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Andrew Selous: Will the hon. Gentleman be kind enough to tell the House how many existing leasehold developments will be able to convert to commonhold status under the Bill in it current form? Is not the reality of the Bill that the only new commonhold developments will be new developments? We are selling the commonhold path to existing leaseholders up and down the country, but they will not be able to take the commonhold route. How many commonhold developments does the hon. Gentleman estimate there will be?
Gareth Thomas: I cannot answer that question—nor, realistically, do I think the hon. Gentleman expected me to. I hope that my hon. Friend the Minister will have a stab at it. Surely the point is that such schemes have a reputation for being too unwieldy and complex and for being the scene of constant dispute, and that they will therefore be a disincentive for the take-up of commonhold. I refer to the practical difficulties that arise when there are two statutory sets of regimes and two sets of money that have to be accounted for. Indeed, when conversion takes place it will be necessary for those who consent to conversion to find the extra money to buy out the freehold interests of those who are not consenting. Again, that would add to the cost of allowing a lower threshold. The commonhold community statement, which is an essential part of the regime, would become unwieldy and unnecessarily complicated.
Mr. Wiggin: As I understand what the hon. Gentleman has said, to achieve commonhold, other tenants or people
living in the same block of flats would be obliged to buy the flat of the person who did not consent to the commonhold. Does that not add to the cost? Will the hon. Gentleman explain what he means?
Gareth Thomas: The hon. Gentleman did not mishear me. That is how I understand the position. Those who convert would have to find the means to buy the freehold in respect of the co-existing leaseholds. Another complication that would arise is that existing leases would have to be amended to take into account the dual regime.
I am sure that the Government have considered the disquiet that Labour Members have voiced and weighed the pros and cons. The Bill's purpose is to introduce a simple form of tenure, so this provision must be considered in the context of the radical reforms relating to the right to manage that the Government are introducing in other parts of the Bill. In many respects, those reforms will deal with the problems that have been raised, but to cut across the Bill's purpose by introducing a large element of complexity would be entirely undesirable.
Mr. Cash: I am fascinated and slightly appalled by what I have heard—or not heard—from Labour Members. On Second Reading, the hon. Member for Brent, North (Mr. Gardiner) and other Labour Members made powerful speeches saying that the Bill could not possibly succeed with the unanimity provision in it. I cannot say that I was persuaded by what they said, because I made exactly the same points on Second Reading. Indeed, as the Minister will no doubt remember, I made similar points in Committee and perhaps so forcefully that the amendment that we tabled was not selected. I was sorry about that, because I have great sympathy for the principles that underlie these amendments. However, other matters also require elaboration.
The unanimity rule simply will not work. The hon. Member for Clwyd, West (Gareth Thomas) was no doubt persuaded to speak by the Whips.
Gareth Thomas indicated dissent.
Mr. Cash: Perish the thought that he was so persuaded. However, does the absence of the other Members who spoke so strongly on Second Reading mean that they have suddenly changed their minds or have the Minister's gentle charms persuaded them to think again?
Mr. Cash: We must therefore conclude that Labour Members were persuaded to think again. However, I do not think that logic lay at the heart of that conversion. It probably had much more to do with the embarrassment of seeing the Government being harried and hunted like a fox on the question whether the Bill would work at all. I do not believe for a minute that it is possible for the Bill to work in relation to anything other than new developments and circumstances unless the unanimity rule is removed.
We should consider how the questions of consent that are referred to in the amendments arise. Clause 3(1) refers to consent and states:
- "An application under section 2 may not be made in respect of a freehold estate in land without the consent of anyone who—
(a) is the registered proprietor of the freehold estate in the whole or part of the land,
(b) is the registered proprietor of a leasehold estate in the whole or part of the land granted for a term of more than 21 years,
(c) is the registered proprietor of a charge over the whole or part of the land,
(d) is registered as a cautioner in respect of the whole or part of the land,
(e) falls within any other class of person which may be prescribed."
5 pm
Mr. Cash: He will in due course.
The restrictions are confined to the consent of anyone in certain circumstances, as described in the Bill. The problem arises as to whether that might prevent the Bill from working at all. The arrangements that I believe ought to apply should be directed towards ensuring that the proposals are workable.
Will commonhold be popular? Irrespective of my earlier comments about Labour Members, hon. Members from all parts of the House, and even many people outside, believe that the requirement of unanimity is unnecessary, counter-productive and will put a needless fetter on the use of commonhold.
Under the Bill in its present form it will be difficult to convert any existing building into commonhold. Only if everyone with an interest in the building consents to conversion will it be permitted. Thus the consent of every single leaseholder will be necessary, as will that of every single finance house that holds a mortgage for any flat in the block, that of any single judgment creditor who has a charging order over a flat in the block and that of the freeholder. Any of those persons can exercise a veto over conversion.
The key point remains whether the word "anyone" is appropriate in these circumstances. Whenever a veto applies, we will be up against the awkward customer. In any sort of collective activity—whether in a golf club or in relation to charging orders on repairing roads—there is always someone who may want to exercise his rights. I mentioned in Committee that there are already precedents for the exercise of similar rights. For example, a line of garages may abut on to a road and some people in the road may want to carry on with developments. Under many enactments it has been prescribed that those on that road should not be held to ransom by any one person who might try to hold out on the grounds suggested by the hon. Member for Clwyd, West—to gain through an increase in the value of a flat so that he could be bought out.
The application of the unanimity rule will frustrate the entire object of the process. The result will be, in practice, that commonhold will be limited to new developments.
I shall be interested to hear the Minister's arguments that that will not happen. No doubt he has given it a great deal of thought.
Mr. Cash: We hope so, as my hon. Friend says. In fact, we are more than dubious; we are convinced that it will not be possible for the Bill to work.
We support this important Bill in principle, but it simply will not work given the stubborn attitude of the Minister and the Government. It is very retrograde for the Minister to take such an obtuse and stubborn position. Indeed, that has been the case throughout consideration in the House of Lords and in Committee, but not, curiously enough, in respect of one or two other matters, on which the Government have moved towards our position. For example, on leasehold and forfeiture, Labour Back Benchers argued just as strongly with respect to unanimity, and the Government moved on that issue, yet we see no movement whatever on this issue. I am intrigued, as well as puzzled and appalled, about the way in which the Government are sowing the seeds of the destruction of their own Bill in this way.
Gareth Thomas: As the hon. Gentleman has said, the Government have given way and made concessions on other contentious issues. Does not that rather undermine his point that the Government's opposition on this issue is not principled and that they are stubborn?
Mr. Cash: Our support for the Bill is principled. Indeed, that is why we took the line that we took on Second Reading and why we dealt with the Bill so responsively in Committee, but we are now on Report and I am fascinated to know why some of the more vociferous objectors on this issue from the Government Benches are not prepared to come to the Chamber, or perhaps they are not able to do so. Perhaps they are incapacitated in some way by the Whips or someone else.
The gentle giant of the Whips Office has been most considerate throughout the consideration of the Bill and he has worked as well as possible through the usual channels. We register no personal complaint against him. What worries me is the health and well-being of Labour Back Benchers; he seems to have leant on them in a manner that suggests that he has been highly effective in his discreet fashion; otherwise Labour Members would be jumping to their feet, as they did on Second Reading, but there is no sign of them now. In fact, I think that I am right to say that at least one hon. Gentleman, who is sitting on the Labour Back Benches at the moment in unaccustomed monk-like silence, expressed himself vociferously on Second Reading, but he does not seem to feel it necessary to do so on this occasion.
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