House of Commons Hansard Debates for 9 Feb 1993

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Points of Order

3.59 pm

Mr. Barry Porter (Wirral, South) : On a point of order, Madam Speaker. I am not given to making specious points of order, but, during exchanges in Prime Minister's Question Time, I distinctly heard, and I have no doubt that you did also, the word "pillock" being used by the hon. Member for Worsley (Mr. Lewis) from a sedentary position--not once, not twice, not thrice but four times. I was not sure whether it was a generic term of abuse of the Government Front Bench or a specific term for the Prime Minister.

As I was brought up in a fairly genteel society, I am not sure what the word means, but even if it means what I think it means, could I have your ruling, Madam Speaker, whether "pillock" or "pillocks" is an appropriate parliamentary term? I raise the matter only because there are times when we might resort to the language of ladies and gentlemen rather than to the language of hooligans.

Madam Speaker : I certainly agree with the hon. Gentleman's last remark. From time to time, our language deteriorates. However, the hon. Gentleman is not quite correct in one aspect. I certainly heard no such word used ; otherwise I would have called it to the attention of the hon. Member who used it. I do not know what the word means--I do not wish to know what the word means--but I find it rather ugly, and I prefer it not to be used.

Mr. Dennis Skinner (Bolsover) : Further to that point of order, Madam Speaker. I was sitting much closer to my hon. Friend the Member for Worsley (Mr. Lewis) than the hon. Member for Wirral, South (Mr. Porter) was. When the Prime Minister was talking about a matter for the receivers, my hon. Friend and others, including myself, shouted "hypocrisy" several times at the Prime Minister, and we meant it. I believe that to be in order, but I did not hear the other word. [Interruption.]

Madam Speaker : Order. This is not confession time. We must move on now.

Mr. Terry Lewis (Worsley) : Further to that point of order, Madam Speaker.

Madam Speaker : The hon. Member for Worsley (Mr. Lewis) has just dashed into the Chamber, in an attempt, no doubt, to defend himself. Of course I must hear his point of order.

Mr. Lewis : Thank you, Madam Speaker. I understand that certain words were attributed to me during Prime Minister's Question Time. I am not absolutely certain what words were used, but I put it to you, Madam Speaker, to the House and to the country that, when the Prime Minister treats the workers of Leyland DAF in such an offhand, arrogant way, anybody of reasonable mind would accept any words that were spoken.

Madam Speaker : Whatever the exchanges in the House, English is a very rich language. I hope that we select it very carefully, however upset and excited we might become in our exchanges.

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Orders of the Day

Housing and Urban Development Bill

As amended (in the Standing Committee), considered.

[Madam Speaker -- in the Chair. ]

Ordered,

That the Housing and Urban Development Bill, as amended, be considered in the following order, namely, New Clauses relating to Part I, amendments relating to Clauses 1 to 8, Schedules 1 and 2, Clauses 9 to 11, Schedule 3, Clauses 12 to 22, Schedule 4, Clauses 23 to 28, Schedule 5, Clauses 29 to 30, Schedule 6, Clause 31, Schedule 7, Clause 32, Schedule 8, Clause 33, Schedule 9, Clauses 34 to 36, Schedule 10, Clauses 37 to 38, Schedule 11, Clauses 39 to 52, Schedule 12, Clauses 53 to 57, Schedule 13, Clauses 58 to 61, Schedule 14, Clauses 62 to 91, New Schedules relating to Part I, New Clauses relating to Part II, amendments relating to Clauses 92 to 104, Schedule 15, Clauses 105 to 107, Clauses 118 to 119, Clauses 125 to 129, Clause 108, Clause 130, Clause 109, Clause 131, Clauses 110 to 114, Clauses 132 to 134, Clauses 115 to 117, Clauses 120 to 124, Clauses 135 to 138, New Schedules relating to Part II, New Clauses relating to Part III, amendments relating to Clauses 140 to 141, Clause 139, Schedules 16 and 17, Clause 142, Schedule 18, Clauses 143 to 150, Schedule 19, Clauses 151 to 166, New Schedules relating to Part III, New Clauses relating to Part IV, amendments relating to Clauses 167 and 168, Schedules 20 and 21, Clause 169, New Schedules relating to Part IV, remaining New Clauses, remaining New Schedules.-- [Sir George Young.]

