Commonhold & Leasehold Reform Bill [Lords]

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Standing Committee D

Tuesday 15 January 2002


[Mr. Alan Hurst in the Chair]

Commonhold & Leasehold Reform Bill [Lords]

10.30 am

The Parliamentary Secretary, Lord Chancellor's Department (Mr. Michael Wills): I beg to move,


    (1) during proceedings on the Commonhold and Leasehold Reform Bill [Lords] the Standing Committee do meet on Tuesdays at half-past Ten o'clock and at half-past Four o'clock and on Thursdays at half-past Nine o'clock and at half-past Two o'clock;

    (2) the proceedings shall be taken in the following order, namely Clauses 1 and 2, Schedule 1, Clauses 3 and 4, Schedule 2, Clauses 5 to 33, Schedule 3, Clauses 34 to 57, Schedule 4, Clauses 58 to 66, Schedule 5, Clauses 67 and 68, New Clauses and New Schedules relating to Part 1, Clauses 69 and 70, Schedule 6, Clauses 71 to 100, Schedule 7, Clauses 101 to 121, Schedule 8, Clauses 122 to 147, Schedule 9, Clauses 148 to 153, Schedule 10, Clause 154, Schedule 11, Clauses 155 to 165, Schedule 12, Clauses 166 and 167, Schedule 13, Clauses 168 to 170, New Clauses and New Schedules relating to Part 2, Clause 171, Schedule 14, Clauses 172 to 174 and remaining New Clauses and New Schedules;

    (3) the proceedings relating to Part 1 of the Bill (so far as not previously concluded) shall be brought to a conclusion at 7 pm on Tuesday 22nd January 2002;

    (4) the proceedings on Clauses 69 and 70, Schedule 6, Clauses 71 to 100, Schedule 7 and Clauses 101 to 111 (so far as not previously concluded) shall be brought to a conclusion at 5 pm on Thursday 24th January 2002;

    (5) the proceedings on Clauses 112 to 121, Schedule 8 and Clauses 122 to 125 (so far as not previously concluded) shall be brought to a conclusion at 7 pm on Tuesday 29th January 2002;

    (6) the remaining proceedings on the Bill (so far as not previously concluded) shall be brought to a conclusion at 5 pm on Thursday 31st January 2002.

I welcome you to the Chair, Mr. Hurst. I am sure that we shall steer the Bill safely to a haven under your sagacious stewardship. As we heard on Second Reading, the Bill is important. Many Committee members have constituents who have suffered greatly under the present system, particularly as it relates to leasehold. As we explained on Second Reading, the Bill will provide answers to problems that have bedevilled people throughout the country for many years. Although it is complex and technical in many respects, it will make a huge difference to such people. Our proceedings are, therefore, important, and I am sure that they will be good-natured and constructive and that we all look forward to them.

Mr. William Cash (Stone): Given the Bill's complexity, several matters could usefully have been elucidated previously, including the regulations, which I mentioned on Second Reading. Those were made available only last night and consist of 32 pages and 88 provisions on complicated and significant matters such as the commonhold community statement. It goes without saying—the Minister told me this informally—that we cannot be expected to take on board all the issues at such short notice.

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Mr. Wills: I intervene simply to apologise formally. The delay was the result of an administrative oversight, for which I am very sorry. All members of the Committee should now have their own copies of the regulations, but they can have access to copies held by my officials if there are further problems.

Mr. Cash: The most that I can say in those circumstances is that I hear the Minister's apology and I hope that there will be no significant knock-on effect. We may want to discuss issues arising from the regulations later in our proceedings and I hope that you will bear in mind, Mr. Hurst, that we have been put in a difficult situation.

Mr. Adrian Sanders (Torbay): I welcome you to the Chair, Mr. Hurst. At our programming meeting yesterday evening, we discussed at some length whether the timetable would give us enough time and I am happy that it provides some flexibility. We shall see how our proceedings progress, but I hope that we shall draw them to a conclusion by the timetabled date.

Mr. John Taylor (Solihull): Having been rightly restored to the Back Benches after a long time on the Front Bench, I am open to your guidance, Mr. Hurst. Members of Standing Committees used to be able to raise a few general points on the sittings motion. I look to you for guidance on whether you will tolerate that practice or whether I should resume my place and discuss issues as they arise. I shall hold the floor while you consult. I would delay the Committee for only three or four minutes with a general observation or two, but I rely on you to tell me whether I am in order.

The Chairman: The hon. Gentleman may take the opportunity to speak, but I am sure that all hon. Members will bear in mind that this part of the proceedings is time limited.

Mr. Taylor: Gladly, Mr. Hurst. I shall not delay the Committee for long.

I start by declaring an interest. I practised as a provincial high-street solicitor for 22 years and had a fair amount to do with long residential leases in that time. I declare a further interest: I am a long leaseholder of what is sometimes pompously called an apartment in my constituency in Solihull and of a flat in Westminster.

In the 1960s, in my part of the west midlands, which we might in shorthand call greater Birmingham, 99-year residential leases were common. I bought one as a young man of 25 when 99 years seemed like eternity. It was only when I was close to my 60th birthday and I came to sell the property that I realised that 99 years was not infinity but could pass in little more than a human lifetime.

