Commonhold and Leasehold

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Ms Keeble: Amendment No. 73 would prevent a RTM company from granting an approval that would diminish a landlord's reversionary interest. We accept that it is important that landlords' interests are safeguarded against the granting of inappropriate approval. However, the Bill already addresses that matter satisfactorily. Clause 96 provides that where the right to manage is acquired, the right-to-manage company takes on primary responsibility for approvals that are required under the leases. However, where the RTM company proposes to grant a consent, clause 96(4) provides that it must first give written notice of that intention to the relevant landlord. The landlord then has the opportunity to decide whether to agree or

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object to the granting of the consent and to notify the RTM company accordingly.

When a landlord decides that he wishes to object, the RTM company may grant approval only if one of two conditions is met: the landlord must agree to withdraw the objection, or, alternatively, an application must be made to a leasehold valuation tribunal for its agreement that the approval should be granted. Those arrangements already make admirable provision for safeguarding the landlord's legitimate interest. A landlord who believes that his reversionary interest would be damaged by the granting of an approval is able, first, to ensure that the RTM company does not disregard that and grant the approval itself and, secondly, to seek to persuade a LVT that the approval should not be granted. In the latter case, one argument that the landlord could place before the tribunal would be that the approval would unduly harm his reversionary interests.

The amendment adds nothing to the arrangements, and our first concern about it is that what will or will not diminish the reversionary value of the landlord's interests is unclear and subjective. It could be argued that any consent to improvement or alteration might diminish the immediate value of the landlord's reversion. For example, would that mean that a RTM company should never grant such an approval? Would the amendment mean that the company should not grant an approval, even if the landlord agreed that approval should be granted?

We are not clear what would happen if the RTM company decided that it wished to grant an approval on the basis that it does not believe that the reversionary interest would be affected but the landlord alleges otherwise. The issue is who would adjudicate in such disputes and why it would be better than the present arrangements of allowing all disputed approvals to be LVTs.

The arrangements in the Bill are the most sensible and practical way to deal with the issue addressed in the amendment, which I hope will be withdrawn.

Mr. Cash: The question of what is sensible and practical is often a matter of dispute. I do not wish to add to what I have said, but I am glad the Minister recognises that there is a problem. She believes that the Bill adequately caters for the issues raised; I am not satisfied that that is so, and I shall press the amendment to a Division.

It may have been an oversight, but the hon. Lady did not mention Government amendment No. 82 in this group—

The Chairman: Order. That Government amendment is in a separate group. It will be debated after amendments Nos. 73 and 71.

Mr. Cash: Thank you, Mr. Illsley.

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Question put, That the amendment be made:—

The Committee divided: Ayes 7, Noes 10.

Division No. 6]

Cash, Mr. William Doughty, Sue Lewis, Dr. Julian Sanders, Mr. Adrian
Selous, Andrew Taylor, Mr. John Wiggin, Mr. Bill

Crausby, Mr. David Hepburn, Mr. Stephen Iddon, Dr. Brian Keeble, Ms Sally McIsaac, Shona
Marsden, Mr. Gordon Moffat, Laura Stringer, Mr. Graham Woolas, Mr. Phil Wright, David

Question accordingly negatived.

Ms Keeble: I beg to move amendment No. 82, in page 49, line 37, at end insert

    '; and an approval required to be obtained by virtue of a restriction entered on the register of title kept by the Chief Land Registrar is, so far as relating to a long lease of the whole or any part of any premises, to be treated for the purposes of this Chapter as an approval under the lease.'.

If it is any comfort to the hon. Member for Stone, I was informed only late in the day too. This is a technical amendment to prevent an anomaly in the approvals regime that the Land Registry has highlighted. As hon. Members are aware, clauses 96 and 97 make the RTM company responsible for the granting of approvals under long leases of the whole or any part of the premises that are subject to the right to manage. The Land Registry has alerted us to the fact that a requirement under a lease to obtain a consent can sometimes be replicated by identical restrictions applied for and entered on the land register in section 58 of the Land Registration Act 1925. The practical effect of such a restriction on the register is that the Land Registry must satisfy itself that a consent has been obtained as required by the restriction, before it can proceed to make the relevant change on the register. Furthermore, the registry will have to be satisfied that the consent has been obtained from the person named in the restriction, which could often be the landlord.

