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Baroness Hanham: I thank the Minister for that reply. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 233AA to 233C not moved.]

Clause 134 [Abolition of limits on rights after lease extension]:

[Amendment No. 234 not moved.]

Clause 134 agreed to.

[Amendments Nos. 234A to 234C not moved.]

Clause 135 agreed to.

Baroness Maddock moved Amendment No. 235:


(" .--(1) Schedule 4A of the 1967 Act (certain leases granted by housing associations) is amended as follows.
(2) In paragraph 3(1), after "a lease granted by a housing association" insert ", or which reverts to a housing association on expiry,".
(3) In paragraph 3(2), omit paragraph (d).").

The noble Baroness said: The amendment refers to the previous Act and the low rent test. I highlighted the issue earlier. It is peculiar to registered social landlords and people who are in the process of buying their houses through shared ownership. This clause will ensure that shared ownership houses can be acquired only by shared owners, through the process of staircasing; that is, gradually increasing their interest in the property eventually to 100 per cent. As I understand it, originally there were amendments to the Leasehold Reform Act 1967 and to Housing Act 1996 to deal with the discrepancies. Many believe that that did not do so effectively, with the result that now shared owners may currently acquire their freehold to their houses through enfranchisement from registered social landlords for very small sums of money. I am sure that this is not the Government's intention. I believe that the amendment would deal with it. I hope that Government will either say that that is not the case or that we can deal with the situation. I beg to move.

4.45 p.m.

Lord McIntosh of Haringey: I do not think that the amendment will deal with it, but the noble Baroness, Lady Maddock, has identified a real problem with the

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1967 Act. It was not designed with shared ownership in mind, and the best thing for us to do is to take the problem away for consideration.

Baroness Maddock: I am grateful. I hope that it can be sorted out this time. There have been attempts in the past and we have not succeeded yet. I look forward to a successful amendment in the future. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Kingsland moved Amendment No. 235A:

    After Clause 135, insert the following new clause--

(" . In section 22 of the 1967 Act, insert-- VALIDITY OF TENANTS' NOTICE ETC
"(3A) If a tenant has given notice to acquire the freehold under this Part of the Act, and has received a notice from the landlord in response to his claim, but has not applied to the leasehold valuation tribunal to determine any of the matters referred to in section 21(1) within six months of the date of the landlord's notice, the tenant's notice shall be deemed to be withdrawn."").

The noble Lord said: This amendment is simply intended to harmonise the procedures for timescales for houses and flats. There is little point in my saying anything about Amendment No. 235B in view of the Minister's response on two previous occasions to amendments seeking to achieve the same objective.

Lord McIntosh of Haringey: Amendment No. 235A would mean that where a leaseholder did not take timely action to resolve any dispute over the price payable or related matters, the claim would be treated as withdrawn. Given that either party can apply to a leasehold valuation tribunal to resolve such disputes and that, in an enfranchisement case, there is no fee for doing so, we do not see why it is necessary to punish the leaseholder for failing to take the initiative. If the landlord wishes matters to proceed, he has only to apply to the leasehold valuation tribunal himself. We do not consider that it would be appropriate to penalise the leaseholder, and only the leaseholder, where both parties have neglected to take any further action.

Amendment No. 235B would amend the 1967 Act so that, instead of valuing the property as at the date of the leaseholder's initial claim, the valuation date would be the date of the landlord's counter-notice. As we have said in the context of collective enfranchisement, we would normally expect the landlord to serve a counter-notice relatively quickly after the service of initial notice. We wish to encourage that.

In those circumstances, adopting the date of the counter-notice rather than the date of the initial notice is unlikely to have a material effect on the price payable. If the landlord delays serving a counter-notice, an advantage could be gained at a time of rapidly increasing property values, and we would not want to encourage that.

Lord Kingsland: I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

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[Amendment No. 235B not moved.]

Clauses 136 and 137 agreed to.

[Amendment No. 235C not moved.]

[Amendment No. 235D had been withdrawn from the Marshalled List.]

[Amendment No. 236 not moved.]