New Clause 13

Tenancies terminable after death or marriage.

"Right to enfranchisement only in case of certain tenancies terminable after death or marriage.

.--(1) The following section shall be inserted in the Leasehold Reform Act 1967 after the section 1A inserted by section 59 above-- 1B. Where a tenancy granted so as to become terminable by notice after a death or marriage--

(a) is (apart from this section) a long tenancy in accordance with section 3(1) below, but

(b) was granted before 18th April 1980 or in pursuance of a contract entered into before that date,

then (notwithstanding section 3(1) ) the tenancy shall be a long tenancy for the purposes of this Part of this Act only so far as this Part has effect for conferring on any person a right to acquire the freehold of a house and premises."

(2) In section 3(1) of that Act (meaning of "long tenancy") (

(a) after "and includes" there shall be inserted "both a tenancy taking effect under section 149(6) of the Law of Property Act 1925 (leases terminable after a death or marriage) and" ; and

(b) in the proviso (which prevents certain categories of tenancies terminable after death or marriage being long tenancies), for the words from "if either" onwards there shall be substituted "if-- (

(a) the notice is capable of being given at any time after the death or marriage of the tenant ;

(b) the length of the notice is not more than three months ; and (

(i) its assignment otherwise than by virtue of section 92 of the Housing Act 1985 (assignments by way of exchange), and

(ii) the sub-letting of the whole of the premises comprised in it.".'.

Brought up, and read the First time.

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4.8 pm

The Minister of Housing and Planning (Sir George Young) : I beg to move, That the clause be now read a Second time.

Madam Speaker : I understand that it will be convenient to discuss at the same time Government amendments Nos. 55, 76, 56, 78 and 79. I draw the attention of the House to Government amendment No. 56, which refers to line 22. There is a misprint ; it should read "line 12". I make that point so that it need not be mentioned again.

Sir George Young : I repeat an interest which I have declared on previous occasions. I am the owner of a 999-year lease on a flat in my constituency, although it is not a lease that terminates on the death of the Prince of Wales, which is the subject of new clause 13. When we debated the matter in Standing Committee, I undertook to reflect on the case for retrospectively bringing within enfranchisement lessees who are presently excluded by the so-called Prince of Wales clause. It is a blatant avoidance device used by some landlords, and its use was blocked prospectively by the Housing Act 1980. Leaseholders persuaded us that, in practice, many of their number would have been unaware of the effect of that clause in their leases, and no landlord groups have made any representations in favour of the clause. In the light of that, we have decided that it would be contrary to the aims of our reforms to leave that small group of leaseholders high and dry.

This new clause, with its associated group of amendments, will amend the Leasehold Reform Act 1967 by adding a new section and modifying the existing section 3. It will enable a leaseholder who was granted a long lease on a house before 18 April 1980, which would qualify under the 1967 Act except that it contains a clause which renders it terminable by notice after the death of, for example, the last survivor of any issue of King George V alive at the time of the grant--hence the name of the Prince of Wales clause--to acquire the freehold interest.

The valuation basis will be the higher of the two in the 1967 Act--the so- called special valuation base. That is consistent with our policy expressed in the Bill, that leaseholders who are given new rights should pay the market price for the interest that they can now purchase.

Nothing in the new clause will prevent landlords from continuing to grant bona fide life tenancies to, for example, former employees. Such leases will continue to be unenfranchiseable. Houses which were previously excluded from enfranchisement because of a Prince of Wales clause will be eligible for inclusion in an area subject to an estate management scheme set up under chapter IV of the Bill.

I hope that the House will recognise that this new clause signifies the Government's desire to be fair with the leasehold reform package. The new clause reforms an anomaly which is no longer defensible, and I commend it to the House.

