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Lord Kingsland: I shall read the noble Lord's speech carefully before deciding whether to retable the amendment for Report stage. Would I be right in concluding from what the noble Lord the Minister said

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that he believes that the power of forfeiture is now effectively otiose? Is that why he has weakened it in other parts of the Bill?

Lord Whitty: I tend to try to avoid the word "otiose". It would be true to say that in much of housing and tenure law the use of forfeiture, or the threat of forfeiture, is not appropriate. The noble Lord may be aware that the Law Commission has been looking at the question of forfeiture for some time. In this context, there is some history of the threat of the use of forfeiture being used inappropriately, and therefore we have put certain modifications at other parts of the Bill.

Lord Kingsland: Would the noble Lord find it helpful if we were to table a wide-ranging amendment on forfeiture at the Report stage?

Lord Whitty: I am not entirely sure that I should be encouraging anybody to table wide-ranging amendments on forfeiture or anything else at later stages of the Bill, should we reach them. No doubt the issue of forfeiture will be discussed both at this stage and at later stages in the Bill.

Lord Kingsland: I am much obliged to the noble Lord for his diplomatic response. I shall reflect on whether to turn my attention to the wider issues between now and Report stage. Meanwhile, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 97 agreed to.

4.30 p.m.

Clause 98 [Tenant covenants: monitoring and reporting]:

[Amendments Nos. 176B and 176C not moved.]

Clause 98 agreed to.

Clause 99 agreed to.

Schedule 7 [Right to manage: statutory provisions]:

Lord Whitty moved Amendment No. 177:

    Page 80, line 48, at end insert--

("(5) Section 26 does not apply.").

The noble Lord said: Amendment No. 177 ensures that a right-to-manage company cannot take advantage of an exemption from prosecution which is granted to certain public sector landlords for non-compliance with certain requirements of the Landlord and Tenant Act 1985. This tidies up the situation. I beg to move.

On Question, amendment agreed to.

Schedule 7, as amended, agreed to.

Clause 100 [Landlord contribution to service charges]:

Lord Kingsland moved Amendment No. 178:

    Page 47, line 19, after ("company") insert ("a sum being that part of").

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The noble Lord said: In moving Amendment No. 178, I shall also speak to Amendments Nos. 179 and 181, and leave Amendment No. 180 in the name of my noble friend Lord Caithness. Amendments Nos. 178, 179 and 180 seek to specify on the face of the Bill how the proportion of costs which fall to the landlord to pay as his contribution to the service charge should be calculated. We would prefer to see the definition of the proportions stated more explicitly.

I am attracted to the proposal put forward by my noble friend Lord Caithness. The substance of it is already likely to exist and, therefore, will perhaps generate less argument. Calculating the proportions by reference to floor area is a viable alternative. However, I am aware that disputes between surveyors over floor area are by no means unusual.

I turn to Amendment No. 181. If a unit were excluded from the right to manage, the amendment would make the person required to pay the service charge on it the superior landlord rather than the direct landlord of a tenant in occupation. I beg to move.

The Earl of Caithness: Before speaking to Amendment No. 180, which is grouped with this, perhaps I may apologise to the Committee for not being in my place when the Committee started. It is very difficult to be in two places at once; in the Chamber talking about foot and mouth disease and in the Moses Room talking about commonhold and leasehold reform. I apologise for my absence, but I was going to lose out on one or the other.

Amendment No. 180 is a very simple amendment. Subsection (4) of Clause 100 refers the internal floor area. That might not be the appropriate or the common way in which the service charge is calculated on the building. It could be done by a service charge or perhaps a rateable value if it were a very old block of flats. Amendment No. 180 seeks to introduce some flexibility into the situation. Should there not be agreement on that flexibility, the matter can be referred to the leasehold valuation tribunal.

Lord Richard: I am a little mystified by the amendments, particularly those of the noble Lord, Lord Kingsland. I do not see the great difference between the Bill as it would stand if Amendments Nos. 178 and 179 were incorporated into it and the Bill it now stands. If there is a point that is escaping me I shall listen to it with great care and attention. However, as the amendments do not seem to add a great deal to the Bill they seem perhaps a little otiose.

