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7.4 pm
Mr. Elfyn Llwyd (Meirionnydd Nant Conwy): I declare an interest. I am the owner of a long lease in London, and from time to time I have advised, as a lawyer, on property matters.
It is high time that we reformed the system of covenants running with land—the whole feudal system with which we are dealing today. There is unanimity on that throughout the Chamber. I do not want to get involved in discussion of how much time was taken by one side or the other; now, we are proceeding in the right direction.
Leaseholders have typically been in a weak position in enforcing covenants against their landlords. Landlords have always had the whip hand in that regard. Earlier, the Parliamentary Secretary mentioned the dreaded flying freeholds and flying commonholds. I once languished in a law lecture hearing about a flying freehold, with the confident expectation that I should never be confronted by one. After only three months of legal practice I came across one, and although that was 20 years ago I have never forgotten it.
The land commonhold system in England and Wales really needs improvement. There are no colleagues representing Scottish constituencies in the Chamber—understandably, because their system is better than ours.
The Bill is most welcome, although obviously there are still matters that must be addressed. Members on both sides of the House have referred to various problems. I listened intently to the powerful speech made by the hon. Member for Rother Valley (Mr. Barron), who spoke strongly from a personal point of view about certain problems. I suspect that he might not be serving on the Standing Committee—although I may be wrong.
In 1985, I acted for a small carpet retailer who was buying small warehouse premises in Llandudno in north Wales. He wanted to open a small retail outlet in the town in a leasehold property that had been a commercial warehouse for heaven knows how long. We had to apply to the landlord for permission to put in a small shop window and for retail premises to be situated in the building. Even at that time, the landlord asked for £7,000—for nothing. However, because of time constraints we had to negotiate for a sum approaching that figure. There were obviously problems.
There are huge problems in the city of Cardiff, not only with commercial but with residential leaseholds, so I welcome the moves to reform leaseholding in general. I certainly also welcome the commonhold principle, but I echo the comments of the hon. Member for Hampstead and Highgate (Glenda Jackson) and others about the unanimity rule. If a possible commonholder was in arrears with his or her mortgage payments it seems ridiculous that that might be enough to make the mortgagee decide that there was no compliance or agreement, so the whole scheme would fall flat.
Mr. Cash: Given the hon. Gentleman's genuine enthusiasm for the principle of the Bill and also the fact that there is an element of national interest, does he agree that it would be an interesting test—in the light of the parliamentary reforms to the whipping system proposed by the Leader of the House—to propose that there should be proper representation on the Standing Committee and that it should include Members, such as the hon. Members for Rother Valley (Mr. Barron) and for Burnley (Mr. Pike), who expressed concerns similar to those that he is raising? That would ensure proper representation on the Committee.
Mr. Llwyd: I hear what the hon. Gentleman says. I should be pleased to see the hon. Members for Burnley (Mr. Pike), for Rother Valley and for Hampstead and Highgate in the Standing Committee; I am sure that its proceedings would be much enhanced. My endorsement may be the kiss of death, of course, in which case those hon. Members can be confident that they will not serve on any Committee in the foreseeable future.
Mr. Pike: I am always willing to serve on Committees. However, I am on the Chairmen's Panel and am also chairing another Committee. It is impossible to do everything that one would wish, as I am sure every Member of the House agrees.
Mr. Llwyd: That must be right.
Applying for a charging order against an errant commonholder is a difficult and expensive legal procedure. In any event, the charging order fails if the debt is small in comparison with the value of the leasehold interest. Charging orders are a total waste of time. However, I welcome the extended rights for leaseholders in the Bill. I also welcome unreservedly the relaxed conditions for leaseholders of houses to extend their lease or to enfranchise; the new right for individual leaseholders not to be excluded from collective enfranchisement; and the new right for leaseholders of flats collectively to take over the management of the block. All those proposals are to the good.
There are some good things about the Bill, which has been a long time coming, and which I am sure will be improved in Committee. I think that the commonhold system will be of considerable use and assistance to many tens of thousands of our constituents.
