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Mr. Peter L. Pike (Burnley): Is it not tragic that, when the 1993 Act went through, Labour Members, with one
or two Conservative Members, repeatedly spelled out that it would not achieve anything like what the Government claimed that it would?
Mr. Khabra: I agree with my hon. Friend. That shows that we have been more concerned about giving rights to the leaseholder than have the Conservatives.
The 1993 Act made so many concessions to the interests of the big landlords that its whole purpose was effectively undermined. As a result, only a few leaseholders have been able to buy out freeholds. The present legislation is complex, and difficult for the public to comprehend. Many of the people who come to my surgeries do not understand the law, and have to go to solicitors. They find it difficult to get satisfactory answers, even after paying large fees. We need the new commonhold tenure, which will extend to leaseholders new opportunities to own and manage their homes.
The Government's current leasehold reform proposals are inadequate and likely to end in disaster, as did the previous ones. This is another feeble effort by the Government to mislead leaseholders. The Government do not have the courage to confront the vested interests of large landlords, who are known to make donations to Tory party funds.
Sir Sydney Chapman:
I have been listening with great interest to the hon. Gentleman. I am sorry that he is trying to turn the debate into a partisan shouting match. Matters relating to commonhold and leasehold are necessarily complicated. It is not as easy as the hon. Gentleman suggests.
Will he comment on the Government's five specific amendments to the Housing Bill which in large measure deal with many of the problems about which he complains? They would close the loophole of the right of first refusal, separate forfeiture procedures because of the dispute on service charges--
Madam Deputy Speaker (Dame Janet Fookes):
Order. It would be better if the hon. Member sought to catch my eye to make a speech later, because this is meant to be intervention.
Mr. Khabra:
I said at the beginning of my speech that I appreciated what was being introduced, but it does not go far enough, or provide the rights that leaseholders need. I am also aware that the five recommendations to which the hon. Gentleman refers have not yet been published.
Furthermore, the Government are adamant in their refusal to introduce commonhold as an alternative to the present rotten leasehold system. Although they pledged to do so in their last manifesto, that is yet another broken Tory promise. For too long, leaseholders have been treated in a shabby way. They have been right to demand that the Government take positive action to find a long-term solution to end their misery, rather than tinker with the present discredited system.
I am sure that many Members of Parliament have received letters from constituents who are worried about the demands made by unscrupulous landlords and managing agents for extortionate service charges. They
are being intimidated, and threatened with forfeiture of their properties. There is widespread concern among leaseholders throughout the country about the lack of protection and safeguards against abuse under the existing legislation.
Some constituents of mine have written me a letter about the problem that they are having with their landlord. I should like to quote the relevant parts of the letter.Mr. David Thompson and Miss Yasmin Mirza wrote:
I must emphasise that the new Bill should contain a provision that full information should be made available to all leaseholders who want to buy their freeholds.
What a scandal. I will not quote the rest of the letter, as it is not relevant.
I urge the Minister, therefore, to incorporate new clauses in the Bill, including: a right to manage; sanctions against the failure of landowners to abide by existing legislation; fairer and simpler valuation procedures; and streamlined rules for enfranchisement to cut through unnecessary red tape preventing leaseholders from buying the freehold of their homes.
Mr. Dudley Fishburn (Kensington):
Since I entered the House, eight years ago, I have introduced eight commonhold or leasehold reform Bills. In 1992, I was made "Radical of the Year"--to take up the phrase used earlier--because of that fact. "Bore of the Year" would have been a more appropriate title--[Hon. Members:"No!"] It is certainly true that on none of those occasions did I match the eloquence and skill of my hon. Friend the Member for Hastings and Rye (Mrs. Lait) in bringing this legislation before the House.
My hon. Friend did not merely make a good speech--this is not an Opposition motion or the fluffing out of a ten-minute Bill--but presented a complete piece of well-thought-out, skilfully crafted legislation in a truly elegant Bill that shows many of the hallmarks of the work and effort put in by the Lord Chancellor's Department during the many years that we have been trying to get commonhold on the statute book.
I was slightly depressed by the previous debate on treasure trove, which was trying to put a mediaeval law right and bring it up to the late 20th century. We want a law on commonhold in the late 20th century to put an 18th-century law right--a single judgment on which all leasehold is based, which makes it impossible to enforce a positive covenant.
Now, some 200 years later, we are finally close to being able to allow the millions of our citizens who live in multi-occupancy flats and apartments to have the same rights of freehold as those living in suburban houses. The intention is to provide them with the rights that are enjoyed everywhere else in the world. It is extraordinary that, for example, the American system of a co-operative or condominium is not allowed under English or Welsh law. It is extraordinary that the way in which millions of Europeans live in apartment blocks--"copropriete" as it is called--is not allowed under English or Welsh law.
