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Lord Monson: I should perhaps explain that, although I must have spoken on three or four leasehold Bills over the years, I did not take part in the Second Reading of this Bill because it took place on a Monday and train services from the North are not yet fully reliable. However, I did attend the greater part of the debate. I have no interest to declare as regards commonhold or leasehold, although as an owner of a straightforward rented property, I am naturally concerned that the principle of confiscation or partial confiscation of property rights should not become too widely established.

I believe this pair of amendments are too paternalistic. In addition, the amendment tabled by the noble Baroness, Lady Gardner, as the noble Lord, Lord Goodhart, said, would also affect blocks of flats built specifically for rack renting.

The late Lord Brook, Henry Brook, the eminent former Cabinet Minister, once told the House of Commons that leasehold had been enormously beneficial for him and his family. It had enabled them to live in a much larger and better house in a much better area than would have been possible had only more expensive freehold houses been available. Why should not people nowadays have the right to opt for a spacious and well designed house or flat in a nice area, albeit a slightly wasting asset, in preference to a much smaller property in a less salubrious area which holds its value in real terms in perpetuity? Surely it should be up to them to decide which they want to do.

Lord Bridges: I make a brief intervention on this point. I am a leaseholder of a London flat but my

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interests do not arise on this clause. We all hope that the commonhold system will work and be a success, and I hope that we can copy the Australian experience, but is it right to introduce a restriction and a degree of compulsion that seems to apply to both these amendments? I would much rather see the commonhold system gain affection among the occupants of property in this country on its own merit, and that is what should happen. I do not like the thought that we shall use the manipulation of the state to force it in one direction or another.

There might still be a certain market for leasehold properties in this country, even after the introduction of commonhold, because it is familiar. People know what it is and they might be able to buy a leasehold property more cheaply than a commonhold property. I do not feel able to support these amendments.

Lord Jacobs: I am very happy to support both amendments, although I agree that the amendment of the noble Baroness, Lady Gardner, is somewhat restrictive. It would not be a difficult matter to have a clause which provides that properties for rent could be excluded. That would be a very straightforward provision to make.

I would not be speaking out of turn for probably 2 million leaseholders in this country in saying that those who know about it are utterly astonished to learn two rather sad facts. Firstly, that their chances of getting into commonhold for existing leases are very small indeed. The discussion that has already taken place confirms that. Secondly, that new developments will take place across the country and they may not be commonhold. It is almost impossible to explain to them why, if the Government are bringing in this quite complex legislation, all new properties should not be commonhold.

I have asked those on my own Benches who from a legal point of view know more about this than I do. They have explained that the Government recognise that it is quite difficult legislation and that they want to field trial it and not compel everybody to develop under commonhold. That may be the case, and it may even be quite reasonable, but if they do not develop under commonhold they can develop on 75-year or 99-year leases. That is why I support the amendment of my noble friend Lord Goodhart, who has suggested 150 years. In discussion with him, I put forward the idea that 900 years would be more appropriate. At least then the developers would recognise that there was no reversionary gain to be sought by not going into commonhold. If we could discourage developers from considering any more leasehold, the Government's objective would be achieved.

Lord Bach: I would not seek to describe anything that the noble Baroness, Lady Gardner of Parkes, does as draconian; in the same way, I am not entirely happy about being associated with something that is a damp squib or a great disappointment. However, there is no doubt that radicalism of an extreme nature exists and is alive in the House of Lords, and it is very good to see

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it in her amendment. I would not describe the amendment as draconian; I would describe it as an ingenious attempt to arrive at a position in which future developments of leasehold flats would be forbidden.

The Government have been clear, rightly so--the noble Lords, Lord Selsdon and Lord Bridges, made the point--that the development of commonhold offers an alternative to leasehold. It has been clear that we have no intention of cutting off the possibility of leasehold development if that is what developers and the market still want. Indeed, to suggest anything else and to go down the road of compulsion would be something for which we would be attacked as quickly as we suggested it.

Of course we want to see that there are no significant, unforeseen problems with the new system. The opposition parties--and my own--would be the first to criticise any actual or arguable fault which the new system of commonhold put up. What we ask is that the market should be left to make up its mind.

