On 28th February the House of Lords debated the Building Safety Bill in the 3rd day of committee. The Bishop of St Albans spoke in support of his amendment 50A, which aims to strengthen tenants rights to consult with landlords over building safety, and require landlords to set up tenants associations to facilitate this:
The Lord Bishop of St Albans: My Lords, I rise to speak to Amendment 50A in my name and those of the noble Lords, Lord Blencathra and Lord Young of Cookham. Let me say how much I support the sentiments and intentions of the noble Lord, Lord Blencathra, who has done us a real service.
I, too, do not want to die over the details of this amendment. I hope that this will stimulate a really vigorous debate so that we can all work together on how we get these sorts of commitments in the Bill. I and others on my Benches want to work with the Government and others to achieve this. If someone else can turn up with much better solutions, that is great.
Throughout the cladding and fire safety crisis, we have heard many stories of landlords imposing outrageous and sometimes astronomical building safety charges on leaseholders and tenants. Often this has been done by managing agents acting on behalf of the freeholder. Leaseholders and tenants have reported a complete lack of accountability and transparency throughout this process and have been unable to challenge or even scrutinise the charges imposed on them.
Of course, this is only one aspect of the fire safety crisis, but one that has been somewhat overlooked when the primary focus has rightly been on ensuring a fair remediation settlement. However, the fire safety crisis has exposed the utterly powerless position that many leaseholders find themselves in, sometimes subject to the whims of freeholders with very few avenues of recourse, unless they raise considerable amounts of money and try to challenge things in the courts, which is very often way beyond the financial ability of many leaseholders, even if they wish to do it.
Amendment 50A would strengthen the right of leaseholders and tenants to consult with, and scrutinise decisions made by, the landlord on matters relating to building safety and would require the landlord to set up a recognised tenants’ association for the purpose of consultation.
The leasehold system in tall buildings has been placed under serious stress in the post-Grenfell years. Future home owners may have looked at the existing crisis and been turned off the prospect of owning a leasehold property. Others, facing far fewer choices, have simply—fatefully—walked into purchasing a leaseholder property unaware of the realities of the leasehold system, only to be later consumed with regret and extortionate charges. We need to make the leasehold system fairer and more attractive, not just for those who are thinking about buying a leasehold now, but for those existing leaseholders who feel powerless in the face of their managing agent and freeholder.
Ideally, leaseholder associations would also be able to scrutinise and consult on insurance commissions, along with other service charges not related to building safety. The amendment would begin to reorientate the relationship between the freeholder and leaseholder, which, as it currently stands, is skewed too far in favour of the freeholder. This is not an anti-freeholder amendment. Many freeholders will manage their property in a responsible manner. There are, however, just too many instances—and quite high-profile ones—of freeholders acting in an appalling manner. For example, the Yianis Group, the freeholder of the West India Quay development, spent over £74,000 in a legal action to block the residents from forming a recognised residents’ association. This was after leaseholders issued proceedings against the freeholder over expensive energy bills—something not covered by this amendment, of course, but worth mentioning—in which they were vindicated after the court revealed that they had been overcharged by 26% on their utility bills.
This is the same freeholder which, when challenged by the residents at a different development at Canary Riverside, lost a ruling brought forward by the residents and was forced to replace the managing agent. The court ruled that the freeholder failed to maintain the estate and did not adequately prove expenses and service charges. As the Times reported, it even charged a 100% mark-up on repairs to leaky windows to a repair company. At the time of reporting, the freeholder then attempted to chip away at the court-imposed manager’s power, costing the leaseholders £1 million in legal fees over 22 proceedings. The freeholder’s intentions here speak for themselves.
Stronger provisions than those listed in Amendment 50A would be welcome, as these powers would relate only to building safety matters. However, the amendment would go some way to breaking the power of any unscrupulous freeholders who view their leaseholders as cash cows. The amendment is not for those honest, conscientious freeholders who retain good relations with their leaseholders and managing agents, but for those such as the Yianis Group, in respect of whom one leaseholder said they were made to feel at the mercy of their landlord.
I hope the Minister will look seriously at measures to strengthen leaseholder representation when dealing with freeholders. The scope of the Bill limits what we can do at the moment, but a verbal assurance that the Government are committed to reforming this imbalance of power would be most welcome.
In the meantime, I hope that the Government will consider these proposals carefully—limited though they may be—as a stopgap to help end some of the egregious abuses that leaseholders and tenants may face from their freeholder. I hope that this will be a contribution. I look forward to hearing what the Minister says in his summing up.
