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1.8 pm
Sir Sydney Chapman (Chipping Barnet): Madam Deputy Speaker, I am grateful to be called. I apologise for an overlong intervention on the hon. Member for Ealing, Southall (Mr. Khabra) and will do penance by making a short speech.
I join my hon. Friends in congratulating my hon. Friend the Member for Hastings and Rye (Mrs. Lait) on introducing this important and radical Bill. For reasons that she explained, she calls it the Leasehold (Reform) Bill. She need not worry. It has nothing to do with leasehold reform; it involves the new concept of commonhold.
The other week, the Government Whip on duty instigated a debate by moving the Adjournment of the House. At the end of the debate, the Government's supporters were encouraged to vote against the Adjournment of the House. We did. If my memory serves me correctly, we won the Division by one vote, and the Government Whip on duty immediately moved the Adjournment of the House. I am trying very hard to learn about the procedures of this House.
Constituents have raised three particular grievances about this area of the law. First, a number complained that they thought that, under legislation, they had the right of first refusal to buy their freeholds. In fact, the owner went over their heads and sold the ownership to another party. It is absolutely right that, as a matter of urgency, we should reinforce part 1 of the Landlord and Tenant Act 1987 to deal with that problem, through stiffer penalties or whatever.
The second principal concern that has been expressed to me by constituents is that there are sometimes two freeholders who affect the property in which they live. In one case, the building itself is owned by one freeholder, while the ground immediately in front of it--if the leaseholders do not get control over that ground, living in the property is nonsense--is owned by another freeholder. That problem should be addressed.
Perhaps my strongest criticism concerns cases in which a leaseholder tries to deal with a freeholder when he or she has been presented with what he or she regards as unfair service charges, and is then immediately threatened with forfeiture procedures. That is quite wrong. There are other problems, but those are the main ones.
I am especially pleased--my hon. Friend the Member for Croydon, North-East (Mr. Congdon) mentioned this--that, on 18 January, the Secretary of State for the Environment announced that he would table five amendments to the Housing Bill. The hon. Member for Greenwich (Mr. Raynsford) has reminded us that they have not yet been dealt with. Whether those amendments will be dealt with on Report or in Committee I do not know. I hope that my hon. Friend the Minister can enlighten us on that point. I know that the Government have acted.
I take up one point made by the hon. Member for Southall. Introducing legislation in this complex area means that we may find that there are still loopholes, or areas that have not been covered. I think that the Government are going about the matter in the right way.
My hon. Friend the Member for Croydon, North-East said that he would like the leasehold concept to disappear. I think that there is a case for leasehold, and I pray in aid my own humble property. I occupy the ground floor of a very modest property, and somebody else occupies the first floor. I would rather deal with a managing agent representing the freeholder than with the person upstairs. [Hon. Members: "Name him."] That is not a reflection on the person who lives upstairs, whose sex I will not give. He--[Laughter.] He could equally say, "I do not want to
deal with the gracious gentleman who lives downstairs, because he is not there 52 weeks in the year, and I may not know where to get hold of him." There is a case for leasehold; it has an important part to play. More importantly, leaseholders should have the right to buy the freehold or to enter the new concept of commonhold.
The Bill has 38 clauses. I very much took to heartwhat my hon. Friend the Member for Kensington(Mr. Fishburn) said about the complexities of these matters. They are difficult, and we must look at the whole matter carefully.
I join my hon. Friends--and, I am sure, the hon. Members for Greenwich and for Southall--in paying tribute my hon. Friend the Member for Kensington. I am told that he is not standing at the next election. That will be an undoubted loss for the parliamentary Conservative party, as I would like to think it will be for the whole House. I pay tribute to his skill and perseverance in proposing all the commonhold Bills over the past eight years. I am glad that his surrogate, my hon. Friend the Member for Hastings and Rye, looks as if she will achieve the aim of his hard work.
Mr. Piers Merchant (Beckenham):
I very strongly support the concept of commonhold and therefore the Bill. As far as I am concerned, the sooner commonhold is introduced the better. I regard it as a piece of unfinished business, not only because there is a clear and extant Government pledge to bring in commonhold but because I do not regard leasehold enfranchisement, important though that is, complete without commonhold. Indeed,I originally very strongly supported leasehold enfranchisement on the understanding that commonhold would be swift on its heels to make it a more effective and manageable innovation.
