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Lord Williams of Elvel: I have little sympathy for the first amendment moved by the noble Lord, Lord Kingsland, but a fair amount of sympathy for the Law Society amendment proposed by the noble Lord, Lord Goodhart. However, I have a great deal of sympathy for Amendment No. 127, just spoken to by the noble Lord, Lord Kingsland. I believe that it is extremely important to ensure that a form of exit strategy--to use military terms--is put in place in case everything goes wrong. As sure as eggs is eggs, sooner or later things will go wrong. I hope that my noble friend will agree that a case has been made by the noble Lord, Lord Kingsland, for Amendment No. 127.
Lord McIntosh of Haringey: Perhaps I may first respond to what the noble Lord, Lord Goodhart, said before introducing his amendment in this grouping. We find the amendments proposed by the Law Society and included, at least in part, on today's Marshalled List quite helpful. Perhaps I may suggest to the noble Lord that, in order not to distort the Report stage of
the Bill by swelling the list of amendments with proposals which were not considered in Committee, he should consider asking representatives of the Law Society to come in to speak to officials and Ministers. If he so wishes, the noble Lord could accompany them. The society should send in a note covering the proposed amendments so that, if possible, we can by agreement deal with those matters as expeditiously as possible. Taking them "offline", as it were, would avoid the risk of swelling the Marshalled List on Report with matters that rightly should have been considered in Committee.Two different themes are pursued within this group of amendments. I should like to deal with them separately. The first is covered by Amendments Nos. 123, 124 and 125. I am afraid it is clear that the noble Lord, Lord Kingsland, has a different view of the right to manage from our own. The amendments introduce the idea that the acquisition of the right to manage could be resisted if it would seriously prejudice the interests of any recipient of a claim notice; that is, a landlord or a manager. No indication is given of what is meant by "serious prejudice". This means that it would be entirely open to a landlord to make all kinds of spurious claims and thus force the RTM company to seek a determination from the leasehold valuation tribunal on whether the prejudice was serious enough.
Our view is that the right to manage is necessary to redress the existing imbalances in the leasehold system. Where a block of flats is predominantly leasehold, the leaseholders will hold the majority stake in the block. The landlord, with his minority stake, will often control the management and, too often, will do so without adequate regard to the interests of the leaseholders. We do not think that that is right. We intend that leaseholders holding the majority stake in a block should be able to take over its management. The qualifying rules in the Bill will reflect this, setting a number of simple, factual criteria and thresholds which must be met.
The amendment would move significantly away from the philosophy which underlines the right to manage. Once again, the noble Lord, Lord Kingsland, is seeking to give the minority interests of the landlord unfair and unmerited protection at the expense of the majority interests of the leaseholders by introducing subjective criteria which would necessarily lead to delay, dispute and uncertainty within the acquisition process. I am afraid that we cannot support the amendments.
Our attitude towards Amendments Nos. 127 and 140A is rather different. I believe that both seek to achieve the same end. Each wishes to ensure that the right-to-manage company can be removed if it fails to do its job properly. This would be done by making an application to the leasehold valuation tribunal for an order that the right to manage should cease.
Given that the amendments do not say anything to the contrary, I assume that if the leasehold valuation tribunal agreed to cessation, it would be on the basis that the management reverted to where it was before the acquisition of the right to manage. We entirely
agree that it should be possible for the right to manage to be taken away where the right to manage company persistently fails to do its job properly. However, the Bill already provides for that. By virtue of paragraph 8 of Schedule 7, any affected party, including a landlord, can apply to the leasehold valuation tribunal for replacement of the RTM company under Part II of the Landlord and Tenant Act 1987. Replacement under Part II of that Act can take place on a number of grounds. The first is a failure properly to carry out management obligations. In that respect, the approach taken in this legislation duplicates that proposed in the amendments. Part II goes further and also allows replacement on the basis of unreasonable service charges and on the basis of failure to comply with standards set down in the approved codes of practice. I should add that Part 2 of Schedule 11 to this Bill would add the further ground of the levying of unreasonable administration charges.The grounds on which replacement of the RTM company can take place under the Bill as it stands are broader than those proposed in the amendments. We think that that is right. It will ensure that the RTM company, as manager, is treated in the same way as landlords who will be outside of the right to manage.
The noble Lord, Lord Kingsland, referred to the voluntary handback of management. That is already provided for in Clause 103(2). Handback will be made in accordance with the terms of the agreement made under that provision.
However, we see some merit in a procedure which would incorporate some aspects of what is proposed. If we understand the amendments correctly, it is suggested that it should be possible for the leasehold valuation tribunal to order that the right to manage ceases. Management arrangements would then automatically revert to the arrangements provided for under the leases. Under the Bill as it stands, on the other hand, the leasehold valuation tribunal can order that management reverts to the landlord but only on the basis of an order made under Part II of the 1987 Act and not on the basis of the normal lease arrangements.
I should like to reflect on the possibility of some kind of synthesis of the two approaches. It will still need to be possible for the LVT to be able to appoint a new manager to replace a deficient RTM company, and we believe that this is best done on the broader grounds provided in the 1987 Act. But there is some merit in the leasehold valuation tribunal having the option to order that the right to manage should cease and that management should revert to the landlord if that is the best option in the circumstances of the case. This could lead to a shorter and simpler order.
I cannot commit the Government to the outcome, but we are prepared to consider that possibility seriously and to bring forward an appropriate amendment at a later stage if possible.
Lord Williams of Elvel: My noble friend has not committed the Government--he said "if possible"--to bringing forward an amendment at a later stage. Does my noble friend accept the principle of the amendment
of the noble Lord, Lord Kingsland? If he does accept the principle, then clearly an amendment will be forthcoming.
Lord McIntosh of Haringey: I said that the Bill already provides for what the amendments of the noble Lords, Lord Kingsland and Lord Goodhart, seek to achieve. I have acknowledged that there may be a way of providing a synthesis between what the Bill achieves--and the Bill will work as it is, let me make that clear--and what the amendments seek to achieve, which could cut some corners and provide for a shorter and simpler procedure. That is what we are willing to explore. There is no concession in saying that we agree with what the amendments seek to achieve because the Bill already provides very largely for that.
Lord Kingsland: The Minister appears to be in an uncharacteristically emollient mood, from which I am delighted to be the beneficiary. I look forward with keen anticipation to the Report stage, when I expect the Minister will table his compromise.
Lord McIntosh of Haringey: I hope that we will be discussing matters before that.
Lord Kingsland: Even better. So far as concerns Amendments Nos. 123, 124 and so on, I was sad to hear what the Minister said, but not at all surprised. This issue is a re-run of what was quite fully discussed in the Grand Committee and at the Report stage of the previous Bill. I shall reflect on the need to bring the matter back at the Report stage of this Bill and on whether to divide the House. In the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 124 to 126 not moved.]
3.45 p.m.
Clause 85 [Deemed withdrawal]:
Lord Goodhart moved Amendment No. 126A:
- Page 42, line 16, leave out "claim notice is deemed to be withdrawn" and insert "tribunal may, on the application of any person specified in section 84(2)(a) above, make an order declaring the application to have ceased to have effect on such dates as may be specified by the tribunal"
The noble Lord said: This is the next instalment of the Law Society group of amendments. The effect of the Bill as it now stands in Clause 85 is that if the RTM company has given notice that it wishes to take over management but then receives a counter-notice under Clause 82(2) alleging that, by reason of a specified provision under this chapter, it was not entitled to take over the management, then, if no application is made within a period--
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