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9.45 pm

The Parliamentary Under-Secretary of State for Transport, Local Government and the Regions (Ms Sally Keeble): I am grateful to the many hon. Members who contributed to this detailed and interesting debate. Like many other hon. Members, I must first declare an interest, as my husband and I own a leasehold house in London.

We have heard a good deal about the difficulties of long leasehold tenure and the imperfections of the remedies that are available under the law as it stands. The debate has been well informed and technical. I accept that

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the Bill is a complicated and technical measure, but its underlying objective is very simple: to give people more security in their own homes. It will achieve that in two ways. First, it introduces a new form of tenure—commonhold—which will eliminate the problems inherent in the leasehold system. Secondly, it will bring the leasehold system into the 21st century by giving more rights and choices to leaseholders, so that they can enjoy the same degree of security and control over their homes as other home owners.

I shall turn shortly to some of the specific points that have been made. I am sorry that there will not be time to deal with them all or indeed to deal with them as fully as I would have liked. However, I am sure that we will return to many of them in Committee. I shall also be happy to deal with some issues in correspondence if hon. Members wish me to. Underneath criticisms of the detail of the Bill, I believe that there is general sympathy in all parts of the House for what we are seeking to achieve. Indeed, the principles have been welcomed on both sides of the House.

First, there has been great support for the principle of leasehold reform, although I recognise that many would argue that we should have gone further. Secondly, there seems to be general agreement that it is high time to introduce a new tenure that is purpose-built to the requirements of multi-unit development, taking into account the experience of the many other countries that have already introduced their own particular variations on the commonhold theme.

Let me deal with some of the issues that were raised. The hon. Member for Stone (Mr. Cash) recognised the benefits that the Bill will bring to people from all walks of society, as he put it. He is absolutely right about that. In particular, the Bill will protect some of the most vulnerable householders. Similar points were made by many of my hon. Friends. The hon. Gentleman also spoke about the rocky path that it has been necessary to take to get the legislation even to this point. Given the history that he set out, I urge the House to get a move on and to accept that the issues have been repeatedly aired and discussed. The programme motion is wholly appropriate. I should point out that it provides not two, but three weeks.

The hon. Gentleman raised many technical issues that will also be discussed in Committee, including the requirement for 100 per cent. support for conversion. The Parliamentary Secretary, Lord Chancellor's Department, my hon. Friend the Member for North Swindon (Mr. Wills), repeated the commitment given by the Lord Chancellor to listen and consider any well-judged amendment on the 100 per cent. rule. As he said, however, any such amendment must tackle the problems that he mentioned, including that of running two systems in one development.

The hon. Member for Stone also raised issues about remedies for non-payment. Such issues were mentioned by other hon. Members, including the hon. Members for Torbay (Mr. Sanders) and for North-East Hertfordshire (Mr. Heald). The hon. Member for Stone argued that the remedies available under commonhold in respect of service charges, for example, are not adequate. Like several other hon. Members, he argued in favour of some variety of charge over the commonhold unit. That would be a complicating and limiting factor. It would also run

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the risk of bringing in forfeiture by the back door—something that many hon. Members on both sides of the House have opposed.

My hon. Friend the Member for Rother Valley (Mr. Barron) set out some of the practical problems of leasehold owners and opposed the 100 per cent. rule for conversion to commonhold, as did my hon. Friends the Members for Hampstead and Highgate (Glenda Jackson), for Brent, North (Mr. Gardiner) and for Clwyd, West (Gareth Thomas). I am sure that that issue will be revisited at a later stage.

My hon. Friend the Member for Rother Valley also mentioned valuation and marriage values, as did many hon. Members on both sides of the House. The Government have carefully considered the forceful representations of leaseholders on marriage value. However, we remain of the view that in a compulsory purchase situation, landlords should receive compensation for the loss of their interest similar to what they would have received in a sale between willing parties. The Bill reflects that principle and, in our view, strikes a correct balance between the competing interests of landlords and leaseholders.

We have taken action to remove scope for unnecessary and costly arguments over the determination of marriage value. At present, landlords are guaranteed a minimum 50 per cent. share, but they can and do argue for more. The Bill will provide that that is shared equally in all cases. It also provides that no marriage value will be payable when the unexpired term of the lease exceeds 80 years. It has been argued that the cut-off point is too high. People will always argue about where the point should be applied and those who fall just outside it will feel aggrieved. Some people have argued that it should be 90 or 100 years. We have chosen 80 as a point above which some experienced valuers have told us that any marriage value is likely to be marginal.

The hon. Member for Torbay committed the Liberal Democrat party to support for the introduction of commonhold and reform of leasehold, which we certainly welcome. He asked about voting methods. The details of the commonhold association will be in the regulations. As my hon. Friend the Parliamentary Secretary said, they will be put in the Library before the commencement of the Standing Committee.

