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Ms Keeble: I shall try to deal with the issues raised and, in particular, with the points made by the hon. Member for Stone (Mr. Cash), who referred to regulations and gave the example of the de minimis level in the contract. Of all the provisions in the Bill, the one before us should be set by regulation because of the need for consultation and because we are talking about small sums of money. What is a small sum one year might appear to be completely trifling 10, 50 or 100 years later. Arrangements for such sums should be made by regulation.
The hon. Gentleman referred to "regulation, regulation, regulation", but it is often far preferable to use regulations for certain types of arrangements. If they are enshrined in the Bill, changes can be made only by primary legislation and the hon. Gentleman knows how rarely the occasion to do that comes along. We want an efficient means of making provision for the proper management of leasehold properties.
Questions were also raised about the application of the de minimis level and about the levels we had in mind. Subsections (4) and (5) of the revised section 20 of the Landlord and Tenant Act 1985 are intended to provide the maximum flexibility in determining the prescribed amount and they will enable the amount to be based on the total cost of the contract, the total costs in any period or the costs recoverable from any service charge payer either over the length of the contract or in any other period. We wish to consult before we commit ourselves to any particular option, but it is our intention to exclude contracts only when the costs of consultation would be disproportionate to the costs of the contract. However, it is difficult to envisage what that might involve.
The hon. Member for Cities of London and Westminster (Mr. Field) asked about the sums that might be involved and, to give him some idea, it might be that we exclude contracts where the annual costs paid by any leaseholder exceed £20 to £25. That might sound a small sum, but I am sure that the hon. Gentleman realises that, when there are many people in a block of flats, that might involve a substantial contract. It is important that there is proper consultation so that we get the amount right. We must strike a careful balance between costs and the requirement to consult.
The hon. Member for Stone asked many questions about the proposed new section 20ZA of the 1985 Act. The proposed new subsection (5) states:
- "Regulations under subsection (4) may in particular include provision requiring the landlord",
The hon. Gentleman also asked for assurances about consultation on the regulations. I hope that I have already made clear our commitment to consult on the de minimis level, which is probably one of the most important provisions before us. He asked whether Members would have a right to discuss the regulations and, as he knows, if they are discussed under the affirmative resolution procedure, they will be debated in Standing Committee. That debate might be wide ranging and extensive. If the regulations are considered under the negative resolution procedure, the Opposition will have the opportunity to pray against them and then discuss them. [Interruption.] The hon. Member for Stone now gestures at me.
Peter Bottomley: My hon. Friend is smiling.
Ms Keeble: Good. I had not noticed that, but never mind.
As the hon. Member for Stone well knows, the Conservatives frequently pray against negative resolutions and we have extensive debates on the regulations concerned. He will get plenty of opportunity to debate regulations.
9.30 pm
Mr. Greg Knight: Will the Minister tell the House tonight which of those procedures the Government will be prepared to use? It is obviously better from our point of view if she gives an undertaking tonight that the affirmative procedure will be used.
Ms Keeble: There is provision for a number of different regulations—some affirmative, some negative. I think that I am right in saying that the de minimus ones are negative. It will be possible to pray against them, but there will be consultation beforehand.
Peter Bottomley: Those who listen to our debates may not know this, but am I right in saying that if the Government are defeated on a negative resolution, the measure is still carried into effect?
Ms Keeble: The hon. Gentleman is right. However, there will be consultation and it will be in the interests of us all to make sure that we get regulations that work.
The hon. Member for Stone asked about plain English, and he is correct. My officials and I are very concerned about that, since the many changes proposed by the Bill will profoundly affect a lot of people and their homes. We are doing a lot to ensure that there is good information in plain English so that people know their rights.
The hon. Member for Worthing, West (Mr. Peter Bottomley) asked about a number of points, most of which did not apply to the new clause or the amendments but which were very interesting none the less. On the question of the legal costs for purchasers being passed on, if charges are levied under the terms of the lease, the provisions of schedule 11 regarding administration charges will apply; for example, they must be reasonable and there is a right to challenge them at the leasehold
valuation tribunal. It is always the case that if rights are given to people, they have to exercise them. However, the rights are there and the point has been considered.I will write to the hon. Member for Worthing, West about water meters. One point that he might not have picked up on, if he has not been closely involved in the Bill, is that the Bill opens up to leaseholders a right to manage. That is very important—particularly for pensioners—because it means that they do not have to go to the trouble to enfranchise, but can acquire the right to manage in leasehold blocks of flats.
