019 report, “Regulation of Property Agents”, including the introduction of mandatory qualifications for managing agents.”
“The House can, of course, help us to speed up the progress of the Bill; 2028 is only a rough estimate based on the time it will take for the Bill, once it has passed its draft phase and scrutiny from the Select Committee, to be introduced in its final form and to get through both Houses. We will then also have to switch on the necessary secondary legislation. Up until that point, people will continue to pay their existing ground rents, but, as I say, the cap will apply once we bring those measures into force. For lots and lots of leaseholders around the country—I am sure the hon. Gentleman has many in his constituency—who are paying onerous, high ground rent terms way above £250, that will be an immediate financial relief that will be hugely beneficial to them.”
“That is why it is so important that the Bill contains an easier mechanism to convert to commonhold, which, as I said in the statement, we are clear is not only an alternative to leasehold ownership but a radical improvement on it.”
“I am more than happy to have a separate conversation with my hon. Friend about the specific conditions pertaining to leasehold houses. She will know, of course, that the Leasehold Reform (Ground Rent) Act 2022 made a number of changes in that area. In general, we want to arrive at a situation, once our reform agenda is enacted, where existing leaseholders can choose to remain in leasehold ownership but can take advantage of the new rights and protections made available to them, including a cheaper and easier enfranchisement process if they want to extend their lease or buy their freehold, or convert to commonhold.”
“It is clear that this draft Bill cannot do absolutely everything, and it is the Government’s considered opinion that we do not need provisions on service charges in this Bill—not least because, for the reasons I have set out, we do not intend to implement a service charge cap—and that the provisions in the 2024 Act will do the job. Help is on the way, though, and I want to ensure that those provisions are switched on at the earliest possible opportunity.”
“I thank my hon. Friend for his kind words on my role in developing the draft Bill. I can say to him very plainly: yes. If he looks at the consultation on service charge protections that we released last summer, he will see proposals that specifically address non-litigation costs and other measures. However, as I said, it is our intention to ensure that in the enfranchisement process, it is not only cheaper but easier for leaseholders to make use of their new rights and protections if they intend to buy their freehold or extend their lease.”
“We launched two comprehensive consultations before Christmas, in respect of how we switch on the consumer protections set out in the 2024 Act for those living on freehold estates and, more widely, on how we end the prevalence of private management arrangements of the kind that I think the hon. Member is referring to. The draft Bill does not have to do everything, but relief is on the way through the new consumer protections for those living on freehold estates who suffer from management companies levying unfair charges.”
“My hon. Friend and I both served on the Public Bill Committee when the Bill that is now the 2024 Act was going through the House, and we discussed many of these issues then; I can assure him that we have given consideration to all of them. He is right that we are now on a path to a commonhold future. As I have said, this is a radical improvement on leasehold home ownership. In general, while we will obviously ensure that leaseholders who wish to remain under leasehold ownership benefit from new rights and protections, it is the Government’s intention to try to persuade as many leaseholders as possible to convert to commonhold and to enjoy the benefits that it provides.”
“I must say, without getting into the detail of the circumstances of the hon. Lady’s constituents, it is hard to know which of the measures will benefit them most. If they are subject to high ground rent charges, the cap on introduction will benefit them hugely on its introduction. If they have suffered from the threat of forfeiture, which is a draconian and disproportionate means of enforcing lease terms, they will benefit in myriad ways from the legislation.”
“As I have said, it is the Government’s intention to ensure that the draft Bill, and the final product that eventually comes forward after scrutiny by the Select Committee, is made law as soon as possible so that leaseholders can benefit from the new provisions. In general terms, no one will pay more than the ground rent cap that we are introducing, but millions of people will pay less. Approximately 770,000 to 900,000 leaseholders with ground rents over £250 will see savings in this Parliament, and others will see savings in greater amounts in Parliaments to come.”
“We recognise that the reforms will have a significant impact on freeholders and investors, but we consider this a justified and proportionate response.”
