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Mr. Clifton-Brown: Does my hon. Friend agree that it is a curious anomaly in the Bill that local authorities are exempted from the right to manage, but housing associations are not?
Mr. Heald: Yes. The Government say that they are in favour of transferring the entire stock of local authorities to housing associations. If they are prepared to trust housing associations in that way, why should there be one rule for housing associations and another for local authorities? Why should there be a lower standard for local authorities? Surely if we want to lever up the quality of public services, we should encourage local authorities to reach the same standards as housing associations and private landlords. They should be able to do that, particularly given all the examples that we have heard from hon. Members on both sides of the House of poor-quality private sector landlords.
Surely the Government are not saying that local authorities cannot attain the standard of the private sector when it comes to property management. That touches on another point that my hon. Friend the Member for Stone made about the regulation of managing agents and those who look after property. In her reply to the debate, will the Minister tell us what proposals the Government have for the regulation of managing agents?
It is good that commonhold will enable more people to own the freehold of their properties. It is good that people will have the right to manage their properties, but the third leg of the tripod is to sort out the regulation of managing agents and to ensure that there is proper guidance and regulation.
What should be done about the bad unit-holder who does not pay his rent or insure his property and does not behave in a neighbourly way? One can criticise the abuse of the right of forfeiture, as the hon. Member for Bolton, North-East did, but it is very important on grounds of safety as much as anything else that bad unit-holders should be made to maintain and insure their premises and to be as neighbourly as possible.
In a block of flats people's lives can be put at risk by a bad unit-holder who does not fulfil his or her obligations. So it is not such a bad thing to have the ability to take draconian measures when an important covenant is breached. Although it should not be abused, in some cases the right of forfeiture is useful in concentrating the mind of the bad unit-holder or tenant and ensuring that properties are insured and maintained in the interests of everybody in the block. That option will not be available in the case of commonhold, at least as it is currently
proposed, but I hope that the Committee will consider seriously what leverage there will be to deal with bad unit-holders.I suspect that many unit-holders will not consider a charging order to be much of a threat or as significant a penalty as forfeiture. It should also be noted that one has to go through quite an expensive rigmarole in order to obtain a charging order. If a creditor or a commonhold association feels unable to become involved in a great deal of expense and inconvenience there may be a temptation to let certain issues slide. That would be bad for public health and public policy. I hope that the way in which the bad unit-holder is dealt with will be considered fully in Committee.
Mr. Clifton-Brown: I am grateful to my hon. Friend for giving way again. He has touched on a very important point. Under a commonhold system, the rogue owners could effectively prejudice the interests of the majority. Therefore it is crucial that the commonhold association has powers to deal with rogue owners.
Mr. Heald: I agree. The hon. Member for Torbay (Mr. Sanders) suggested that the commonhold association could be a priority creditor when the property was sold. I do not think that that goes far enough, but it shows that the issue has struck a chord with hon. Members from all parties—I notice the odd nod from Labour Members—and I hope that some way will be found to protect the innocent unit-holder who does everything right from the bad unit-holder who does not. That is one reason why responsible freeholders are keen to insist on the insurance obligation. If one tenant is not insured, it can often prejudice the insurance of everybody else in a block of flats. These are not minor issues; they are important considerations and I hope that the Committee will address them.
My hon. Friend the Member for Solihull (Mr. Taylor) spoke about the need to have a clear price mechanism for enfranchisement. He said how important it was to have adequate time to deal with these issues in Committee and I echo that point. A million flats are in leasehold occupation; they could be home to 3 million people or more. An additional 1 million houses are in leasehold occupation. If we can solve some of these problems by developing a clear price mechanism for valuing a freehold or dealing with bad unit-holders, we will help millions of people. So to be less than generous with our time and say that we are only prepared to spend a week or 10 days on it is denying quite an important duty to millions of people.
I hope that sufficient time will be provided for these issues to be dealt with properly, particularly as, as far as I can see, there is no real party political argument about the principle of the legislation. Our draft Bill was criticised for being far too late; the Government's Bill has been criticised for being five years too late, but we all agree on the principle, so it should be possible to sort out these technical issues, as 2 million households are looking to us to do just that.
