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"National Health Service and Community Care Act 1990 (c. 48)

In section 4A of the National Health Service and Community Care Act 1990 (provision of certain services under NHS contracts), in subsection (3), in paragraph (a) of the definition of "ophthalmic services", for "39(a)" substitute "39(1)(a)"." Page 90, line 23, leave out "In"

    Page 90, line 24, after "Act)" insert "shall be amended as follows.

(2) After paragraph 40 insert--
"40A A Patients' Forum established under section 12 of the Health and Social Care Act 2001.
40B A Patients' Council established under section 13 of the Health and Social Care Act 2001."

On Question, amendments agreed to.

Schedule 5, as amended, agreed to.

Schedule 6 [Repeals]:

Lord Hunt of Kings Heath moved Amendment No. 326:

    Page 92, line 9, column 2, at end insert "In section 33(1B), the words from "including, in particular," to the end of the subsection."

On Question, amendment agreed to.

22 Mar 2001 : Column 1709

Lord Hunt of Kings Heath moved Amendments Nos. 326A and 327:

    Page 92, line 34, column 2, at beginning insert--

    "Section 12(2)."

    Page 92, line 36, column 2, leave out "18" and insert "17"

22 Mar 2001 : Column 1710

On Question, amendments agreed to.

Schedule 6, as amended, agreed to.

Title agreed to.

        House resumed: Bill reported with amendments.

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Official Report of the Grand Committee on the

Commonhold and Leasehold Reform Bill [H.L.]

Thursday, 22nd March 2001.

The Committee met at four of the clock.

[The Deputy Chairman of Committees (Lord Skelmersdale) in the Chair.]

Clause 125 agreed to.

Clause 126 [Replacement of residence test]:

Lord Williams of Elvel moved Amendment No. 225:

    Page 58, line 3, leave out subsection (2).

The noble Lord said: In moving this amendment, it may be for the convenience of the Committee if I speak also to Amendment No. 227. Included in the group are other amendments which propose similar arrangements. We now move on to the question of the renewal of leases. From our debate so far, I understand that the Government are not entirely committed to abolishing leasehold. Therefore, we have to look at the problems of those who remain leaseholders under the present system.

I recognise that the Government have a problem. Having removed the residence test for qualifying tenants who wish to enfranchise, they then have to address, as they have done in Clause 126, the problem of tenants who wish to renew their leases. I do not think that the Government have it quite right in this instance. As drafted, the Bill is unduly restrictive. Having removed the residence test for enfranchisement, it seems to be slightly unfair on those who wish to have a new lease to provide that they should be qualifying tenants for at least the previous two years. My amendment, coupled with Amendment No. 227, would reduce that period to six months. There are some fairly serious arguments in favour of that, which I am sure other Members of the Committee will deploy. It is a question of fairness. I recognise that there is a problem, but I believe that the Government have gone a little too far. I beg to move.

Lord Goodhart: Our Amendment No. 226 is grouped with Amendment No. 225. Amendment No. 226 would retain a residence qualification, though a considerably reduced one in time. For the reasons given earlier, we no longer wish to press for the preservation of a residence requirement. In those circumstances, I shall not be moving the amendment.

Lord Kingsland: I am sad that the noble Lord, Lord Goodhart, does not intend to move his amendment because had he done so we would have supported it.

We also have Amendment No. 226A--Amendment No. 227A is consequential--which seeks to replace the existing residence test with an occupancy requirement. If there is no occupancy requirement, we believe that

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investors will quickly realise that they can benefit from a windfall gain through being able to sell the extended lease at a premium. This would encourage speculative purchasing and would eventually distort the market by pushing up the value of short leases. This, in turn, would make it more difficult to identify a fair price for enfranchisement.

The Earl of Caithness: I rise to support the amendment of the noble Lord, Lord Williams, to which I have added my name. I hope that it will receive a favourable comment from the Government because on Clause 116 stand part the noble Lord, Lord Whitty, said that he did not want speculators to benefit from enfranchisement. If one does away completely with the residency test, it is exactly those speculators who will benefit the most from enfranchisement.

There is no question that there are people out there in the market--particularly in the London market--who buy properties with a view to enfranchising them. If there is no residency test, one will encourage the development of a small and, to my mind, unacceptable group of people who will do that as a professional way of making money. That would be an abuse of the normal housing market and would be bad for the landlord/tenant system.

I thought of tabling an amendment to provide that any non-resident should pay 100 per cent of the marriage value. Having listened to the debate last week, I knew that that would commend itself, notably to the Liberal Democrat Party, which would like marriage value to continue. However, perhaps the better way of achieving what is required is the way that the noble Lord, Lords Williams, has suggested: that there should be at least a six-month residency test. I would prefer a 12-month test. However, I understand the difficulties that some tenants have faced under the present condition of three years. I believe that the noble Lord, Lord Williams, has reached a sensible compromise.

