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Lord Jacobs: My Lords, I believe that I said that excluding inflation. Inflation disguises the true situation. I shall be referring to that with regard to another amendment. If there was no inflation, the tenant would be very clear that its value goes down every year—every day indeed.
Baroness Gardner of Parkes: My Lords, I find this amendment, the amendment tabled by the noble Lord, Lord Williams of Elvel, and the statements made by
the Minister on the previous occasion all slightly conflicting. I was quite impressed by the remarks of the noble and learned Lord, Lord Falconer, that tapering would automatically happen and therefore the marriage value would not apply. I find the text of Amendment No. 20, tabled by the noble Lord, Lord Williams of Elvel, rather too definitive in setting matters out. Therefore, I do not strongly support his amendment this time, whereas last time I strongly supported its principle.Is the marriage value simply that there is an element of compulsion that the landlord is being forced to sell? Is a marriage value given to compensate him because, as was explained a moment ago, if he puts his property on the market to sell the reversion he will not get any marriage value? Is the marriage value simply because he is being obliged to sell?
I commented at the previous stage of the Bill in relation to another amendment that charities act like any other landlord. I have had an irate letter from someone involved in the charities issue. It says that that was impugning the character of charities. That was not the case at all. As a chairman of a charity myself, I know that we are under an obligation to the Charity Commission to get maximum return for whatever we handle, whether it be property or anything else. So I think that he certainly misunderstood my view on charities.
Getting back to the point about the charities, it means that any charity wanting to sell a property, if there is a marriage value in the Act, cannot possibly exercise any discretion to reduce the price or agree to a reduction in price. It has the same official duty as a trustee. Whereas a private landlord could have a discretion, it means that an executor, a trustee or a charitable trustee would not. Therefore marriage value will be quite significant in cases where there is no right to relinquish part of it.
When the Minister replies, will he tell me whether it is the element of compulsion that means that people are entitled to marriage value? It may be accepted practice, as my noble friend Lord Caithness has said, but that does not make it desirable. I should like an explanation of why the Government believe that provision to be necessary.
Lord Jacobs: My Lords, may I crave the indulgence of the House? I wanted to speak to Amendment No. 20—
Lord McIntosh of Haringey: My Lords, it is Third Reading and noble Lords can speak only once.
(Lord Falconer of Thoroton): My Lords, it may be the 15th time that the noble Lord, Lord Goodhart, has addressed the issue of marriage value, but every time I have heard him do so, it sounded as fresh as on the previous occasion.
I know that the issue of marriage value is of great concern to the noble Lord, and to other noble Lords. He has explained his position at some length during
earlier debates on the Bill. I fear that we will have to agree to disagree on the issue. It remains our view that the Bill strikes the correct balance between the competing interests of landlords and leaseholders. We are not willing to make any further concessions.To answer the specific point made by the noble Baroness, Lady Gardner of Parkes, we cannot support an alternative valuation method that would result in a compulsory and substantial transfer of resources from one private individual to another. It is both the element of compulsion and the fact that substantial assets are involved that lead us to adopt our position. As I said last week, we must recognise that marriage value exists when the freeholder sells to the leaseholders. We propose to divide that gain equally between the parties. That means that leaseholders obtain added value, in the form of the ability to grant themselves new leases, which exceeds the price that they paid for it.
My noble friend Lord Williams of Elvel raised the question of tapering. We discussed that at some length last week. I know that my noble friend has strong views on the matter, but, as I said last week, the fact remains that the current valuation basis provides its own taper. The price payable for enfranchisement increases progressively as leases shorten.
Lord Williams of Elvel: My Lords, I thank my noble and learned friend for giving way. The noble Lord, Lord Jacobs, wanted to speak to Amendment No. 20. I shall therefore move that amendment in its place, so that the noble Lord can do so.
Lord Falconer of Thoroton: My Lords. I thank my noble friend for that sign of what is to come.
The price payable for enfranchisement increases progressively as leases shorten. We have taken the view that marriage value is likely to be de minimis where leases have more than 80 years to run and, to avoid arguments over insignificant sums, we are providing that no marriage value will be payable in such circumstances. As leases drop below 80 years, marriage value will progressively increase but will be split equally between the parties. We do not accept that there is a case for a further arbitrary apportionment of the marriage value which would effectively reduce the price payable by leaseholders.