I am greatly impressed by the initiative shown by my hon. Friend the Member for Hastings and Rye (Mrs. Lait) in promoting the Bill. She is very assiduous in the House and is known to be so in her constituency. It is typical of her to use this opportunity to introduce a measure that will directly benefit her constituents and that springs from her experience of constituency case work.
To an extent, I have experienced the problem of heavy constituency case work arising from leasehold problems. It is somewhat ironic that in the first case that I handled--an elderly lady who faced a one year's service charge bill of more than £20,000 because of major works planned for the property in which she lived--the freeholder's company happened to be based in the constituency of my hon. Friend the Member for Hastings and Rye, which of course I do not at all hold against my hon. Friend. The Bill is excellent and she is doing the House a great favour by introducing it.
There are two principal reasons why I support commonhold. The first springs from the cases that I have mentioned--showing the clear inadequacy of leasehold and the necessity to find measures that can overcome such problems. The introduction of commonhold is therefore
very important to the success of enfranchisement. It is also important to bear in mind the sort of problems that are increasingly emerging as a result of leasehold. Incidentally, I find that the weight of case work and other problems caused by it are increasing.
I certainly accept some leasehold arrangements work perfectly satisfactorily. Indeed, I was a leaseholder in a very happy arrangement with a managing agent and a freeholder who owned the property. The problem is that happy arrangements are dependent not so much on the operation of the law on the good will of the landlord. If that good will is not present, or if a bad landlord purchases the freehold, the whole happy arrangement collapses.
There are two particular sorts of unhappy consequence. One is where a rapacious freeholder simply buys properties to use leaseholders as milch cows to generate cash. There are many easy ways in which they can load unreasonable charges on leaseholders. There are many complex arrangements available to freeholders, which I shall not go into, to enable them to raise money from leaseholders. In such cases, it is not surprising that leaseholders wish there to be a remedy. It is unsatisfactory that the law as it stands cannot easily provide that remedy.
The arrangement goes wrong also when the freeholder is essentially a property speculator and buys a property because he or she--or it, if it is a company--sees an advantage in developing it. There was an especially good--or bad--example of that in my constituency. The firm of managing agents and the freeholder had a close relationship. Indeed, it was suggested by some that they were the same people. They bought properties because they saw the possibility of extending them upwards and downwards--in other words, developing basements and attics and adding on, as it were, to increase capital values and to generate the extra income that would ensue.
The only way of overcoming such problems is by radically changing leasehold law. Commonhold is one important way of achieving that.
My second reason for supporting the concept of commonhold so strongly is that I believe that English property law needs a new form of tenure. Commonhold answers that demand. I rather agree with my hon. Friend the Member for hon. Friend the Member for Croydon, North-East (Mr. Congdon), who said that he would like to see leasehold disappear. I regard it as an anachronistic form of tenure. Perhaps it should have withered on the vine along with socage, frankalmoin, serjeanty, copyhold and other forms of mediaeval property holding which eventually disappeared in 1660 or 1925, or at some stage in between.
As my hon. Friend the Member for Kensington(Mr. Fishburn) said, leasehold has been under a question mark for 200 years. Its origins, however, date back even further than that. It is necessary to bring the law up to date and tidy it by doing away with such a form of tenure. The introduction of commonhold would be a major step in that direction and would considerably improve and clarify the law.
There is another problem that might be taken up as we examine the Bill or through the tabling of amendments to it. It might also be taken up in another form of leasehold reform. The problem is that leaseholders may remain as a minority in a building, and are therefore unable to enfranchise and unable to take advantage of commonhold. In that situation, there remain significant weaknesses that
we must try to remove. I compliment the Government on their planned amendments to the Housing Bill, which to an extent will address the problem. There are, especially, the problems of forfeiture and the ability of leaseholders to challenge unreasonable service charges that are imposed on them by freeholders. That is one of my basic reasons for supporting commonhold.
I remain extremely concerned about leaseholders of local authorities or, in the case of my constituency, of Broomleigh housing association, which took over the property in question from the council. That association has imposed extremely high service charges on a number of leaseholders--in some instances in excess of £25,000 for one year--for capital works. Such sums are often considerably more than the property's original purchase price. The people involved are incapable of paying such service charges, which are completely unreasonable. The matter has been handled badly. There is some evidence that, while the handling has been improved, the law behind it has not yet been adjusted accordingly.
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