6.48 pm
Glenda Jackson (Hampstead and Highgate): With all due respect, I think that the hon. Member for North-East Hertfordshire (Mr. Heald) fell into a trap into which many speakers have fallen this evening in attempting to get to
grips with the Bill—that of being infinitely too detailed in attempting to protect someone who, by virtue of a lease, is outside our thinking in relation to home owners. I accept absolutely that people who live in flats are in a different situation from home owners who live in a row of terraced houses where everyone owns their properties. However, the damage that can be inflicted on a row of terraced houses by one rogue property owner can be just as great and just as disturbing as that caused by one rogue tenant or commonholder in a block of flats. I do not believe that the House would be prepared to pass legislation that was so detailed in that respect that it set out precise ways of preventing the appearance of a rogue householder. We would look to the existing tenets of the law to protect other people.The Bill gives the House another opportunity to solve a problem with which Parliament has been struggling ever since I entered the House in 1992. I was much encouraged to hear that the Conservative party has changed what I perceived to be its attitude to leasehold enfranchisement. Conservative Members now regard that as an issue of national interest that demands a bipartisan approach to the Bill. It is a shame that that was not the attitude of the Conservative Government in 1993 when they introduced their Bill on leasehold enfranchisement. If that Government had accepted some of the amendments tabled by the then Opposition, there would be no need for us to debate the matter this evening. The rumour in 1993 was that the then Conservative Government had been forced to emasculate their initial proposals on leasehold enfranchisement, not by lack of bipartisan support for the Bill but by fear of the major London ducal estates.
I represent a London constituency, and I found that two of the most interesting of this evening's contributions were made by my hon. Friends the hon. Members for Bolton, North-East (Mr. Crausby) and for Burnley (Mr. Pike). They mentioned freeholds being offered for sale for £350, whereas in London it is par for the course for freeholds to be offered for £350,000. Such statements come as something of a shock.
When it comes to enfranchising leaseholders and implementing the other provisions of the Bill, we must take national differences into consideration. My hon. Friend the Member for Bolton, North-East crystallised the argument when he said that the aim of the House must be to balance up the gross inequity that exists between those who own freeholds and those who have leases.
My constituents have given me examples of the difficulties that they face as leaseholders. I remember the evidence presented to the House in 1993 on this matter, and I do not think that I exaggerate when I say that the majority of the freeholders with whom my constituents have had to deal would not still have properties standing on the land that they own were it not for the fact that the leaseholders who live in those properties had maintained them, year in and year out.
The leases involved may place various demands on the freeholders, but those demands have never been met. In contrast, my leaseholders have maintained the fabric of the buildings in which they live. They have engaged in major repairs when necessary, and in many instances have been responsible for the decoration, internal and external, of the properties.
My hon. Friend the Minister said that, for all their investment and commitment, leaseholders have seen their right to live quietly, calmly and securely in a home that
they have created diminish every year. That is the problem that the House is attempting to solve with this Bill. We need to make the balance rather more equal, especially in London. The present imbalance persists, despite the improvements that have been made with regard to leasehold enfranchisement.My hon. Friend the Member for Bolton, North-East said that the basic principle involved was one of human rights. We must ensure that, in the 21st century, no one in our society can be imposed on by the essentially uncaring but more powerful part of the leasehold equation. The Bill should be approached in that spirit.
However, I must tell my ministerial colleagues that my constituents are extremely disappointed with the Bill's requirements regarding commonhold. I share their disappointment, especially over the requirement that 100 per cent. of leaseholders in a property must agree before that property can move to commonhold.
I do not understand the Government's thinking on that matter. For example, the Bill has been changed to reduce the requirements that must be met before leasehold enfranchisement can be entered into. The Bill does not require 100 per cent. of leaseholders to agree before they can join together to buy the freehold to a property, so why does it do so over the introduction of commonhold?
The Minister said that, if commonhold were dependent on something other than 100 per cent. agreement, the result would be that the block involved would have two strands of management. Yet that arrangement exists already in those local authority properties where not all tenants exercised their right to buy. Indeed, local authorities are obliged to buy back leases in order to maintain properties.
I was amused to hear the hon. Member for North-East Hertfordshire mention the exclusion that precludes local authority tenants from exercising the right to manage. I presume that that provision exists because such tenants already have the option to create their own management structures. Moreover, the Government are encouraging local authorities to offer tenants the option of setting up their own management structures or of giving management responsibility for their property to another housing association. In either case, the clear understanding is that the majority of tenants must be in agreement.