The noble Lord, Lord Jacobs, raised the Leasehold Reform Act 1967. The 1967 Act reflected the different political and economic circumstances of the day and allowed enfranchisement on a basis that was extremely favourable to leaseholders. We no longer consider that equitable but do not seek to withdraw the right to enfranchise on that basis from those who currently enjoy it.
The noble Lords, Lord Jacobs and Lord Goodhart, referred to the promise made by my party when in opposition. We did not promise to abolish marriage value in An End to Feudalism. We sought views on two options: abolition and sharing marriage value equally between the parties. We have decided on the latter.
I turn to the final point raised, which was that the landlord will have received the equivalent price for the sale of a freehold when he first granted the lease. That may or may not be the case, but he would have granted the lease on the assumption that he would be entitled to either the freehold reversion at the end of the lease or a fair price for the sale of his interest—including marriage value. by contrast, the current leaseholder may have purchased the lease when the unexpired term was relatively short, at a price that reflected that. Abolition of marriage value would result in a substantial windfall gain at the expense of the landlord, which is difficult to justify. I invite the noble Lord to withdraw his amendment.
Lord Goodhart: My Lords, we are approaching the close of our debate on marriage value. My noble friends and I feel strongly on the matter. We have not had an opportunity to divide the House on it before, because we did not reach it on Report of the previous Bill, and reached it only late in the evening on Report of this Bill. I should like to test the opinion of the House.
6.25 p.m.
On Question, Whether the said amendment (No. 13) shall be agreed to?
Their Lordships divided: Contents, 45; Not-Contents, 182.
Addington, L.
Barker, B.
Bradshaw, L.
Carlile of Berriew, L.
Clement-Jones, L.
Dholakia, L.
Falkland, V.
Fearn, L.
Geraint, L.
Goodhart, L. [Teller]
Greaves, L.
Hamwee, B. [Teller]
Harris of Richmond, B.
Hooson, L.
Howarth of Breckland, B.
Jacobs, L.
Lester of Herne Hill, L.
Linklater of Butterstone, B.
Livsey of Talgarth, L.
Ludford, B.
Mackie of Benshie, L.
Maclennan of Rogart, L.
McNally, L.
Maddock, B.
Mar and Kellie, E.
Methuen, L.
Monro of Langholm, L.
Newby, L.
Northover, B.
Oakeshott of Seagrove Bay, L.
Phillips of Sudbury, L.
Razzall, L.
Redesdale, L.
Rennard, L.
Rodgers of Quarry Bank, L.
Roper, L.
Russell, E.
Sharp of Guildford, B.
Shutt of Greetland, L.
Smith of Clifton, L.
Thomas of Walliswood, B.
Tope, L.
Walmsley, B.
Watson of Richmond, L.
Williams of Crosby, B.
Acton, L.
Ahmed, L.
Alton of Liverpool, L.
Amos, B.
Andrews, B.
Anelay of St Johns, B.
Ashton of Upholland, B.
Astor of Hever, L.
Attlee, E.
Bach, L.
Barnett, L.
Bassam of Brighton, L.
Berkeley, L.
Bernstein of Craigweil, L.
Billingham, B.
Blackstone, B.
Blatch, B.
Boardman, L.
Borrie, L.
Bowness, L.
Brabazon of Tara, L.
Bragg, L.
Brennan, L.
Brightman, L.
Brooke of Alverthorpe, L.
Brooke of Sutton Mandeville, L.
Brookman, L.
Brougham and Vaux, L.
Burlison, L.
Burnham, L.
Caithness, E.
Campbell of Alloway, L.
Campbell of Croy, L.
Campbell-Savours, L.
Carnegy of Lour, B.
Carter, L. [Teller]
Chadlington, L.
Chandos, V.
Clark of Kempston, L.
Clark of Windermere, L.
Clarke of Hampstead, L.
Coe, L.
Colwyn, L.
Cope of Berkeley, L.
