Clause 10 - Financial penalties

Part of Leasehold Reform (Ground Rent) Bill [Lords] – in a Public Bill Committee at 2:00 pm on 7 December 2021.

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Photo of Maria Eagle Maria Eagle Labour, Garston and Halewood 2:00, 7 December 2021

It is a pleasure to serve under your chairmanship, Ms Elliott. I have a couple of points for the Minister. There are extensive provisions on the recovery of prohibited rent, which I generally welcome. I notice that on page 14 of the explanatory notes, under the heading “Financial implications of the Bill”, it says:

“An Impact Assessment has been prepared for the Bill and covers the implications on private sector bodies and home purchasers… The Impact Assessment illustrates a de minimis impact of less than £5m.”

It then says that there is an assumption

“that the number of enforcement cases will be very small.”

One would hope that that would be the case, because one would hope that landlords will not seek to charge and benefit from ground rent in the interim between the Bill coming in and peppercorn becoming payable, when it becomes commenced, by putting provisions into new leases that charge ground rent. One hopes that that is a correct interpretation. The explanatory notes then say:

“Over and above the use of the proceeds arising from the enforcement action, a further amount of expenditure will be required to provide additional capacity within the National Trading Standards function to support local weights and measures authorities. Leasehold law is a complex area, and it is felt that a central support function will aid the effective introduction of the provisions of this Bill. The cost estimate of this support function is £29,000 per annum”,

which is very precise. It is sort of a round figure, but it is quite a small sum. I wonder whether the Minister could explain the assumptions underlying the explanatory notes.

I also notice from the clauses that we are debating that there is no provision for costs. While I understand that there is a hope that a small number of enforcement cases will be necessary, and that there is provision for enforcement authorities to retain whatever the fine ends up being, I wonder upon what assumptions the Department has concluded that there will not be costs to the enforcement authorities that may not be recoverable. As we have been discussing all day, this kind of land law is very complex and tends to require a specialist understanding. Although it may be a small point, and for a short period, and one hopes that it will not happen, if there needs to be enforcement it could be quite complex for the officers of the enforcement authority to get their head around what needs to be done in a particular case. Landlords may well seek to evade their responsibility and to find loopholes of some kind to get around the Bill. I wonder to what extent the Minister is clear that there is unlikely to be extensive costs, and whether he can explain further the figures in the impact assessment, referred to in the explanatory notes.