The hon. Member for Torbay also mentioned limited liability partnership and asked why we were opting for a commonhold association that would be a company limited by guarantee. As such a company, a commonhold association will be firmly rooted in company law, with adjustments to take account of the objects of the association. Both limited liability partnership companies and commonhold associations have the same origins—they are in the same family tree, but occupy different branches. If a limited liability structure were used, it would steer the provision back towards aspects of the Companies Act 1985 that are vital to commonhold. That is not the only problem that we perceive if commonhold associations are set up as limited liability partnerships. There are many others and I am sure that that matter will be raised in Committee.

Mr. Bellingham: Will the Minister give way?

Ms Keeble: No, I will not. I will deal with as many of the points made as I can in the limited time available.

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My hon. Friend the Member for Burnley (Mr. Pike) pointed out the different positions of leaseholders in the north and in London. One matter that he highlighted was insurance—

Mr. Bellingham: Will the hon. Lady give way?

Ms Keeble: No. The hon. Gentleman made a point in his speech, which I will deal with later.

My hon. Friend the Member for Bolton, North-East (Mr. Crausby) also dealt with insurance and spelled out clearly the nature of some of the scams. We are well aware of concerns about anti-competitive practice. He is one hon. Member who has been vociferous in pressing that point. I can assure him and other hon. Members that we will carefully consider the strong representations that have been made on the issue to find out what more we can do to help leaseholders, although it is not possible to give a definite commitment on that this evening.

Mr. Bellingham rose

Ms Keeble: I made it clear that time is limited. I will deal with as many of the arguments as possible, including those of the hon. Gentleman.

My hon. Friend the Member for Bolton, North-East also mentioned forfeiture, as did my hon. Friend the Member for Brent, North, who has been a leading opponent of what he terms the "ground rent grazers" for a number of years. I appreciate that many leaseholders consider forfeiture a draconian measure, but the law on this issue is complex and we have not been able to provide for more comprehensive reform in this Bill. The Law Commission is continuing to work on broader reforms in this area.

The hon. Member for Solihull (Mr. Taylor) raised the possibility of a formula for the cost of enfranchisement. We commissioned research to find out whether there was a fair way of dealing with some of the key factors involved but, sadly, it did not prove fruitful. The hon. Member for North-East Hertfordshire welcomed the Bill and made the point that the right to manage should apply to local authority leaseholders. A broad range of options is already open to all local authority tenants, and we do not believe that it would be right to overlap those with a further right that could be exercised only by local authority leaseholders. That would lead to competition, and probably conflict, between different groups of tenants and between the existing broader rights and the narrow one proposed by him. Such competition or conflict would not be to anyone's advantage.

My hon. Friend the Member for Hampstead and Highgate gave welcome support to the Bill. She also raised issues about meetings, and those will be dealt with in the regulations. She said that she still felt that she would be buying a pig in a poke. In fact, she would be buying the individual ownership of the freehold of her unit, and the corporate management of the commonhold part.

The hon. Members for Meirionnydd Nant Conwy (Mr. Llwyd), for Poole (Mr. Syms), for Leominster (Mr. Wiggin) and for North-West Norfolk (Mr. Bellingham) all welcomed the Bill, but with reservations. The hon. Members for Poole, for Leominster and for North-West Norfolk also said that we were rushing

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the Bill, although the evidence from the speeches all around the House is that the changes are long overdue and that people want to see them on the statute book.

My hon. Friend the Member for Ealing, Southall (Mr. Khabra) raised issues about security of tenure for high-rental properties, but we cannot deal with them within in the scope of the Bill. My hon. Friend the Member for Brent, North made an impassioned speech that has been recognised on both sides of the House as important. He dealt in particular with a requirement for developers to offer management responsibility or a share of the freehold from the outset. Many already do so.

The hon. Member for Huntingdon (Mr. Djanogly) raised a number of technical issues based on his constituents' experiences, including that of positive covenants. That is another issue that the Law Commission is reviewing. My hon. Friend the Member for Brighton, Pavilion (Mr. Lepper) has been consistent in arguing the case of his constituents on a number of issues, and mentioned the need for sunset clauses. We would be prepared to consider that in more detail in Committee if a workable amendment were tabled.

The hon. Member for Guildford (Sue Doughty) made a welcome contribution, as did my hon. Friends the Members for Clwyd, West, for Telford (David Wright) and for Cleethorpes (Shona McIsaac). My hon. Friend the Member for Cleethorpes raised a number of important issues about leasehold houses, and I can assure her that the provision of clear public information, especially to protect very vulnerable leaseholders, is very much one of our priorities.

The Bill is the careful culmination of years of effort and consultation. It will build on the best of the overseas experience of producing commonhold, and make some important amendments to the law on leasehold. Those include introducing the right to manage, opening up the right to collective enfranchisement, improving the right to a new lease, strengthening the protection for leaseholders, introducing more effective arrangements for consulting leaseholders and many other measures that will benefit millions of people up and down the country. Those changes will bring our system of land tenure into the 21st century and ensure that all home owners of houses or flats have the same security. I commend the proposals to the House.

Question put and agreed to.

Bill accordingly read a Second time.

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