We now move to item 12, the legislative consent motion on the Leasehold Reform (Ground Rent) Bill. I call on the Minister for Climate Change to move the motion—Julie James.

Motion NDM7867 Julie James

To propose that the Senedd, in accordance with Standing Order 29.6, agrees that provisions in the Leasehold Reform (Ground Rent) Bill in so far as they fall within the legislative competence of the Senedd, should be considered by the UK Parliament.

Motion moved.

Diolch, Llywydd. I move the motion. The Leasehold Reform (Ground Rent) Bill is a short Bill that starts the process of dealing with a very big topic, leasehold reform. The Bill's stated policy objectives are to make leasehold ownership fairer and more affordable for leaseholders by ensuring that freeholders will no longer be able to make financial demands for ground rent of new leases. The Bill does this by restricting ground rent on newly established long residential leases of houses and flats to a token one peppercorn per year. This effectively means ground rents on new leases will have zero financial value. The Bill also prohibits the levying of administration charges in relation to peppercorn rents, thus preventing such charges becoming an alternative means of extracting profit.

The Bill does not deal with the issues affecting existing leaseholders. Further legislation will be required to reform leasehold home ownership, including the reforms that are being proposed by the Law Commission, which I have previously welcomed. This Bill paves the way for those further reforms by stopping ground rents being charged on new leases. Resolving the problems on existing leases is a much more complex issue, as is reflected by the very detailed recommendations produced by the Law Commission.

I thank the Legislation, Justice and Constitution Committee and the Local Government and Housing Committee for the work they have done in considering and reporting on the legislative consent memorandum. I note the concerns they've raised in their reports, including their criticism of the approach we took to the laying of the supplementary memorandum, and I have responded in writing to a number of their recommendations. But, I strongly believe that consenting to UK Government legislation that delivers vital improvements to a system that we all regard as unfair is entirely appropriate—indeed, absolutely the right thing to do.

I've previously set out my intention to work in collaboration with the UK Government to deliver the wholesale legislative reform of leasehold, of which this Bill is but a first step. To ensure that they comprehensively address all of the issues, it is possible that these reforms relate to the devolved matter of housing as well as matters that are not within the competence of the Senedd. In order to achieve comprehensive reform that works for leaseholders in Wales that does not leave potential gaps in protection, I consider that UK legislation is most likely to be the most effective and sensible way of approaching these reforms.

But, let me be clear: if the provisions of this Bill were not to apply in Wales, future leaseholders here would be at a very considerable financial disadvantage compared with their counterparts in England. Any legislation we might put forward to rectify that situation would inevitably take a very considerable time to draft and agree. I do not think that leaseholders in Wales should be placed in that position and I therefore urge Members to support the motion and consent to the Bill. Diolch.

I now call on the Chair of the Local Government and Housing Committee, John Griffiths.

Diolch yn fawr, Llywydd. We laid our report as a committee on this LCM yesterday afternoon. Leasehold reform is an area of interest for the committee, and the Welsh Government's plans for reform were something that we raised with you, Minister, during our scrutiny session on 22 September.

We welcome the decision to set ground rent on new leases to a token one peppercorn per year, effectively restricting ground rents to zero financial value. We note that the Bill does not apply to existing leases. We also note that the Bill does not address other weaknesses in the leasehold system, such as service charges and other issues faced by leaseholders. Minister, are you able to give an update on the next steps for the programme of leasehold reform and the programme for government commitment to enact the recommendations of the Law Commission?

Our committee first considered the LCM on 22 September. However, that LCM was out of date because amendments conferring powers on the Welsh Ministers to make delegated legislation were made to the Bill on 20 July, but a supplementary LCM was not laid. We wrote to the Minister on 24 September, asking when a supplementary LCM relating to those amendments would be published. Unfortunately, the Minister did not lay one until 26 November, four months after the Bill had been amended. Of course, the Senedd's Standing Orders provide that a supplementary LCM should be laid normally no later than two weeks after amendments are tabled.

The four-month delay in laying the supplementary LCM has considerably restrained our ability as a committee to scrutinise the amendments in a timely manner. We are disappointed that we had very limited time to consider the further supplementary LCM laid on 3 December, though we are grateful to the Business Committee for extending the reporting deadline to this morning. But, of course, the timescales were still extremely tight. Minister are you able to commit in future to laying a supplementary LCM no later than two weeks after relevant amendments to a Bill are tabled? Can you also commit to providing committees with sufficient time to consider and report on LCMs?

