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Mr. Pike: I receive letters of exactly the same kind. Is it not worrying that, for every person who writes to my hon. Friend or me, there are a number of people who feel so pressurised that they cough up even when they cannot afford to do so?
Mr. Crausby: Absolutely. Thousands of people are so intimidated that they feel there is nothing else they can do.
When I requested a meeting with AXA to urge it to refuse such business, I naively assumed that it was unaware of the tactics employed by Compton—that it did not know what was being done on its behalf. AXA, however, refused to meet me, telling me that the matter was nothing to do with it and suggesting that I meet representatives of Compton instead.
Mr. Andy Homer, AXA's chief executive, told my local newspaper, the Bolton Evening News, that he could not comment because the dispute was between Compton and its tenants. In other words, "It's not me, guv". I can only assume from AXA's behaviour, and from its lack of concern, that it is just as bad as Compton—interested only in profits from the insurance business. It is clear that it desperately wants to pour money into the pockets of multi-millionaire footballers, and is prepared to fund that by forcing pensioners in my constituency to buy its insurance.
I spoke on the telephone to an elderly lady who had lived in the same property, with her husband, for more than 40 years. Throughout their married life, they had paid their insurance through the Co-op to an insurance
collector who called at the door. The couple had received a series of aggressive letters from Compton. When the lady raised the matter with her insurance agent, the man from the Co-op, he advised her to give in and take out insurance with AXA.That lady cannot believe that in this day and age, in Great Britain, it can be legal for her and her husband to be harassed and intimidated in such a way. To be honest, neither can I. It is fundamental to our freedom in this country that we should not be intimidated—that we should not be forced by those who are stronger or wealthier than us to do what they bid, especially when they act for no better reason than to make themselves even stronger and wealthier. It is the responsibility of democratic Government to ensure that the public are protected. The British public should be bullied by no one: they should not be bullied at school, they should not be bullied at work, and they certainly should not be bullied in their own homes.
This sorry tale of intimidation by large, wealthy organisations or householders who have worked all their lives to buy their homes is bad enough, but when we consider that the freeholder is armed with the draconian measure of forfeiture and is prepared to use it—prepared, certainly, to threaten to use it—we can imagine the pressure that elderly residents will experience. It is no wonder that so many cave in.
Forfeiture is just one example of the way in which the existing law is tilted in favour of landlords. Its use, or should I say misuse, to force leaseholders to take out insurance by people threatening the loss of their homes convinces me that it is a power that should be abolished.
When the Bill's predecessor was discussed in the other place last March, Lady Hanham tabled an amendment to void provisions in a lease requiring a tenant to insure with a company nominated by the landlord. It was a simple amendment, intended to address a simple injustice. Why should anyone be forced to buy insurance from a company with which he or she does not want to deal? Lord Whitty expressed some understanding of the concerns behind the amendment, and said that he felt some sympathy with it. He promised that the Government would look at it in the longer term, outside the scope of the Bill.
The problem is that, on a daily basis, poor people are being taken advantage of. To put it simply, they are being ripped off. If we do not stop these anti-competitive practices now, they will clearly increase to a point at which all insurance companies will feel compelled to become involved in what is a very seedy business.
I strongly agree that the Bill takes householders' entitlements in the right direction. I hope very much, however, that in Committee we will take the opportunity to strengthen its proposals further in the interests of the people. We have a responsibility to prevent companies from being able to stipulate in lease agreements the firms through which buildings insurance should be organised. If we do not do that, the Government will be forced to return to the matter as they have so many times before.
6.28 pm
Mr. Oliver Heald (North-East Hertfordshire): I welcome the Bill. I agree with the hon. Member for Bolton, North-East (Mr. Crausby) that the actions of some freeholders and managing agents are unacceptable: indeed, I think that much of the pressure for the Bill has
come from those who see commonhold as a way of escaping from certain managing agents and certain freeholders. I shall say more about that later.Of the Bill, I say "Better late than never". In 1996, when the Conservative Government presented a draft commonhold Bill for discussion, the Minister for Local Government, the right hon. Member for Greenwich and Woolwich (Mr. Raynsford)—the then Opposition spokesman—expressed criticisms. He said, nearly six years ago, that
- "Labour in Government will have no hesitation in introducing a comprehensive leasehold reform package including commonhold legislation".
