Lords from all parties trash government’s multi-billion pound give-away to freehold owners

And Sir Ed Davey signs up to Sir Kier Starmer’s criticism of the move

By Harry Scoffin

Members of the House of Lords have rounded on the government’s two-storey planning give-away to freehold owners of blocks of flats.

Baroness (Kay) Andrews, a former Labour housing minister, praised “the very authoritative Leasehold Knowledge Partnership” for “reveal[ing] the scale of profit potential for developers … to be between £20 billion and £40 billion”.

The overwhelmingly negative response of the Lords to the permitted development give-away has been echoed by Liberal Democrat leader and LKP patron Sir Ed Davey.

He has signed Sir Keir Starmer’s early day motion condemning the move and encouraged all other Lib Dems to do the same – including Alastair Carmichael, MP for Shetland and Okney Islands (which do not have many flats and no English leasehold tenure either). The government needs to sort out the leasehold and cladding scandals “rather than tearing up planning laws”, said Sir Ed.

This means 50 MPs have now signed Sir Kier’s EDM, which was initiated by Conservative MP and LKP patron Sir Peter Bottomley.

42 MPs back Starmer’s attempt to block rooftop planning give-away to freeholders 

LKP analysis of the government’s own impact assessment shows that over 1.8 million leaseholders in the freestanding purpose-built blocks, which must have been built between 1948 and 2018 and be of less than 30 metres in height and over 3 storeys to qualify for the new upwards extensions process, will lose out with the cost of freehold purchase increasing by between £11,000 and £28,000 per flat.

Baroness Andrews declared that she is one of the 1.8 million leaseholders affected by the policy, with her freehold owner already rushing to capitalise on the rule change.

She told the Lords in the debate on Thursday:

“This SI [statutory instrument] will guarantee uncontrolled profits for developers who are looking around at the scale of building in the centre of London, for example, thinking “I want some of the action” and taking opportunities to do just that. It will also damage the prospects and well-being of residents of existing residential blocks of flats who in different ways will be put at serious risk by this …”

She added:

“We have not been consulted; we do not want it; it is unpredictable and problematic in terms of buildability, safety and loss of amenity. We may well be faced with a choice between living in a building site—ceilings coming down and holes in the walls—or evacuating, and there is no compensation for the loss of peaceful enjoyment. 

“There will be resort to law, but only for people who can afford it.

“The Government knew from the start that this was an unpopular policy … and many of the issues raised were completely ignored.”

She urged the government to opt for an early review of the policy rather than waiting the normal five years.

She concluded:

“Will the [housing minister Lord Greenhalgh] also seize the opportunity presented by the Law Commission to accelerate the reforms in leaseholding and look for ways to restrain the colossal prospects of developers? It is an unfair, unbalanced and inefficient policy, but we have a chance to do something about it.”

Lord German, a former leader of the Welsh Lib Dems, said the sudden planning give-away was “the perfect example of a major policy change being side-slipped through Parliament” under cover of the coronavirus crisis to minimise parliamentary scrutiny.

Lord German added that when the government originally put the rooftop development proposals out to public consultation, the majority of responses were overwhelmingly negative.

With the planning consultation process “a shadow of what currently exists”, Lord German noted that the prior approval notice will be served on leaseholders “within a very tight timetable”. Objections will “only be considered if they relate to the dual issues of amenity and external appearance”.

He argued the new policy has failed to consider substantive issues such as how the influx of additional occupiers will affect access to the property; whether a lift would be needed and where it could be placed; and the requirements on the freehold owner to prevent added pressure to the service charges of the existing leaseholders.

The building work would inevitably be disruptive, said Lord German.

“Residents would turn to their council and their councillors to express their concerns – and they would find them powerless.”

Lord German ended by saying that the planning give-away “indicate a Government making a dramatic shift away from strong and caring communities, with local councils as their facilitators, towards the aspirations of developers and a distant Government”.

Labour peer Baroness Wilcox, a former council leader, demanded the government “look for ways of restraining developers’ profits, so that opportunist developers have less ability to make life worse for our communities”.

Lib Dem Lord Greaves described the two-storey permitted development right as “silly nonsense”.

Chartered surveyor Lord Thurlow, a crossbench peer and member of the APPG on leasehold and commonhold reform, warned last month that the permitted development reform would lead to another “tidal wave of protest and complaint” on the scale of the ground rents scandal.

He tolds the Lords yesterday that the government has had two years of evidence of the disastrous impact that a similar relaxing of planning rules on office-to-residential conversions has caused.

“In short, the provision of some of the worst housing seen in Britain for decades came through … crushingly small flats lacking adequate daylight, with windows out of position for suitable residential use, designed to squeeze the maximum number of bed-sits into a given floor area, cramming in as many rent payers as possible with little regard for the quality of life, mental health or general well-being of the people there,” he said.

“Many landlords will negotiate with their tenants—they are the responsible ones. Others will not. It is likely to become a minefield of legislation and only a small percentage of tenants will be able to afford it. There is no regulation of landlords, no minimum standards and no best practice of building management.”

He also suggested the rule change would empower the very worst speculators in residential freeholds to cram new flats into a block as a way of extracting more service charges. “The image of a modern Rachman comes to mind.”

Former Welsh Tory leader Lord Bourne, who spoke alongside Lord Thurlow last month in the chamber to criticise the “windfall” given to freehold owners by the two-storey PD right, joined in to query why the permanent reform was bundled together with emergency coronavirus regulations.

A professor of law, Lord Bourne also said leaseholders looked to be “short-changed” as they were “not really considered in this legislation as they should be” in terms of their rights, particularly with regards to collective enfranchisement.

He praised LKP joint patron / APPG co-chair Sir Peter Bottomley for drawing the attention of the Commons to the issue.

Responding for the government, Lord Greenhalgh said the measure had been introduced under the coronavirus heading to both “kick-start the economy” and make the “most efficient use” of the statutory instrument procedure, which has been criticised for subverting the legislature’s role in scrutinising the executive.

Lord Greenhalgh also claimed that the Law Commission’s recommendations on reducing the price payable would also apply to leaseholders in buildings where the freehold owner can impose two extra storeys.