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7.19 pm
Mr. Piara S. Khabra (Ealing, Southall): It is easy, at present, to get swept away by the constantly changing events overseas and their implications for this country's interests at home and abroad, yet it is essential that we do not neglect day-to-day legislation, which, although possibly not so dramatic, has the power to affect the lives of many people in this country. The Bill will address some of the issues faced by many people.
I am not an expert in the intricacies of housing legislation, and many hon. Members have a great deal more knowledge and expertise in this matter, but the Bill will affect leaseholders in constituencies across the country, especially in London and the south-east, which contain more than half the United Kingdom's leaseholders. I am therefore glad that the Government
have reintroduced the Bill at the earliest opportunity. I participated in previous debates on such matters, and I am happy to do so again today.Although leasehold suits some, it has many drawbacks for long-term residential occupiers in England and Wales. Many people, including some in my constituency, experience serious difficulties with their landlords, who neglect their obligations under the lease, either wilfully or because they are absent. The Bill will go some way to redress the balance of power between landlord and tenant, and, arguably, it will better reflect the relative investment values in the property.
I welcome the changes being introduced to create the new commonhold tenure for blocks of flats and other multi-unit properties, as well as further reform of residential leaseholds, particularly in respect of making it easier for people to purchase the freehold of their properties.
The introduction of commonhold should provide a better system for the future management and ownership of blocks of flats and other interdependent buildings with shared services and common parts, and it is designed with the admirable intention of giving people in commonhold the opportunity to own the freehold of their homes. Commonhold is a new concept for the United Kingdom, and thus may take some time to be accepted, but it should prove a popular option for new developments.
The Bill will provide an option to convert from leasehold to commonhold, but it is likely that many leaseholders will find that their concerns are sufficiently addressed by the proposed leasehold reforms. For leaseholders, one of the most welcome aspects of the Bill is that proposed under the chapter entitled "Right to Manage".
The Leasehold Advisory Service has said that it receives a large number of inquiries that relate to complaints about service charge abuses and over- charging, mismanagement and the neglect of properties by landlords. I sometimes receive complaints from my constituents on such matters. The Bill will provide tenants with further powers to address those problems. So long as certain reasonable conditions are met, such as the building, or part of the building, being self-contained and containing at least two flats, tenants will be given the power to manage the property without the need to buy the freehold. They also need not prove fault on the part of the landlord, as would be the case if they were applying for a management order under the Landlord and Tenant Act 1987.
I also approve of the improvements in the rights of those who inherit a leasehold house from a deceased leaseholder, provided that the tenant had certain rights immediately before his death and that they do not serve the notice any later than six months after the grant of probate or letters of administration.
I should like to ask the Minister to consider a point that appears to have been missed: what happens when a long lease—one over 21 years—expires? Robert Orr-Ewing, a leasehold reform specialist, has pointed out that when a long lease expires, the leaseholder has the right to remain as an assumed periodic tenant under the Local Government and Housing Act 1989. However, leaseholders have the right only if they qualify as tenants, but people do not qualify as tenants if they pay more than £25,000 per annum. That may sound like a great deal, but
it is not really that much in some areas, especially central London. Thirteen years after the relevant Act was passed, I wonder whether that ceiling should be removed, or at least raised.Overall, I am positive about these reforms. I agree with Ray Walker, a housing and planning specialist who has worked closely with the Co-operative Bank and written a pamphlet for the Mutuo think tank on the issue. He argues that if the regulations are to work, leaseholders will need extra support, including better guidance on how to form and run effective management companies, and details of accredited solicitors and other experts who can help prevent abuses in the system. However, I believe that we are taking important steps, that this important Bill will take us forward and that leaseholders and freeholders will get a good deal from the reforms.
Finally, I am impressed by what seems to have been an outstanding level of co-operation and consultation with the public and professional bodies to find resolutions to the issues that have been raised. I support the Bill.
7.26 pm
Mr. Robert Syms (Poole): I intend to make a brief contribution, but first, like many hon. Members, I declare an interest as the director of a family property and building company and the owner of a flat with a long lease in Poole and another in London. Several other hon. Members are in similar situations.
