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Lord McIntosh of Haringey: My Lords, I hope that the noble Lord, Lord Jacobs, had a happier evening on his birthday last week than we are having this evening.
In his absence, and as he knows, we discussed this issue at some length, but I believe that I should set out the Government's case again as he has so helpfully set out his own. The amendment reflects the view that we should remove the attractiveness of the leasehold system to landlords and developers in order to promote the use of commonhold. We are confident, as the noble Lord, Lord Jacobs, recognised in the quotation he read from the speech I made last week, that commonhold will be attractive to developers and will be widely adopted. Many current developments already offer 999-year leases and a share in a leaseholders' management company. However, until commonhold has been tried and tested we consider that it would be premature to restrict the use of leasehold.
Any restriction on the granting of leases would limit the choice of the purchaser, as the noble Lord, Lord Monson, said, because it is a transaction between a willing seller and a willing buyer. It is very difficult to see how we should intervene unless there is some distortion of the market which I do not find here.
If a person wishes to save on rent or to fix housing costs over a period by paying a capital sum for a short lease, we believe that he should be permitted to do so. The amendment, as drafted—I know that this is an extreme case—would prevent the granting of a six months' tenancy for a single payment.
Furthermore, there may be circumstances where a developer or landlord has only a leasehold interest and cannot grant leases beyond the term of his own interest. A very long minimum period such as 300 years or 999 years would mean that the landlord could rent out units only on periodic tenancies and could prevent redevelopment from taking place. We know that some local authorities have properties on land which they hold on a leasehold basis. If a lease of that sort runs out after 150 years, should we be saying that because they cannot offer a lease of 300 years they should be prevented from selling those leases to tenants under the right-to-buy scheme? I very much doubt if tenants in such a situation would support a
move of that kind. As I have said before and has been quoted back at me, we will be monitoring the development of commonhold after the Bill comes into force. We expect that it will be the preferred form of tenure and that leasehold will gradually wither on the vine. But we would be prepared to consider possible restrictions on its use in the longer term if there was a clear need to do so and if the benefit to be gained outweighed the disadvantages. I cannot say that that is the case now.I know that the noble Lord, Lord Jacobs, has also argued the case in particular about 20-year leases. The market for these leases is very specialised involving a limited number of high value properties in a limited area. It is not typical of the market generally. People who may pay very substantial sums of money for a short lease should be aware of the nature of the interest that they are buying. Many purchasers are businesses which view these leases as a medium-term business asset.
It has been suggested that landlords who offer such leases are exploiting a local monopoly. However, there is no such thing as a local monopoly in housing; no one has to live in a particular high-value area. People who can afford to pay £500,000 for a 20-year lease on a flat in Eaton Square should be able to find somewhere else to live if they wish to ensure longer-term security for their money.
If I may say so, I do not consider this to be a particularly liberal amendment.
Lord Jacobs: My Lords, I thank the Minister for that response. I did not deal with minor issues such as six-month leases because I thought that they could be dealt with elsewhere. Perhaps I may respond to two points. First, the 20-year leases came into existence only when certain Greater London landlords knew that new legislation was due to be enacted. They gauged the cut-off point and then offered 20-year leases with no option to tenants who expected significantly longer leases. To say that that represented choice for the consumer is, I believe, mistaken.
Secondly, as regards those holding leases which do not extend for longer than 150 years, that fact is that if under the current legislation the landlord has only a limited period left to run on the lease, under the new legislation he will still be obliged to go back to the freeholder to negotiate an extension. That is not an insuperable objection. I wish to mention a point which I do not believe has been fully taken on board—although perhaps I did not expect that it would be—and if it is wrong I should like to be proved wrong. The Government should conduct surveys among landlords and tenants to find out exactly what all the parties want. I have said that tenants want very long leases, as long as 999 years, and that they would be prepared to pay for those long leases. The Government claim that what tenants really want is many different lengths of lease: 20 years, 75 years, 125 years and so forth. I do not think that that is correct. If the Government were able to take up my challenge, they would be better able to deal with me on another occasion.
Once again, I thank the Minister and beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Baroness Gardner of Parkes moved Amendment No. 29:
- Page 86, line 16, at end insert—
The noble Baroness said: My Lords, this amendment would add a further subsection to Clause 166 on page 86 as the Bill is presently drafted. However, to deal with the matter in detail, one must turn to pages 125 and 126. Schedule 12 covers the relevant points.