The Bill is in such a complete state that it could be passed as it is. It sets to rights the very real concerns expressed by many people living in leasehold property without the right of freehold. With only 38 clauses, it steers its way sensibly and clearly through a legal minefield--no other aspect of the law is more difficult than property law.
One has to ask why the Bill has taken so long and why, alas, we fear that it may take longer still. I hope that I shall not be described as cynical, but perhaps the answer is that the House enjoys adversarial politics so much that any measure that is not widely opposed does not get noticed. Perhaps if the hon. Member for Greenwich
(Mr. Raynsford), who has done so much to advance the cause of commonhold, were to say that the Bill was an evil Tory plot to extend the rights of home ownership, Conservative Members would get a little more excited about it. However, I know that the hon. Gentleman would not say such a thing. Perhaps the proposal has been in the doldrums for so long precisely because no one is criticising it.
In 1987, the Law Commission came up with its review. It was the result of problems that had existed for 10 or 20 years and whose ferocity was mounting. The problems did not start in 1987, but it was the first clear sign that our Law Officers were unhappy with the law.
In 1991, the then Minister for Housing and Planning, my right hon. Friend the Member for Ealing, Acton(Sir G. Young), made a speech that lightened the hearts of many of us. He said:
by the Law Commission. He went on:
That speech is a distant but clear echo of what my hon. Friend the Member for Hastings and Rye said today.
It is worth looking back to that 1991 debate because it underlines my point, which is that everyone is on the same side in this instance. The hon. Member for Hammersmith (Mr. Soley), who was then the Opposition spokesman on housing, welcomed the proposal; Sir Hugh Rossi, who was then the Member for Hornsey and Wood Green, welcomed it; the hon. Member for Southwark and Bermondsey (Mr. Hughes) welcomed it, as did my hon. Friend the Member for Eltham (Mr. Bottomley), the hon. Member for St. Helens, South (Mr. Bermingham) and the hon. Member for Norwood (Mr. Fraser), who has long had an interest in the subject. Mr. William Benyon, who then represented Milton Keynes and who was a fierce opponent of much leasehold reform, welcomed the commonhold proposals.
That was an early sign of the extent of the agreement. Then came the party manifestos. Both the Conservative party manifesto and the Labour party manifesto contained a clear commitment to commonhold. I know that the Conservative party's manifesto contained that commitment, because I put it in myself. The hon. Member for Greenwich probably placed the commitment in his party's manifesto.
The measure is favoured by the big estates, which were my bitter opponents during the process of leasehold reform. Credit should be given where it is due: the first organisation to float a commonhold paper--before even the Law Commission--was the Grosvenor estate. It has said throughout that it is a sensible, progressive and overdue reform of the law.
The measure has been favoured by Back Benchers who were opposed to leasehold reform. In my last feeble attempt to introduce a commonhold Bill into the House on 17 May last year, I carefully gained the support, in a
ten-minute Bill, of a number of hon. Members who had opposed leasehold reform, including my right hon. Friend the Member for Westmorland and Lonsdale (Mr. Jopling), who had spoken out with great effect against some of the measures in the leasehold reform Bill. He supported the commonhold measure, as did my right hon. Friends the Members for City of London and Westminster, South (Mr. Brooke) and for Chelsea (Sir N. Scott), my hon. Friends the Members for Fulham (Mr. Carrington) and for Carshalton and Wallington (Mr. Forman) and others.
It is important for Ministers to realise that there is a universal thrust in support of the measure. It is favoured not just by those hon. Members I mentioned but by Members of another place, who did so much to scupper the leasehold reform proposals. It is supported by academics and by building societies and the Council of Mortgage Lenders, which realise at first hand how much better it would be to be able to advance a mortgage on an apartment or a flat underwritten by a freehold--that is to say, a commonhold--than one underwritten by the dwindling asset of a complicated lease.
The measure is supported by developers--a point touched on by my hon. Friend the Member for Hastings and Rye--because developers who are building a project from scratch do not want to be left with a residual freehold once they have sold the leasehold; they want to be out of the property. They would much rather those people who had bought into the shops, the shopping mall and the flats above it were the owners of that property. The developers could make the development and be gone.
What went wrong? Why has the measure taken so long to reach this stage? There are two reasons: the first is that, the more the Bill was worked on--after the initial Law Commission report and the 1,000 replies, all of which supported commonhold, were sent to the Lord Chancellor's Department--the more complicated it became. I remember seeing the proposals for commonhold at one stage and they looked like two thick telephone books--they were, perhaps, bigger than the Scott report. Clearly, the matter had got out of control, as more and more people put in bells and whistles--80 pages were devoted to winding up commonholds.
