| Previous Section | Index | Home Page |
Ms Winterton:
As my hon. Friend knows, the tribunal system is obviously meant to provide people with a form of redress where they can make their own case, so it should not involve five QCs. One hopes that tribunal chairmen would be able to acknowledge points made by the individual taking the case and would not be intimidated by five QCs. I am not sure how the individual taking the case to the tribunal ended up paying the costs for five
QCs. I am surprised to hear that, so perhaps my hon. Friend will write to me with further details. My recollection of the tribunal system is that the person opposing the individual can have legal representation while the individual does not, so I am not quite sure how the system led to costs being awarded in that way.
There were complaints under the previous system that leaseholders were insufficiently protected from being coerced into paying sums claimed by landlords through the threat of forfeiture. Landlords would begin or threaten to commence repossession proceedings to recover disputed sums. In such circumstances, the leaseholder’s mortgagee would often pay up to avoid losing the leaseholder’s property, which formed the security for the loan. The Commonhold and Leasehold Reform Act 2002 stopped such action being taken when service charge moneys were still in dispute. It also prevented forfeiture action from being used as a means of recovering relatively insignificant amounts of money—where service charges, administration charges and ground rent or a combination of those charges did not exceed £350 and where no part had been outstanding for more than three years.
The 2002 Act also significantly improved the ability of most leaseholders to take over the management of the building containing their flats and introduced a no-fault right to manage. This gave leaseholders the right to take a greater stake in their homes: they could get together and take over the management of the building containing their flats. I should say that this is one particular area where the rights introduced in the 2002 Act distinguish between the public and private sector, because the right to manage is obviously not applicable to the public sector. I view that as an understandable exception within the legislation.
Mrs. Lait: The right hon. Lady might like to know that Broomleigh had one or two blocks that were full of public sector leaseholders and it sold the flats as freehold. There are some enlightened RSLs, but not very many of them.
Ms Winterton: I acknowledge the hon. Lady’s point, but as I say, there is that distinction in the 2002 Act between the private and public sector. Leaseholders no longer have to undertake potentially lengthy proceedings to satisfy a leasehold valuation tribunal that one of a number of grounds had been met to justify removing the current manager. Rather, they could join together and take away the management. This was a substantial increase in their rights.
As hon. Members are no doubt aware, collective enfranchisement is also an important right that allows leaseholders to buy the freehold of the building containing their flats. This gives leaseholders an even more significant stake in their homes. They can step into the shoes of their landlord completely. Exercising collective enfranchisement was also made substantially easier by the 2002 Act. It removed some obstacles to enfranchisement and opened up the right for many more leaseholders. The 2002 Act also made it easier for leaseholders who wanted to maintain the value of their properties to extend their leases. In both cases, changes were made to the valuation principles. These changes reduced the opportunity for disputes about the price payable for either enfranchisement or lease extensions.
Barry Gardiner: I rise simply to lay down a marker. Following the Custins v. Hearts of Oak court case, in 1967 a Labour Government introduced legislation establishing the principle that there should not be marriage value. That principle was given away in the 2002 Act, and that has been a significant financial impediment to many leaseholders exercising their right to enfranchisement. We will need to consider that at a future point.
Ms Winterton: I thank my hon. Friend for making that point, and I assure him that we would look into it—and, no doubt, discuss it with him—if we were to introduce further consultation on this matter.
[Official Report, 14 July 2009, Vol. 496, c. 3MC.]For the first time, all leaseholders are entitled to receive a prescribed ground rent demand at a certain time before such sums became payable. This provided important protection against a leaseholder inadvertently forgetting about his obligation to pay a ground rent and then facing claims for additional costs alleged to have been incurred by a landlord in recovering these sums.
In the Housing and Regeneration Act 2008, we amended the Landlord and Tenant Act 1985 to enable us to introduce measures to ensure that leaseholders will automatically receive a regular statement containing information about their service charges, with the same right to see supporting documentation. Landlords who do not provide the statement or make the supporting documents available will be open to challenge at a leasehold valuation tribunal. We are currently drafting regulations to give effect to this measure, along with other measures to provide protection in respect of service charge moneys held by landlords. Leaseholders will have sanctions if this is not complied with, including the right to withhold service charges. Also, when leaseholders receive demands for service charges and administration charges, they must be given a summary of their rights and obligations in relation to such charges. That means that when they need to know, they are made aware of their important rights where such sums are concerned. Leaseholders can now challenge demands for administration charges covering matters such as payments for consent, which they are required to pay under the terms of their lease. Leaseholders of houses can now also take over the responsibility for insuring their properties from their landlords.
I turn to an issue that will be of particular interest to the hon. Member for Beckenham. We have looked at the issue of local authority leaseholders who find it difficult to pay service charges. The Housing and Regeneration Act 2008 increased the options available to local authority landlords to help leaseholders in this position. Since April 2009, landlords have been able to offer interest-free equity loans and to buy equity shares in properties. This is in addition to their long-standing ability to offer loans on varying terms, to spread payment over a longer period, to agree to delay payment until the property is sold, or to buy properties back outright from owners who are in arrears with service charges or cannot cope with the costs of looking after their home. The Government fund part of the cost of such buy-backs by letting the authority retain more of the receipts from property sales.
