Commonhold and Leasehold Bill [Lords]

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Mr. Cash: I am grateful to the Minister not only for her description of the Government's policy but for the manner in which she has handled the fact that I decided that I would not move the amendments, because I found that I had been overtaken by the Chairman's ruling at the point when I thought that we would be dealing with them. As a result, we have dealt with those matters quite adequately and we are grateful for the fact that we are making progress. I therefore recommend that we do not vote against the clause.

Question put and agreed to.

Schedule 12 agreed to.

Clause 166


Mr. Cash: I beg to move amendment No. 113, in page 86, line 7, at end insert—

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    '( ) But every appeal will be limited to a review of the decision of the leasehold valuation tribunal unless the Lands Tribunal considers that in the case of an individual appeal it would be in the interests of justice to hold a rehearing.

    ( ) And the Lands Tribunal will not receive oral evidence or evidence which was not before the leasehold valuation tribunal unless it considers that it would be in the interests of justice to do so.'.

The clause deals with appeals procedures with respect to leasehold valuation tribunals. It provides that appeals against such decisions should be made to the Lands Tribunal. Subsection (3), having already stated that the appeal may be made only with the permission of the leasehold valuation tribunal or the Lands Tribunal, states that the appeal must be made within the time specified by rules under the Lands Tribunal Act 1949.

We are proposing that there should be included arrangements under which every appeal would be limited to a review of the decision of the LVT, unless the Lands Tribunal considered that in the case of an individual appeal it would be in the interests of justice to hold a rehearing. The second point is that the Lands Tribunal should not receive evidence that was not placed before the LVT unless it considers that it would be in the interests of justice to do so. I do not think that any further explanation is needed; our aim is clear. However, I shall be interested to hear the Minister's response.

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Ms Keeble: We have discussed the issue previously, as the hon. Gentleman raised it in connection with an earlier amendment. However, it might be useful for me to go through the arguments again, because they relate more closely to this clause and this amendment than they did to the previous one. The effect of the amendment would, as he said, be to alter the procedures for appeals to the Lands Tribunal from the LVT. The question of whether an appeal should involve a full hearing or be limited to a review of the original decision is a complex matter, and one that arises in many different contexts; it deserves very careful consideration indeed.

As I said earlier, the Government are examining reform of the tribunal system in the light of the report by Sir Andrew Leggatt. Having completed the consultation exercise, we expect to announce our conclusions in the summer of this year. I am sure that the Committee will agree that an important and complex issue such as this is best considered as part, and in the context, of the Government's wider-ranging work. I therefore ask the hon. Gentleman to withdraw the amendment, given that the area is under serious consideration and will shortly be the subject of recommendations from Government.

Mr. Cash: Without over-egging the pudding, I must say that we seem again to be making progress. There are improvements in the pipeline which everybody would no doubt like to see happen today or tomorrow. Our amendments seem to be achieving a degree of response from the Government with which I am satisfied, so I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

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Clause 166 ordered to stand part of the Bill.

Clause 167 ordered to stand part of the Bill.

Schedule 13 agreed to.

Clauses 168 to 170 ordered to stand part of the Bill.

New clause 1

Landlord's share of marriage value

    'Paragraphs 4, 4Aa 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. Adrian Sanders (Torbay): I beg to move, That the clause be read a Second time.

New clause 1 goes to the heart of our deliberations. I did not join in the earlier debates on marriage values, because other people covered what I wanted to say. However, some of it needs to be said again. We have had a good debate on leasehold. I hope that those who have made a forceful case against leasehold and marriage value will support the new clause. We heard that leasehold shackles people into a contract, despite the fact that the leaseholder may have paid at least as much as a neighbouring freeholder for the benefit of using the property.

One would not buy a car in that way. Imagine, Mr. Hurst, that you had taken up an offer to buy a Rover 75 for £14,000 on leasehold over three years. On top of that, you would have to pay a maintenance fee and your insurance would be fixed—you could not shop around like other car owners. The road recovery scheme would be included, but you would have to use the one recommended by the freeholder; you could not choose to join the AA or the RAC. The garage would decide when it was time to service the car and would send you a bill saying that you would have to have a new set of wheels fitted, although you knew that you did not need them—any more than you needed a service, a re-spray, or a tune-up. Other people would take all the decisions about the management and maintenance of the car and you would be lumbered with the bills. No one would buy a car under such a system, yet hundreds of thousands of people purchase property in that way.

Shona McIsaac (Cleethorpes): When this hypothetical leasehold car is taken in for a new set of wheels, whether or not the owner wants them, he will also be charged £600 or £700 plus value added tax for the privilege, but all he is buying is the right to drive the car for 99 years.

