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Lord Strabolgi: But these contracts were not always entered into in the way in which the noble Lord, Lord Boardman, describes. Very often they were contracts which the tenants were forced to enter into because speculators took over blocks of flats and threatened them with expulsion--they were people with ordinary rentals--unless they entered into long leases. That is why they had to scrape together to get the money, by borrowing or raising mortgages and so on, in order to maintain themselves in their homes. I do not believe that one could describe them as contracts freely entered into, as the noble Lord, Lord Boardman, said. He used to say so in 1988, and I used to say the same sort of thing too. It rather took me back when he spoke just now. I am glad that he did, but I believe that historically this is a special case.

Also, the Government believe in leasehold enfranchisement. They say so on almost every occasion. The Prime Minister has said so many times. They say so in theory and maintain it in theory, but when it comes to it, they do their best to undermine it.

Viscount Caldecote: This is a very complex issue. I am slightly confused because the noble Lord, Lord Dubs, said that he was speaking to his proposition that Clause 98 should not stand part of the Bill and also to his other amendments, to some of which I have my name. Surely, since the whole purpose of Clause 98 is to give effect to Schedule 8, if Clause 98 does not stand part of the Bill then Schedule 8 falls to the ground and all the other amendments will not be called. I believe that that is the situation.

However, I believe that it is in order to speak to Schedule 8 on the Motion that Clause 98 does not stand part of the Bill. As the noble Lord, Lord Dubs, said, Schedule 8 deals with the low rent qualification which applies to long leases of less than 50 years. I appreciate that the logic behind the concept of a low rent qualification is not to give to what may be described as temporary tenants on relatively high rack rents the same rights as tenants who are long leaseholders who regard the property as their permanent home.

Long leases are now defined by Section 3(1) of the Landlord and Tenant Act 1987 as those exceeding 21 years. The schedule now proposes to increase that to 50 years. There seems to me to be no justification whatever for removing the rights of many long leaseholders through a low rent requirement nor for discriminating between long leases of 50 years and 21 years which has always been the custom in the past and as is now proposed under paragraph 1 of Schedule 8.

But now I diverge from the noble Lord, Lord Dubs, who says that he wants to keep the exclusion of people who live in rural places. It has been pointed out that he

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does not actually achieve that by removing Clause 98 and with it Schedule 8. But surely there is no justification in fairness or logic for excluding wholly from the right of enfranchisement people living in rural areas. I understand the argument that has been used to justify that exclusion; that it is to protect the freeholders of certain types of houses on country estates. That is a perfectly understandable point of view which others can put much more clearly than I can. But in general, it seems to me to be an unacceptable point.

In my view, it is quite wrong to use that logic to exclude everyone who lives in a village house, on rural estates, from the right of enfranchisement. Surely the right solution to the problem is to withdraw Clause 98 and with it Schedule 8 and to insert a specific exclusion to deal with the houses which justify being kept separate on rural estates, and leave with the right of enfranchisement all the other village houses which many people have occupied all their lives and perhaps also in the lives of their parents. I have heard mention of dower houses and so on as being an example of those which should be excluded and they should be dealt with by a special provision.

I hope that the Government will look again at this matter. Even if this amendment is not put to a vote, I hope that the Government will agree to look again at this whole question in relation to low rent disqualification, the 21 to 50 years and the rural disqualification. It is something of a muddle at present which needs to be looked at afresh.

Perhaps I may comment briefly on what my noble friend Lord Boardman said. I entirely take his point that contracts freely made should not be upset by legislation. But I believe that to take that principle in this case is going rather too far. After all, before any of the recent Acts were passed, if you were a long leaseholder and your leasehold came to an end after, for example, 100 years, you had no rights at all. That was the condition on which you took on the original long lease.

Parliament felt that that arrangement was so unjust and unfair that it should be altered, as it has been altered by a number of Acts which have been passed. Therefore, this proposal is merely an extension of that principle; namely, to ensure that long leaseholders, who have been occupying their property as their home for many years, are subject to fairer conditions. I support the proposition of the noble Lord, Lord Dubs, that Clause 98 should not stand part of the Bill, but I ask the Government to look very carefully at the whole of this problem. They should try to tidy this area and not use a blunderbuss, particularly in relation to rural areas, which causes great injustice.

