| Previous Section | Index | Home Page |
Mr. Raynsford: As the Minister said, this is an important measure relating to problems facing leaseholders who are threatened, or have been threatened in the past, by the prospect of forfeiting their lease because of a dispute about, for example, service charges.
We very much welcome the steps that have been taken under pressure. As a result of the campaign that the Labour party has maintained throughout the past year on behalf of leaseholders, the Government have moved to some extent to deal with these problems. Later, we shall debate the Government's failure to act adequately in other areas where there is a need for more effective action, but this is a proper and appropriate response to close the forfeiture loophole.
We very much welcome the requirement that leaseholders be informed, because there is a risk that, despite Parliament's best intentions, leaseholders may find themselves threatened with forfeiture without being told of their right to challenge the landlord's entitlement to seek forfeiture for a service charge dispute.
We welcome the new clause, which we believe will help leaseholders. It is part of a much wider package of measures of leasehold reform that is necessary, only part of which is addressed by the Bill; nevertheless, the new clause is a step in the right direction.
Lords amendment agreed to.
Mr. Clappison:
I beg to move, That this House doth agree with the Lords in the said amendment.
Mr. Deputy Speaker:
With this, it will be convenient to discuss Lords amendments Nos. 100 and 101, Lords amendment No. 102, Government amendments (a) and (b) in lieu thereof and Lords amendments Nos. 103, 104 and 129.
Mr. Clappison:
We now come to the important subject of leasehold valuation tribunals. I shall invite the House to agree with the Lords in the amendments, save for Lords amendment No. 102, with which I shall invite the House to disagree.
The amendments make new provision for procedures to be followed by leasehold valuation tribunals when hearing service charge disputes. Lords amendment No. 99 makes provision for leasehold valuation tribunals to secure consistency in handling separate cases about the same issue. For example, if a number of tenants in a block challenge the same service charge, it may be convenient to hear the separate cases together. This mirrors procedures that are often followed in the county court and High Court. It also allows leasehold valuation tribunals to strike out frivolous or vexatious cases or those which are an abuse of process.
Lords amendment No. 101 allows leasehold valuation tribunals to apportion the reimbursement of fees, as they think appropriate to the circumstances of the case.
Lords amendment No. 103 allows the court to dispose of that part of the case which it has not remitted to a leasehold valuation tribunal, and to enforce the leasehold valuation tribunal's decision as a decision of the court.
Lords amendment No. 104 is a consequential amending definitional amendment.
Lords amendment No. 129 widens the Secretary of State's regulation-making powers to allow the possibility of having a "pre-trial review" before a single member of the tribunal, to clear the ground before the main hearing--another procedure that will be familiar to those who have used the courts, and often a way of shortening cases.
I shall now discuss Lords amendment No. 102 and Government amendments (a) and (b). I invite the House to disagree with Lords amendment No. 102 but to agree with Government amendments (a) and (b). The amendments concern the level of fees that may be charged
by a leasehold valuation tribunal to an applicant under the new procedures for the resolution of service charge disputes.
It may help the House if I explain the background to the issues. The proposal to give this new jurisdiction to leasehold valuation tribunals was introduced by Government amendments to the Bill in Committee in this place. The initial provision on fees was that, taking one year with another, they should be sufficient to cover the full costs of providing this service.
The measures in the Bill to help protect leaseholders of residential properties were prompted by the bad actions of a minority of landlords who were imposing unreasonable, and in some cases outrageous, service charge demands. Any leaseholder who contested those claims was faced in some circumstances with the immediate threat of forfeiture and an action, usually in the High Court. There are measures in the Bill that deal with this abuse and provide that forfeiture proceedings can no longer be taken until the disagreement about service charges is resolved. This is a significant step to help leaseholders, an important part of our package of reforms which will materially improve the lot of leaseholders.
