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Lord McIntosh of Haringey: There are two separate concerns with the amendments. I hope I can satisfy the

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noble Baroness, Lady Maddock, that there is no problem. The first is the fear that where there is a flat with a tenant who is not a qualifying tenant, such as one held by an assured tenant, no one could be counted as a qualifying tenant for that flat.

I can appreciate that it is difficult because the Bill is somewhat elliptical. The situation is that we do not require leaseholders to be resident to qualify for the right to manage, so any person or organisation who holds a long lease will qualify. When a long leaseholder sublets his flat on a short lease or an assured tenancy, the long leaseholder--in this case the housing association--will be considered by the Bill to be the qualifying tenant for the flat. A registered social landlord who sublets the flat on an assured tenancy will automatically be the qualifying tenant by virtue of the long lease and there is no need to make special provision.

The second proposal is that tenants of charitable housing trusts should not qualify for the right to manage. That would be consistent with the position under the right to enfranchise, but there is a very good reason why tenants of charitable housing trusts do not enjoy the right to enfranchise. They have acquired their leases on very favourable terms, designed to make home ownership affordable to those for whom it would not otherwise be a realistic option. It would be wrong to enable them to take advantage of enfranchisement and then sell on in the open market.

The right to manage, however, does not affect the ownership of the property or the owner's ability to sublet it as he or she chooses. It merely transfers management functions to the people who have purchased the majority share in the equity. So charitable housing trusts could continue to let out other properties to tenants of the appropriate kind after exercise of the right to manage. We have discussed this with most of the people concerned and nobody came forward with any sound reason for exempting charitable housing trusts from the right to manage, as distinct from the right to enfranchise. Indeed, both the housing corporation and the Charity Commission support the application of the right to manage to such properties.

Baroness Maddock: I thank the Minister for his helpful reply. It will be helpful for those who have been concerned about this to be able to read quite clearly what the position is, particularly in respect of the first amendment.

On the second amendment, I would like to read more carefully what the Minister said and consult again as to whether it will be satisfactory. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

5 p.m.

Lord Kingsland moved Amendment No. 118:

    Page 31, line 17, at end insert--

("and is either--
(a) an individual residing in the flat; or

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(b) a company controlled directly or indirectly by an individual residing in the flat or jointly by individuals both or all residing in the flat.").

The noble Lord said: The remarks I want to make apply equally to Amendment No. 84A. This is a central issue. The effect of the amendment is to limit the right to manage blocks of flats where the residents want to manage. The Bill as presently drafted gives the right to manage to all leaseholders, including companies and people who hold leases solely for investment purposes. These are typically those living abroad who invest in residential property with a view to letting it out.

It does not seem right to give such investors these valuable rights to manage. The whole thrust of this legislation should be to enhance the rights of residents. Indeed, we find it strange to find such enthusiasm among the Government for the capitalist classes.

Let me deal with the proposal that a company should be entitled to the right to manage if it is controlled by an individual residing in a flat. I have heard reports that certain landlords are refusing to grant long leases, or refusing the assignments of long leases, unless the lessees buy through the medium of a limited company. The reason for this is that the landlords wish to avoid tenants having the various rights to enfranchise and to extend leases which they are given by legislation dating from 1967 onwards.

This is an abuse. The fact that an individual buys via the corporate vehicle of a limited company should be neither here nor there, so long as that individual is in truth a resident. Accordingly, the purpose of the amendment is to ensure that residents--and only residents--have the right to manage, but that it is irrelevant whether the residents hold the lease in their own names or the names of companies. I beg to move.

Lord Monson: In introducing Amendment No. 84 on Tuesday, the noble Lord, Lord Kingsland, suggested that removing the landlord's right to manage was tantamount to expropriation and might indeed fall foul of the European Convention on Human Rights, if I understood him correctly--a point of view which is widely held in his party and elsewhere. Perhaps there may be an element of expropriation here, albeit not remotely in the same league as the expropriation inherent in Clauses 123 and 124 of the Bill as it stands.

Surely a landlord expects most of his profits to come from the ground rent, with perhaps a modest profit from managing the property as a little cream on top. If it is the other way around, with most of the landlord's net income arising from the management of the property, surely he must be abusing his monopoly position as sole provider of management services by overcharging. In this case, the Government are being neither unreasonable nor unfair in introducing an element of competition into the process, as the Bill effectively does, and as the previous administration started to do in their legislation.

Having said that, the ground landlord has a legitimate interest in ensuring that a property, whoever manages it, is properly maintained so that it does not

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deteriorate. As the noble Lord, Lord Kingsland, said, somebody who is a sub-tenant, who is there for only a few months, or somebody who may be the leaseholder but is perhaps a tax exile--as many leaseholders in Belgravia, for example, may be--and is abroad for nine months of the year or more is unlikely to have either the capability or, in many respects, the incentive to manage the property as efficiently as a landlord.

As the noble Lord, Lord Selsdon, said on Tuesday, and the noble Lord, Lord Williams, hinted a few minutes ago, even those who have permanent residential status are likely to have management problems if they are inexperienced in the matter. I have pleasure in supporting the amendment.

Lord Whitty: The amendment seeks to introduce a requirement that an individual must be resident in his flat in order to be a qualifying tenant for the right to manage. I understand why the amendment is moved and the noble Lord's indication that our main concern must be for those who are resident within the block. However, it would be extremely difficult to implement such a requirement. Issues of principle are involved here. The rationale behind the right is that if in effect a group of leaseholders owns the majority of the equity in the building it should have the right to exercise the right to manage it. The logic of that principle applies whether or not the owner of a lease, as an individual lessee, occupies the premises to which the lease applies.

In any case, even if one discards that principle and says that one is acting solely on behalf of people who are resident the definition of "resident" is extremely difficult to establish. Does one have to be resident for one week, a year, or three months a year? In the "company" test, does one literally need to be a company, or can the company actually bestow at least partial residence on someone else? Even if we accept the principle of the approach, there are great complexities of definition which are not addressed in this amendment.

As the noble Lord, Lord Kingsland, indicates, practical experience of existing enfranchisement rights is that there is an abuse of the situation by recalcitrant landlords who wish to stop the rights being used. They can use it as an excuse to harry leaseholders and pry into their private lives in respect of where they reside and who resides there. We do not want to get into that area. The straightforward position is that the person who is the lessee is able to trigger the right to manage. However desirable may be the principle of looking after the residence, as a matter of principle and practicality this is not the way in which we should limit the right.

No doubt there are some strong feelings on this matter both inside and outside the Committee. I suspect that we shall return to this matter, but I hope that the noble Lord, Lord Kingsland, at least accepts some of my argument.

Lord Kingsland: Apart from me, the noble Lord the Minister was the only noble Lord to speak to this amendment. I am surprised that there were not

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stronger feelings about it in the Committee. I beg the Committee's pardon. One other noble Lord spoke to this matter with great feeling. It is most unlike me to have the memory of an observation by the noble Lord, Lord Monson, erased so swiftly. I shall reflect on the definition of "resident". I see the validity of the Minister's criticism that that may be too ill-defined a concept. However, I must confess to having some surprise at the overall approach of the noble Lord to my amendment. I would have expected the philosophy of the Bill, generally, to have militated towards my amendment. So I shall reflect on what he said and return to the issue at the Report stage. Meanwhile, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 119 and 120 not moved.]

Clause 72 agreed to.

Clause 73 [Long leases]:

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