We are also concerned and disappointed that the Welsh Government does not have any control over when the Act comes into force. Instead, the Act confers powers on the Secretary of State to make commencement Orders. Likewise, the Welsh Ministers do not have any powers to make consequential amendments that may be necessary under the Bill. These powers are conferred on the Secretary of State only. Welsh Ministers should have the power to make delegated legislation in Wales in devolved areas, not the Secretary of State. So, Minister, are you able to seek amendments to the Bill so that Welsh Ministers have equivalent powers to the Secretary of State to pass secondary legislation?

We are further concerned that the law on leasehold reform will not be as accessible to the people of Wales as it should be. Minister, you told the committee that the Bill represents the first, but significant, step towards the implementation of broad-ranging reforms for leasehold as a tenure, and that another UK Bill dealing with reforms will be introduced. You also told us that some other important areas of leasehold reform will be taken forward on a Wales-only basis in the planned building safety Bill during this Senedd term. Surely, making these reforms through multiple pieces of legislation will reduce the accessibility of Welsh law. So, Minister, are you able to outline how you will ensure that the law in Wales is as accessible as it should be?

Llywydd, despite these concerns that I have just outlined, most members of the committee see the benefits of applying these reforms to Wales as soon as possible, and of having an England and Wales approach. But, as I mentioned, the absence of scrutiny did mean that we were not able to put assertions to the test as we would have liked to have done. I would therefore encourage the Welsh Government to ensure that committees have the necessary time and resources to be able to play a meaningful role in the legislative consent process. Diolch yn fawr.

Chair of the Legislation, Justice and Constitution Committee next, Huw Irranca-Davies. 

Thank you, Llywydd. We issued our reports on the first memorandum and the supplementary memorandum, memorandum No. 2, last week. Unfortunately, there wasn't enough time for us to consider memorandum No. 3 and report on it. 

I'd better point out at the beginning of this that I sometimes feel like a legalistic and constitutional Jeremiah sometimes, but we do want to make clear as a committee that our intention is not only to signal where we have concerns, but also, constructively highlight areas which may well help avoid these regular challenges from the committee, some of which are now following a clear and predictable pattern. 

A memorandum is the basis on which the Senedd's consent for a Bill is sought, of course. Unfortunately, we concluded that this particular memorandum was not fit for purpose and fell below the standard we would consider to be acceptable. Amongst other things, there is little information to explain how the provisions relate to leasehold reform in Wales, which is a key point. Within the memorandum, there are continual references to the powers of the Secretary of State, despite this being a devolved area. While the memorandum acknowledged that the Welsh Government would indeed be seeking comparable executive powers for the Welsh Ministers, little attempt was made to explain which powers of the Secretary of State this would apply to.

So, as a result, we recommended that, in advance of today's debate, the Minister should explain why the memorandum lacks a Wales focus in explaining the relevant clauses, all of which fall within the Senedd's legislative competence, and why the memorandum did not refer to wider aspects of the leasehold reform programme and its relevance to Government thinking on the use of a UK Bill. So, unfortunately, the committee still does not find the Government's response wholly satisfactory. We do understand the Bill is to be made on an England and Wales basis, but the memorandum is about circumstances in Wales, and that needed to have been the focus. The explanation as to why matters of competence were not adequately addressed in the memorandum is not wholly persuasive to us.

Now, the Bill was amended in the UK Parliament in July 2021, to provide the Welsh Ministers with the regulation-making powers I've previously referred to. The Minister did respond to questions we raised about these powers on 16 November, but we waited until 26 November to receive, as the other Chair has mentioned, memorandum No. 2 explaining these amendments. This is some four months after the amendments were agreed in the UK Parliament. So, there are two issues to unpick here—the delay in the laying of memorandum No. 2, and as I will come on to, the regulation-making powers that are to be retained by the Secretary of State. So, the delay, for whatever reason, in conveying crucial information to the committee until late in the consent process, has greatly reduced the amount of time we have to effectively scrutinise the Welsh Government's decision to seek consent to legislate by means of a UK Government Bill in a devolved area, which is regrettable, as we think that earlier sight may have helped us and the Government. 

Turning now to the issue of the regulation-making powers delegated to Welsh Ministers, while most of them were extended to them in July, some were retained by the Secretary of State. The Minister's explanation for this approach did not convince the committee, who will argue that the Welsh Ministers should be provided with all the regulation-making powers in devolved areas, and not retained by the Secretary of State, even with the Minister's reasoning that they may be exercising frequently, or because of an expectation that policy would not diverge between Wales and England. Providing the Welsh Ministers with all the powers would ensure that all regulations relating to leasehold reform, as it applies in Wales, will also be bilingual and subject to scrutiny by the Senedd. It will also avoid having some regulations made by Welsh Ministers, and some by the Secretary of State, which, again, does not make Welsh law more accessible. 