Given that that option is open to local authority tenants, why cannot it be open to potential commonholders? If a majority of tenants involved can make such decisions about local authority housing, it seems entirely feasible to say that a majority of leaseholders can do so in relation to commonhold.
The Government believe that commonhold can make the sort of changes desired by hon. Members of all parties. However, I do not believe that they are right to rely on the initial steps being taken in relation to new build. That will not secure the results that all hon. Members want within the period of time that would be acceptable to my constituents.
We are not talking rocket science. I think that Britain may be the only country in the world that does not have some form of commonhold. Commonhold works best when it has tradition behind it, and when people have
known each other and the blocks in which they live for a considerable time. To pin our hopes on new build for the first steps towards commonhold seems to me to be to neglect the fact that none of those supports will be in place.In an intervention that the Minister kindly allowed earlier, I asked about commonhold associations, and I am still somewhat perplexed. The Government expect that such associations will redress the imbalance between freeholders and leaseholders. What will be the contribution of individual commonholders to the management of the block in which they live, given that they will not all meet for a considerable time? I made the point earlier that all flats are not sold at exactly the same time and that all tenants do not automatically move in on the same date. Moreover, I expect that the amounts of money that developers determine must be paid each year to maintain properties will vary widely.
People moving into a block of flats for the first time might read that the flats would be in a commonhold system and that there would be regulations to ensure the basis of the commonhold association, but if it were me, I should still feel that I was buying a pig in a poke because I would have had no say in the constitution of the future management system for the block.
I hope that the Government will return to the issue of commonhold—certainly on the requirement for 100 per cent. agreement. They should certainly return to the issue if they hope that commonhold will be driven by new build—although very, very few developers in London will be willing to give up what they still regard as a sizeable investment: freehold. I hope that the Government will reconsider those points.
I also want to raise with the Government issues relating to marriage value. I know that it is extremely difficult to reach agreement on that topic, but my constituents constantly raise it with me. I notice that there is no requirement for marriage value on leases that run longer than 80 years. However, I point out to my hon. Friends that some of my constituents who would dearly love to extend their present leases so that the need for marriage value is removed at present find that the freeholders vastly inflate the amount of money asked for the extension of the leases.
Some of those constituents certainly feel that they are yet again being excluded from a measure that they believed would transform their situation. In essence, they feel that they are maintaining someone else's property and that when push comes to shove they will always be in the vulnerable position of having maintained that property—of having sunk not merely their life savings but their lives into it. They will always be vulnerable if the freeholder can see ways of squeezing yet more money out of the leaseholders. Heaven knows, many freeholders are immensely imaginative in doing that.
Several hon. Members have spoken about insurance. I certainly recall the discussions of that topic when the Leasehold Reform, Housing and Urban Development Act 1993 was in Committee. An outrageous force majeure is being wreaked on tenants—especially the elderly, as was pointed out—whereby they must obtain their insurance from a particular company.
I am sorry to repeat myself. It is par for the course not only for the management companies of blocks in London to charge sizeable amounts for insurance under their
agreements, but in the case of an accident for leaseholders to discover that the premiums have never been paid and that they are completely uninsured.I am sure that we could all produce for the benefit of the House horror stories of the realities of life for leaseholders. I am telling the stories that my constituents have told me about London, where, as we know, there are huge complexities owing to the shortage of affordable properties. I pointed out to the hon. Member for Stone (Mr. Cash) that it came as a shock to hear such phrases emanating from the mouths of Conservative Members, but if they are moving in that direction it is to be welcomed. There are huge pressures in London; there is a desperate shortage of land.
I end where I began. The reason why we are considering the Bill is the same one that has applied in all our discussions of the matter—certainly since I became a Member: to redress an unfair balance between people who own a freehold and those who buy a leasehold. In many cases, if the leaseholders did not give their commitment to the property, the freeholder would merely have an empty piece of land.
Many aspects of the Bill are to be welcomed. However, opportunities have been missed and I trust that some of the Bill's inequities will be tackled in Committee. I was impressed to hear my hon. Friend the Parliamentary Secretary, Lord Chancellor's Department say that the Government are prepared to listen. No doubt these arguments will be made again and I hope that the Government will accept amendments on some points.
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