Corbett of Castle Vale, L.
Crawley, B.
David, B.
Davies of Coity, L.
Davies of Oldham, L.
Dean of Harptree, L.
Dean of Thornton-le-Fylde, B.
Desai, L.
Dixon, L.
Dixon-Smith, L.
Dormand of Easington, L.
Dubs, L.
Eccles of Moulton, B.
Eden of Winton, L.
Elder, L.
Evans of Parkside, L.
Evans of Temple Guiting, L.
Falconer of Thoroton, L.
Farrington of Ribbleton, B.
Faulkner of Worcester, L.
Filkin, L.
Fookes, B.
Fraser of Carmyllie, L.
Fyfe of Fairfield, L.
Gale, B.
Geddes, L.
Gibson of Market Rasen, B.
Gladwin of Clee, L.
Golding, B.
Gould of Potternewton, B.
Grabiner, L.
Grenfell, L.
Grocott, L.
Hanham, B.
Hanningfield, L.
Hardy of Wath, L.
Harris of Haringey, L.
Harrison, L.
Haskel, L.
Hayman, B.
Henley, L.
Hilton of Eggardon, B.
Hodgson of Astley Abbotts, L.
Hogg of Cumbernauld, L.
Hooper, B.
Howe, E.
Howell of Guildford, L.
Howells of St. Davids, B.
Howie of Troon, L.
Hoyle, L.
Hughes of Woodside, L.
Hunt of Kings Heath, L.
Hunt of Wirral, L.
Irvine of Lairg, L. (Lord Chancellor)
Janner of Braunstone, L.
Jay of Paddington, B.
Jones, L.
Jopling, L.
Kennedy of The Shaws, B.
King of West Bromwich, L.
Kingsland, L.
Knight of Collingtree, B.
Lamont of Lerwick, L.
Layard, L.
Lea of Crondall, L.
Levy, L.
Lipsey, L.
Liverpool, E.
Lockwood, B.
Lofthouse of Pontefract, L.
Luke, L.
Lyell, L.
McColl of Dulwich, L.
McIntosh of Haringey, L. [Teller]
MacKenzie of Culkein, L.
Mackenzie of Framwellgate, L.
Masham of Ilton, B.
Massey of Darwen, B.
Mayhew of Twysden, L.
Merlyn-Rees, L.
Milner of Leeds, L.
Mitchell, L.
Monson, L.
Montrose, D.
Morgan, L.
Morris of Aberavon, L.
Mowbray and Stourton, L.
Moynihan, L.
Noakes, B.
Northesk, E.
Oppenheim-Barnes, B.
Palmer, L.
Parekh, L.
Park of Monmouth, B.
Parkinson, L.
Patel of Blackburn, L.
Pearson of Rannoch, L.
Peel, E.
Pendry, L.
Pilkington of Oxenford, L.
Pitkeathley, B.
Plant of Highfield, L.
Radice, L.
Ramsay of Cartvale, B.
Randall of St. Budeaux, L.
Rea, L.
Rendell of Babergh, B.
Renton, L.
Renwick of Clifton, L.
Richard, L.
Rooker, L.
Rotherwick, L.
Sainsbury of Turville, L.
Sawyer, L.
Scotland of Asthal, B.
Seccombe, B.
Shaw of Northstead, L.
Sheldon, L.
Sheppard of Liverpool, L.
Simon, V.
Skelmersdale, L.
Smith of Leigh, L.
Stone of Blackheath, L.
Symons of Vernham Dean, B.
Taylor of Blackburn, L.
Temple-Morris, L.
Thornton, B.
Tomlinson, L.
Turner of Camden, B.
Uddin, B.
Walker of Doncaster, L.
Warwick of Undercliffe, B.
Weatherill, L.
Whitaker, B.
Whitty, L.
Wilcox, B.
Williams of Mostyn, L. (Lord Privy Seal)
Windlesham, L.
Resolved in the negative, and amendment disagreed to accordingly.
6.36 p.m.
Clause 124 [Freeholder's share of marriage value]:
Clause 125 [Disregard of marriage value in case of very long leases]:
[Amendment No. 15 not moved.]
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