I am keen to introduce this protection. The noble and learned Lord knows that I have introduced the matter on several previous occasions. I am concerned that excessive costs and fees are used to put pressure on people. They are told that if they take their case to the leasehold valuation tribunal, win or lose, the case will progress to the Lands Tribunal. If the people concerned thought that they were able to afford the leasehold valuation tribunal, they certainly will not be able to afford anything after that. That serves as a serious deterrent.
I am pleased to see the noble Lord, Lord Richard, in his place. I believe that he took up the issue when the legislation was earlier debated in the Moses Room. The lack of a ceiling on fees and costs is used as a form of moral blackmail. It is unfair and frightening for those who find themselves in this position. It is impossible to quantify the numbers who have been prevented from pursuing their case to the Lands Tribunal.
At the previous stage, the noble Lord, Lord Goodhart, mentioned examples where people had won their cases but then found themselves in a most unfortunate position. If the Government wish to demonstrate that they are keen for people to enfranchise their property, as well as to deal with the various problems that may arise under the leasehold valuation tribunal, then it is important that such a sword hanging over people's heads in the form of unlimited costs and fees when the case goes to the Lands Tribunal should be removed.
I have read carefully the differences between fees and costs and I appreciate the details. I was also interested to learn that the procedures as set out in the schedule already allow for a reduction or waiver of fees if someone is in a difficult position financially. However, there is a difference between helping those in desperate financial straits and helping a person who has been careful with their money and who does not wish to enter into such a procedure with no idea of what the costs and fees will be. Provisions have been put into the schedule which would allow the Government to set the limits. Fees are covered in
I understand that the legal system cannot be run so that all the expenses are borne centrally. People must be willing to bear a proportion of their own expenses in life. However, it would be unfortunate if people were unable to enfranchise their property simply because they could not arrange for matters to be dealt with by the tribunal. I beg to move.
Lord Goodhart: My Lords, I rise to express my support for the amendment moved by the noble Baroness, Lady Gardner of Parkes. I did so on Report and I am happy to do again, although I recognise some force in the argument put forward by the Government; namely, that this is a matter to be dealt with as part of any new legislation on tribunals. In principle, however, I believe that the noble Baroness is absolutely right.
Lord Falconer of Thoroton: My Lords, as the noble Baroness has clearly explained, the effect of this amendment would be to limit the fees payable to the Lands Tribunal and to limit its ability to award costs. As on the previous occasion, I appreciate that the risk of a substantial costs award can deter leaseholders from resisting appeals to the Lands Tribunal or even making use of the leasehold valuation tribunals in the first place, and that unscrupulous landlords have exploited this on a number of occasions.
As the noble Baroness will know, we have introduced a requirement in Clause 166 that, in all cases, appeals can be made to the Lands Tribunal against a decision reached by the LVT only with the permission either of the LVT concerned or the Lands Tribunal. That is intended to prevent frivolous or intimidatory appeals by landlords. However, I am sure that the noble Baroness would respond by saying, quite fairly, that that would not deal completely with the situation that she has identified.
As I explained last week, Sir Andrew Leggatt recently concluded a wide-ranging review of the tribunal system as a whole. The Government are still consulting on the outcome of that review. It will provide an opportunity to consider all aspects of Lands Tribunal procedures, including its costs regime. I suggested on Report that the noble Baroness might agree that this issue would be better dealt with in that context when her arguments, which have considerable force, can be put.
However, I appreciate the strength of feeling in support of making early changes through the provisions of the Bill before the House rather than awaiting the conclusions of the broader work in the Leggatt review. In that light, we are prepared to take the matter away and consider carefully whether we
"( ) In any proceedings in the Lands Tribunal on appeal from a leasehold valuation tribunal, the fees payable and costs awarded shall not exceed such fees and costs as may be specified for a leasehold valuation tribunal under paragraphs 9 and 10 of Schedule 12 to this Act."
"such other amounts as may be specified in procedure regulations".
Costs are similarly covered in paragraph 10(3)(a) and (b). It is possible for the limits to be changed.
7.15 p.m.
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