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Mr. Sanders: There is no doubt that the amendment improves the Bill but it still keeps forfeiture on the statute book. It is therefore necessary to press new clause 3.
As the Minister has admitted, the Government have recognised the unfairness of the use of forfeiture for the collection of debt, because in the case of commonhold units there is a provision preventing a right to forfeiture. The issue for leaseholders is that, where forfeiture of a long lease occurs, particularly for the non-payment of ground rent or service charges, the landlord will obtain benefit that is wholly disproportionate to the breach. Its existence enables landlords to practise a wide variety of
abuses. It encourages unreasonable charges, because landlords know that they have the final sanction in order to secure them.Leaseholders have felt reluctant to challenge unreasonable charges for fear of losing their homes, and because it is the lessee who has to pay the costs of obtaining relief against forfeiture.
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Strict time limits are imposed, and these can often be missed. The fact is, good landlords do not need forfeiture, as owed moneys can be reclaimed through normal debt recovery procedures. The fact that forfeiture exists goes against natural justice. It appears archaic in the modern legal context, which is supposed to seek a fairer balance of the rights of individuals at law, and it helps to perpetuate the discredited reputation of leasehold tenure—one of the factors behind the Bill.
A lease can be drafted so that service charges are described as being
- "by way of further rent."
Forfeiture is a one way street, heading in the landlord's direction. If a tenant refuses to pay ground rent because, for example, a roof is faulty, he can be faced with losing his home. If the home is lost, the "homeless" leaseholder is not compensated for his loss, following the sale of "his" property.
The Government will say that forfeiture is used only rarely, as the Minister noted earlier. It could therefore be argued that it is unnecessary to keep it on the statute book at all. A Conservative Member said, in Standing Committee, that forfeiture was akin to state-sanctioned theft. That summed the matter up.
Forfeiture is not appropriate in modern property management. For long leases, it could be abolished straight away, as the law provides other mechanisms for recouping moneys owed. The threat of losing one's home is out of proportion to the scale of debt, and causes a vast amount of distress. It is a punishment that far outweighs the crime.
Liberal Democrat Members are not able to support the Government amendments, even though they are an improvement, as they do not address the principle. That principle is forfeiture, and it must go.
Mr. David Lepper (Brighton, Pavilion): I welcome the Government amendments, which go some way towards removing the central abuse involved in forfeiture. That abuse was not necessarily the loss of a home, which happens relatively rarely, as has been acknowledged. The main abuse of forfeiture has been the fear factor, which has threatened tenants and leaseholders for so many years. Indeed, it would be hard to pick an aspect of leasehold that more clearly represents the feudal relationship that exists between freeholder and leaseholder.
I am pleased that the Government have introduced proposals that will go at least some way to removing the freeholder's right to use the blunt instrument of forfeiture.
The term "blunt instrument" was used by Peter Haler, the chief executive of LEASE, in a letter to me picking up some comments of mine on Second Reading. He wrote:
- "Whilst it is quite correct that relatively few cases of forfeiture are enforced by the courts, the present archaic law provides opportunities for mischief by some landlords, and this is a major cause of concern for us."
- "what we find reprehensible is the use of the forfeiture procedure as a blunt instrument to harass leaseholders."
Reform of the leasehold laws has been discussed for many years. I therefore find it hard to understand why, with only 10 minutes or so to go before the last stage of voting on the Bill, insufficient thought has been given to including in it provisions for the abolition of forfeiture, and for compensation.
I am one of the vice-chairs of the all-party group on commonhold and leasehold reform. In our submission to the Government at the earlier stage of consultation on the draft Bill, we welcomed their desire to curb abuses of forfeiture. We went on to say, as a cross-party group, that forfeiture should be abolished. Such debts should be handled primarily through the small claims courts and ultimately it should be possible to force a sale of property to pay a debt. However, the balance of funds after settlement of the debt should revert to the leaseholder.
I am realistic enough to see that there is no hope of the new clause to abolish forfeiture succeeding this evening, but I hoped that the Government would accept the principle of compensation. I note what my hon. Friend the Minister says about intending to deal with compensation at a later date, which takes me back to my earlier points about the time scale. For those reasons, I will be supporting my hon. Friend the Member for Bolton, South-East this evening.
Ms Keeble: We have had an important discussion this evening on an issue of major concern to hon. Members on both sides of the House. I share the concerns of my hon. Friend the Member for Bolton, South-East (Dr. Iddon); our earlier discussions about some small, technical amendments have meant that the amount of time available for debating this matter has been curtailed. It is a matter of great importance, because it is a principle and because of the serious practical consequences arising from measures in the Bill.
We have listened carefully and sought to strike a fair balance. We all recognise the need to protect vulnerable leaseholders from oppressive behaviour by unscrupulous landlords and from threats and bullying. However, there is also a need to protect responsible landlords and other leaseholders and to make sure, at this late stage, that there are proper orderly arrangements in place for people's homes, and that includes financial arrangements.
The hon. Member for Stone (Mr. Cash) was muddled in his thinking. He has recognised throughout the Bill's proceedings that the ultimate sanction is the termination of the lease, which is a factor in leasehold arrangements. However, he has not carried through the logic of his argument, for purely party political reasons, I suspect, and not because he is thinking carefully about the best arrangements for leaseholders. New clause 19 does not provide an orderly alternative for sanctions for non-payment of the lease. Given that the hon. Gentleman is presumably trying to present it as a credible alternative, I am astonished that he has not even attempted to discuss his proposal with the Council of Mortgage Lenders.
I recognise the consistent concerns expressed on this issue by hon. Members, including in particular my hon. Friend the Member for Bolton, South-East and the hon. Member for Torbay (Mr. Sanders). They have raised these concerns on Second Reading and in Committee, and have pressed the issue in various discussions. The Law Commission is due to come back in the spring or summer of this year and produce a draft Bill in time for the 2002–03 Session. I realise that it has been a long time in coming, but the Law Commission has got a long way down the road and is very near to concluding its work.
I point out to the hon. Member for Torbay and to my hon. Friends the Members for Bolton, South-East and for Brighton, Pavilion (Mr. Lepper) that I clearly stated the Government's intention and the principles set out by my Department on the removal of forfeiture and a fairer regime for leaseholders. However, it was not possible—especially at the stage when the measure came to this place—to set up a system that would replace the current regime. We have listened—
Lynne Jones (Birmingham, Selly Oak): Will my hon. Friend give way?
Mr. Cash: Will the hon. Lady give way?
Ms Keeble: We have all been extremely tolerant of the hon. Gentleman, but I intend to close my remarks—
Mr. Cash: The Minister is being patronising.
Ms Keeble: Perhaps the hon. Gentleman is being patronised for the first time in his life.
I shall give way to my hon. Friend the Member for Birmingham, Selly Oak (Lynne Jones).
Lynne Jones: I thank my hon. Friend as I have not yet had an opportunity to intervene.
Is my hon. Friend actually saying that the Government—with all the resources that they have at their disposal—intend to put the matter off for a future legislative opportunity that may well not occur? We know about the pressure on the legislative programme, so surely now is the time to deal with these matters.
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