My Lords, it gives me great pleasure to open Committee on the Leasehold and Freehold Reform Bill. Before turning to the debate on the amendments that have been tabled, it would be remiss of me if I did not take this opportunity to thank those Peers who have engaged with the Bill and those who have long championed the rights of leaseholders. I also thank colleagues from the Law Commission, without whose advice much of this vital legislation may not have been possible.
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Reforming the leasehold market has long been an ambition of this Government. The Bill builds on the success of the Leasehold Reform (Ground Rent) Act 2022, which put an end to ground rents for almost all new long residential leasehold properties in England and Wales. The Government continue to be committed to improving the situation of leaseholders across the country. The Leasehold and Freehold Reform Bill is the best and most efficient way to make leases more transparent and affordable. When taken together, the
package of reforms in this Bill goes further than the Government’s manifesto commitment, and will bring increased fairness, security, transparency and competition to the leasehold housing market.
I now turn to individual amendments that have been tabled to the Bill. The noble Baroness, Lady Taylor of Stevenage, asked about a number of issues. I have considered those issues and am pretty sure that they will all be covered within the Bill in further groups. I will make no comment on any newspaper articles at the Dispatch Box today. I thank all noble Lords for their valuable contributions to this group, especially the noble Baroness, Lady Taylor of Stevenage, in her opposition to Clause 7.
I turn to Amendments 1 to 4. The effect of this group of amendments would be to remove certain exceptions from the ban on new leases of houses. Like the noble Baroness, the Government want to see new houses sold as freehold. That is why we committed to ban the sale of new leases of houses other than in a very narrow set of circumstances. Having twice consulted carefully on this matter, the Government have listened to all parts of the housing market. We recognise that there are a handful of legitimate reasons for certain developments or types of houses or consumers where a lease may still be appropriate. Ignoring those, and pursuing a total ban, could restrict consumer choice and even access to housing. For example, on inalienable sites of National Trust land, the freehold is not disposable. Were the ban to capture these sites, selling new houses on them would not be possible. It could also prevent the granting of leases intended to help maintain and preserve a historic property—the central business of the National Trust.
However, we are sympathetic to the concerns raised by the noble Baroness, and recognise that there may be circumstances where it is not always evident to the consumer if the lease is permitted. As an added protection for consumers, we will therefore require that certain leases, contained within Part 1 of Schedule 1, must obtain a certificate from the relevant tribunal stating that the proposed lease of a house is permitted. This will ensure that the limited exemptions we have set out cannot be abused or manipulated by unscrupulous developers.
I restate that the Government share the noble Baroness’s objective that the vast majority of new houses be sold as freeholds—indeed, already, on account of steps taken by the Government, the overwhelming majority are. The provisions in this Bill will ensure that they continue to be so. Nevertheless, we believe the exceptions in the schedule are necessary, fair and appropriate. Following two public consultations on the matter, they have been considered in depth and with care.
Before I move on, I will speak about just one or two particular types of exemptions. First, the first noble Baroness, Lady Taylor, brought up the land-banked lots of leased land that will be exempt from the ban. She is quite right. For land leased prior to our announcing that we would bring forward legislation to ban new leasehold properties, which was on 21 December 2017, the market would have been unaware that the ban was forthcoming. If any development land held on a lease has been historically land-banked, it will effectively be
sterilised if the land, for example on the edge of towns or villages, is only suitable for building housing. It could reduce the supply of new housing from land that is ideally suited for the construction of new houses.
We do not expect this exemption to result in a significant volume of new leasehold houses, other than in shared ownership, where there are now currently only a couple of hundred new leasehold houses being sold each year. Many such leased sites will already have been built out in the passing of time and any land leased after the 2017 announcement would not qualify for this exemption. Therefore, leasehold properties that are built would not be allowed to charge a ground rent following the provisions of the Leasehold Reform (Ground Rent) Act 2022. A developer would also not be allowed to sell new leasehold houses on land leased after 21 December 2017 once the legislation is commenced, unless they are selling an exempted lease on a house; they could sell flats on the site or offer houses for rent.
The noble Baroness, Lady Pinnock, also brought up exempting of the National Trust. I think I have covered that but, as I have said, the use of the tribunal is an added layer of protection for consumers. Permitted National Trust leases will require that certificate, which will identify the leases permitted and the reason why.
I thank the noble Lord, Lord Young of Cookham, for bringing up Homes for Life. I do apologise, but I will look into this; I will come back to him and make sure that the House is aware of our response to that.