Mr. John Battle (Leeds, West) : We welcome the new clauses which the Government have tabled on the Prince of Wales clause. They signify some give, after efforts were made in Committee. While the Government's intentions to extend enfranchisement to leaseholders are reflected in the

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clauses, what we have before us in the amendments and the new clauses do not satisfy all the promises which the Minister gave in Committee.

While we welcome the Minister's shifting of the direction of enhancing and extending leasehold, we would--as we said in Committee--push further : we want commonhold. At least the Government have given us an assurance that we shall get commonhold. We look forward to the Government introducing a commonhold Bill so that we can proceed with that.

Some small measure is provided in the Government's clauses which we are immediately discussing. I hope that the three quarters of a million leaseholders who think that they will be enfranchised under the legislation actually will be, because there is still a danger, despite the new clauses, that the Bill is hedged with exemptions. As we know, some of the clauses before us today will push through even more exemptions, so that those who think that they will be enfranchised will find in practice that they are not.

We welcome the shift on the Prince of Wales clause. In the further discussions on the shift, as it were, on the low-rent test for flats and houses which the Minister promised to re-examine, we look forward to the operation of the two-thirds rule in smaller blocks as well. I hope that we can make progress tonight to enhance and extend the rights of leaseholders to enfranchisement, rather than restrict them and hedge them with exemptions, which the Government still seem to be doing.

Question put and agreed to.

Clause read a Second time and added to the Bill.

New Clause 2

Principal residence

(1) Nothing in Chapters I and II shall be taken to confer a right upon the tenant of a flat to acquire a lease extension unless the tenant occupies the flat as his principal residence.

(2) In relation to a claim for collective enfranchisement under Chapter I such a claim shall not be valid unless not less than half of the participating tenants occupy flats in the relevant premises as their principal residence.

(3) In this section "principal residence" means a flat which a tenant--

(a) occupies as his main or only residence ; and

(b) has so occupied for the last three years or periods amounting to three years in the last ten years.'-- [Sir Jerry Wiggin.] Brought up, and read the First time.

Sir Jerry Wiggin (Weston-super-Mare) : I beg to move, That the clause be now read a Second time.

Madam Speaker : I understand that it will be convenient to discuss at the same time the following amendments :

No.5, in clause 5, page 5, line 40, after rent', insert

and

(a) occupies the flat as his principal residence, and

(b) has so occupied the flat for the last three years or periods amounting to three years in the last ten years.' No. 10, in page 6, line 37, at end insert

(7) In this section "principal residence" means a flat which a tenant occupies as his main or only residence.'.

Sir Jerry Wiggin : It is a matter of considerable regret to me that the Bill is modelled on a Labour precedent, the Leasehold Reform Act 1967. That Act was passed only after its opponents on the then Conservative benches, led by Mr. Anthony Barber, forced major concessions and amendments on the Government.

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A number of us find it difficult to accept that a Conservative Government are retabling a socialist measure which has been described by Professor Wade QC, who is acknowledged to be the United Kingdom's foremost administrative lawyer, as a form of

"expropriation (which) can scarcely be said to have been for public purposes, since its object was merely to enrich certain tenants at the expense of their landlords."

However, we must accept that the principal motivation behind the Bill--to deal with abuses by landlords on leaseholders of flats--was contained in the 1992 Conservative manifesto, and neither I nor my right hon. and hon. Friends seek to renege on that promise. We seek a solution that is fair and equitable to all. The Bill is not. It is a sledgehammer to crack a nut ; it is unjust.

On page 33 of the Conservative manifesto for the last election, under the title "Home Ownership", there is a preamble which outlines Conservative policy on housing :

"Conservatives have extended the right and opportunity to own a home and pass it on."

I am sure that we all agree that that is one of the most important rights that an individual has in a free society.

In that context, the manifesto commits this Conservative Government to

"giving residential leaseholders"--

I underline the word "residential"--

"living in blocks of flats the right to acquire the freehold of their block at the market rate."

Those who see the matter in a different light have been quoting the manifesto at me, but the manifesto specifies residential leaseholders.

