Previous Section Back to Table of Contents Lords Hansard Home Page

Lord Goodhart: I am sorry that the Minister has not accepted our position on Amendment No. 207. It is a matter to which we may well have to return at Report stage. On Amendment No. 212, I cannot express a view at the moment, because I shall await with interest to see what the noble Lord, Lord McIntosh, writes in his letter to me. If that is not appropriate, we shall bring forward a new amendment to cover that point. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 209 to 213 not moved.]

Lord Whitty moved Amendment No. 214:

On Question, amendment agreed to.

[Amendment No. 214A not moved.]

Lord Whitty moved Amendment No. 215:

    Page 55, leave out lines 29 to 35.

The noble Lord said: These are tidying-up amendments. In rising to move Amendment No. 215, I shall speak also to Amendments Nos. 218 and 221. These amendments delete powers that would otherwise be granted under the Bill to specify in regulations the form and content of three notices that are part of the enfranchisement process--the notice of invitation to participate, the participation notice and the initial notice to commence the enfranchisement process. There is already a general power under the 1993 Act to make regulations on the form and content of any enfranchisement notice, and the specific powers, which are on the face of the Bill, are unnecessary duplications. I beg to move.

On Question, amendment agreed to.

[Amendments Nos. 215A and 215B not moved.]

Clause 118, as amended, agreed to.

Clause 119 [Invitation to participate]:

Lord Goodhart moved Amendment No. 216:

    Page 56, line 26, after ("company") insert (", or qualifying tenants intending to form and become participating members of a RTE company,").

The noble Lord said: In moving Amendment No. 216, I shall speak also to Amendments Nos. 217 and 219. These cover two short points. Amendments Nos. 216 and 219 seek to allow people who want to form an RTE company but who are not sure if they will get enough support to make it viable to serve an invitation to participate before forming the company. They will therefore avoid the costs of formation if they do not get enough support.

Amendment No. 217 covers another short point. The estimate of the costs involved in collective enfranchisement is completely unpredictable. It therefore seems pointless and probably misleading to include it. I beg to move.

Lord Richard: My Amendment No. 217A is part of this group. Perhaps I can speak to the amendment at

15 Mar 2001 : Column CWH224

this stage. The amendment would permit the RTE company not to include details of the proposed price and estimated costs in notices of invitation to participate that are served on those flats where the qualifying tenant would be the freeholder. I do not think that one could reasonably expect any party to a negotiation to be required to reveal its position to the other party except in its own time and in the manner of its own choosing. The amendment would make that positional point.

For the benefit of all members of the Committee who have the British Property Federation brief, which has been quoted in extenso during the course of the afternoon, I am happy to say that it supports the amendment.

Lord Kingsland: I support the amendment of the noble Lord, Lord Richard, and Amendment No. 216 standing in the name of the noble Lord, Lord Goodhart. However, I am not inclined to support Amendment No. 217, which stands in the names of the noble Lord, Lord Goodhart, and the noble Baroness, Lady Hamwee.

Under the present legislation, the enfranchising leaseholders are responsible for meeting the landlord's reasonable costs in dealing with an enfranchisement. If the costs are thought to be unreasonable they may be challenged in the leasehold valuation tribunal. It is unfair to expect someone who is subject to a compulsory purchase procedure to bear his own costs incurred as a result of someone else exercising the right. If a leaseholder is invited to participate in an enfranchisement, it is only fair that he is aware of the full cost that may be involved.

Lord Whitty: The amendment moved by the noble Lord, Lord Goodhart, would in effect remove the obligation on those who are proposing to establish an RTE company to serve notices without having first established that company. The Bill requires that all the formal steps in the enfranchisement process are carried out by an RTE company. We consider that to be the simplest approach.

Clearly, in the pre-consideration of whether one goes to an RTE company, we would expect leaseholders who are contemplating moving to enfranchisement to try to sound out their neighbours on a more informal basis to see whether there was sufficient support before they started incurring the expenses of formal proceedings, including the cost of setting up the RTE company itself. So there is an informal stage of consultation with the potential participants that would not be covered by this restriction. There is certainly nothing in the Bill to prevent such an informal process taking place.