Extracts from the speeches that followed:
Baroness Fox of Buckley (Non Afl): My Lords, I shall speak to Amendments 52A to 52C, 54A, 54B, 55B and 55C, which relate to Clauses 97 to 99. I also support the amendments in the name of the noble Lord, Lord Blencathra, and his comments, as well as those of the right reverend Prelate the Bishop of St Albans. It is in that spirit that I make these observations.
One issue that the building safety and cladding crisis has shone a light on is just how iniquitous residential leasehold tenure really is. The system of leasehold may dress itself up as home ownership. When I bought my flat 25 years ago, which was the first time I had ever bought anything or got a mortgage, I thought of myself, very proudly, as a home owner—it was part of my growing up—but I now think that it was a bit of a mis-sell, as I am nothing of the sort. As Rabina Khan, a Liberal Democrat councillor in Tower Hamlets, puts it—she has been very insightful on all these issues—in effect:
“Leaseholders are tenants when it comes to rights, but owners when it comes to paying any bills. Yet they have no control over the contractor, costs or scope of any works. They must pay up pretty much whatever is demanded by the freeholder landlord and their agent.”
Under Part 4 of the Bill and the clauses that I am referring to, building owners are given sweeping new rights in relation to entry to and surveillance of leaseholders’ homes in the name of safety and fire prevention, even being able to force entry if the leaseholder does not admit entry to their own homes by a set time. Leaseholders who I have spoken to are concerned that these Part 4 provisions could be used to threaten and harass leaseholders, are overly intrusive without affecting fire safety in any real way, and, more broadly, feed into a dangerous atmosphere —which we are familiar with from the Covid period and lockdowns—of dispensing with civil liberties and privacy too easily under the auspices of safety.
Baroness Neville-Rolfe (Con): Like the right reverend Prelate the Bishop of St Albans, I am passionate about consultation, as my record elsewhere shows. Obviously, I am very concerned about bad practice. However, we cannot have a system where an unco-operative resident or two could prevent appropriate safety arrangements being agreed—that is a concern of mine—or encourage the use of too many expensive lawyers, with the cost ending up with the leaseholder.
We also need to think about the enforced requirements for a residents association, as suggested by my noble friend Lord Young in one of the amendments. It may be worth considering in high-risk cases, but it could complicate matters needlessly in some areas. (…)
I was struck by the complexity of what is proposed, and the certainty that there will be hidden and unnoticed effects. The right reverend Prelate the Bishop of St Albans, in an excellent speech, was right to point out that any levy paid would inevitably be passed on to consumers and tenants in large part. He was also right to remind us of the chronic shortage of supply of homes in the UK. Indeed, in our report Meeting Housing Demand, the Built Environment Committee found a shortage of homes of all tenures, including social housing. We need to ensure that that does not go backwards, and that the whole building industry, already short of skills and resources, is not needlessly diverted—while, of course, doing the right thing on safety. A decent home is so important to all and we now need to cater for yet more arrivals as a result of the desperate situation in Ukraine.
I was therefore disappointed by the approach of my noble friend Lord Blencathra, who until recently chaired—very well, if I may say so—the Delegated Powers Committee. I believe it is irresponsible to give yet wider powers for bringing in and punishing, or penalising—effectively fining—new groups, when we have not thought through how they might be involved during our scrutiny of the Bill. I am afraid I have the same hesitation about engagement with residents, which is the subject of today’s group of amendments, which include a widening of powers. I regret to say that I think those amendments go too far.
Baroness Pinnock (LD): I completely agree that there has to be a residents’ engagement strategy. One of the learning points from the terrible Grenfell Tower fire was that residents wanted a voice and tried to make their voice heard, but it was not listened to. Their voice may have been heard, but it was certainly not listened to—and it was certainly not acted on.
As the noble Lord, Lord Young of Cookham, has pointed out, there is a big part of the Hackitt report which references the importance of the residents’ voice, and of listening to and acting on what they say. They are the folk who live there. They are the people who daily see what goes on. Their voice must be heard so, whatever else we do, I hope that we will strengthen those clauses about resident engagement. Picking up on the point made by the right reverend Prelate the Bishop of St Albans, we need residents’ associations to do that. We cannot force them to exist, but we can put the onus on the freeholder or the accountable person to ensure that there is some method for the residents’ voice to be heard.