I support the introduction of commonhold. Although I accept what the hon. Member for Bolton, North-East said—it is wrong for a landlord to insist on a long-lease tenant taking out insurance with a company that may not offer the best terms—it is important to realise that tenants have been trapped in leasehold for so long because the only way of ensuring that properties were insured was to have a system under which the positive obligations of ownership could pass from one owner to another. It was necessary for each unit to have positive legal obligations towards its neighbours and for those to continue generation after generation, owner after owner. It would not have been possible to insist on insurance for all properties, which is vital, if the leasehold system had not been in place. It was not open to freehold properties to continue with those positive legal obligations.
That is why 1 million flats and 1 million homes are leasehold today. A majority of lessees would prefer to be freeholders or commonholders; the commonhold proposals will allow them to meet that aspiration. It is good that we are in a position to let so many people reach something that they have wanted for so long.
There will be fewer opportunities for unscrupulous freeholders and managing agents to take advantage of lessees. We have heard personal examples from the hon. Member for Rother Valley (Mr. Barron), who was asked to pay a premium for putting up a garage and extension at his property. He had the ability to fight his corner and ended up not paying the money. However, many people would not have had the courage and fortitude to achieve that.
The combination of the commonhold and right-to-manage proposals in the Bill will mean that there are fewer opportunities for the sort of misbehaviour that we have heard about and for other forms of misbehaviour by freeholders and their agents. The campaign for the abolition of residential leaseholds sent a list to us all, which criticises some of the behaviour by landlords.
It is important to include the caveat that many freeholders and agents do an excellent and efficient job and behave entirely properly. One would not want to criticise them, but it is wrong that some landlords should steal money from maintenance funds that in law should be held on trust; falsify tenders for works to premises, which they are carrying out at a secret profit; make
leaseholders pay the landlord's legal costs even if the landlord is in the wrong; bully and intimidate; charge for services or work that has not been carried out; fail to carry out essential works until the costs become astronomical; fail to disclose money missing from maintenance funds in the annual accounts summary—apparently, according to the Institute of Chartered Accountants, it is legal to omit the fact that money is missing from the fund—create phoney management companies to levy unnecessarily high charges; and hold lessees to ransom when they sell their properties by imposing huge administration fees for answering queries.Some of those actions would be illegal under current law, but not all. If we move to a system where more long-term tenants are able to have commonhold and own the freehold in effect, or have the right to manage their properties, there will be less abuse of the system.
I share the concerns of the hon. Member for Burnley (Mr. Pike) about the conversion rules. It will be possible to convert from leasehold to commonhold only if certain criteria are met. Among the details in the Bill is the 100 per cent. rule—the freeholder and each unit-holder would be able to object, as would cautioners and others with minor interests in the land.
What worries me is that a cautioner could hold one unit-holder to ransom and everyone else would be denied the opportunity to become a commonholder. One can imagine circumstances where a caution has been entered on land in respect of a debt that is owed to one creditor. That creditor may have no hope of ever getting the money out of the unit-holder in normal circumstances. When the commonhold suggestion comes up, he may say, "I am not prepared to agree to the registration unless the caution is vacated and I get my money." For all we know, the unit-holder may not be able to pay. One hundred or 400 long-lease tenants in a block of flats could all be deprived of the opportunity of commonhold, which would avoid some of the difficulties that I have mentioned and which may be a long-held aspiration for many of them, just because of a dispute over a debt that cannot be resolved in relation to one unit-holder. The Committee will need to look at that. It is not right that all those people could be denied the opportunity of commonhold because of that sort of dispute.
There may be an argument about a right of way. We all know that that happens. In my surgery, I get cases about disputed rights of way from time to time. Someone may own a right of way that is used by residents in a block of flats. Do we want that person to be able to stop 400 or 100 people becoming commonholders? Probably not. The Committee will have to look closely at whether the 100 per cent. rule is right, or at least at the categories of persons who can object. If it is to be every minor cautioner or every owner of a right of way, that is far too restrictive. There is cross-party consensus that commonhold should proceed. That could scupper it.
As my hon. Friend the Member for Stone (Mr. Cash) said, there are already systems with long leases—999 years, for example—where the freeholders have in effect contracted out the management of the premises to the tenants, or where the tenants are freeholders in a company and are able to manage the premises themselves. In those circumstances, there needs to be some attraction for commonhold to become the rule. If minor property
holders of the sort that I have described are able to scupper the conversion, that will defeat many attempts. That needs to be examined.My hon. Friend was on to a strong point when he said that it was wrong for the Government to be able to exclude local authority premises from the right to manage. The Government need to justify that. One of the complaints that one hears and is reported nationally from time to time is that local authorities are not always the best landlords of premises. One would want to know why local authorities should be exempted from the right- to-manage proposals. Surely if tenants are not happy with their current arrangements they should be able to obtain the right to manage the property themselves.
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