Clause 3 - Prohibited rent

Part of Leasehold Reform (Ground Rent) Bill [Lords] – in a Public Bill Committee at 9:45 am on 7 December 2021.

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Photo of Eddie Hughes Eddie Hughes Parliamentary Under Secretary of State (Department for Levelling Up, Housing and Communities) 9:45, 7 December 2021

Clause 3 prohibits a landlord from requiring a leaseholder to make a payment of a prohibited rent. Subsection (2) defines that as making a request that the leaseholder make the payment, and/or having received a payment of prohibited rent, failing to return it within 28 days. To ensure that landlords are held accountable for their actions, we have made a conscious decision to include current and former landlords in the Bill. That will ensure that our enforcement measures, which are detailed later in the Bill, can be used in circumstances where a landlord has sold their interest in the property.

Having focused on landlords, I now turn to those we are seeking to protect. I am sure that the Committee will agree that the protective reach of the Bill should extend beyond current leaseholders who remain leaseholders when the wrongful payment is identified. A leaseholder who has sold the lease, for example, should none the less be able to seek redress if they subsequently realise that their former lease contained a prohibited rent. That is why subsection (3) ensures that the protections afforded to leaseholders also apply to previous leaseholders, a person acting on behalf of a leaseholder, and a leaseholder’s guarantor.

Clause 3 is the foundation for restricting unjustifiable rents for future regulated leases.