This restriction would therefore frustrate the intentions behind clauses 96 and 97. We can envisage a scenario in which a leaseholder has obtained approval from the RTM company in accordance with clauses 96 and 97, but then needs to approach the landlord separately for consent to satisfy the restriction on the register. That is clearly undesirable. There would therefore be a parallel consent regime, but one that required consent for the same thing from different people. The amendment would rectify that anomaly, and I hope that the Committee will agree to it.

Mr. Cash: I am grateful to the Minister for bringing this forward. It is obviously on the advice of the Chief Land Registrar. Not only do we have this Committee in common, Mr. Illsley, but fairly recently we were together on the Land Registration Bill. Even before that, although I hesitate to refer to this extremely contentious matter, there was what is now described as an arrangement in a brewery at a football ground not far from your constituency. I served on a Committee

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for about eight weeks on that matter. We have become accustomed to having to deal with extremely contentious issues. However, the matter before us is not contentious. If an amendment is required to the land registration legislation to accommodate the arrangements set out in the Bill, and there are one or two other matters where amendments have been tabled that affect land registration, I should be grateful if it could be slotted in at the right place so that that Bill can be in shipshape form on Report. I am grateful to the Minister for her explanation.

Amendment agreed to.

Clause 96, as amended, ordered to stand part of the Bill.

Clauses 97 to 100 ordered to stand part of the Bill.

Schedule 7 agreed to.

Clauses 101 and 102 ordered to stand part of the Bill.

Clause 103

Cessation of management

3.30 pm

Sue Doughty (Guildford): I beg to move amendment No. 12, in page 52, line 36, after 'passed', insert

    'by not fewer than 51 per cent. of the members of the company, voting in person by secret ballot.'.

The amendment is similar to an earlier one. We took note of the discussion on that but we still have some points to make. If a company is to be wound up, many people will have an interest in it. Without a quorum of 51 per cent. of the members, such a decision would not be democratic. We propose the amendment in the interest of fairness to all tenants and to avoid winding up a company on the vote of a small majority. We use the phrase

    ''in person by secret ballot''

but we would be swayed if an amendment on Report specified postal and proxy votes, as long as secrecy was maintained.

Ms Keeble: The amendment relates back to one of the principles that I set out earlier. We are drawing on existing law for the company and the contracts. Clause 103 specifies the circumstances in which an RTM company ceases to be entitled to exercise the right to manage. Amendment No. 12 would have the effect of imposing a particular resolution procedure on the RTM company. We do not consider that to be necessary. Indeed, some of the voting figures look rather different when one considers existing procedures. We intend to set out in the articles of association the voting procedures for the RTM company. We see no reason for departing from the normal procedures of company law in this area to insist that a voluntary winding-up resolution should be conducted in person or in secret.

Any resolution for winding up the RTM company would need to be by special resolution. A special resolution needs to be passed by a majority of three quarters of those voting at the meeting at which it is proposed, or in a ballot. In some circumstances the amendment would require a larger absolute number of

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members to support the resolution, because it requires a majority of all the members of the company, not just of those voting, but we believe that the normal procedures of company law provide sufficient protection and should apply in this as in a number of other areas. On that basis I hope that the hon. Member for Guildford (Sue Doughty) will withdraw her amendment.

Sue Doughty: I thank the Minister. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 103 ordered to stand part of the Bill.

Clauses 104 to 108 ordered to stand part of the Bill.

Clause 109


Ms Keeble: I beg to move amendment No. 83, in page 55, line 6, at end insert 'or'.

The Chairman: With this it will be convenient to take Government amendment No. 84.

Ms Keeble: This is a technical amendment removing an inconsistency in clause 109, which as Members will know, relates to the right to manage. Amendment No. 84 removes the reference to the Land Registration Act 1925. As Members will know, the Land Registration Bill is currently before Parliament. Some Members present were involved in the discussions on that. It will repeal the section to which clause 109 refers, which makes the reference redundant. Amendment No. 83 is consequential.

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