Peter Bottomley: In my constituency, the average age in a block of flats may be about 80, and most people do not want to take on the responsibilities of management.
Ms Keeble: I take that point, but in terms of people's ability to deal with issues that otherwise they could deal with only through enfranchisement, they will now have this other route open to them.
That deals with all the points. The new clause and the amendments provide further improvements to the Bill and make it possible to look in more detail at some of the more detailed provisions. They ensure that we get the right balance between consultation and cost, for example, and that we help to improve the Bill for leaseholders.
Clause read a Second time, and added to the Bill.
New Clause 1
Landlord's share of marriage value
'Paragraphs 4, 4A and 4B of Schedule 13 to the 1993 Act (landlord's share of marriage value) are hereby repealed.'.—[Mr. Sanders.]
Brought up, and read the First time.
Mr. Sanders: I beg to move, That the clause be read a Second time.
Madam Deputy Speaker: With this it will be convenient to discuss the following: Government amendment No. 43.
Amendment No. 8, in clause 134, page 65, line 20, leave out clause 134.
Amendment No. 9, in clause 135, page 65, line 24, leave out clause 135.
Amendment No. 1, in clause 144, page 69, line 33, leave out clauses 144, 145 and 146.
Mr. Sanders: First, I declare an interest as a freeholder of a flat occupied by a leaseholder who pays a ground rent.
Under the Leasehold Reform Act 1967, marriage value was not deemed to be part of the valuation of the freehold interest; the leaseholder had only to pay the capitalised value of the ground rent, plus the reversion of the site value. In the pamphlet "An End to Feudalism", prepared
by the Minister for Local Government and the right hon. Member for Holborn and St. Pancras (Mr. Dobson) before the 1997 election, a call is made to return to
- "the fundamentally sound logic of the 1967 Act, which does not include marriage value in the valuation process. Its subsequent appearance has tilted the balance significantly in favour of the landowner and there is a strong case for it to be deleted".
The Government have said that most compulsory purchase schemes are based on full open market valuation, and they do not want to depart from that principle. However, they have made a mistake regarding what constitutes the open market value of a property. The Royal Institution of Chartered Surveyors defines that value as:
- "An opinion of the best price at which the sale of an interest in property would have been completed unconditionally for cash consideration on the date of valuation, assuming . . . that no account is taken of any additional bid by a prospective purchaser with a special interest."
The reality for many people is that they have no choice between freehold and leasehold properties. Due to the circumstances in which they find themselves, they may have no choice but to opt for leasehold, even though it may not be in their best interests. The complicated and murky practice of marriage value is widely misunderstood, and there must be a clearer and easier way to compensate landlords on the transfer of property from leasehold to commonhold.
Let us compare purchasing council housing with buying leasehold properties. For example, leaseholders have paid for mortgages and years of upkeep and improvements to their homes, yet they must still pay a premium to transfer their properties to freehold, but council housing tenants have had the upkeep on their homes paid for by the council—albeit with contributions through rent—yet they can buy their properties at a significant discount.
Leaseholders often feel that they are maintaining someone else's property, yet they are bled once again if they try to improve their position by enfranchising and converting their property to freehold.
Often leaseholders do not even realise that they are being taken advantage of because the calculations involved in these negotiations are complex and specialised. Going to a leasehold valuation tribunal is intimidating and costly, so many people fall prey to unscrupulous landlords without having any idea of their rights.
It is important to remember that leaseholders paid for their property when they originally bought the lease. Why should they have to pay extra to keep what should already be theirs? Additionally, the leaseholder may have paid just as much as neighbouring freeholders for the right to live in their property. Why should they have to pay again when their neighbours do not have to?
The main problem with marriage value is that it takes unfair advantage of the fact that leaseholders have a vested interest in keeping the property in which they live and so are willing to pay whatever it takes to gain freehold rights to their property. In that relationship, freeholders have the power and can force leaseholders to pay exorbitant prices to hold on to the property in which they live. That is not a realistic market situation; it is unfair to the leaseholder, who should not be charged more than an outside investor would be asked to pay for the property.
We have been having this debate in the Chamber for more than 100 years. Its time has come—we should rid ourselves of marriage value.
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