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Mr. Wiggin: Before the last election, the Government promised to introduce these new laws without hesitation, but there is serious concern on both sides of the House that the unanimity requirement will make it even harder to bring about commonhold. Although the amendment was not tabled by my party, Conservatives are nevertheless greatly concerned that we have gone through this process only to discover that the Bill could go the way of its 80 predecessors because we have made it too difficult to achieve 100 per cent. consent.
Mr. Cash: As my hon. Friend may know, I addressed that very issue on Second Reading, and extensively in Committee. Perhaps because it had indeed been dealt with extensively, the amendment that we tabled was unfortunately not selected. Notwithstanding that, the issue goes to the heart of the Bill. If the Bill will not work because of the unanimity requirement, that is a very serious matter. I am therefore glad that my hon. Friend is addressing this issue, as shall I later on.
Mr. Wiggin: I am grateful for that intervention. Throughout our proceedings on the Billmy hon. Friend will doubtless express the point better than mewe have done everything that we can to co-operate. We all agree that commonhold is a positive measure that should be introduced properly and speedily, but unanimity is an unnecessary stumbling block.
Even the vice-chairman of the Federation of Private Residents Associations said, "The one big disappointment with the Bill is the extreme difficulty it poses for converting existing long leaseholds into commonholds. The Government have said that you will have to get 100 per cent. consent from the leaseholders in the property, and in many cases of larger blocks of flats this will be practically impossible to achieve." He is absolutely right. His organisation is also anxious to ensure that the reforms do not render unmanageable existing residents' owned and managed leaseholds, thereby enabling groups to mount coups within blocks.
The 100 per cent. rule will lead to all manner of problems, and anyone who wants residential leasehold to be abolished will be as uneasy as I am about such a commitment. I look forward to hearing the Minister explain why the rule is a good idea. The Bill risks repeating the failure of its 80 predecessors during the previous century, and unless we get it right, we will be tinkering at the edges and failing to give leaseholders the means to win their own homes.
The Government's position is strange for several reasons. In company law, we are well used to minority shareholders being bought out. They are treated fairly by the law and compensated, but they are not allowed to hold up a company takeover that has been agreed by the majority of shareholders. That is established custom and commercial practice in English law, so the Government have no reason to claim that they could not similarly vary rights in the property field.
We will have cases in which the majority of leaseholders in a blockor even all, bar onewant to convert to commonhold status, but are prevented from doing so. If just one person holds out, they could effectively demand a ransom from all the others. The dissenting leaseholder could extort considerable sums of money for their agreement to allow all the other leaseholders to convert.
Mr. Don Foster (Bath): Does the hon. Gentleman agree that the situation could be even worse than he describes? The landlord is included in the list of those eligible to vote, so 100 per cent. of the leaseholders could vote to convert to commonhold but that would still be prevented under the Government's proposals.
Andrew Selous: The hon. Gentleman is right. Indeed, one mortgage company or secured creditor on one leasehold property in a block could put a stop to conversion. As I have said, it beggars belief that the Government are not prepared to move on this issue. The Opposition support the Bill and wish to see it work, and even at this late stage I hope that the Minister will bear in mind our views and, possibly, those of some Labour Members.
The Government have said that it would not be right to vary the legal title of property owners. However, as I said in Committee, I fail to see how the Government can use the defence that they are unwilling to vary the rights of leaseholders in the rest of the UK when one considers what is happening in Scotland, with owners of large estates having the title to their property varied under measures passing through the Scottish Parliament.
I did some research on the subject and discovered that other jurisdictions around the world do not require unanimity for the conversion to commonhold status. In Honolulua somewhat exotic locationunder legislation of 1998, the law requires only that 25 owners of units in a condominium development, or at least 50 per cent., need to agree to the conversion. Other jurisdictions do not require unanimity and the onus is now on the Minister to explain why it is uniquely a problem in the UK.
Mr. Mark Field: I was not on the Committee that considered the Bill. I would like to make a brief declaration, which probably has a certain significance given the importance of this issue in my central London
I confess that I had some strong reservations initially about the confiscatory element of some of the proposals, but it seems that the requirement for unanimity on commonhold effectively runs the risk of putting a coach and horses through the entire intention of the Bill. That seems a foolish way of moving forward. On the basis that we are to have reform legislation that is supported both by the Conservative and by the Liberal Democrat Opposition, we should at least ensure that such legislation works.
This issue goes almost to the root of the question whether commonhold itself will be popular. Under the current BillI know that this has been discussed by a number of colleaguesit will be very difficult for any existing building to be converted into commonhold if a very small minority of dissident tenants object. A dissident tenant may even be in league with the freeholder in order to try to stop the process going through. In essence, if we do not throw away the unanimity rule, we will run the risk of the entire legislation beginning to fall apart.
Mr. Wiggin: Does my hon. Friend not feel that a person might think it worth while to block the commonhold procedures to receive the money? It is in the interests of any individual faced with a commonhold procedure to say to their fellow leaseholders, "Give me the money." They can wreck, to use the trendy term, the commonhold procedures. It is almost worth their while to put up that sort of resistance. That will have such a bad effect on the whole thing. At the same time if that one person does not ask for the money, more fool him. We should not be legislating to open opportunities of blackmail within small communities or blocks of flats.
Mr. Field: I thank my hon. Friend for what was a rather long intervention. I could see the Deputy Speaker's eyebrow being raised. We are all wreckers now perhaps, but I think that my hon. Friend's point is spot on.
I agree with what my hon. Friend the Member for South-West Bedfordshire (Andrew Selous) said. I hope that I will be able to join him on the fact-finding mission to Honolulu at some point to discover how these processes work in foreign jurisdictions. He made a point in relation to company law. It is already established that if 90 per cent. of shareholders agree to a takeover, the position is regularised by the remaining 10 per cent. also being subject to the offer, even if they have voted against it. It should not be beyond the wit of the Government and indeed of legislators to find a similar formula where a small minority try to oppose the proposal for a commonhold.
I hope that the Government will rethink the provision. If we allow the unanimity rule to remain in place, realistically the great intent of the Bill will entirely fall apart, and in 10 or 15 years' time commonhold will be
Gareth Thomas (Clwyd, West): I sat on the Standing Committee, and I confess that there were times during the Committee stage when I would have liked to be part of a fact-finding mission to Hawaii or Honolulu.
The fact remains that there has been ample opportunity to test the argument on the unanimity point. I am prepared to accept that the Government have considered the position carefully in this place and another place. I have taken the opportunity to re-read the Official Reportparticularly the first Sitting of the Committee, when my hon. Friend the Minister outlined the Government's position. The Government take the view not that it is impossible to draft an appropriately worded amendment or to formulate a form of words that would enable a dual scheme to exist, but that it would be contrary to the purpose behind the Bill to introduce that degree of complexity. If commonhold has one great advantageI speak as a lawyer who has knowledge of this area of lawit is that it does away with some of the complexity inherent in the current tenure of leasehold, and that it introduces a system of tenure
The Government are adopting a pragmatic approach. I well understand that there would be extreme difficulties in allowing long leaseholders to co-exist with commonholders, and that serious practical problems would arise that would undermine the attractiveness of that form of tenure.