Under the Social Landlords Discretionary Reduction of Service Charges (England) Directions 1997, landlords can also cap service charges if certain conditions are met, including if a leaseholder will suffer exceptional
hardship. In 2002, we undertook a review of issues relating to major works service charges paid by local authority leaseholders. That was done because of concerns raised over high service charges that were being levied on local authority leaseholders, principally arising out of work being carried out to bring homes up to an acceptable standard under the decent homes programme. We learned that many local authorities, particularly in London, already offer a range of forms of assistance to their leaseholders. They offer a range of payment by instalment options; some agree to delay payment until the property is sold; others even offer a discount if the bill is paid in full promptly.
A written ministerial statement on 29 March 2007 outlined the Government’s position and the options on offer to leaseholders at that time—support which, as I have already mentioned, has been improved by legislation. However, I can assure the hon. Lady and other Members present that we are keeping the position under review in the light of current financial and housing market conditions. I therefore hope that Members will agree—although I completely take on board the points made today—that the Government have improved the rights and protections available to leaseholders in many significant respects. They have been empowered by rights that were not available until we took this action.
Let me deal with the Bill’s proposals in more detail, and begin with the proposal for involving tenants in works. As I outlined earlier, the consultation provisions in the Landlord and Tenant Act 1985 which were amended by the Commonhold and Leasehold Reform Act of 2002, already cover most of what is proposed here. There is a statutory requirement that all landlords must consult their leaseholders before carrying out works to their buildings and estates. These existing consultation requirements, which are contained in regulations made under the 1985 Act, cover most of what is proposed in the Bill.
I have already mentioned how the existing consultation rights give leaseholders an input into the procurement process. We have to ask whether the additional requirements proposed in the Bill—to consult on specifications for tenders, to put forward counter proposals and to hold ballots—would add to the consultation process. It would not be helpful to tenant or landlord if we were to replicate or replace rather than add to the process. We need to be cautious not to increase the complexity, time scales, costs and burdens of consultation, given that in some cases those would be passed on to leaseholders.
We also want to be clear that there is no risk that leaseholders could also force landlords to accept counter-proposals that could put them in a position where they are not able fully to meet their contractual obligations to all leaseholders—and to their tenants—to maintain and repair a building or estate. I am sure that those are consequences that the hon. Lady would want to ensure were avoided in her Bill.
Proposed new section 20ZA(1)(g) would require the landlord to make certain documents available for 10 years. Retaining documents relating to service charges, works and agreements should, at the very least, be a matter of common sense where it is not already enshrined in best practice or as a statutory requirement. But it is sensible for both leaseholders and landlords to retain those documents. Because leaseholders can challenge the reasonableness of service charges through a leasehold
valuation tribunal, even when they have paid the charges, landlords need to be able to justify those charges with documentary evidence. Without such evidence, they are likely to have a weak case that will not impress a leasehold valuation tribunal. However, it seems unlikely in practice that a leaseholder will need to see information relating to service charges that goes back some 10 years.
Further, leaseholders can currently request a summary of service charges, representing the last 12 months, and can ask to see documents supporting the summary.
Also, as I have previously mentioned, we will be proposing changes to the legislation so that leaseholders will automatically receive a regular statement containing information about their service charges, with the same right to see supporting documentation. We are drafting the regulations that will give effect to this measure. There will also be sanctions if this requirement is not complied with, including a right for leaseholders to withhold service charges. Landlords would also be vulnerable and open to challenge at a leasehold valuation tribunal if the supporting documents were not available. We need, therefore, to reflect on the need specifically to legislate to compel landlords to retain information for an arbitrary period of time, particularly as it is already in a landlord’s interest to do so.
Proposed new subsection (5)(g)(iii), which can be found in clause 1(2), would place a requirement on landlords to make publicly available requests to the residential property tribunal service as well as the decisions. We think that that is unnecessary, because determinations made by those tribunals that determine matters under the residential property tribunal service are already publicly available through the residential property tribunal service website. Of course, tribunals make all relevant information available to the parties involved in the dispute. We therefore do not need to add additional burdens and costs to the process by asking landlords to make public all requests to the tribunal.
The final element of clause 1 relates to payment arrangements that must be made by landlords when service charges exceed £12,000 in any 12-month period. I recognise the driver behind the clause. I know that quite a number of local authority leaseholders have received high major works service charge bills that reflect the work being carried out through the decent homes programme to overcome years of neglect. The intention of the clause appears to be to allow leaseholders to spread out their contributions to costs over a longer period. However, we need to ensure there is no ambiguity and to ensure clarity in what is proposed.
There is a risk that the clause is unlikely to achieve what is intended. In addition, it would also affect all landlords and not just local authority landlords. It would require landlords to make index-linked arrangements for leaseholders to pay in reasonable instalments when contributions exceed £12,000 in any 12-month period. As I said, the clause raises a number of questions that I think would need to be considered. For example, what does it actually mean? Over what period should the instalments be paid? What would be regarded as reasonable instalments? Those matters appear to be left solely to the discretion of the landlord.