Lord Selsdon: I have a problem with the difference between what is a qualifying tenant, a qualifying person or a qualifying being and what is residency and non-residency. As the Bill stands, it is not so much occupation but ownership that determines matters.

In my banking life, I have come across many situations where a family decides that it will buy a flat for its children for them to occupy for a period of time. Some of these flats may not qualify for enfranchisement. The difficulty we have is in separating those whom we believe morally should have a right to enfranchise from those who would do so from a purely speculative point of view.

Lord Williams of Elvel: I am sorry to interrupt the noble Lord. The definition of a qualifying tenant is set out in Section 6 of the Leasehold Reform, Housing and Urban Development Act 1993, which states:

    "That condition is that the tenant has occupied the flat as his only or principal home".

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Lord Selsdon: I understand that. I am referring to the difficulties that have been created by previous legislation where it has not necessarily been clear. When one is faced with serving a Section 13 notice and having to prove people's residency status--whether they are domiciled or ordinary residents of the United Kingdom; whether they are expatriates who have been abroad for a particular time; whether for three years out of the past 10 they have been occupying the property--one finds that there are people who put telephone bills and so on in their own names even when they are not there. People get up to these kinds of tricks because of the complexity of the previous legislation and the failure of previous governments to address the issue.

I am trying to say that, if possible, we should treat ownership as the key factor: how long someone has owned a property; whether it is for the benefit of their family or for their own personal benefit I have often been involved with members of the international expatriate community who feel very strongly about the previous legislation. They have bought property for themselves and their future, let it and then found that for some reason they are unable to enfranchise. I should like to see the definition reworded. If we start to argue about whether it should be three months, six months or nine months, speculators may find an opportunity to put someone into the premises and have a side agreement. It is not clear. If our objectives are to treat well those who deserve to be and to try to stop speculation, the Bill as drafted does not achieve them.

Lord Richard: My name is attached to the amendment. I thought that I was putting my name to a proposal to abolish the two-year residence qualification. Having heard the noble Earl, Lord Caithness, I was not sure whether that was the effect of the amendment. On the assumption that it is, I shall listen with great interest to what the Government have to say; if it is not, I shall return to it at a later stage.

The Parliamentary Under-Secretary of State, Department of the Environment, Transport and the Regions (Lord Whitty): Some of the principles that we have just debated were dealt with in the previous context. We appreciate the concern expressed by the noble Lord, Lord Kingsland, and others that to abolish the residence test could provide an incentive and a temptation for speculative purchasers rather than genuine home-owners. To reiterate, it is certainly not the Government's intention to enable investors to expropriate the assets of others by entering this market. In addition, the existing test excludes leaseholders from the right to renew their leases, and in many cases they are in genuine need of the protection that is afforded by that right.

As has been said, currently many flats are occupied for a variety of different reasons. They may be second homes, against which we are not legislating. To bring

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home the point more acutely to some Members of the Committee, they may be the London homes of people whose main residence is elsewhere for various purposes: others are sublet while the leaseholders work abroad, as the noble Lord, Lord Selsdon, said, or because the owners have had difficulty selling them. The occupiers or owners of those flats are not speculators, or, strictly speaking, investors, but private owners. If the lease becomes too short they will be unable to sell it without first extending it. Without a right to renew the lease at a reasonable price they are left vulnerable to greedy landlords. Moreover, some landlords have made a practice of refusing to let to genuine residents unless they create a company to which the lease is then given. Although these people lease through a company they are genuine residents. That structure would automatically prevent them from ever qualifying under the existing residence test.

Instead of requiring leaseholders to reside in their flats, the Bill provides the alternative requirement that they must have held a long lease for at least two years before they can exercise that right. That is not perfect but it goes some way to remove the opportunity for short term speculative gain while protecting the interests of other residents, which seems to represent a sensible balance. It is, therefore, a matter of balance and a number of these amendments seek to strike a different one.

The amendment spoken to by the noble Lord, Lord Goodhart, dealt with the abuse of company lettings. While a minimum residence of 12 months, as in the amendment of the noble Lord, Lord Kingsland, would be a greater deterrent to speculators than a shorter period, it would still create difficulties for the categories of private owner that I have mentioned.

The issue of evasion mentioned by the noble Lord, Lord Selsdon, is dealt with to a large extent by the two-year provision, because eligibility depends on owning the lease for two years rather than on a dubious basis of proof of actual residence.

Amendment No. 225 would reduce the period to six months. That, again, is subject to the same criticisms as apply to the amendment of the noble Lord, Lord Kingsland. The noble Lord coupled that amendment with the amendment of my noble friend Lord Richard, which would have gone one stage further. Unusually, my noble friend Lord Richard was confused about the implications of his amendment. My noble friend Lord Williams indicated that the two amendments should be taken together. However, as we understand it, Amendment No. 227 not only scraps the residence test but also cuts out the requirement that the leaseholder should have been a qualifying tenant for two years, in which case there would be no anti-speculation test whatever.

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