Leaving the problems of forfeiture to one side, leaseholders currently have the right to challenge unreasonable service charges or to seek to have a new manager appointed if they can show fault with the current manager, but these jurisdictions lie with the county court. The second stage of our proposals is therefore to switch these cases to the leasehold valuation tribunals.
This move has been widely welcomed, on the ground that the tribunal will offer leaseholders a much more effective and cheap method of taking action against the unreasonable behaviour of landlords. This is because leaseholders have found it extremely difficult to challenge freeholders' actions in the courts. Although the initial court fee may be low, leaseholders often face protracted and potentially expensive litigation, and if they lose the case they are exposed to the risk of paying the costs of both sides. Even in normal cases that last for, say, two days, the likely exposure to costs can run into thousands of pounds.
The advantages of going to leasehold valuation tribunals are considerable. They have quicker, less formal procedures, and there is no need for full legal representation. The tribunal will include a professional surveyor who is fully qualified to assess the technical arguments that are likely to arise.
The other important point is that tribunals cannot award costs, so the exposure of leaseholders to the risk of costs will be much reduced.
Those advantages to leaseholders should be kept in mind when considering the fee that should be paid for access to the tribunals. There was little discussion of the full cost recovery principle when the Bill was originally before the House. The matter arose chiefly in another place, when my noble Friend Lord Lucas explained that it was likely that the daily cost of dealing with service charge cases by a tribunal could be as much as £2,000. That does not mean that the fee for hearing any case would be that much, as a detailed fee structure has not been determined, but there was general concern that full
cost recovery would lead to fees of a considerable amount that could wipe out much of the cost advantage of a tribunal compared with county courts.
Various amendments were debated that would seek to limit the amount of fees chargeable. On Third Reading in another place, the Government tabled an amendment to ensure that the fee did not exceed the cost of the service. That would have allowed a considerable element of flexibility to set the fees, either at full cost recovery or at any percentage point below 100 per cent. of costs. A similar amendment was carried in relation to the parallel and new procedures for the tribunal to deal with the appointment of a manager.
For the procedures on service charge disputes, amendment No. 102, moved by Lord Bledisloe, was accepted. It provides that fees for these cases should be no more than the comparable fees in the county court. That would have the effect of setting a maximum of £120 for each case. Much concern was also expressed by noble Lords on both sides of the other place that our proposals for fees to be levied by tribunals offend the basic principle that there should, allegedly, be no charge for access to justice.
I emphasise that such fears are not justified--in the sense that the principle of cost recovery is already established. Indeed, Lords amendment No. 102 accepts the principle of charging fees, as it refers to fees paid in the county court.
It was suggested in another place that it would be breaking new ground to allow tribunals to charge a fee, but that is not so. For instance, if there were an appeal against a case heard by a leasehold valuation tribunal, it would be dealt with by the Lands Tribunal, which has a long-established fee--in these cases, involving a charge of about £250.
I turn next to our reasons for not accepting amendment No. 102 and for tabling amendment (a), which would allow for a maximum fee of £500. We think, given the great advantages of access to the leasehold valuation tribunal, that it is right that applicants should contribute towards the costs of the service. I fully accept that the point of the leaseholder package is to help thousands of leaseholders who have been the subject of deplorable and aggressive behaviour by their landlords. I think that our package achieves that, but we have to have regard to competing demands on the public purse. I am sure that Opposition Members will agree that it is important to strike a careful balance in that respect.
As I have said, the Government amendment moved in another place would have allowed for less than full cost recovery, but our amendment today puts an explicit limit on the face of the Bill. A fee of £500 represents a reasonable balance which will still mean that a substantial proportion of the costs will have to be borne by the taxpayer. It represents an affordable amount, particularly as it will usually be shared between a group of leaseholders in a block of flats. The amendment allows the maximum to be changed by order, but only following an affirmative resolution of both Houses, which will offer hon. Members the opportunity for debate before any changes to the limit are made. We intend to use the power in the usual way to reflect cost changes from time to time.
| Next Section
| Index | Home Page |