Clause 2 proposes to amend section 105 of the Housing Act 1985. Section 105 deals with the duty on landlord authorities to engage with their secure tenants on housing management matters that are likely substantially to
affect them—for example, if there is a new programme of maintenance, improvement or demolition of dwelling houses let by the authority, or a change in policy or practice. Landlord authorities for that purpose mean local authorities, registered housing associations, charitable housing trusts and development corporations. That means that secure tenants of these authorities must be kept informed about the authority’s proposals and given the opportunity to comment.
The Bill would require those landlords similarly to consult their secure tenants on all national Government consultations that substantially affect them and where the landlord intends to respond. As proposed, it would appear that that would be a significant additional burden for any authority to carry, without obvious benefits to the tenants. As drafted, the proposal would also appear not to relate to leaseholders, whereas I believe that the Bill’s main aim is to help them.
Overall, there is a balance to be struck. We all need to satisfy ourselves that what is proposed would provide a greater opportunity for tenants to make their views known to Government, rather than duplicate how the Government received responses. We also need to consider the burden on local authorities and other landlord authorities, which may be forced to consult on issues on which tenants do not wish to engage.
To recap and conclude, the proposals in the Bill put forward by the hon. Member for Beckenham, while very well intentioned, are already available under existing legislation. I do not think that the changes proposed would deliver real benefits to leaseholders, and there is a danger that they would add significantly to the procedures with which landlords would need to comply. Again, that would create unnecessary burdens and costs—costs that would, in many cases, be passed on to the leaseholders whom the measures are intended to benefit.
The current position strikes a fair balance between the rights and responsibilities of leaseholders, having taken into consideration the sometimes polarised views of those affected, so the Government cannot support the Bill. However, as I have said, I will certainly look at all the issues closely, and will discuss them with my right hon. Friend the Minister for Housing. I ask the House not to support the Bill on Second Reading.
1.36 pm
Simon Hughes (North Southwark and Bermondsey) (LD): Mr. Deputy Speaker, I apologised to your predecessor in the Chair for having left the Chamber to attend to constituency duties. I was here for the beginning of the debate, and for all the earlier debates today. I just want to make a brief comment. It is disappointing for us sponsors of the Bill, and those of us who have piloted similar Bills through the House, that the Bill introduced by the hon. Member for Beckenham (Mrs. Lait) is not getting a more positive response. When I left, she was making a very good case; when I came back, the Minister was making a response that was clearly not very helpful.
The Lord Commissioner of Her Majesty's Treasury (Steve McCabe): You didn’t hear it!
Simon Hughes:
The part that I heard was not very helpful; I can say that without having heard the other part. [Interruption.] Yes, I caught the mood music.
We will obviously study what the Minister said carefully, but for the tens of thousands of people in boroughs such as mine, which is where the Minister lives when she is in London, there will be considerable disappointment that the Bill is not getting Government support. The Minister has undertaken to speak to her colleague, the new Minister for Housing. I hope that Ministers will at least work out what changes the Government would be willing to make to reflect the consistent concerns. I am sure that those concerns are not unique to outer south-east London, or inner south-east London, but are shared, as my hon. Friend the Member for Dunfermline and West Fife (Willie Rennie) said, by people all over the country. I hope that the Minister will take away the message that the present legislation is not sufficient.
1.38 pm
Mrs. Lait: With the leave of the House, may I congratulate the Minister on her mammoth speech, even though it was deeply unhelpful? The people affected by the problems that we have discussed are public sector leaseholders, who have come to me, to the hon. Members for Hendon (Mr. Dismore), for Brent, North (Barry Gardiner), and for North Southwark and Bermondsey (Simon Hughes), and, interestingly, to the hon. Member for Dunfermline and West Fife (Willie Rennie)— [Interruption.] Not Renfrewshire; I know about Renfrewshire. It is on the other side of the country. Of course, unless the law has changed in Scotland, there is no leaseholding law there. However, I congratulate the hon. Member for Dunfermline and West Fife on doing a noble job with regard to a very unfamiliar situation.
I thank my hon. Friend and colleague the Member for Bromley and Chislehurst (Robert Neill). All of us have public sector leaseholders in our constituency who have consistently complained for years, after the 2002 Act just as much as before it, about the deficiencies in their input into the homes in which they live.
The right hon. Lady tried nobly to defend the current system. Although I appreciate enormously her offer to brief the Minister for Housing and to write to me about various matters, she and the Department must understand that the situation for public sector leaseholders is deeply unsatisfactory. At some point legislation will have to be introduced, possibly much more extensive than my Bill, which I readily acknowledge is defective, to give those leaseholders a fair crack of the whip in the management of their own homes.
Those who read the debate or may have been listening to it will be desperately concerned that the right hon. Lady thinks there is a fair balance at present. They know well that that is not the case. As there is a certain eagerness to get on to other private Members’ Bills, I shall not seek to divide the House. I beg to ask leave to withdraw the motion.
Illegally Logged Timber (Prohibition of Sale) Bill
| Next Section | Index | Home Page |