The Leasehold Reform Act 1967 enabled long leaseholders of houses to buy their freeholds. That was a good mechanism, and I took advantage of it in the early innocence of valuation of freehold. The initial presumption was that to value a freehold, one had to consider the capital sum, which one had prudently invested, as yielding the ground rent as a return. Consequently, I got my freehold inexpensively. It was only later that more sophistry entered into the

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valuation considerations, especially when the concept of marriage value between long leasehold and freehold began to influence the Lands Tribunal.

I am near the end of my remarks, but I want to add one more point. I blame no party, but assail the political community of 1967 in general when I say that the 1967 Act fought shy of a price mechanism. That left an awful lot of our constituents needing to go to the Lands Tribunal.

The Chairman: Order. The hon. Gentleman should link his remarks to the programming motion.

Mr. Taylor: I am anxious about the limited time available to consider the issues on which I shall now finish commenting.

The 1967 Act fought shy of tackling valuation. When we consider the ability of long leaseholders in concert to acquire their freeholds, I hope that we shall have enough time to consider that matter. Let politicians not be cowardly about valuation but produce an end product that is clear to our constituents and shows them, more or less, what ball-park terms they may be expected to pay, to use an American expression. Let us not commit our constituents to litigation before the Lands Tribunal but steer them and give them guidance on what they may expect to pay.

I am grateful to you for your patience, Mr. Hurst. I shall not delay the Committee further.

Shona McIsaac (Cleethorpes): I endorse what the hon. Gentleman said. I, too, hope that the Committee is given sufficient time to consider the specific issue of resold houses and valuations in relation to resold houses.

Mr. Cash: I have already declared my interest on Second Reading, but on the basis that it does not do any harm to repeat such things, I declare that I am a solicitor with a practising certificate. Furthermore, I have a tenancy in a block of flats in London and several other properties that I rent myself.

Question put and agreed to.

Mr. Graham Stringer (Lord Commissioner to the Treasury): On a point of order, Mr. Hurst. We have just agreed that we may have 12 sittings over the next three weeks. As there is serious overcrowding on the Labour Benches—I do not think that any of us will be crossing on to Opposition Benches—can anything be done so that we have a little more space?

The Chairman: Yes, I think that we can take that under advisement, as the Americans would say. I shall try to make arrangements.

Clauses 1 and 2 ordered to stand part of the Bill.

Schedule 1 agreed to.

Clause 3


Mr. Cash: I beg to move amendment No. 22, in page 2, line 18, at beginning insert 'Subject to subsection (2A)'.

The Chairman: With this it will be convenient to discuss the following amendments:

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No. 1, in page 2, leave out lines 22 and 23.

No 2, in page 2, line 27, at end insert—

    '(2A) An application under section 2 may not be made in respect of a freehold estate without the consent of a simple majority of the registered proprietors of the leasehold estates in the whole or part of the land granted for a term or more than 21 years.'.

No. 23, in page 2, line 39, at end insert—

    '(2A) Where the conditions set out in sections 1 to 10 of the Leasehold Reform, Housing and Urban Development Act 1993 (right to collective enfranchisement) as herein amended are satisfied in respect of any premises to which those sections apply, regulations made under subsection (2) above shall make provision in respect of such premises dispensing with the consent of the persons:

    (a) mentioned in subsection (1)(a) hereof;

    (b) mentioned in subsection (1)(b) hereof where no more than 25 per cent. of qualifying tenants within the meaning of the said 1993 Act as amended herein refuse to consent;

    (c) mentioned in subsections (1)(c) and (d) hereof:

    (i) insofar as the charge or the caution (as the case may be) is over the whole or part of the freehold estate in the land; and

    (ii) insofar as the charge or the caution (as the case may be) is over flats held by qualifying tenants who constitute no more than 25 per cent. of the qualifying tenants of the premises.

    (2B) Regulations under subsections (2) and (2A) hereof shall make provision:

    (a) where consent has been dispensed with under subsection (2A)(a) hereof for the compensation of persons mentioned in subsection (1)(a) hereof, including provisions determining who shall be obliged to pay the compensation and how and by whom the compensation is to be determined;

    (b) where consent has been dispensed with under subsection (2A)(b) hereof for the continuation of the leases of qualifying tenants who refuse to become unit-holders of a commonhold unit; and

    (c) where consent has been dispensed with under subsection (2A)(c) and (d) hereof for the substitution of the charge or caution of persons mentioned under subsection (1)(c) and (d) for a charge or caution over the commonhold unit of the person.

No. 51, in Clause 40, page 19, leave out line 30 and insert—

    '(b) by a majority of 75 per cent. of the members of the commonhold community association who cast a vote on resolution.'

New clause 5—Conversion of existing buildings—

    '(1) Notwithstanding the provisions of sections 2 and 3, in order to facilitate the creation of commonhold from an existing freehold building, the following provisions shall apply—

    (a) existing long leases may continue and comprise part of a commonhold;

    (b) where leaseholders do not wish to become unit-owners and have signified this accordingly, existing long leases will continue and the commonhold association shall be regarded as the unit-holder, with the obligation to the leaseholder as the freeholder of the unit;

    (c) existing rights applicable to long leases shall continue to be maintained; and

    (d) existing rights applicable to mortgages shall be maintained.

    (2) Conversion may take place where no less than 50 per cent. of the long leaseholders consent to convert to commonhold.

    (3) Where more than 10 per cent. of leaseholders object to this conversion, they may apply to a tribunal court indicating the grounds for their objections; and the tribunal may then confirm or prevent the conversion having regard to the circumstances'.


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