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Lord Kingsland: My Lords, for obvious reasons, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 91 [Duty to provide information]:
Lord Falconer of Thoroton moved Amendments Nos. 46 to 52:
- Page 46, line 10, after "company," insert "the company may give notice to"
- Page 46, line 16, leave out "must" and insert "requiring him to"
- Page 46, line 17, leave out "him to provide"
- Page 46, line 20, leave out "RTM company" and insert "notice"
- Page 46, line 28, leave out "person may not be required" and insert "notice may not require a person"
- Page 46, line 31, after "required" insert "by a notice"
- Page 46, leave out line 33 and insert "notice is given"
On Question, amendments agreed to.
Clause 96 [Functions relating to approvals]:
The Earl of Caithness moved Amendment No. 53:
- Page 48, line 39, at end insert—
The noble Earl said: My Lords, Clauses 96 and 97 govern the ability of an RTM company to grant approvals. As noble Lords will be aware, the landlord is given 30 days' notice in some circumstances and 14 days in other circumstances.
The purpose of the amendment is simple. I hope that the noble and learned Lord will agree to it. It would limit the power of the RTM company to grant an approval to something of detriment which will diminish the reversionary value of the landlord's interest. I am sure that the Government want that. I beg to move.
Lord Williams of Elvel: My Lords, I put my name to the amendment because I believe that the Government should pay considerable attention to the issue.
I give an example. Let us suppose that a leaseholder decides to knock down half his flat. He applies for planning permission; he applies perhaps for listed building permission and obtains it. He then goes to the RTM company—he would at present go to the landlord—and says, "I now want a licence". In its wisdom the RTM company decides that it is a good idea. Alternatively, let us suppose that the leaseholder decides to turn his basement into a lap-dancing club. He obtains permission for a change of use and gets planning permission. He goes to the RTM company which says, "Yes, this is not a bad idea".
Both proposals would probably damage the reversionary interest of the landlord. The point which the noble Earl's amendment addresses should be addressed by the Government.
Lord Monson: My Lords, it is a good and worthwhile amendment. The only improvement would be the inclusion of the word "significant" before "diminished". If a proposed alteration, improvement or change of use were to lead to a diminution in reversionary value by a mere one quarter of 1 per cent one would not be justified in interfering; but any significant diminution would be wrong. I hope that the Government will accept the amendment in principle.
If the Government wish to insert "significant", or an equivalent word, that can always be done at Third Reading or in another place. I look forward to hearing the Minister's response.
Lord Falconer of Thoroton: My Lords, we agree with the noble Earl, Lord Caithness, that it is important that the landlord's interests are safeguarded against the granting of inappropriate approvals. That is the current position. However, we believe that the Bill already addresses this satisfactorily.
As noble Lords will know, Clause 96 provides that where the right to manage is acquired, the RTM company takes on primary responsibility for all approvals which are required under the leases. However, where the RTM company proposes to grant a consent, Clause 96(4) provides that it must first give written notice of that intention to the relevant landlord. The landlord then has the opportunity to decide whether to agree or object to the granting of that consent and to notify the RTM company accordingly.
Where a landlord decides that he wishes to object, the RTM company may grant the approval only if one of two conditions are met. First, the landlord must agree to withdraw the objection. Alternatively, an application must be made to a leasehold valuation tribunal for its agreement that the approval should be granted.
We believe that these arrangements already make admirable provision for the safeguarding of the landlord's legitimate interests. A landlord who believes that his reversionary interest would be damaged by the granting of an approval is able, first, to ensure that the RTM company does not disregard that and grant the approval itself and, secondly, to seek to persuade a leasehold valuation tribunal that the approval should not be granted. In the latter case, one of the arguments that the landlord would be able to place before the tribunal would be that the approval would unduly harm his reversionary interest although, of course, the question of whether the approval should be granted would have to be decided in accordance with the terms of the lease, as the noble Earl would accept.
We do not think that the amendment adds anything to those arrangements. Our first concern is that the question of what will or will not diminish the reversionary value of the landlord's interest is both vague and subjective. It could be argued that any consent for improvements or alterations might, in some way, diminish the immediate value of the landlord's reversion. Does that mean that the RTM company should never grant an approval for these matters? Indeed, does the amendment mean that the company should not grant an approval even if the landlord agrees that approval should be granted?
We are not clear, furthermore, what should happen where the RTM company decides that it wishes to grant an approval on the basis that it does not believe that the reversionary interest would be affected and then the landlord alleges otherwise. Who would adjudicate in such disputes? And why would that be better then the present arrangement of allowing all disputed approvals to go to the LVTs? We believe, therefore, that the arrangements in the Bill already address the issue raised in the amendment; and that they do so in the most sensible and practical way. In effect, they prevent any approval being granted unless the landlord or the LVT agrees. I believe that we do that in a sensible and practical way. On that basis, I hope that the noble Earl will not press the amendment.
The Earl of Caithness: My Lords, I am grateful for the support I received from the noble Lord, Lord Williams of Elvel, and the noble Lord, Lord Monson. I listened carefully to the Minister's reply. I was reassured to some extent. I would not say that the position of the landlord was admirably protected—I think that those were the words used by the noble and learned Lord—otherwise I would not have tabled the amendment. However, I should like to consult between now and another stage because it is an
Amendment, by leave, withdrawn.
Lord Falconer of Thoroton moved Amendment No. 54:
On Question, amendment agreed to.
Schedule 7 [Right to manage: statutory provisions]:
Lord Falconer of Thoroton moved Amendments Nos. 55 to 57:
On Question, amendments agreed to.
Clause 103 [Cessation of management]:
Lord Falconer of Thoroton moved Amendments Nos. 58 and 59:
On Question, amendments agreed to.
Clause 111 [Index of defined expressions]:
Lord Falconer of Thoroton moved Amendment No. 60:
On Question, amendment agreed to.
Clause 113 [Non-residential premises]:
"( ) The RTM company must not grant an approval in relation to the making of alterations, improvements or change of use which will diminish the reversionary value of the landlord's interest."
6.30 p.m.
Page 48, line 43, after "of" insert "structural alterations or"
Page 100, line 12, at end insert—
"( ) The power in section 24 to make an order appointing a manager to carry out functions includes a power (in the circumstances specified in subsection (2) of that section) to make an order that the right to manage the premises is to cease to be exercisable by the RTM company; and such an order may include provision with respect to incidental and ancillary matters (including, in particular, provision about contracts to which the RTM company is a party and the prosecution of claims in respect of causes of action, whether tortious or contractual, accruing before or after the right to manage ceases to be exercisable)."
Page 100, line 21, after "42B" insert "of the 1987 Act"
Page 101, line 23, leave out "registered" and insert "recognised"
Page 52, line 29, leave out "is"
Page 52, line 30, at end insert ", begins so to act or an order under that Part of that Act that the right to manage the premises is to cease to be exercisable by the RTM company takes effect."
Page 57, line 5, column 2, leave out "Section" and insert "Sections 69(1) and"
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