I appreciate that even at the point where the RTE company is formed it may be difficult to assess the likely costs of the transactions in advance. There is a risk that an over-pessimistic estimate may discourage participants, and presumably vice versa. However, potential participants are at that stage being formally asked to accept a binding obligation to pay those costs. It is only fair and reasonable that they should have an

15 Mar 2001 : Column CWH225

idea of what they are letting themselves in for at that point. I therefore wish to resist, subject to the qualification on the informal procedures, the implications of the three amendments tabled by the noble Lord, Lord Goodhart.

Amendment No. 217A, which stands in the name of my noble friend Lord Richard, reflects a concern that leaseholders should not have to disclose their proposed bid to the landlord--to the reversioner--in notice of the invitation to participate. It would mean that they would not need to give it to the landlord--the reversioner--if he was also a qualifying tenant. However, that situation would not arise by definition. If the owner of the freehold of a building acquired a leasehold interest in that building, or indeed vice versa, the two interests merge by operation of the law, so that the freehold owner is not a qualifying tenant.

Although the landowner may be occupying a flat equivalent to those of the other leaseholders, he will not be a qualifying tenant in those circumstances and therefore will not be required to receive a notice of intention and an invitation to participate, with an indication of the costs. Therefore disclosure of one's negotiating hand could not take place by stealth in those circumstances.

It would obviously be necessary for us to give guidance to clarify this position, but, as I understand it, the situation that the noble Lord, Lord Richard, is understandably concerned about could not arise.

6.30 p.m.

Lord Goodhart: I am sorry that the Minister has not been more helpful. But these are minor points; we shall look at them again and consider what action to take. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 217 not moved.]

Lord Richard had given notice of his intention to move Amendment No. 217A:

    Page 56, line 43, at end insert ("save where the qualifying tenant of the flat is the reversioner").

The noble Lord said: I do not intend to move the amendment. I heard what my noble friend the Minister said but I do not profess that I understood what he said. Will he be kind enough to write to me, setting out the law on which he bases his opinion?

Lord Whitty: I shall write to my noble friend.

Lord Richard: In that case, I shall not move my amendment.

[Amendment No. 217A not moved.]

Lord Whitty moved Amendment No. 218:

    Page 56, line 45, leave out from ("company") to end of line 7 on page 57.

On Question, amendment agreed to.

[Amendment No. 219 not moved.]

Clause 119, as amended, agreed to.

15 Mar 2001 : Column CWH226

Clause 120 agreed to.

[Amendment No. 220 not moved.]

Schedule 8 [Enfranchisements by company: amendments]:

Lord Whitty moved Amendment No. 221:

    Page 84, line 7, leave out from ("company;"") to end of line 10.

On Question, amendment agreed to.

Schedule 8, as amended, agreed to.

Clause 121 agreed to.

[Amendment No. 222 not moved.]

Clause 122 [Valuation date]:

Lord Kingsland moved Amendment No. 222A:

    Page 57, line 21, leave out from ("payable),") to end of line 22 and insert ("in paragraph 1(1), for the definition of "the valuation date" insert--

""the valuation date" means the date of service of the reversioner's counter-notice."").

The noble Lord said: The amendment would fix the valuation date as the date of the landlord's counter-notice, rather than the date of the service of the claim notice. We support the proposal to fix the valuation date; however, we feel that it would be more appropriate for it to be fixed at the date of the landlord's counter-notice as this is the point at which the second party engages in the process.

Under standard compulsory purchase procedures, the valuation date is the day the deal is actually concluded. The amendment is part of a package intended to give the landlord a greater sense of security during the period over which his investment is being compulsorily purchased.

Also in this group is Amendment No. 223A, which would incorporate into the purchase price interest at the current bank base rate on the valuation figure. The Government's proposals have been framed on the assumption that landlords are more likely to delay the process than leaseholders. There is consequentially minimal protection for the freeholder against an enfranchising group that seeks to exploit the system.

If the valuation date is fixed at the date of the claim notice, it will be in the interests of leaseholders to delay the conclusion of the deal as the price they pay will not change, however rapidly the market rises. Meanwhile the landlord would stand to receive a lesser price than the market value on the date of the actual transaction.

We believe that the only way to discourage delay and ensure that leaseholders are encouraged to conclude the deal as quickly as possible is to provide for interest to be included.

Next Section Back to Table of Contents Lords Hansard Home Page