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Functions relating to approvals

Amendment made: No. 33A, in page 50, line 5, at end insert—

'; but nothing in this section or section 99 applies in relation to an approval concerning only a part of the premises consisting of a flat or other unit not held under a lease by a qualifying tenant.'.—[Ms Keeble.]

Clause 102

Statutory functions

Amendment made: No. 34, in page 52, line 18, after "leases" insert—

'(including enactments contained in this Act or any Act passed after this Act)'.—[Ms Keeble.]

Clause 116

Qualifying leases

Amendment made: No. 35, in page 59, line 9, at end insert—

'(2) In section 69(1)(b) of the 1993 Act (estate management schemes), for "by virtue of the amendments of that Chapter made by paragraph 3 of Schedule 9 to the Housing Act 1996 (c. 52)" substitute "in circumstances in which, but for section 116(1) of the Commonhold and Leasehold Reform Act 2002 and the repeal by that Act of paragraph 3 of Schedule 9 to the Housing Act 1996 (c. 52), they would have been entitled to acquire it by virtue of the amendments of that Chapter made by that paragraph".'.—[Ms Keeble.]

Clause 121

RTE companies

Ms Keeble: I beg to move amendment No. 36, in page 61, line 7, after "notice" insert "to the company".

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Mr. Deputy Speaker (Sir Alan Haselhurst): With this it will be convenient to discuss Government amendments Nos. 37 to 42.

Ms Keeble: These amendments are all consequential to the change to the valuation date for flats, as provided for in clause 125. As hon. Members may recall from previous debates, under existing law the valuation date for flats is the date on which the terms of acquisition are agreed or determined. The Bill would provide that, instead, the valuation date was the date on which the right- to-enfranchise company served its initial notice on the landlord. We have subsequently realised that that could have some unintended consequences and these amendments are designed to rectify them.

First, under the proposals currently contained in the Bill, it could be argued that the price for the freehold should be based on the number of participants when the initial notice was served. That is plainly not what we had intended and amendment No. 41 makes it clear that, though the property should be valued as at the date of the initial notice, the valuation should be based on the number of participants at the point where the landlord and the RTE company actually exchange contracts.

Of course, we also need to ensure that the landlord knows how many participants there are at that stage. When the initial notice is served, the landlord will be told how many leaseholders are participating at that point. Amendment No. 40 will ensure that the landlord is sent a copy of any participation notices given to the RTE company after that point. Amendments Nos. 36 to 39 are consequential. Amendments Nos. 37 and 38 specify the time by which assignees and personal representatives have to give notice to participate.

Secondly, existing law provides that the landlord must be notified of any agreements between the nominee purchaser and non-participating leaseholders which provide for the disposal of a relevant interest in relation to the enfranchisement. Under existing law, the nominee purchaser must tell the landlord of any such agreements entered into between the serving of the section 13 notice and the valuation date.

Amendment No. 42 makes a consequential amendment requiring the RTE company to notify the landlord of any such agreements entered into at any time before the exchange of contracts.

I commend the amendments to the House.

Mr. Cash: It is clear that the Government have concluded that adjustments need to be made to this part of the Bill. As I have said from the beginning, we are anxious to see improvements to the Bill.

On amendment No. 36, the Minister perhaps got through the explanation a little speedily. That does not alter the fact that it is important that we put on the record exactly what its implications are. The clause in question is clause 121, which deals with the exercise of the right to collective enfranchisement.

Under clause 120, the right is exercisable only by the RTE company. Therefore, it is important for us to know exactly what kind of company we are dealing with and to understand what the word "company" means in relation to amendment No. 36. What is this company?

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In the first place, a company is an RTE company in relation to premises if

"(a) it is a private company limited by guarantee, and


(b) its memorandum of association states that its object, or one of its objects, is the exercise of the right to collective enfranchisement with respect to the premises."

New section 4B in clause 121 is to be inserted in the Leasehold Reform, Housing and Urban Development Act 1993, which the Minister did not explain. In the chapter, participating member, in relation to an RTE company,

"means a person who is a member by virtue of subsection (1)(a) of this section".

Subsection (1)(a) of the newly inserted section 4B, which is put after section 4 of the 1993 Act, states the persons who are entitled to be members of the company. Therefore, where we talk about giving a participation notice to the company, we are referring to the company limited by guarantee. Participating members are

"qualifying tenants of flats contained in the premises".

A participating member means a person who

"(a) has given a participation notice before the date when the company gives a notice under section 13 or during the participation period, or


(b) is a participating member by virtue of either of the following two subsections."

That refers to section 13 of the 1993 Act. New Section 4B is being inserted by way of amendment.

I have attempted to go through part of this by way of explanation and by reference to the provisions. I do not criticise the Minister—she has a job to do, which is to get on with the Government amendments—but it is necessary to try to put on the record what the amendments are doing in relation to existing legislation, which in this context is the 1993 Act. It is just a matter of context. In so far as she is right to explain simply what she believes it is necessary to explain in the Bill, I feel that it is my job to explain exactly what is happening in the context of the pre-existing legislation and how that is being amended.

Amendment No. 37 again relates to clause 121. The amendment arises, for those who are interested in following these matters, in respect of page 61, line 14. In line 14, the Government propose—we are dealing again with the membership of RTE companies inserted in the 1993 Act—that

"A member who is the assignee of a lease by virtue of which a participating member was a qualifying tenant of his flat is a participating member if, within the period of 28 days beginning with the date of the assignment, he gives a participation notice to the company."

I understand that the Government want to improve the Bill, as do the Opposition. They now propose to leave out the words after "if" to the end of line 16, and to insert:

"he has given a participation notice to the company within the period beginning with the date of the assignment and ending 28 days later (or, if earlier, on the execution of a relevant conveyance to the company)."

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That is the right approach, for the reasons that the Minister gave, but serious difficulties can be encountered when periods are specified. The

"period beginning with the date of the assignment and ending 28 days later"

is likely to be a fixed date. I do not think that there would be any difficulty with that, but the amendment goes on to state:

"(or, if earlier, on the execution of a relevant conveyance to the company)".

Many problems can arise with the alleged execution of relevant conveyances to companies, or with relevant conveyances of any type. It is by no means impossible that what was thought to be the execution of a relevant conveyance could turn out not to have taken place, or to have been performed incorrectly. I shall not press the point, but I am concerned about the uncertainty that can arise when such language is used.

The Minister may ask what other words could be used. I suggest that the word "valid", or something along those lines, could be inserted before

"execution of a relevant conveyance".

These are drafting questions, related to last-minute Government amendments. The Bill has been through five processes, in the other place and in this House. It is incumbent on us to examine the wording carefully to ensure that everything is in order before the Bill gains Royal Assent.

Government amendment No. 38 deals with clause 121(6), which at present states:

"And if the personal representatives of a participating member are a member, they are a participating member if, at any time, they give a participation notice to the company."

Such language may be necessary as a matter of law, but it is complex and convoluted. The amendment would insert, after the second "if",

"they have given a participation notice to the company at any time (before the execution of a relevant conveyance to the company)."

As I said earlier, there is sometimes uncertainty about whether a conveyance has been duly executed.

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