Lord Carnock: First, I must declare an interest. I am a leaseholder in the process of extending my lease but I have no financial interest in the subject of this debate.

I had in mind to refer to two anomalies in the existing law, both of which have been referred to by the noble Lord, Lord Dubs. I shall say nothing about the first but I should like to enlarge upon the second. That concerns property which underwent major works of reconstruction after the war and at a time when it became uninhabitable so that its rateable value was

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reduced to nil. Such a house does not meet the low rent test. But if you compare that with a property which was newly reconstructed, you will find that there is no rateable value at all when the house is under the process of construction and becomes first rated after the building is complete. Such a house would comply with the low rent test.

I ask the Minister whether, if these amendments are not accepted, the Government would be prepared to amend the 1993 Act so as to avoid the anomaly that a property with a negative rateable value could qualify under the test.

4.30 p.m.

Baroness Gardner of Parkes: Having earlier declared my interest in a flat, I should indicate that that is non-enfranchisable and so does not come in any way into any further discussion on this Bill. The home I live in is already freehold. In my time on the estates committee of one of the major London hospitals we were faced with this problem of how to re-let the houses that were becoming vacant. At that time--I am going back 15 years--we were well aware that 20 years was not considered a long lease and that it was a safe period for a hospital to let their property on a rack rent. There has been an awareness of the 21-year term for a long time. I do not think there is anything new in that.

A genuine matter of concern is the situation as regards properties on a rack rent. I feel that the 50 years might be significant if it were going to exclude properties on a rack rent, or market rent or full rent for today. This has been put to me in two different ways. The Leasehold Enfranchisement Association has said such leases do not exist, so I went to the British Property Federation and asked them to produce chapter and verse on it. The federation told me that they have produced chapter and verse to the Secretary of State, to the department, asking for proof that such leases did exist; and they do exist. There do not seem to be a great many of them, but the evidence had certainly been produced. Therefore, I will ask my noble friend the Minister to confirm that to me. If that is the case and such rack rent properties exist, then they should be treated differently from other properties.

I would support the points made by my noble friend Lord Carnock about properties that were not on the rateable list. Indeed, everyone I have spoken to, including the British Property Federation, acknowledges that that is an anomaly and that it was unfortunate if your house was undergoing major repairs. Everyone wants to see that corrected so that people who are in that position are not disadvantaged through it.

A very interesting point was made by the noble Lord, Lord Dubs, about the difficulty of tracing the rents that would have been applied to leases before 1963. I am unclear as to why there is such a difficulty because I thought this was a country full of documentation on everything going back hundreds of years. I would have thought it would have been easy to produce something. After all, 1963 was not that long ago.

There are people who want to be able to buy a property at a lower value if they are buying a lease, and currently these people buy a short lease. There is a

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problem that exists there, that if we reached the point where property owners were only prepared to sell really short leases, say, 20-year leases, in order to secure the return of their property at a later stage, would we then face a situation where people would not be able to get mortgages? In my time as a director of a building society I know that with any term less than 50 years it was not very easy to get a mortgage because the building society wanted 25 years remaining after you had paid off the 25-year mortgage, in order to give it a degree of security.

That is something we should look at carefully. We should take care not to kill off a market in shorter leased, affordable property for people, but also make it financeable for people, because, unless they can afford either to rent or to buy, it is not much good creating a market for short leases, which landlords have opted for, in order to protect their property interests.

None of these things is as simple and straightforward as we would like to think and whatever we decide in this law we will be affecting so many other decisions made by people. If we do develop a really short leasehold market and a longer leasehold market and enfranchisable and non-enfranchisable markets, we will definitely see differentials in values in the property market, and those people who have a lease that is enfranchisable will find their property worth relatively more than those who have one that is not enfranchisable.

On the rural position, I have had a considerable number of letters on both sides of that argument. The people from Adlestrop in Gloucestershire, who I understand have written to many Members of this Chamber, are concerned that some of the village are able to enfranchise and others are not, but I have had just as many letters from other people saying that on no account do they want the rural exemption lifted and they would like to see it more restrictive. This is a very complex matter and the point made by my noble friend Lord Caldecote is an important one; namely, that if the Government would really consider reviewing this whole issue I would not oppose the present clause standing part. I would rather see that than nothing, but I really hope that there are many aspects of this matter that should be looked at again.

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