It is quite remarkable that my hon. Friend has managed to produce a well-worked-out piece of legislation that extends to 38 clauses, in which the winding up of commonhold is reduced to 11 clear and legally apposite clauses. We have pulled back from the enormous wad of legislation that might have come out of the Lord Chancellor's Department had we adopted commonhold earlier. I know that the Cabinet Committees that look at these things always met the representative of the Lord Chancellor's Department with a sigh as he came in bearing the two enormous and heavy tomes that were to constitute such a simple new form of land tenure. This real difficulty has now been surmounted by the Lord Chancellor's Department, which has done so much work, and by my hon. Friend.
We also have not got as far as we should have because commonhold has been caught up with leasehold reform. My hon. Friend the Member for Hastings and Rye made it very plain this morning that, although we are here under the official title of the Leasehold (Reform) Bill, this is a commonhold Bill--therefore, it is a particular delight to see my hon. Friend the Parliamentary Secretary,
Lord Chancellor's Department in the Chamber, and not someone from the Department of the Environment. The Bill is about the law rather than about housing.
Commonhold is not a leasehold reform measure, although, in Standing Committee on the last Leasehold (Reform) Bill, the hon. Member for Greenwich and I made much play of the fact that we should have commonhold in it. We received many reassurances that it was not necessary to have commonhold in the Bill because it was to come along soon and would be on the statute book, perhaps even ahead of the leasehold reforms. However, that has not happened, and much progress is to be made.
As a result of the difficult battles over the leasehold reforms, when something comes to the Government's business managers with leasehold reform on it, they carefully--and quite understandably--shuffle it to the bottom of the pile and the danger signals flash. How many dukes will be leaving the Tory party if this measure goes through?
There are no such dangers in relation to this measure. As I said earlier, everyone--not least the landlords and the property industry--wants this measure. I hope that the message will go out clearly from this morning's debate that this issue should not make danger signals flash, but has the support of those who are interested in getting a proper form of property tenure.
"Dear Mr. P. Khabra,
We are writing to you, as first time buyers who purchased the above property in November 1994, on a 125 year leasehold, with the hope that you may be in a position to help, or advise the best way forward with regard to us buying our freehold.
We purchased the property from Dao Heng Bank Plc, who at the time were also the freeholders. At the time of purchase we had been informed by the acting Estate Agents that there would be an opportunity in the future for us to buy the freehold. This was one of the main contributing factors for our purchase of the above property.
In June of last year, to our surprise we received notification from Dao Heng's solicitors . . . that the freehold had been sold toCyril Freedman Ltd, alias our new landlord. Following on from this notification, we also received a letter from our new landlord,Cyril Freedman, requesting that we make an interim payment for the sum of £450.00, in lieu of 'service charges' . . .
The above property is in a building comprising of eight individual flats, converted in 1989, and hence all tenants are recently new to the property. Having discussed our concerns regarding the freehold sale with fellow tenants, it was apparent that the majority of tenants were also led to believe that they should of had the opportunity or at least had an interest in buying the freehold. After further discussions one of the tenants approached her solicitor for further advice.
The solicitor advised that, as tenants, we should have received 'First right of Refusal' for the purchase of the freehold, and that we should serve notice on Cyril Freedman Ltd under section 11 of the Landlord and Tenant Act 1987 . . . We were also informed by our solicitor that we had a requisite majority, ie) the names and signatures of four qualifying tenants, but if we wanted to formally respond under this Act we had to do so within 30 days of receiving notification of the sale.
Unfortunately due to these timescales we were unable to gain further signatures, as some of the tenants were on holiday, and the notice had to be served in a matter of days.
We have since received confirmation from the remaining tenants that, had they been available at the time, they would have been more than willing to put forward their names. Like most of the tenants we were at the time not aware of the Landlord and Tenant Act 1987, giving tenants 'First Right of Refusal'".
"On the 31st July 1995, having issued follow up letters through our solicitor we had still not received a response fromCyril Freedman Ltd. At this point we were advised and actually issued through our solicitor court proceedings, for a 'Declaration Order' namely that we have the requisite majority in respect of Qualifying Tenants and an Injunction Order requiring the Landlords to serve us with the requisite information under the Act . . .
The appointed management agent for Cyril Freedman Ltd is David Glass Associates (DGA), and for reference bothCyril Freedman and DGA reside at the same address!!
We have since received various threatening letters from DGA, chasing up the outstanding payment of £450.00. In one of their more recent letters they stated that they 'will serve proceedings for forfeiture of the lease and possession' of our flat. On the advice of our solicitor we have responded to these letters, explaining that we are taking legal proceedings under the Landlord and Tenant Act 1987."
8 Mar 1996 : Column 595
"The Government have decided to introduce for England and Wales a scheme providing for the freehold ownership and communal management of flats and other interdependent buildings with shared facilities. This new scheme, called commonhold, was proposed in 1987"
"It is proposed that commonhold should be available for all types of land use--whether residential or commercial . . . In addition to providing for the freehold ownership of flats and other relevant properties, the scheme would establish standard democratic management arrangements".--[Official Report, 12 July 1991;Vol. 194, c. 1239.]
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