“I thank the right hon. Member for his fair and reasonable question. The Government consider the intervention on ground rents that we are making through this draft Bill to be a justified and proportionate approach to the specific problems that leaseholders face as a result of high and harmful ground rents. We are introducing the reforms to deliver on specific commitments in our manifesto and in the context of a significant number of wider reforms to the leasehold market. We have carefully weighed the different options to meet our manifesto commitment on ground rents and we have taken investors’ concerns into account when developing the policy, which we believe strikes a fair balance between leaseholders, freeholders and those invested in ground rents.”
“I am more than happy to write to my hon. Friend about the issue of shared ownership specifically. She will know that through our £39 billion social and affordable homes programme, we are making improvements to shared ownership as a tenure model. More widely, I can assure her that the provisions in the draft Bill will benefit leaseholders in her constituency in the way that she makes clear. I am happy to have a further conversation with her about how the reforms will benefit her constituents and what advice leaseholders can draw on, including the Government-backed Leasehold Advisory Service.”
“I think that leaseholds will exist for some time to come. Indeed, people in various buildings may not, for whatever reason, wish to convert to commonhold, but it is absolutely our intention to make it easier to do so and to encourage as many leasehold homeowners as possible to make the change, because it is a radical improvement on leasehold ownership, not just an alternative to it.”
“We are absolutely committed to strengthening regulation of managing agents. Some proposals on charges were set out in the consultation on protections for leaseholders, which we released last summer, but there is more to come.”
“I must correct the hon. Gentleman: it does not solely deal with leasehold, as I made clear in the statement. The draft Bill will repeal sections 121 and 122 of the Law of Property Act 1925, ending the disproportionate remedies that give rent charge owners access to a draconian enforcement regime on freehold estates. As I have said, we are doing more, through the two consultations launched before Christmas in particular, to give new consumer protections to those living on freehold estates. I hope the hon. Gentleman will take part in and respond to that consultation.”
“I agree with my hon. Friend. She, like me, will have constituents who are subject to high, unfair ground rent charges and, in some cases, to escalating ground rent charges, particularly those that are inflation-linked. People across the country see those ground rent charges stack up to significant amounts and they will benefit from the cap once it is implemented. We estimate that the cap on ground rents will take approximately 12 months to introduce after Royal Assent, but that is all subject to parliamentary timings. If, as in the past, there is cross-party support on this issue, we can all work together to ensure that the Bill makes speedy progress.”
“I detected an unusual amount of support in that question from the hon. Lady, which I welcome. On the specific issue of insurance charges, again, there was a consultation on switching on some of the provisions in the 2024 Act that relate to insurance commissions. I am more than happy to write to her to set out further detail, but we need to bring those into force and it remains our commitment to do so at the earliest opportunity.”
“All manner of provisions in the draft Bill that we are discussing are absolutely about rebalancing leasehold and freehold interests. To take the example of forfeiture, freeholders have often been in an unassailable position of strength vis-à-vis leaseholders. That is what we are trying to address by introducing the Bill. I thank my hon. Friend for her support.”
“I will happily meet the hon. Gentleman. As I have said, it is our intention as a Government to end the unjust and discriminatory practices from which leaseholders suffer. As I hope I have made clear, over the course of the Parliament we intend to end—finally, once and for all—this iniquitous system. That will take some time; it cannot happen overnight, but that is our intent. Leaseholders across the country, including those in his constituency and mine, will benefit from that.”
“My hon. Friend is right: there will always be vested interests that resist reform of the nature that we are trying to take forward, just as there will always be naysayers out there for whom nothing we do is ever good enough. This package as a whole, as I have said, will end the leasehold system in its entirety and in a single Parliament. That will be a huge achievement for this Government and we will succeed on that basis where other Governments have failed. I am aware of the specific issue my hon. Friend raises and we have had many discussions about it. The provisions to address it are not in the draft Bill, but my officials and I are giving serious consideration to how and where we will resolve the matter that my hon. Friend has campaigned on for so many years.”