Clause 138 [Extending meaning of service charge and management etc.]:

Lord Richard moved Amendment No. 236A:

    Page 61, line 5, after ("properties") insert (", enfranchised houses and flats").

The noble Lord said: There is a problem that charges arising from a leasehold and freehold of a building included within an estate management scheme are not statutorily subject to reasonableness, nor indeed to dispute procedures through an LVT. Estate management schemes, as I understand it, are there to maintain the character of an area--for example, the Grosvenor estate or the Dulwich estate--and to protect it from any possible damage by enfranchising leaseholders; for example, the hideous crime of pebble-dashing a house in Grosvenor Square.

The manager of a scheme, usually the landlord, is entitled to levy charges arising from the operation of the scheme. It seems somewhat unjust that homeowners within such a scheme should have no defence against unreasonable estate charges. We therefore propose the extension of Schedule 9 to extend the application of the legislative service charge regime, including requirements of reasonableness, to enfranchised houses and flats. The later suggested amendment to Schedule 9 is designed specifically to include charges arising from EMS. I beg to move.

Lord Whitty: It is clear that the issue raised by my noble friend Lord Richard needs to be looked at. I regret to indicate to the Committee that we have not worked out an option for doing so in this Bill. We are certainly not opposed to ensuring that enfranchised leaseholders have rights against unreasonable charges, but we need to ensure that such rights would work properly.

The way in which the amendment is couched does not do so. It seeks to amend the definition of "service charge" so that it includes charges levied under estate management schemes. By implication, that seeks to allow those who pay charges under such schemes to enjoy the same rights as those who pay a service charge under their leases. The problem is that most, if not all, of the relevant rights to which that would give rise are expressly written in terms of rights being exercised by a tenant; for example the Landlord and Tenant Act 1985, which provides that a tenant may apply to a tribunal for determination of the reasonableness of a service charge.

The obligation to pay a charge under an estate management scheme would normally fall on a freeholder and not on a tenant. Indeed, where it is a house--as is the case in this amendment--that has been enfranchised, the freeholder of the previous leasehold interest will in effect have merged and there

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will be no tenant in any sense for that property. Changing the definition of "service charge", as these amendments propose, would not achieve the objective.

Having said that, this is an issue which needs to be addressed, but if we are to do so the whole issue will need to be looked at very carefully. It is our judgment that it would not be possible to do that in time for measures to be included in this Bill. However, in the longer term the Government are intending to examine this area, and with that assurance I ask my noble friend to withdraw his amendment.

Lord Richard: In view of the expressions of sympathy from my noble friend Lord Whitty, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 236B not moved.]

[Amendment No. 237 had been renumbered as Amendment No. 238YA.]

Clause 138 agreed to.

Schedule 9 [Meaning of service charge and management]:

[Amendment No. 237A not moved.]

Lord Goodhart moved Amendment No. 238:

    Page 92, line 8, at end insert--

(" .--(1) Section 21 of the 1987 Act is amended as follows.
(2) In subsection (3)(a) for "or a resident landlord" there is substituted "(aa) the interest of the landlord in the premises is held by a resident landlord and more than half the flats in their premises are held on long leases,".
(3) After subsection (7) insert--
"(7A) References in this Part to a landlord (except in subsection (3)) include any person who is responsible under a lease for the management of the premises or any part of the premises.".").

The noble Lord said: This is a very short point. It arises under Section 21 of the Landlord and Tenant Act 1987, which exempts from the tenants' rights to apply to the court for the appointment of a manager any premises where the interest of the landlord in the premises is held by a resident landlord. We wish to allow the tenants to apply to the court for the appointment of a new manager even though in certain circumstances there is a resident landlord.

The exemption would be restricted to cases where the interest of the landlord is held by a resident landlord and more than half of the flats in the premises are held on long leases. Where more than half of the flats in the premises are held on long leases there would in many cases be a right to collective enfranchisement, which would seem to be a more appropriate remedy. Property can be badly managed just as much when the landlord is resident as when he is non-resident and there should not be an absolute bar to the landlord in cases where he is resident. I beg to move.

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