I cannot quantify the exact amount people will pay, but it is fair to say that we have set out a fundamental system of protection that admittedly does not go as far as the zero or peppercorn proposed in opposition amendments, but it does go a considerable way to ensuring that leaseholders are the last in line to pay, as opposed to the first.
As I said, the amendments tabled by the noble Baronesses, Lady Hayman and Lady Pinnock, and the noble Lord, Lord Stunell, seek to reduce leaseholder contributions to zero or a peppercorn. Where there is no clear party that must pay, it would not achieve a fair balance between relevant parties to transfer the costs in full to the freeholder or landlord. I appreciate that that opinion seems to vary from that of noble Lord, Lord Marks of Henley-on-Thames, but that is the government position.
Amendments tabled by my noble friends Lord Young and Lord Blencathra propose to reduce the leaseholder contribution caps, and another amendment proposes alternatively that the contribution is 1% of the lease value. The Government have already taken significant and far-reaching steps to protect leaseholders, protecting
those in lower value properties and doubling the repayment period to 10 years. On that basis, I ask the noble Lords not to move their amendments.
Government Amendment 164 provides for the value of a lease to be determined without the need for a valuation. It allows for the value of the lease to be determined by uprating the most recent sale price prior to 14 February 2022. The uprating, which will be set out in regulations, will ensure all properties are compared on a level playing field. The uprating will be based on a metric called the house price index which tracks house prices. This will allow properties to be assigned a nominal present-day value.
Amendment 165, tabled by my noble friends Lord Young and Lord Blencathra, proposes that the value of the lease would be based solely on its most recent sale price. I am afraid the Government will not be able to accept this amendment as it would put leaseholders who have purchased their properties more recently at a significant disadvantage. The Government consider it important that properties are compared like for like, irrespective of when they were last sold. On that basis, I ask my noble friends not to move to their amendments.
I will turn now to Amendments 123 and 124, which deal with the definition of a qualifying lease. The Government have already tabled amendments which will see people with a total of up to three UK properties eligible for the protections. Amendment 123, tabled by my noble friends Lord Young and Lord Blencathra, proposes to increase this to a total of up to five UK properties. Amendment 124, tabled by the right reverend Prelate the Bishop of St Albans, proposes to increase the total to six for individuals in receipt of a state pension. I am afraid that the Government will not be able to accept these amendments.
As I have previously discussed, it is important that the Government take a proportionate approach and ensure that our measures are fair to all parties. This includes considering where certain groups of leaseholders are likely, on average, to be able to afford to contribute to the costs of remediation. The Government need to focus their protections on those who need it most, primarily leaseholders living in their own homes and those who have moved out and are subletting. We also recognise concerns about people with small numbers of additional properties, and that is why we are ensuring those with up to three UK properties will be protected.
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There is still significant support available for people with more than three properties. The principal home will always be protected irrespective of how many additional properties are owned. In addition, all leaseholders will be protected from all historical building safety costs where the building owner or landlord is, or is connected to, the developer. This includes leaseholders with more than three properties. In addition, all leaseholders will benefit from our £5.1 billion funding to fix unsafe cladding on high-rise residential buildings, irrespective of how many properties they own.
We are also clear that developers must fix buildings above 11 metres that they had a role in developing or refurbishing. This will benefit all leaseholders with
properties in these buildings. Our amendments will also drive a more proportionate approach to building safety as building owners and landlords will no longer be incentivised to commission unnecessary and costly works. This more proportionate approach will benefit all leaseholders. On that basis, I ask the noble Lords to withdraw these amendments.
I turn now to Amendment 115, which extends the leaseholder protections to buildings of all heights containing two or more residential dwellings. It is not necessary to extend the leaseholder protection provisions to lower-rise buildings. Leaseholder protections are needed in multi-occupied buildings above 11 metres as essential and costly remediation works may be needed in buildings of this height from which leaseholders need to be protected. On the other hand, there is no systemic fire safety risk in buildings below 11 metres. Low-rise buildings will not need costly remediation to make them safe. Lower-cost mitigations are likely to be more appropriate.