We also considered that the Welsh Ministers should have control over the commencement of the leasehold reform provisions for Wales following Royal Assent. Such an approach would not prevent the same provisions being commenced in Wales at the same time as they are commenced in England; it would simply mean that the executive power and the scrutiny rested here in Wales. We therefore recommended that before seeking the Senedd's consent for the Bill, the Minister should ensure that it is amended to ensure that the Welsh Ministers have all the regulation-making powers in devolved areas. And we still find it hard to understand why this recommendation has not been accepted. Perhaps it would have been, we would suggest, if there was a more timely laying of memorandum No. 2, and a chance to act earlier in response to committee recommendations laid earlier subsequently. 

So, the committee considers that permitting the Secretary of State to make regulations in a devolved area is an unwelcome development, and it's one that potentially sets a troubling precedent. Because in so doing, the Welsh Ministers have not provided themselves with safeguards should the Secretary of State, either now or in the future, make regulations with which the Welsh Government do not agree.

Now, as we keep highlighting, and as the Minister appeared to acknowledge in evidence to the Local Government and Housing Committee, using a UK Government Bill to deliver legislation in a devolved area provides less opportunity for detailed scrutiny than using a Bill introduced into the Senedd. Members of the Senedd cannot, for example, engage with stakeholders and table amendments to test, challenge and influence the Welsh Ministers—this is a key tool of scrutiny. And moreover, fully protecting Welsh needs and interests through legislation is the function of the Senedd in devolved areas, rather than the Minister or her officials through inter-governmental relations.

And finally, Llywydd, we recommended that the Minister should explain how the approach adopted by the Welsh Government is consistent with its own principles for using UK Bills to legislate. Whilst the Minister did provide an explanation—and we thank her for that—her response raises further issues surrounding these principles, which our committee will look to examine further next year. Diolch yn fawr iawn.

On a brighter note, I welcome both the Leasehold Reform (Ground Rent) Bill and the LCM. Minister, over 1 million households in the UK are sold as leasehold, and this legislation will go some way—in fact, a long way—to help thousands of home owners caught in a leasehold trap. And I can say first-hand, having seen some of my residents, who put their name down for a lovely property, then bought the property, moved in the property, only to find out a few years later that they didn't actually own the land that the house was built on. Under the current law, many people face high ground rents, which, when combined with a mortgage, can make it feel like they are still paying rent on a property they own. We also know that escalating ground rents can also make it difficult for leaseholders to sell or even remortgage their property.

Now, according to research compiled by Propertymark in 2018, 93 per cent of survey respondents said that they would not purchase another leasehold property, such was the nightmare consequences many of them faced. A third said they were struggling to attract a buyer, because they simply did not own the freehold. Enforced across England and Wales, this positive change to the legislation, brought about by a Conservative Government in Westminster, will now mean that millions of leaseholders will be given the right to extend their lease by a maximum term of 990 years at zero ground rent. As such, approval for this LCM could certainly help them to save thousands of pounds a year, whilst also giving them peace of mind. For others, where ground rent is demanded as part of a new residential long lease, the fact that it will no longer be for more than one peppercorn per year is an important shift.

The Welsh Conservatives welcome the fact that this Bill will ban freeholders from charging administration fees for collecting peppercorn rent, meaning that future leaseholders will not be faced with financial demands for ground rent. We also welcome the fact that this LCM will increase accountability for leaseholders, by making provision for them to recover unlawfully charged ground rents through the leasehold valuation tribunal in Wales.

Now, I do acknowledge, and I respect, the concerns raised by the Legislation, Justice and Constitution Committee over the memorandum laid by the Welsh Government in respect of the Bill, which they found not fit for purpose, and to have fallen below the standard considered acceptable. It is time to move on for these people who have found themselves caught in this trap. With the progressive and positive steps that I have just outlined, which were reached after active collaboration with stakeholders, I now call on other parties in this Senedd to join the Welsh Conservatives by voting in support of probably what are the most significant changes to property law in a generation. Diolch yn fawr, Llywydd.

I want to note at the outset that Plaid Cymru will be voting against this motion as a matter of principle. The Government has now laid LCMs for 14 UK Bills within the first months of this Senedd. This is more than any other year with the exception of 2020. The number of LCMs coming before us is cause for concern. Every LCM cuts our powers as a Senedd and is an attack on Welsh democracy therefore. Two of this Senedd's committees have raised broad-ranging concerns about the documents attached to this memorandum, as the Minister has already noted, as have the Chairs.

Now, the Minister says that she doesn't want the people of Wales to be disadvantaged because it would take so long for Wales to develop our own legislation in this area, but why hasn't the Government done any work to that end already? Where does this argument leave the Senedd and the purpose of devolution itself? I am convinced that we should not give consent here today. I am dissatisfied with the inadequate system we have in dealing with this process. There wasn't sufficient time to scrutinise the Bill or the memorandum in the housing and local government committee, for example, and it's clear that the Legislation, Justice and Constitution Committee takes a very dim view of this memorandum, as we've already heard.