Lord Whitty: This is an interesting area. As you may know, in this area long leases will normally make the leaseholder responsible for paying the service charges, and in a block of flats that will normally be accompanied by a provision to set out how the overall service charge liability is divided up. In many cases, that is on a fairly straightforward basis of their shares, but in some blocks the leases will set down the precise proportion that each leaseholder must make, which may have been based on all kinds of formulae in the past.

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Logic suggests that where this applies, the proportions however arrived at, should add up to 100 per cent. Regrettably, however, there are instances where they do not, and that may be because the leases themselves are defective--and there are rights to correct that. But it may also be that the leases were deliberately set to come out to less than 100 per cent in recognition of the fact that the landlord holds some of the units or some of the territory and therefore meets a share of the costs.

To take a simple example, if one flat in a block of four is held by the landlord, each of the leaseholders has to contribute only 25 per cent. Where that applies--and unless we provide otherwise--the newly created RTM company will find itself faced with a shortfall. Of course, the company could seek to amend the leases, but it does not seem right that it should necessarily have to do so. If the landlord met a fixed share of the cost when he was the manager, we consider that he should continue to do so when the RTM company is in effect the manager. Clause 100 is designed to do that.

I hope that what I have said indicates that the landlords should in certain very limited circumstances be liable to meet some of the costs that would otherwise fall on the RTM company, and I hope that these amendments will not be pursued.

As regards Amendment No. 181, it is probably best to say that we cannot see why the freeholders should have to bear the full cost in such circumstances.

On Amendment No. 180, the noble Earl, Lord Caithness, suggests that there should be a choice of alternative formulae for apportioning costs among a number of landlords. I can appreciate the arguments in favour of that. However, we believe that it is better for there to be just one. We want to minimise the opportunity for landlords to be obstructive. If there is a choice to be made, there is a danger that that will lead to further argumentation or further disputes. Those disputes can take a long time, leaving the RTM company out of pocket. That is our initial view on that amendment, but we are not irrevocably wedded to the precise formula currently on the face of the Bill. We obviously consider that floor space is a clear and easily measurable basis for apportionment, but would be happy to look at alternatives. We cannot see that having regard to the leases themselves would work in these circumstances.

The requirement imposed under this clause would apply only where the leases specify the individual proportions payable by each leaseholder. Simply having regard to that will not necessarily provide an answer as to how that should be cross-applied to the landlords. This could again create scope for argument and delay, which we are obviously hoping to avoid. We may return to this matter but we are not convinced at the moment that the opportunity for choice offered by Amendment No. 180 resolves any of the problems.

The Earl of Caithness: I am glad that there is some flexibility in the Government's position on this. The

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noble Lord has a very good argument: that if there is one method of calculating a formula it resolves a great many disputes.

However, it should be borne in mind that a number of situations exist throughout the country where the noble Lord's formula would run contrary to the existing formula under which the building is operated. That could lead to all kinds of difficulties as one would then be applying two formulas to running the building.

I hope that the Minister will reconsider this issue. I am glad that the noble Lord said that he was not entirely wedded to his wording. There is a good case for having some sort of flexibility here, where an established pattern has been set and all the tenants are used to it, rather than having to change that and come to a new formula. If the noble Lord, Lord Whitty, is going to take this matter away, I am happy to proceed no further at this stage.

Lord Kingsland: I saw the noble Lord, Lord Whitty, nodding as my noble friend Lord Caithness was sitting down. In those circumstances, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 179 to 181 not moved.]

Clause 100 agreed to.

Clause 101 agreed to.

Clause 102 [Cessation of Management]:

[Amendments Nos. 182 and 183 not moved.]

Clause 102 agreed to.

Clause 103 agreed to.

Clause 104 [Agreements excluding or modifying right]:

[Amendments Nos. 184 to 187 not moved.]

Clause 104 agreed to.

Clause 105 [Application to Crown]:

[Amendments Nos. 188 and 189 not moved.]

Clause 105 agreed to.

[Amendment No. 190 not moved.]

Clause 106 [Powers of trustees in relation to right]:

[Amendments Nos. 191 and 192 not moved.]

Clause 106 agreed to.

Clause 107 agreed to.

Clause 108 [Notices]:

[Amendments Nos. 193 and 194 not moved.]

Clause 108 agreed to.

4.45 p.m.

The Earl of Caithness moved Amendment No. 195:

    After Clause 108, insert the following new clause--

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