Lord Khan of Burnley (Lab): I found the speech of the right reverend Prelate the Bishop of St Albans inspiring. It was an excellent speech which raised a lot of issues. Amendment 50A talks specifically about the rights of tenants’ associations. How have the Government consulted tenants’ associations and leaseholders as part of this Bill so far? What was the method of consultation? Has the consultation already happened? The noble Baroness, Lady Pinnock, said that at the heart of Dame Judith Hackitt’s review is engagement. What have the Government done in relation to that in particular?
The right reverend Prelate also mentioned some companies which were, unfortunately, exploiting the situation. An example referenced was the West India Quay development, where £74,000 was spent on stopping and weakening leaseholders’ and residents’ groups. He said that there were too many instances where freeholders were ripping off leaseholders, and that leaseholders’ and residents’ groups were at the mercy of their landlord. That is unacceptable, and I hope that the Minister will reflect on those points and rectify the situation.
Lord Greenhalgh (Con): On Amendment 50A, my noble friends Lord Young and Lord Blencathra—a fearsome grouping—are acting in tandem with the right reverend Prelate the Bishop of St Albans.
I want first to respond to the noble Lord, Lord Khan, on resident engagement. I reassure him that there has been considerable resident engagement as part of drawing together these proposals within the Bill. I have been party to a number of those as the Minister, as this is my prime ministerial area. In fact, we were able to bring together the resident engagement that is forming part of the work of the new building safety regulator within the HSE and the people who are putting together the Bill, so that resident engagement happened as part of a more joined-up programme. That has been considerable, and I assure him that that will continue as we move to creating the building safety regulator in law.
Turning to my noble friends’ amendment—I do not think I will call them a “terrible trio” as that is probably not the right way of winning them over, but they are a fearsome trio—Amendment 50A relates to where a landlord has more than two tenants. This amendment places a duty on the landlord to consult recognised tenants’ associations on the residents’ engagement strategy and on planned long-term maintenance or improvements to common parts. Where there is no recognised tenants’ association, the amendment would require the landlord to create one. Effectively, it is calling for mandation as opposed to empowerment.
This is a point where I want to depart from just simply giving the Committee these words to say that I understand that noble Lords are trying to bring forward an amendment designed to deal with the problem landlord. The right reverend Prelate the Bishop of St Albans mentioned that the problem landlord is not the norm but the exception. I suggest that we continue to work together to understand that in more detail and recognise the points that have been highlighted. If we are going to look at mandation, we must understand why it is required and why empowerment simply does not work. I am keen to engage to understand instances where we feel that mandation has to be the way forward. Mandating anything on a landlord is quite a thing to do. That is what I propose we do with regard to this amendment so that we as a Government understand the particular concerns, because we would prefer to use empowerment as a route to achieve those ends.
Lord Blencathra (Con): I particularly like the right reverend Prelate’s amendment and his comment that he was attempting to skew the balance slightly further in favour of leaseholders. He made a compelling case. I am delighted to hear my noble friend the Minister say that we should work together to get something drawn up; I assume that means ASAP over the next two weeks so that we have it for Report.
I thought there was considerable merit in the introduction from the noble Baroness, Lady Fox of Buckley, of the concept of “material breach”. She made a very strong case that leaseholders have been treated as second-class citizens in comparison with freeholders. My noble friend Lord Young of Cookham is absolutely right that we need proper leasehold reform; this is not the Bill to do it in but, before we conclude on the fourth day, I hope we will have a statement from the Minister on when we can expect a proper leasehold reform Bill. I know he will use the standard formula, “I cannot presage what may be in the Queen’s Speech”, but we need that Bill. My noble friend was also right to draw attention to the right reverend Prelate’s amendment, putting the obligation on landlords to create tenant associations.
While I agree with my noble friend Lady Neville-Rolfe that impact assessments have their place, how long would they take and who would do them? Would it be civil servants, who might not have the detailed knowledge, or industry experts, who have the detailed knowledge but might not be as impartial as we want? No one is unbiased in this. Excessive powers have been granted to people who have a considerable say over how residents live their lives and what they will have to pay. Residents and residents’ associations must be consulted.
As for the noble Lord, Lord Stunell, I cannot comment on his speech in detail since I did not understand most of the technical details of it, but he seemed to make some very good points. The noble Lord, Lord Khan of Burnley, summed it up well: more consultation is needed. I think he was giving support to the right reverend Prelate the Bishop of St Albans; I hope Labour will give that support on Report. If my noble friend the Minister cannot come up with a workable solution and the right reverend Prelate puts down his amendment, I look forward to the noble Lord, the Labour Party and the Lib Dems supporting it, along with some rebels on this side.
The Church of England in Parliament 
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