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Lord Richard: As I understand the argument, I believe that the Government are absolutely right and, with great respect to the noble Lord opposite, he is wrong. Assuming that I am a commonhold unit-holder and I want to sell it to the noble Lord opposite, if I have not paid my debts and he finds out about it--the chances are that he will--he need not sign the contract. If he signs the contract for the sale of the unit obviously he is bound, and I am bound if I sign it. This is a question of how one recovers debts, rather than how to stop the transfer of property. I am not in favour of this amendment.

The Earl of Caithness: I am grateful to all those who have taken part in this short debate. I am particularly grateful for the support that I have received. I disagree with the noble Lord, Lord McIntosh, that to insert something like Amendment No. 27 would weaken commonhold. Far from it; it would strengthen commonhold. To run property is not an easy business; it requires a good deal of effort by a number of people if it is to be done successfully. I know many people who for many years have longed to run their flats and to be part of a management company but, when they have achieved that position, have regretted it because of the effort and commitment required.

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I am simply trying to make commonhold work better. As the noble Lord, Lord Richard said, it is a question of collecting debt. But why not use this opportunity to strengthen the hand of the commonhold association and all the other commonholders who have units? I agree that if a particularly troublesome person is constantly in arrears with monies due to the commonhold association there is a range of flexible measures which the commonhold association can take to deal with that individual. However, when it comes to the transfer of the unit there is a golden opportunity to get that situation up to date for the benefit of all the other commonholders in the association. It is that one person, or perhaps two people, who are holding back the regular maintenance; holding back the upkeep of the building. Here is a chance to say, "Right. You cannot transfer your commonhold unit until all the debts have been paid. When you have paid your debts, that is great. You go ahead and transfer it". Surely that is a sensible approach. I hope that the Minister will think again on this issue. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

6.30 p.m.

Clause 15 agreed to.

Clause 16 agreed to.

Clause 17 [Leasing: residential]:

The Deputy Chairman of Committees (Lord Lyell): I should advise the Committee that if Amendment No. 28 is agreed to, I shall not be able to call Amendment No. 28A on the supplementary sheet.

Lord Goodhart moved Amendment No. 28:

    Page 8, line 20, leave out subsections (1) and (2) and insert--

("(1) No term of years absolute may be created in a residential commonhold unit--
(a) for a term exceeding 7 years;
(b) in consideration of the payment of a premium or other lump sum;
(c) which does not comply with such other conditions as may be prescribed.").

The noble Lord said: The viability of commonhold depends on the unit-holder having a satisfactory degree of flexibility for the way in which he or she deals with the unit. The unit-holders will not all be permanent residents: some may buy a unit, be posted abroad and want to come back; some may buy a unit for retirement in advance of retiring and taking up residence; and some may buy a unit for investment, and there is no reason why they should not. Unit-holders must have a power to rent out their flats. If they were not able to do so, commonhold would lose a good deal of its attraction because it would be much more difficult to deal with than a leasehold property.

At the same time, it is reasonable to say that unit-holders should not be allowed to create long leases at a premium. That would simply recreate the leasehold problems and complicate management. In addition,

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members of commonhold associations should regard themselves as members of a co-operative body and have a real and personal interest in the commonhold property.

The Bill seeks to leave these issues to regulations. We think that some issues are fundamental to the viability of commonhold schemes and are too important to be left to regulations; they should be on the face of the Bill. We need commercial certainty. It is necessary that vital matters should not be left to regulations, which could always be changed at short notice.

In our view, two matters are essential and should be on the face of the Bill. One is the maximum length of the lease; the other is the exclusion of the premiums. Our amendment proposes a seven-year maximum for the lease, which we think is the right length of time. Of course, there is nothing to prevent the unit-holder renewing the lease by agreement when the original seven years are coming to an end if at that point he does not want it for his own residence or for leasing to someone else. Less than seven years would not give enough flexibility; if you have more than seven years you begin to get into long leasehold issues and the unit-holder ceases to have any real personal interest in the unit.

Seven years is recognised by existing legislation as the point at which, for example, certain maintenance and repair responsibilities shift from the landlord to the tenant. We think that 15 years, as proposed by the noble Lord, Lord Kingsland, is somewhat too long. We believe it is appropriate to use the same dividing point for commonhold purposes as is used, for example, for the shift of responsibilities for maintenance and repair. I repeat that this is a matter of such importance that it should be placed on the face of the Bill and not be left simply to regulations. I beg to move.

Baroness Gardner of Parkes: Grouped with this amendment is the debate whether Clause 17 shall stand part of the Bill. I am opposed to Clause 17, but I am equally opposed to the amendment. There should be no restrictions whatever. Once you own your unit of commonhold, it should be entirely up to you what you do with it. If you want to let it for ever, that is up to you; if you want to let it for a short time or a long time, that is also up to you. I do not know where the provision comes in about seven years and the liability for repairs. It is not something I have ever thought about. I am not familiar with it and I do not understand it. I have known of people owning units and living abroad for 20 years. That does not apply to me--I have lived abroad for 40 or 50 years. The whole essence of commonhold is for it to be free. The noble Minister told us just a moment ago that he did not want that last restriction about transferring title, nor any restriction on commonhold. He referred to the value of the freedom of commonhold; that it is yours,

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to do with as you wish. Then we come to this clause and see that we are going to restrict what you can do with it, in terms of having a tenant or anyone else.

Lord Goodhart: I am grateful to the noble Baroness for giving way. However, would she allow a unit-holder to grant a 99-year lease at a premium?

Baroness Gardner of Parkes: I probably would, but I doubt whether anyone would want to do that. It would seem most extraordinary for anyone to have such an aim. However, if you own a unit, it is entirely up to you what you do with it. That is how the Australian system works and it is the right way. There should be no unnecessary restrictions. In response to the previous amendment, the Government said that they did not wish to impose that degree of restriction with regard to people settling their debts. So why should they wish to make this one?

Lord Selsdon: I am sorry to intervene again. However, this is a perfect example of where we can find incentives. One of the biggest growth markets in this country among the retired and semi-retired should be buying to let. The same is the case with expatriates around the world. If you have the protection of buying a commonhold unit with the intention of letting it, that is better than handing over the money from your pension to a government who will give you a useless annuity over a period of time. That same kind of mood is prevalent around the world. You are providing accommodation for rent, for which there is a demand. I think that my noble friend is wrong and that the noble Lord, Lord Goodhart, is wrong. Somewhere in this is the need to encourage not necessarily owner occupiers but investors.

Lord Lea of Crondall: Is this not another issue which relates to the commonhold association memorandum? I would be surprised if one could restrict the right of the commonhold association to put in a covenant about sub-letting or other matters along those lines. Will there not be issues to clarify at that stage? There will be a need to clarify what is the scope for restrictive covenants on this document.

Baroness Gardner of Parkes: Perhaps I may come back on that point. At Second Reading, I made it clear that there had been two forms of title in Australia. The first was called company title, where you had to get consent of other people for whatever you did in your property. The second one--the strata title--is what we were aiming to produce in this country as commonhold. In the latter case, you were totally unrestricted, even on the point about repairs, which came up on an earlier amendment. Certainly, you were liable to ensure that the building as a whole stayed up, but if you allowed your unit, internally, to become a pig sty, that was entirely your choice. No one in the commonhold could enforce any improvement in that, unless it became noxious or was spreading some

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terrible infection to other unit-holders. The whole point about the commonhold is that it is your little piece of freehold in that big building.

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