Similarly, the 1967 Act gives the right to enfranchise to tenants and leaseholders who occupy the property as their genuine home, and the 1966 Conservative general election manifesto committed Conservatives to providing choices for a ground leaseholder of residential property who had occupied the house as his principal residence for at least the last five years. One of the choices was the right to buy the freehold, but here Conservatives made it clear that the freehold should be purchased on the basis of full compensation to the freeholder.

In stark contrast, the Bill gives the right to enfranchise to any long leaseholder of a flat. It will therefore be possible for absentee leaseholders, corporations, foreign companies and speculators forcibly to acquire a freehold property at a discount. The Bill, as I propose to discuss later, offers inadequate levels of compensation to freeholders and allows leaseholders, in the words of my right hon. Friend the Minister of State, to acquire

"an asset worth more than the price paid."

So the Bill goes much further than the Conservative manifesto. Its provisions are even more confiscatory than the 1967 Act and, perhaps most disturbingly, it sets a dangerous constitutional precedent by giving rights of confiscation not to genuine home owners who may in late life regret having willingly entered into a leasehold contract, but to any investor with an interest in leasehold property. The Bill does not set out to nationalise property--after all, the beneficiaries are private persons--nor does it bestow the right of eminent domain, which would enable the compulsory purchase of property for a public purpose or public interest such as building a road. No public interest is served by the collective enfranchisement of leaseholders, many of whom will be corporations, absentee overseas leaseholders and speculators. I cannot believe that Opposition Members really believe that it is sensible

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to pass legislation that benefits those classes of people. Instead, the interests of one set of private persons, the leaseholders, is served by the expropriation of the interests of another set of private persons, the freeholders.

Let us not imagine that all freeholders are dukes, vast estates or charities ; many freeholders are single individuals who have invested in a block of flats or a house or have inherited the same. I have received a number of pathetic letters from people who will be seriously disadvantaged by the Bill, people against whom nobody could have any serious political angst. It is seriously wrong.

Mr. David Winnick (Walsall, North) : The hon. Gentleman paints a picture of poor freeholders, almost as people used to talk about "poor widows" when Rent Act protection was being discussed. Is he aware that one of the richest people in the country--sometimes described as the second richest person in Britain--the Duke of Westminster, has waged a campaign, obviously not among Labour Members but among Conservative Members? He has tried to do what he possibly can to persuade a sufficient number of Conservative Back Benchers to vote against the Bill. Is not the Duke of Westminster someone who has an interest in the matter and would feel much aggrieved if the Bill became law?

4.15 pm

Sir Jerry Wiggin : The hon. Gentleman cannot make a case based on one individual, any more than I can make the opposite case based on another individual. The fact of the matter is that, if confiscatory legislation is introduced, surely the House should protect the rights of the individual, whether duke or pensioner. It has been a principle of long standing of the House that it protects the rights of individuals. It would be a great mistake for us to depart from that principle simply because one individual or case did not fit. I should add that I have never heard the Duke of Westminster or his estate accused of being a bad landlord. But I am aware that many small landlords seriously abuse the law. Those are the people whom the Bill should get at. It should not seek to break up big estates or take people's property, at whatever level.

Britain has signed a European protocol which enforces certain rights and freedoms not included in section 1 of the European convention. Under article 1 of that protocol, the signatory Governments have agreed that

"Every natural or legal person is entitled to the peaceful enjoyment of his possessions. No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law".

The Bill deprives natural and legal persons of the peaceful enjoyment of their possessions--their freehold properties. If the Bill is to be accepted by the House, it must be amended to prevent a challenge under the first protocol.

The new clause sets out to achieve the aims that I have described. It includes the requirement that enfranchisement or lease extension will be limited to individuals who occupy the property solely for residential purposes and as their principal residence. Furthermore, he or she should so have occupied the flat for the past three years or for a period amounting to three years in the past 10 years. In reply to anxieties properly expressed in Committee by my hon. Friend the hon. Member for Surrey, East (Mr. Ainsworth), the Government argued that the residential qualification

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"would considerably reduce the effectiveness of the proposals, not least because it would make it harder to achieve a two-thirds majority of qualifying tenants."