Mr. Sanders: The hon. Lady is right.

I do not say that leasehold must go, because for some people it is an appropriate way of managing the home. For instance, many pensioners do not want to be bothered with management decisions about their home and leasehold is obviously right for them. Indeed, many leasehold properties are purpose-built for old people. Although maintenance fees and so on may lead to arguments from time to time, leasehold is nevertheless preferable to such people. I would not want to take away the choice of leasehold by abolishing it. However, for the majority of people,

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leasehold is a highly inappropriate form of tenure and it is unfair.

The biggest barrier to enfranchisement is the marriage value. The inclusion of marriage value in the computation of the price to be paid to the landlord on enfranchisement is the final straw. For the freeholder, it truly is a case of having one's cake and eating it. The basic price to be paid is what the freeholder loses; that is the market value of a reversion being acquired by the leaseholder or a right-to-enfranchise company, or the reduction in the market value of the reversion as a result of the granting of an extended lease.

There is nothing wrong with that principle, but we want to remove the double whammy faced by leaseholders, which is that the market value paid to the freeholder is increased on the footing that the leaseholder is a special purchaser and is willing to pay more than someone buying a freehold as an investor. We have a warped market. Getting rid of marriage values would bring us closer to a proper market situation. It is wrong in principle. The freeholder should not be allowed to take advantage of the weakness in the bargaining position of the leaseholder. It is an inequitable relationship—the freeholder holds all the aces and gets the icing on the cake with the marriage value at the end of the enfranchisement process.

Marriage value should be eliminated from the equation. The leaseholder should have to pay what an investor would pay for the property—nothing more or less. He is not in a special position; it is an artificial market.

Mr. John Taylor (Solihull): It is not a true market at all.

Mr. Sanders: No, it is not. If we removed marriage value, it would be fair for the purchaser on enfranchisement to pay what anybody else would expect to pay, were they purchasing that property for an investment. That is why we have tabled the new clause.

Shona McIsaac: The Bill is causing a lot of interest among other Members of the House and I seem to have become the recipient of all their letters and queries about it. The question that comes up most often is, ''What is marriage value?'' People are writing to other MPs, saying ''I have been married, how does this affect me?'' It is a poorly understood concept. If we are not going to get rid of marriage value, let us at least change its name. Perhaps we can call it ''landlord's bounty'', then people will know exactly—

Mr. Gordon Marsden (Blackpool, South): In view of continuing and entirely welcome developments from the Government in this area, might I suggest that we replace the term ''marriage'' with ''partnership''?

Shona McIsaac: We could certainly do that and I welcome the suggestion. We shall have to see what the Minister says.

I must tell the Liberal Democrats that I do not think that marriage value will be scrapped. The

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Government will not agree to that, although it has been a long-term Labour commitment to do so. The Government do not want to get rid of marriage value—even though many hon. Members feel that it is profoundly unjust and unfair—but I have been trying, through amendments and in the course of debate, to ensure that it applies as little as possible and that we can have a sort of partial abolition. I hope that that will tally with my hon. Friend the Minister's sterling attempts to be seen to be fair to both landlords and tenants.

I have maintained, for example, that if someone enfranchises after lease extension, which is a welcome change in the Bill, and was originally entitled to purchase the lease on original valuation basis, where marriage value does not apply, he should be able to continue to buy the freehold on that basis. To suddenly say that special valuation basis applies and, thus, so does marriage value, is an injustice. It creates a new category of leaseholder and increases the number of householders who will be affected by marriage value.

If the Minister is not going to get rid of marriage value per se, I should like her to come back on Report and delete the sections of the Bill in which the purchase price of the freehold is based on special valuation for all those extensions. Similarly, I have suggested that if someone originally enjoyed a 99-year lease, he should be able to enjoy a 99-year lease extension. Again, marriage value would not apply.

I do not feel that I have had an adequate explanation as to why the extension is only 50 years. As marriage value will apply to purchase price on lease extension, that will leave too many homeowners—enfranchised or not—in a difficult position with regard to selling their homes due to the reluctance of many lenders to lend on less than 60 years of unexpired lease.

The unfairness of marriage value was extremely well articulated by my hon. Friend the Member for Brent, North (Mr. Gardiner) on Second Reading. He made the analogy with the car and how we would react if we had to make the expensive purchase of a car on similar terms to those on which we are expected to make the expensive purchase of a leasehold house.

Few people understand what marriage value is about. I have always believed that the law should be clear and simple.

3 pm

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