I congratulate the Minister on the manner in which he opened the debate and took many interventions—rather more than I might have done in his position in discussing a technical and complex subject. The Bill has been a long time coming. It is easy to make political statements about wanting reform, but rather more difficult to determine the details and come up with the goods. The delay has produced one benefit in that widespread consultation has taken place. I welcome that because improvements have been made, but as an Opposition Member, I regret the fact that there is a programme motion, under which proceedings in Committee must be concluded by the end of the month.
We can all agree on the principles behind much of the Bill, but the devil is in the detail. I fear that if the Bill is rushed and some clauses are not fully debated in Committee, there will be more work for the lawyers, of whom I have seen many in the Chamber today. It is important to get the Bill right, even if that takes a little longer, and I hope that the Government will take that into account.
There are rather more hon. Members present than during some debates, because, as we have heard, there are 2 million residential leaseholders in the United Kingdom. Almost all of us have heard in our surgeries about examples of bad practice with freeholders or managing agents. All of us have had to wring our hands and give advice about the state of the law, which has not always adequately protected our constituents. However, we are dealing with two sides of a bargain—there are freeholders. Although we have discussed many bad landlords, there are also many very good landlords. Indeed, many pension funds, which are owned by the people, own freeholds and develop property in the United Kingdom. We must get the balance right. We must not draft the law so that it discourages legitimate pension funds that invest in property companies from producing the physical capital that the country needs to be a competitive and first-rate economy.
As I have said, there are many bad landlords involved in the misuse of maintenance funds, dodgy tendering systems for building work, failure to carry out work and hitting people with large repair bills that they find difficult to meet. We have all heard of such examples, so I broadly welcome the Bill and any proposals that will make it easier for leaseholders to become enfranchised and to take over the freehold of their flats.
When that has happened in my constituency under the existing legislation, which was introduced by the previous Government, people are on the whole happy. They have managed to buy freeholds, have usually granted themselves a longer lease, set up a company to own the freehold and then found managing agents to run it. That system works very well, but it is a long, tortuous process and it takes someone to drive it through. It usually happens when one of the leaseholders gets the bit between his teeth and pursues the matter for the several years that it sometimes takes to reach the end of the process. Any changes to legislation that will make it easier for leaseholders to get on with the process and to take proper control over their lives must be welcomed, but difficulties will still arise.
We all welcome the principle of commonhold, but I wonder whether the concept will take off. The Bill's 100 per cent. rule for existing blocks sets a very high hurdle. We have heard about lower hurdles, such as for the transfer of local authority stock, so I wonder whether we should not reduce the figure from 100 per cent. Commonhold will not take off if we rely purely on new building projects. People are conservative about property matters and commonhold will take off only if people see many examples of it happening very quickly. To make commonhold a success, existing flats must transfer to the new system.
As the hon. Member for Hampstead and Highgate (Glenda Jackson) pointed out, there are real problems with new developments. The properties in blocks of 10, 20 or 30 flats sell one at a time and, to a large extent, any new scheme may well be set by the developers and that fact may concern the purchasers. The first person to buy a flat in a block that will be commonhold may not be sure quite what they will get. Indeed, some commonhold blocks may not even be physically finished before the units start to be sold. The time at which a building project is completed is not always entirely clear. There will, therefore, certainly be problems with commonhold.
Under the leasehold system, if tenants do not pay legitimate service charges, a procedure can be used so that the threat of forfeiting a flat can force them to pay up. As far as I can see from the commonhold system, if members of a commonhold block do not pay the charge, they will not have to pay a price for not doing so. That issue must be examined. If it is not, the system will not work very well.
Broadly speaking, I support the Bill, but the devil is in the detail. Much of the real work will have to be done in Committee and I regret the fact that the Committee stage will last for only three weeks. Unless the members of the Committee work extraordinarily long hours, I do not see how all the details in the Bill can be considered. There will be snags and, given the scale of the Bill and the
timetable for its consideration, we may have to return to this issue again before the end of this Parliament. That would be a terrible pity and a waste of time.
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