At the same sitting on 17 November, the Minister of State said : "It is not the object of the Bill to enable one investor in a property to enfranchise against another. Alternatively, such a person could block enfranchisement by other qualifying tenants in the building if the number of flats for which he was the qualifying tenant ensured that the requisite majority was never reached without his involvement."--[ Official Report, Standing Committee B, 17 November 1992 ; c. 103, 113.]

The new clause ensures that, if the principal private residence qualification interferes with the majority needed for enfranchisement to be agreed, lessees who occupy as their genuine home should be given the right to a new long lease. It is a fair and sensible new clause, and I commend it to the House.

Mr. Battle : The hon. Member for Weston-super-Mare (Sir J. Wiggin) seeks Labour support, but I have to disappoint him and say that we cannot offer him support for this clause because we believe that enfranchisement should be extended and not hedged by further exclusion clauses. We wholly reject the contention that enfranchisement should be limited to leaseholders who have owned the property as their principal residence for three or more years. If we can refer back, as we did in Committee, to the Consumers Association report, although it revealed that there is no uniform profile of leaseholders, it showed that a large proportion, about 90 per cent., of leaseholders had bought their flats in the past 10 years, and that three quarters of those surveyed had purchased their flats in the past five years. In other words, the practical import of the new clause is that, at a stroke, it would effectively render by far the majority of long leasehold flat owners ineligible to take part in an enfranchisement bid.

We think that the Government enfranchisement proposals are already too restrictive, but the knock-on effect of this clause would be arbitrary and unfair, and it would totally undermine the Government's intention in extending leaseholder enfranchisement. We have for a long time argued for leasehold enfranchisement, and we shall continue to argue for it--to be extended to everybody, not agreed in principle, as it were, giving a kind of rhetorical assent to a right and extending it as a rhetorical right and then undermining it by hedging it with more and more extensions. We see this new clause as further exemption, which would undermine the intention to enfranchise leaseholders.

Mr. Michael Jopling (Westmorland and Lonsdale) : I must first declare an interest, in that I own some domestic property which is let, but I am advised that none of it comes within the provisions of this proposal.

I support the comments of my hon. Friend the Member for Weston-super-Mare (Sir J. Wiggin) in moving this new clause. This is the second time I have intervened in proceedings on the Bill. On the first occasion, the Secretary of State for Environment was kind enough to give way and I can do no better than repeat what I said then, that I can bring myself to agree, after much heart-searching, to legislation which forces people to sell their property when they do not want to. That, clearly, sometimes has to be done.

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I am also just prepared to agree that, where people have entered freely into agreements without any pressure upon either side, those agreements freely entered into can be torn up, but my principal concern is about the level of compensation. We shall come to that a little later. But I do not like the proposals in this Bill. I find them basically offensive, and we shall come to the main reason why I find them offensive later.

I certainly find the provisions which are dealt with in new clause 2, together with amendments 5 and 10, very offensive, but that is because I do not see why it should be necessary at all to give a vast overnight windfall profit to people who have entered into agreements perfectly freely in the past. I cannot see why it is necessary for there to be a great moral crusade to allow the sort of bodies my hon. Friend referred to-- corporations, investors, overseas residents, speculators and any others who happen to have a main residence elsewhere--to make vast overnight profits. We are all aware of foreigners who have houses or flats in London, for instance, and come to use them for relatively shortly periods of the year.

It is an injustice that those people should make, or in some cases, as the Bill stands, would make, vast overnight windfall profits just through the provisions of this Bill. I can think of no sensible argument, and have heard no sensible argument, that would justify giving such people of the opportunity presented by the Bill. I strongly support what my hon. Friend the Member for West-super-Mare (Sir J. Wiggin) has said. Opposition Members are usually the first to seek to clobber speculators, overseas residents, investors and the like ; I was astonished by the attitude of the hon. Member for Leeds, West (Mr. Battle), and I cannot understand why the Opposition do not support the new clause.