The Senedd hasn't had an opportunity to scrutinise the amendments to the Bill in any way, apart from a brief discussion here this evening. The decision of the Welsh Government to introduce the amendments to a Bill through the UK Parliament, rather than bringing forward its own Bill, means that Members and stakeholders haven't had an opportunity to make any recommendations let alone changes to legislation that impacts Wales and that is devolved. 

Wales has its own voice and we have this Senedd as a forum to express that voice, but this fundamental right to our democracy is being denied to the people of Wales this evening. If things go on like this, then it raises a question about the future of devolution. It would suit Westminster down to the ground to have no more than a working group, consenting to this legislation rather than a powerful democratic body, creating legislation in response to problems here in Wales.

I'm particularly concerned that the Bill sets a dangerous precedent by providing powers to the Secretary of State rather than to Welsh Ministers. Consent to this will mean that Welsh Ministers will have no powers to make consequential amendments, which will be necessary, or could be necessary, under clause 21, for example. This is a clear example of how we will have lost powers here in Wales. It's only the Secretary of State in London who has the powers to make regulations in terms of the form and content of notices, in one of the clauses. There is no reference as to how it's relevant to Wales, as has already been noted by previous speakers.

And finally, Welsh Ministers will have no control as to when the Act comes into force. Minister, do you believe that this situation is acceptable? You are arguing that we need consistency between England and Wales, but, Minister, don't you believe that this argument sets a dangerous precedent when it comes to devolution? We are seeing devolution in demise and not only is there no fight, but the Government here seems to be encouraging that. That's not my definition of standing up for Wales. In light of the lack of appropriate scrutiny, the number of LCMs that we've seen, the inadequacy of supplementary documents and the very real threat to this Senedd and the devolution settlement by transferring powers to UK Ministers in devolved policy areas, I would encourage fellow Members to vote against this motion this evening. Thank you. 

The Minister for Climate Change to reply to the debate—Julie James.

Diolch, Llywydd. I thank all the Members for their contributions on this. Just to answer one of the particular things that was raised that I didn't cover in my opening remarks, I do understand the frustration of Members on the timing of the supplementary LCMs. We originally thought that we could table a single, supplementary LCM in relation to this Bill that covered all the amendments made to it, which would have been much more useful to Senedd Members than multiple supplementary LCMs dealing with different amendments at different times. However, unfortunately, there was a much longer delay in the tabling of subsequent UK Government amendments than had been expected at the outset. In the end, they did not happen until 30 November, by which point I had already decided to issue the delayed supplementary LCM, so it was just caught up in the timescale. I’m very happy to work, as Huw suggests, with the committees on the process to make it more streamlined and to understand from the committees whether a stream of individual LCMs on each individual amendment is more helpful in the end than attempting to consolidate them.

In terms of the three regulation powers that Members have mentioned, excluding those relating to amendments that have not been delegated, I am content that they are not critical in any way to the effective operation of the legislation. The three are a non-delegated power for the prescription of notices to be used in relation to the exemption of business leases from the legislation. It is very difficult to understand how we would ever prescribe a different notice in Wales for this purpose. It’s a very technical matter. The second is for regulations to be made amending the definition of home finance plan leases, which are exempted from the Bill. There are no current plans to use this in England, and there’s no reason why we ever would in Wales. And the last one is the power to make consequential amendments. That’s not at all unusual, and when legislation's made by the Senedd, it often includes the power for Welsh Ministers to make consequential changes to other non-devolved UK legislation. So, I don’t think that’s of any real significance, far from the significance accorded to it by occasional Members.

In the end, Llywydd, I appreciate very much the concerns that Members have raised, particularly about the amount of time for scrutiny. We will certainly want to work with the committees to ensure that they have the maximum amount of time available to them. But, in the end, this Bill is fundamentally good legislation that addresses obvious unfairnesses in the system. There is, of course, much more to do, and, just in answer to one question from John Griffiths, we understand that the UK Government intends to bring forward the next leasehold reform Bill in the next parliamentary session. There is much more to do, but this is a vital first step in securing fairness for leaseholders in Wales, and I urge all Members to support the motion. Diolch.

The proposal is to agree the motion. Does any Member object? I'm just waiting for a moment to see if I see a Member objecting. You may show your hand. [Objection.] Yes, I see that there is an objection, and I will, therefore, defer voting until voting time.

Voting deferred until voting time.

That bring us to voting time, and we will now take a short break to prepare for the votes. A short break.

Plenary was suspended at 19:32.

The Senedd reconvened at 19:37, with the Llywydd in the Chair.