My Lords, I declare a personal interest as someone who pays ground rent on my flat in London.
I congratulate my noble friend the Minister on his usual courteous and full explanation of the Bill. I just do not know what he has done to draw the short straw again, but I suspect that he will get as much hassle from this House on this Bill as we saw with the Trade Act, China and the Fire Safety Act. However, I shall support it, inadequate though it is, because it is a small step in the right direction and because I have never before been involved putting lipstick on a pig, which the Bill attempts to do.
Before one can judge the merits, one has to look back at how we got here with these things called leasehold and ground rents. I do not mean just looking back at the 2017 consultation, nor the Commonhold and Leasehold Reform Act 2002, nor the 1993 leasehold reform Act, nor even the Leasehold Reform Act 1967. No, to understand where we are coming from, we have to go back a bit further than that—right back 1,000 years to the 11th century and the Domesday Book of 1089, which uses the term “freeholder” for the first time. The term “leasehold estates” appears a few decades later.
Medieval or feudal law was not concerned with hard-working families trying to get on the property ladder; in those days there was no concept of levelling up in Hartlepool or Rotherham. Land meant power in the Middle Ages, and powerful families wanted to retain ownership of their land while maximising their earnings from it. Thus the concept of leasing was established to allow serfs to work a plot of land, for a fixed period, on the basis that they would pay “in kind” by providing food and services to their master further up the social order. Thus, the common law of the landlord-tenant relationship evolved in England during the Middle Ages, based on a feudal social order and an agrarian economy, where land was the primary economic asset and ownership of land was the primary source of rank and status.
Let us roll on 1,000 years, and what has changed today? Nothing of real substance. We may buy a property but find that we are still vassals of a landlord who does nothing for us. We sit in this place as noble Lords and most of us are life Barons, but for those of us who are leaseholders, like the 4.6 million of our fellow country men and women, we are still just feudal serfs paying our masters for nothing in return. I suggest that the whole leasehold system is rotten to the core and has no place in a modern property-owning democracy.
Ground rent is even worse and can be traced back to Roman times, when the solarium, or ground rent, was payable by the lessee of a piece of land. I rather liked studying Roman law as a student in Scotland many years ago and learning, through the Institutes of Gaius and Justinian, how to manumit my slaves. Little
did I realise on moving to England and buying a flat, that England still had that Roman equivalent of slavery with its servile property laws, whereby we are bonded to the master for 999 years, paying for nothing in return. It is therefore no surprise that the Normans brought the concept of ground rent to England and, following the 1290 statute of Quia Emptores, the landlord had complete control over the tenant.
I simply do not understand how such an iniquitous system can have survived for 800 years. In the last century we had radical reforming Governments, and even socialist Governments, but we still have a 1,000 year-old feudal law with regard to property ownership. Will the Labour Party opposite bring forth a new Wat Tyler or Jack Straw—the old Jack Straw, of the Peasants’ Revolt—and lead a revolt against ground rent? I hope it will, because I will be tempted to—or rather, I certainly shall—support it.
The Bill seeks to amend 800 year-old rules of common law. I like common law and respect it—it is one of the greatest systems of law in the world—but as far as the property rights of England are concerned, it has long outlived its moral justification. In this Session of Parliament we will debate Bills dealing with the challenges of the technological age: policing the internet, creating an advanced technology organisation, telecommunications infrastructure—all the stuff of the modern age and the future. Then let us look at this Bill. Clause 4(3) states:
“In this Act a ‘peppercorn rent’ means an annual rent of one peppercorn.”
What in the name of God are we doing in 2021 legislating with terminology such as “peppercorns”, a term invented in the late 16th century? Nothing demonstrates how archaic, obsolete and unlevel is our society like the iniquitous system of leasehold and ground rent surviving and prospering to this day.
The Minister hit the nail on the head when he said in his letter to all Peers:
“Ground rents are a charge that leaseholders pay with no clear service in return from freeholders. Unfair practices relating to ground rent have damaged the reputation of the leasehold system and caused substantial difficulties for some leaseholders. We believe that people’s homes should be theirs to live in and enjoy, not designed as an income stream for third party investors.”
There was never a truer paragraph—my noble friend is absolutely spot on—so why must millions of leaseholders be exempted from the Bill and still have to pay for no service?
We have a situation in which all future serfs will be freed from bondage but existing ones must still pay the master. I thought it was quite instructive when my noble friend said in his opening speech that the Government had decided not to define “ground rent” because—I paraphrase slightly—unscrupulous freeholders would use every underhand trick in the book to find a way round it. That is the problem we face: it is not about the innocent, decent freeholders but the unscrupulous ones.
I was going to put down an amendment to abolish ground rent completely, but I understand that landlords could complain to the European Court of Human Rights that they had been deprived of their property rights. Well, we cannot have that, can we? Since the
Government like peppercorns, I suggest that we should have a full packet of them. Thus, I will invite the House to support an amendment so that all ground rents, including all present ones, become peppercorn rents. If future leaseholders need to be protected from being ripped off for no service in return, to use the Minister’s words, existing leaseholders are even more deserving of being protected. The Government might say that it is unfair to interfere with the income received from property, but the Government do that all the time when they take up to 12% stamp duty, 28% capital gains and 40% of your money when you die.
In conclusion, therefore, there is no fundamental new principle in limiting the charge of ground rents to a peppercorn. Landlords would not be deprived of their property rights, although in all morality they should be; they would just get a lower income in peppercorns—although that may rub salt in the wounds. Let us build those 300,000 homes per annum as a bare minimum, and let us give existing home owners proper rights to their homes, free from a feudal serfdom system that should have no place in a modern society.
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