My Lords, I will speak to my Amendments 65A and 65B. The Government should be applauded for their ambitions as laid out in the Bill. Let us hope that we can achieve them all. I put on record that I am pleased with the Government’s direction of travel, because some of my interventions up until now may have seemed slightly belligerent, but can my noble friend the Minister provide some reassurance around the Government’s stated aim of a revolution in the right to manage? That would help to address what, for me, is at the heart of what I consider the leasehold scandal, which is really about control. Leaseholders in England and Wales are unique in the lack of control that they have. Worldwide, leaseholders and those with commonhold and many other types of tenure have much more control. I believe that is something the Bill can address, and the Government have to demonstrate that they want to deliver on it. Indeed, it was our own Secretary of State who said that he wants to see a revolution in the right to manage.
I put on record my colleagues Nickie Aiken and Barry Gardiner, who brought a very similar amendment in the other place. Amendment 65A seeks to ensure that leaseholders in mixed-use property who would otherwise qualify for the right to manage because 50% or more of the floorspace is residential, but because of a technicality—a boiler or an underground car park—are prevented from having that management given to them, still have that right. The current test means that you have to demonstrate that your building is self-contained or that the residential part is partly
self-contained, but the layout of the building might suggest that it is not self-contained due to an underground car park or boiler room, when actually it is.
The Law Commission saw these two tests as too strict. It suggested that a third test could be set whereby, if it could be demonstrated that people are reasonably capable of managing the residential area fully independently, they should be given access to this power. As I have stated in most of the debate, the thing that most drives me is the potential for the abuse of service charging. Giving residents control over their assets is clearly the answer to that.
The amendment does not mean that leaseholders can take over the management of shops, hotels or commercial premises. That is not the idea of the amendment. The right to manage applies exclusively to the residential parts, such as corridors and lift lobbies —parts of the building used only by residents. The amendment does not seek to change that position.
At Second Reading, I made the point that even the leading freeholder lobby group pointed out that free- holders own, at best, only 2.5% of the capital interest in the buildings they have the freehold of. That leads me to my other amendment, Amendment 65B. We must lower the threshold at which a group of people can take over the management of that lease. It is currently at 50%. I suggest that it should be at around 35%—again, to help the Government achieve their stated aim of a revolution in right to manage.
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Modern blocks, modern life and modern investment vehicles mean that it is often impossible to get hold of 50% of the residents. People live abroad or sublet, and so on. If we want people to have that control, and I dearly do, we need to lower that threshold. I am pleased to note that the Law Commission believes that this recommendation, if adopted, would curtail some of the litigation. There is a real culture of litigation around the right to manage and the technicalities. A lot of bad actors are able to get away with their residents taking the right to manage over that building. Similarly, leaseholders will need to show to other leaseholders that this can be done properly, and that is easily done. What is often talked about is leaseholders running the contracts themselves. Of course, they would not; they would get a management company in. They would be able to kick out a management company that is ripping them off and replace it with one that is actually offering them a service, keeping their bills low and therefore increasing the value of the investment they have made in their flat.
On Monday, the Minister talked about measures that the Government want to bring in to provide transparency around the charging regimes that landlords put in place. When I lived in a leasehold property, I did not want to know how I was being ripped off; I wanted to know that I had the ability to do something about it. The right to manage is the way to do something about it—to reduce those bills, create greater competition in the market and get better service for leaseholders countrywide.
In short, both these amendments are designed to push forward the Government’s will, their desire, to boost the right to manage. But we have to lower the
threshold—the number that one needs to take hold of that right. We also have to make sure that bad actors, bad landlords, cannot avoid that on a technicality by saying that the plant room or the underground car park, for example, means that the building cannot be managed separately. In many cases, it is managed separately and leaseholders often use that to demonstrate that they could take over the purely residential parts.