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Lord Goodhart: Earlier today I moved Amendment No. 233, which proposed the complete removal of excluded tenancies on this ground. I would be happy to support, as an alternative, the amendment moved by the noble Baroness, Lady Hanham.

Lord McIntosh of Haringey: In response to the earlier amendment, I said that there is a case for amending the rural exemption to target it at the kind of properties we wish to exempt. I said that we were willing to look at that in the longer term but I did not think there was anything that we could do within the time scale of the Bill.

It is true that the amendment of the noble Baroness, Lady Hanham, is more targeted than the complete removal of the rural exemption. It restricts the rural exemption to cases where a house is integral to the management of a rural estate and had been leased on terms relating to that purpose. We shall certainly consider that element of targeting, although I do not believe that is what was intended by the rural exemption.

The point of the rural exemption is not whether the house is integral to the management of the estate but whether it has a historical connection to the estate. There is scope for argument about that, but the point that the noble Baroness made in relation to Amendment No. 247 can be taken into account in our considerations.

6.15 p.m.

Baroness Hanham: I thank the Minister for that helpful reply. I am not quite sure of the difference between the historical aspect that he mentioned and the legislative aspect. I do not think that it matters. I am grateful to the Minister for the concern that he has shown about the matter. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Baroness Hanham moved Amendment No. 247A:


(" .--(1) Any provision in a lease of a dwellinghouse to which this Act applies, whensoever created, requiring a tenant to insure with a nominated company and through the agency of a lessor (or both) or any other person, firm or company shall be void.
(2) Such provision shall continue to be effective so far as it relates to the insurance of a dwellinghouse against the usual household risks, for the full reinstatement value and index-linked, with any reputable insurance company.").

The noble Baroness said: This amendment seeks to deal with the question of insurance companies and the necessity to insure with particular companies. Under the terms of most leases, there is a requirement for the lessee to insure the leased premises. More often than not, the requirement is that it should be with an insurance company named by the landlord or through the landlord's agency. Under such circumstances,

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leaseholders do not have the freedom of choice to obtain the best terms and conditions for their insurance. Flat holders can apply to the leasehold valuation tribunal on this matter, but house leaseholders do not have that protection.

Threats are often made by landlords to take forfeiture action in cases of non-compliance, which can sometimes result in tenants being intimidated into taking out double insurance, with the complications that that entails in the event of a claim.

The lessees on a long lease, on a full repairing basis, have the major interest in the premises and should be able to insure with any reputable insurance company of their choice. I beg to move.

Lord Goodhart: I rise to support the amendment. The practice is an abuse. The motive for including such provisions is, almost always, to enable the landlord to obtain commission. I have long taken the view that commission paid by insurance companies is a form of legalised bribery. Anything that reduces it seems to me to be a good thing. It will enable insurance policies to be cheaper than they are now, although that is clearly a long way beyond the scope of the Bill. I am happy to support the provision in the amendment.

Lord Hodgson of Astley Abbotts: I rise briefly to support the amendment of my noble friend Lady Hanham. I declare an interest in that I am director of a building society. The good practice in a building society now is to allow people to insure more widely. There was previously a practice whereby insurance could be obtained only from one company because that assured the position of the society. The amendment is in keeping with modern consumer choice and gives people a preference.

Lord Whitty: Again, we have some understanding of the concerns behind the amendment. We have received many reports that leaseholders have been required, usually under the terms of their lease, to insure their property with a nominated company, sometimes at inflated premiums. Under the present provisions, the leaseholder can go to an LVT to challenge the landlord's choice of nominated insurer. We recognise that under the present system the cost of launching such a challenge may turn out to be greater than the money saved. For that reason, among others, we plan to reduce the minimum fee for applying to the LVT in such cases.

The amendment takes a more sledgehammer approach and suggests that we should ban nominated insurer clauses outright. I have some sympathy with that. But we need to give considerable thought to how that works out in detail. Landlords have a legitimate interest in ensuring that their property is properly insured, and we need to make sure that any new arrangements are fair to the landlord and also give some flexibility to the leaseholder. Moreover, the clause as drafted would require overriding the insurance terms of existing leases. While that might be desirable in certain cases, we could not do that without having previously consulted widely on the implications. I hope, therefore, that the noble

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Baroness will not pursue the amendment. We undertake to look at this matter as a possible longer term measure outside the scope of the Bill.

Baroness Hanham: I thank the Minister for his reply. I make two points in response. First, as I suggested in my opening remarks, I believe I am right in saying that leaseholders of flats have the right to go to a leasehold valuation tribunal but leaseholders of houses do not. I am concerned about that discrepancy. I see noble Lords shaking their heads, but I believe that that is the situation. Secondly, I cannot believe that it is beyond the wit of all the wonderful lawyers--it may be beyond mine--to devise a system whereby the landlord can be satisfied that the required insurance is in place. I am sure that nowadays that is perfectly tenable. None the less, I am glad that I have raised the matter. I thank the Minister for his courteous reply. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Baroness Hanham moved Amendment No. 247B:

    After Clause 142, insert the following new clause--


(" .--(1) Section 1 of the Landlord and Tenant Act 1987 is amended as follows.
(2) In subsection (2), before paragraph (a) insert--
"(za) they consist of an individual house;".").

The noble Baroness said: The Landlord and Tenant Act 1987 makes provision for qualifying tenants in blocks of flats to have rights of first refusal when the landlord sells his interest. The Housing Act 1996 strengthened this provision and made it a criminal offence for the landlord not to offer the freehold to his tenants if he decided to sell it. There is again a discrepancy between flats and houses. House leaseholders do not have the right of first refusal. There have been instances in which whole estates of houses, in particular in the Midlands and the North East, have been bought over the heads of their leasehold owners by professional freehold companies. The amendment will put house leaseholders on a footing of equality with flat leaseholders as far as concerns the right of first refusal. I beg to move.

Lord Whitty: I understand the concern but I do not believe that we can deal with it as simply as this amendment. In this case the noble Baroness is absolutely right that there is a difference between houses and flats. There are some problems with the existing legislation that governs the right of first refusal in relation to flats, and we may need to look at that. However, it would require lengthy amendments to existing legislation to achieve this objective. We would probably need to draft fresh provisions with which we cannot realistically deal in the timescale of the Bill.

We are aware that there is a loophole in the existing right of first refusal in relation to flats, in that it does not apply to the sale of a company that owns a freehold

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as opposed to the sale of the freehold itself. Therefore, companies can be sold without the flat leaseholder having the right of refusal in real terms.

If we looked at the whole area we would look at the shortcomings of the existing provisions as well as their extension to the housing area, which raises separate issues. The noble Baroness must be fed up with my saying that I have deep sympathy with what she is trying to do, but I do not believe we can do it simply by this method. We do not have the time or scope to do it within this Bill.

Baroness Hamwee: As the Minister said, this is similar to answers that the Minister has given to other amendments. I do not expect him to respond to this point but nevertheless I make it. I hope that the Government will consider, if the Bill falls because of the dissolution of Parliament in the event of an election, but is brought back afterwards, making real efforts to use the opportunity to pick up many of the points being made in this technical area. It is fairly unlikely that we will have a chance to come back to the question during the next Parliament. We might, of course--who knows--but it would be a pity if opportunities were missed.

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