I am aware of just a handful of low-rise buildings—as mentioned by my noble friend Lord Blencathra—where freeholders have been commissioning such works. This is in the context of there being vastly more low-rise than medium and high-rise buildings. It is clear in this very small number of cases that many of the examples of buildings under 11 metres follow the recommendations of EWS1s undertaken prior to the July statement and prior to the withdrawal of the consolidated advice notice in January of this year, as well as the introduction of the publicly available specification 9980, which followed shortly thereafter. I am completely clear that freeholders and landlords should not be commissioning costly remediation works in buildings below 11 metres tall.
I now turn to Amendment 117, which seeks to bring leaseholder-owned buildings into the scope of the protections. Our leaseholder protection measures work at a fundamental level by preventing building owners and landlords from passing on certain costs to leaseholders through the service charge and requiring building owners and landlords to pay instead. The leaseholder protections do not apply where buildings have been collectively enfranchised, as in these circumstances the building is owned by some or all of the leaseholders. We are therefore unable to apply the leaseholder protection provisions in these circumstances as there is no separate landlord or freeholder with whom costs can be shared.
In essence, there is nothing in these amendments that increases liability for enfranchised leaseholders. Enfranchised buildings are of course eligible for the £5.1 billion building safety fund in the same way as other buildings. It is still our expectation that the polluter will pay, and our expectation is that developers will pay to fix buildings that they had a role in developing or refurbishing. In addition, all the other legislative provisions will apply equally to collectively enfranchised buildings, including all measures and powers in the Bill to pursue developers and cladding manufacturers and compel them to pay. On that basis, I would ask my noble friends to withdraw their amendments.
Amendment 126 seeks to make it clear that the protections transfer to future purchasers of a lease. The drafting of the provisions already does this and I
can confirm that the protections that applied on 14 February will transfer to any future purchaser. As this amendment is not needed, I would ask my noble friends and the noble Earl, Lord Lytton, to withdraw it.
Amendment 153 relates to trusts and third-party investors. I thank my noble friends Lord Young and Lord Blencathra, who are always here to help, for tabling this amendment, but I am afraid that the Government will not be able to accept it. Unfortunately, we believe that the amendment will not have the intended effect of ensuring that the assets of third-party investors are considered when the landlord “contribution condition” is assessed. I do, however, consider that your Lordships have brought up an important issue which needs addressing. Therefore, I am happy to commit to consider this further, and would be happy to meet to discuss this matter. Given this commitment, I hope that my noble friends Lord Young and Lord Blencathra will not press their amendment.
Amendment 165A, tabled by the noble Baroness, Lady Fox of Buckley, would mean that the value of the lease is also “determined by reference to” the tenant’s ability to pay, and with reference to “the open market value of” the lease. Taking into account tthe open market value would involve an individual valuation for each property which would be fraught with difficulty as there likely would be disputes between the landlord and leaseholder as to the value assigned. It is critical that the lease value cannot be subject to a protracted dispute. I also point out that the Government have already brought forward a number of measures to further protect leaseholders, notably increasing the repayment period to 10 years. With that explanation, I kindly ask the noble Baroness, Lady Fox of Buckley, not to press her amendment.
I turn now to the amendment from the right reverend Prelate the Bishop of St Albans, who has been a stout campaigner on this matter over the entire passage of this Bill. The right reverend Prelate’s amendment aims to provide further cost protections to leaseholders, including the right of appeal to a court under the fire safety order. First, in practice, there will already be a requirement for responsible persons to communicate such fire safety matters which are relevant to residents. Secondly, this amendment potentially has unintended consequences which could be detrimental to fire safety. It could mean that the cost of fire safety reparations in response to an enforcement notice, even those of relatively small cost incurred as maintenance or reparations of wear and tear, could be taken to a court. This could mean that important fire safety works in more serious cases are simply put on hold pending court action, which may compromise the safety of residents. For the reasons I have outlined, I ask the right reverend Prelate not to press his amendment.
Above all, I thank noble Lords for a high standard of debate which has been touched by moments of expertise which, frankly, I could not entirely follow. It is important that we all rely on noble and learned Lords at all times to tell us what we can and cannot do. I have done my best to respond to the issues raised, and I hope that noble Lords will not press the non-government amendments—but I do not expect so.