I have some queries on commonhold, which the Minister will undoubtedly address at some point, although perhaps not this evening. I wish to know about the status of unregistered interests where consent to register is sought; the rights of mortgagees where the mortgagors vote to sell off common parts; whether leases should automatically terminate if the commonhold terminates; and the ability of a commonhold association to recover service charge arrears, particularly if a unit changes hands. That was mentioned earlier with regard to the charging order, nisi and absolute.
The extended work load of the leasehold valuation tribunals is a good thing, and I am sure that the people involved will be trained appropriately. That is not meant to be patronising, but this is a fairly new area of law. It is a good idea for more applications to go to the LVTs rather than the courts. I should like the LVT procedure to be as informal as possible, although I know that that might be difficult to achieve bearing in mind the need for valuers.
The Law Society contends that the LVTs should be able to deal with all residential leasehold issues and should act as a one-stop shop. At present, issues are divided between tribunals and the county courts. For example, the majority of applications concerning whether costs incurred in relation to services, repairs and maintenance works are reasonable are dealt with by LVTs, while judgments on arrears are made by county courts. Such duality is probably not in tenants' interests.
I agree that the law needs to be consolidated. The hon. Member for Rother Valley and others have mentioned numerous pieces of legislation. It is a very complex situation and will remain so even after the Bill, amended or not, reaches the statute book. There are more than a dozen statues involved. They include the Landlord and Tenant Acts 1954, 1985 and 1987, the Rent Act 1977, the Leasehold Reform, Housing and Urban Development Act 1993 and the Housing Acts 1988 and 1996, to name but a few. Clearly, there is a crying need for consolidation.
I cannot understand why we are not considering a form of mandatory introduction of commonhold with new build. The Minister said that the markets will be the determining factor. In other words, the benefits likely to accrue in a commonhold situation will in some way persuade developers and commonholders to adopt this particular model. I remind the House that the Land Registration Act 1925 introduced the registration of freehold and leasehold titles. Until the late 1980s, only a tiny proportion of rural properties had ever had registered title until it became compulsory. The benefits of registered title were obvious, not just to lawyers. It led to the simplification of conveyancing, but did not commend itself to people in general. This might be a comparable situation. Perhaps the Government should think again about a mandatory introduction of the commonhold with regard to new build.
The unanimity rule has been dealt with eloquently by many speakers in the debate, so I shall not dwell on it. It is a very real issue. One errant commonholder with
mortgage arrears will apparently scupper the whole system for everyone in the proposed scheme. That must be addressed. The Minister said in his opening remarks that the Government were listening. With respect, had they listened to what was said in the other place, changes would already have been proposed. Even at this stage, and even with the restricted timetable that is a matter of some criticism, bearing in mind the ground-breaking nature of this important Bill, I hope that the Government will think again about this issue in Committee.On dispute resolution, clause 34(3)(b) provides that the directors of a commonhold association
- "shall have regard to the desirability of using"
The Minister said that there would be draft regulations on delegated powers, which I welcome. I hope that those will be made available before the Bill goes into Committee. On the framework of delegated powers in general, the Bill was considered by the Select Committee on Delegated Powers and Regulatory Reform in its fifth report. The Committee concluded that the regulations should be available as soon as the Bill was before the House.
I echo everything that has been said about insurance arrangements and about freeholders determining which insurance company should be used. In addition, there should be better regulation of managing agents.
I echo what was said by the hon. Member for Solihull (Mr. Taylor). There is an obvious tendency for ground landlords to seek inflated valuations, knowing that the leaseholders are usually anxious to complete a purchase. It is known as the Delaforce effect. I do not see much change in the Bill. The freehold valuation is usually based on the percentage site value approach, which is often arbitrarily determined.
I would like a change in the statutory fee for issuing a demand to purchase. It is routine for the leaseholder to pay the legal and surveying fees for both parties. How are those fees determined? I have been involved in situations in which ridiculous fees have been asked. I would like a mechanism in the Bill to put a stop to that without having endless correspondence about it.
My comments are sincere and are meant to be constructive. This is a good Bill, but it needs improving, and I hope that that will happen in the coming weeks.
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