If, in due course, it seems proper to come to some decision about the continuation of leasehold, no doubt that can be looked at and taken, but we do not think that that is likely to happen in the very short term. To prevent leaseholds altogether, we fear, would be a prohibition and an interference with an owner's use of property and might--I use the word "might"--potentially be a source of problems in relation to the first protocol to the European Convention on Human Rights.

I know why the noble Baroness has raised this issue in the way that she has; she wants to draw attention to it. I can see her point of view; it would, in a way, be something that was agreeable.

However, I have to point out to the noble Baroness that if in Australia they are beginning slowly to construct leaseholds again--even if in a small way--there cannot be any prohibition there of the kind she is suggesting should be imposed here. But I do not believe she is absolutely serious in suggesting that there should be a prohibition.

What the noble Lord, Lord Selsdon, said attracts us. We shall look carefully at ways in which we can, to coin a phrase, "market" the commonhold system. There is no reason why there should not be some marketable incentives towards encouraging people to move to commonhold, provided the playing field remains even. However, I say with confidence that we believe that commonhold will be a success. It will be a success on its own merits and not because we are, as it were, abolishing some other form of land tenure. I ask the noble Baroness not to press her amendment and to withdraw it.

As far as concerns the amendment of the noble Lord, Lord Goodhart, we see the reasoning behind it. However, at this stage--I do not wish to give any false hopes--we are not convinced that it would be effective in solving the problems faced by leaseholders and might create some very real, practical problems. I shall deal with these shortly.

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In many cases, developers may be able to acquire land only on a leasehold basis. They will be unable to offer leases for a longer term than the term granted to them. Land subject to a lease of less than 150 years could not be utilised for residential development unless the developer could persuade the landowner to grant a new lease of an appropriate term. That may distort the market and prevent the sensible use of land. There may be difficulties in redeveloping existing leasehold property which has reached the end of its life if those concerned are unable to acquire the freehold or to do so on reasonable terms. In addition, council tenants have the right to buy a long lease on the flat in which they live. Local authorities may hold the land on which the flats are built only on leasehold.

The amendment, if carried out to the letter, would remove consumer choice in prohibiting the grant of any lease below 150 years for a premium. We are advised that it would, therefore, apply to an assured shorthold tenancy where the rent was payable as a lump sum in advance. Where willing parties wish to agree to such an arrangement, such as a company requiring temporary accommodation for an employee, it would be wrong to interfere. The amendment does not deal with the fundamental problem, as the noble Lord sees it, of leasehold tenure. It would not prevent leasehold abuse nor prevent the lease depreciating over time, albeit a long period of time. It would probably merely postpone the latter problem. However, the noble Lord raises a serious issue and we shall look at it again.

Lord Jacobs: Is the Minister aware of his department's own consultation paper Residential Leasehold Reform in England and Wales? The introduction deals with the fundamental point under discussion: existing and new leaseholds. I read briefly the first two paragraphs:

    "The leasehold tenure is almost unique in England and Wales. It has its roots in the feudal system and gives great powers and privileges to landowners. It is totally unsuited to the society of the twentieth--let alone the twenty-first--century ...

    "The Government believes the leasehold system is fundamentally flawed. It is committed to introducing a new form of tenure for flats--commonhold--which in future will enable the individual flat-owners in a block to own and manage the whole building collectively from the outset. We see commonhold as the best way to tackle the problems faced by many existing"--

I emphasise that word--

    "residential leaseholders".

Does the Minister agree that what he said about the earlier amendments and the likelihood that very few existing leaseholders would be able to change to commonhold--the noble Lord now says that the Government want to keep leasehold going even when the commonhold legislation is enacted--does not tie up with any of the aspirations of his party from the very beginning?

5.45 p.m.

Lord Bach: The noble Lord is wrong. Naturally, our aspiration is that eventually there will be no leasehold, but it is a question of how that is arrived at. In a free

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society people cannot be compelled to lose a tenure that has existed, rightly or wrongly, for centuries. We want to persuade people that with the new commonhold system there is no need for leasehold, and that will take time. People cannot be compelled to do that. In time commonhold will assert itself, but any government would be highly irresponsible if they took any course other than the one that we have taken.

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