The provision in the Bill was not properly thought out. I understand that it was shuffled into the manifesto at the last minute, with the minimum of consultation and discussion. I do not think that it should have been included, but it is there and we shall have to honour it. I feel, however, that the House is perfectly entitled to trim it in the way proposed in new clause 2, moved so ably by my hon. Friend the Member for Weston-super-Mare.

Mr. Nick Raynsford (Greenwich) : Let me spell out the simple, straightforward and fundamentally just reasons for proceeding with leasehold enfranchisement at a far more energetic pace than the Bill allows. We are talking about dismantling an archaic and unjust form of tenure which has disappeared almost everywhere in the world except in this country. Here, its continued existence buttresses the privileges of certain exceptionally wealthy people, who have been able for many generations to live on the money that they have extracted from land that they happen to own, on which other people's efforts built houses and other people's money paid rent.

Lest the hon. Member for Weston-super-Mare (Sir J. Wiggin) has any doubts, let me remind him that, as long ago as 1889, fear of the possibility of leasehold enfranchisement--then much in public debate--made the first Duke of Westminster and his board decide not to renew leases. The writing was on the wall in 1889 ; it is sad that it has taken more than 100 years to reach this point, at which we are taking a significant step to dismantle an archaic and absurd form of tenure which has allowed a small number of people to become fat and wealthy at the expense of many others.

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Let us look at the reality of the leaseholder's position. As the Bill stands, many leaseholders will find it impossible to exercise their right to enfranchise, because of the hurdles that they must overcome to qualify. They will have to establish that they themselves have a qualifying tenancy : that involves serious tests which we shall probably debate later, notably the low rent test, which may well prove an obstacle. They will have to establish that an appropriate percentage of the occupants are also qualifying tenants--in fact, two thirds of residents in the block--before they can proceed. They will have to establish that two thirds are willing to proceed with the enfranchisement ; that no more than 10 per cent. of the accommodation is in non-residential use ; and that there is no resident freeholder. All those serious tests will have to be passed if leaseholders are to benefit from the Bill, which is nowhere near as simple and straightforward as it should be.

If leaseholders negotiate those hurdles successfully, they must pay a significant price, allowing freeholders to obtain half the marriage value of the process for nothing. Let us hear no more cant about the poor unfortunate multi-millionaires who have lived off their landholdings for generations, and are now being required to dispose of them as part of the process of leasehold enfranchisement. We want a far more energetic pursuit of enfranchisement, and the removal of many of the obstacles that we shall discuss later. I sincerely hope that the House will dismiss this wrecking amendment for what it is--an attempt to impose yet another obstacle on leaseholders who deserve the earliest possible opportunity of enfranchisement.

4.30 pm

Sir John Wheeler (Westminster, North) : I am glad to speak after the hon. Member for Greenwich (Mr. Raynsford) because on this occasion I agree with him and disagree with my hon. Friend the Member for Weston-super-Mare (Sir J. Wiggin) and those who support the new clause. But then, I would, considering the constituency that I represent.

On the face of it, the proposed new clause looks sensible, and there must be many hon. Members who consider it to be a reasonable condition to place on those seeking to enfranchise. But some of the most dangerous things in life are disguised to look the most harmless. Anyone who knows anything about the housing market, particularly in central London, will be aware that, far from being an innocuous addition to this part of the Bill, the new clause would effectively wreck it.

I am sure that its proposers are not unaware that, if the new clause were adopted, the vast majority of leaseholders, certainly in my constituency, would be prevented from enfranchising. So we would be passing a piece of legislation that enabled leaseholders to gain control over their homes in principle, but prevented from doing so in practice. It would be a worthless piece of legislation.

The enfranchisement of blocks of flats is a collective action. A certain number of leaseholders must meet the criteria set out in the Bill if they wish to get together and exercise their right to enfranchise. By dramatically extending the scope of the criteria that must be met, the new clause would severely limit the number of cases in which sufficient qualifying leaseholders existed.

As the hon. Member for Greenwich said, hon. Members with first-hand knowledge of the need to reform the leasehold system feel that the hurdles that those

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