My Lords, I agree fundamentally with the point made by the noble Baroness, Lady Taylor of Stevenage, and with what other noble Lords have said with regard to the desirability of a transition to commonhold. I say that because, apart from anything else, conventional leasehold has clearly got itself an extremely bad press. Like it or not, that is something we have to take account of. However, although it is poorly regarded among leaseholders, it happens to be the commercial preference and the model on which a great deal of leaseholder and freeholder value rests. We have to be a bit careful about that.
My interest here is very much about consumer protection. I do not want us to enter a brave new world in which the existing leasehold situation is seen as in any way second class. Comments are made about the evils of monetisation of the management process, but I think that is a slightly different issue. I do not see that as intrinsic in the tenure. I see that as an abuse, a lack of transparency and another area in which consumer protection has not operated.
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If we transition to commonhold as seems to be now proposed, leaving existing leasehold and freehold situations in place—particularly the leasehold situation—it would create a market of commonholders and leaseholders. It would certainly add the interesting, if not potentially perilous, market dimension of an additional tenure. We have to consider whether we do the whole of it in one job lot—in other words, get all the pain done, convert all the existing leaseholds and deal with it that way—or whether we deal with it by a thousand cuts, in which case you may end up with part of the market sector not being liked by the finance houses, lenders, banks, insurers and people like that. In that case, which camp is it going to be? Is it going to be traditional leasehold that becomes eschewed in favour of commonhold or is commonhold to be one of those unfortunate experiments that nobody really wants to buy into, because it is seen as a novelty? We really have to be extremely careful about that, which is the main reason why I support the approach of the noble Baroness, Lady Taylor.
The second thing here is that whatever you have, commonhold or leasehold, does not of itself guarantee good management, which requires something different; I made that allusion in what I said previously. Whatever the tenure, the question of ongoing building safety remediation, which we know is floating around in the system, does not get resolved. I know that the noble Baroness, Lady Pinnock, is particularly concerned about that because of its pernicious and corrosive effect on people’s lives—their livelihoods, life chances and everything else in their own homes. Whether you are in commonhold or traditional leasehold, it does not disappear. The legal construct does not govern the physical effects of bad construction from some previous
time by some person who, in nine cases out of 10, is not themselves party to the leasehold or freehold arrangement. It does not go away.
We also hear much about commonhold being nearer to outright home ownership and ought to be very careful about what we are trying to promise in that respect. Unit ownership and occupation within a larger block—a unit that may be one of dozens or hundreds—does not align perfectly with block ownership and control. It will never totally align, and the question of who does the management may not of itself answer that problem.
There is an essential conundrum here. If you have a residential unit and are in a collective with a lot of other people—with common parts and possibly with bits going forward that have larger elements of commercial property within them, up to 50%—it is about the management style and how that is seen to be objective for the building and the collective of its occupiers and tenants, rather than simply approached on the basis of saying, “We want to do what’s good for the residents and never mind the commercial element” or “We want to do what’s for the benefit of this particular group of residents and not for the others”.
I am grateful to the Minister for allowing a meeting earlier today in which I aired some of this, but one comes across situations in which parts of a building are older and less modern and the residents have a different set of objectives from those in the other parts of the building. I well remember that from a situation in Brighton that I had experience of, where part of a building had had a bomb dropped on it in the Second World War and been rebuilt after the war, but the other bit was inter-war. The residents of the two bits could not agree on the priorities for management and maintenance.
If we allow the residents themselves, the vox populi, to vote for whatever the immediate purpose is—the maximum number of goodies for its vote—that is not necessarily a stable thing. However, I would be the first to agree that residents have the far greater stake by value, often by floor area and by the fact they sleep there and are more vulnerable in that respect; they are more easily hurt by things going wrong. It is right that they should have a substantial say, but to make the decision-making in some way mutually exclusive is very difficult. Getting the balance right between particular groups of residents is not automatically a given. Another dimension is involved, which is not answered simply be altering the tenure. I feel the need to spell that out from my own experience of dealing with these things over many years.
That is not to say that commonhold is in any way wrong. I do not think leasehold is particularly good; I certainly do not subscribe to much of what is going on at the moment. However, I suggest we concentrate on the process of consumer protection. That is why the noble Baroness, Lady Taylor of Stevenage, has got it right. We need to get more feedback. I take the point made by the noble Baroness, Lady Fox, that we probably need a sunset date to force the political decision-making so that we know that we will get to an endpoint and will not still be talking about this in 10 years.