“I can feel the glare of my private office as I agree to meetings across the House, but I am happy to do so. The matters that the hon. Lady addresses are in the consultation we brought forward last year. It is an incredibly technical consultation on standardising and making more transparent service charges across the country, which are not uniform in any way as things stand. However, as I have said, we want to introduce those protections as soon as possible.”
“I say to my hon. Friend that we are on his constituent’s side. It is because so many leaseholders across the country are suffering from unjust and discriminatory practices that we have to overhaul and ultimately end this feudal system.”
“I have made it clear to the House that we have already set out proposals to strengthen the regulation of managing agents. Those proposals are not the summit of our ambitions; there is more to come. I say to the hon. Gentleman and generally to the House that managing agents will play an even more important role as we progress towards a commonhold future. We must therefore end the abuse and poor service from unscrupulous managing agents that so many leaseholders face.”
“It is certainly not our intention to allow any loopholes into the legislation. That is precisely why we have brought forward a draft Bill rather than a final product. Such is the complexity and technical nature of the reform we are enacting that the additional and enhanced scrutiny to be provided by the Housing, Communities and Local Government Committee will be invaluable.”
“The draft Bill, as published, includes exemptions that mirror the ground rent exemptions for new leases entered into since 30 July 2022, based on that previous Act of Parliament, but we will consider through the pre-legislative scrutiny process whether other exemptions would be appropriate for a small number of leases granted for specialist purposes. I can assure the hon. Member that I have given consideration, and will give further consideration, to the matter she raises.”
“My hon. Friend is absolutely right. For various reasons, commonhold failed to take off after its introduction in 2004 and the legal framework is now hopelessly out of date. That is why we have to reform and reinvigorate commonhold as a tenure. We want to put in place an easier conversion mechanism. We have given a great amount of thought to the Law Commission’s recommendations in this area, and we have tried to strike the right balance to ensure that our approach meets those objectives, but my hon. Friend is more than welcome to contribute to the scrutiny process for the draft Bill outside the Select Committee, and I hope that the does so.”
“I can assure the hon. Lady that we are going as fast as we possibly can, but I hope she would not want us to follow the example of the previous Government, who rushed forward legislation that contained serious specific flaws that a future Government—this Government—would have to fix in due course.”
“I very much agree with my hon. Friend that the draft Bill will be life-changing for leaseholders across the country, freeing them from the unjust and discriminatory practices that so many of them face, and from the financial cost of high ground rent terms. I am more than happy to write to her on the specific issue she raises. It is these nuanced points that we want to work through, and that is why we have brought forward a draft Bill for enhanced scrutiny.”
“We have given serious consideration to how we will take forward Lord Best’s recommendations from his 2019 report and, as I have made clear, we are taking some of them forward already. This Bill introduces reform in a number of specific areas and, as I have said in response to previous questions, it does not need to do everything. There are other pieces of legislation, not least the 2024 Act, that do lots of the work that hon. Members are calling for, but we want to ensure that the whole agenda is a comprehensive one that benefits leaseholders in the way that the hon. Lady and I both want.”
“My hon. Friend will be aware that there were very few provisions relating to the right to manage in the 2024 Act. We are committed to enacting the remaining Law Commission recommendations relating not only to the right to manage but to leasehold enfranchisement. I am more than happy to write to her to try to get at the specific issues she raises in relation to the building in her constituency.”
“Hopefully the hon. Gentleman heard my answer to a previous question. We intend to switch on the 2024 Act provisions that standardise service charges and increase transparency around them, so that people can more easily challenge unreasonable charges at tribunal. I will not put a time on that, because I do not have an exact date in mind, but I can assure him and other Members across the House that we are working as fast as possible to bring forward the necessary protections to ensure that leaseholders are protected from high and rising service charges.”