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Andrew Selous: Does my hon. Friend agree that we should not consider our country's accounting and legal skills to be in any way inferior to those of a jurisdiction such as Honolulu, which seems perfectly able to cope with mixed tenures within blocks?

Mr. Cash: I was most attracted by the Honolulu argument, which took me back to that wonderful film, "South Pacific". My hon. Friend is right, and there are many other places where the unanimity rule does not apply—for example, there are the strata arrangements in America, Australia and elsewhere in the western world.

It is certainly true, as the Government say, that a commonhold association would have to make arrangements so that service charges could be collected from commonhold unit-holders in accordance with the commonhold community statement, and from long leaseholders in accordance with the terms of their leases, but it is absurd, with respect, to suggest that this presents any practical difficulties.

Mr. Mark Field: Does my hon. Friend agree that there is an analogy with the situation in a council block in which some of the flats have been sold to long-standing tenants? In that case, two sets of accounts have to be dealt with in a way that the Bill seems to suggest is impossible.

Mr. Cash: I could not agree more. The same situation arises in many different contexts. Having to have two sets of accounts is no reason to give up on the many advantages that people will gain in respect of the important principle that lies at the heart of the Bill.

There are frequently different leases for different flats in the same block, with different service charge and rent provisions. That is an absolute fact that the Minister must acknowledge. No managing agent has the slightest difficulty in keeping accounts that distinguish between the liabilities of different flats. Why should managing agents be worried about different accounts for commonhold arrangements? I challenge the Minister to tell me now.

Mr. Wills: In due course.

Mr. Cash: Very well.

The situation would be exactly the same in a block with commonholders and leaseholders: the managing agent would calculate the service charge for each flat, based on the relevant legal principles.

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The Government's second argument is even more far-fetched. They say that, okay, one could allow a commonhold without a unanimity requirement but that, with all the recent reforms to leasehold, leasehold is now such an attractive option that there is no need for existing leaseholders to convert to commonhold.

What is one to make of that argument? Commonhold is about choice, and about expanding choice. That is the gravamen of the argument that I urged on Second Reading and in Committee and that I repeat today. People with leases should have the right to choose whether to carry on with leasehold or to convert. That is the key consideration, and it affects millions of people. It is not for the Government to dictate whether people should convert or not. The Government stand condemned for wrecking their Bill and removing that choice from those people. It is incredibly obtuse of them and I do not understand their decision.

5.30 pm

It is true that leasehold has been improved as a result of various reforms, most notably those contained in the Housing Act 1996, which was introduced by the last Conservative Administration, although the Government do not admit to that. As a consequence of those reforms, leasehold is a much more satisfactory form of tenure. However, there remains a widespread dissatisfaction with it. It is wrong to prevent tenants in blocks from converting to commonhold when there is a widespread desire to do so just because one tenant or mortgagee does not agree. The veto should go. The amendment would achieve that purpose. The most important consideration is that we enlarge the property opportunities for the people of this country. Millions will be affected by the proposals and the Government are obtuse, wrong and arrogant in their refusal to accept that unanimity must go.

Mr. Wills: I am glad finally to be given the chance to address the points raised. We have covered this ground over and over again. The indignation of the rhetoric used by the hon. Members for Stone (Mr. Cash) and for South-West Bedfordshire (Andrew Selous) outstripped their attentiveness to the arguments. The words "appalled", "obtuse", "it beggars belief" and "astounding" were used frequently. They might disagree with us, but had they listened carefully they would understand that there is a clear logic to our decision.

The Opposition once again made the same old arguments and they gave only a partial view of the problem. The hon. Member for Stone, in a lengthy disquisition on all sorts of things including the amendments, airily brushed away the problems with the alternative approaches and the opportunities that the alternative choices present for leaseholders. It is not adequate to make a case by dismissing the problems in such a way.

Government amendment No. 10 will render amendment No. 6 unnecessary, and we are not prepared to accept the other amendments in the group. I hope that the hon. Member for Torbay (Mr. Sanders) will forgive me if I pass quickly over amendments Nos. 2, 3, 5, 6 and 7. They are drafting devices aimed at getting to the meat of the group, contained in amendment No. 4. That amendment makes another attempt to introduce a consent level that is less than the 100 per cent. on which the Government still

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insist for conversion from leasehold to commonhold. Despite the hon. Gentleman's heroic efforts, we looked in vain for recognition of the extremely complex tasks posed by conversion and the subsequent management arising from such a change.

Amendment No. 4, like all the others that have aimed at reducing the hurdle, fails to take into account the practical problems that the poor souls who try to take advantage of conversion will face. We repeatedly said on Second Reading, in another place and in Committee that had we been able to find a way both to lower the hurdle and to provide for a sensible, practical and, above all, simple way of accommodating the resulting procedures, we would have done so, but it has proved impossible. We went through the arguments in considerable detail at every stage of the Bill in both Houses and, of course, in the three stages that were completed in another place before the last election. It is a matter not of being stubborn or obtuse, as the hon. Member for Stone alleges, but of considering the problem practically, in a cold-eyed way, and making a judgment on the best evidence available. There is not much to add to those discussions, but none the less—

Dr. Julian Lewis (New Forest, East) rose

Mr. Wills: I shall give way to the hon. Gentleman in a moment. I am glad to see that he has joined us for the latter part of these proceedings. I was about to say that, as there is such concern among Opposition Members, I shall explain the arguments again in the hope that they may finally penetrate.

Dr. Lewis: I thank the Minister for giving way. In case he has not noticed, I was present for the earlier part of the proceedings; there was merely a slight intermission. Does he accept that the import of his remarks is an admission that the Government are accepting the fundamental point made by my hon. Friend the Member for Stone (Mr. Cash) because they cannot get round the problem? Are they not admitting that the benefits of the Bill will apply only to people in new properties and not to those in existing leasehold properties, with hardly any exceptions?

Mr. Wills: No, I do not accept that. The truth is that nobody in the House has any idea of exactly what will happen in future. As we have always said, the market will decide the issue. As the hon. Gentleman will no doubt be aware, the market, by its very nature, cannot be predicted with any degree of certainty. None the less, I shall go on to reassure him about some other matters that have not fully percolated into Opposition Members' consciousness.

Dr. Lewis: May I remind the Minister of the point that I made in Committee when another Minister was dealing with the Bill? If a freeholder does not want leases on his property to be converted to commonhold, is it not a racing certainty that he will take either personally or by proxy a single lease on one small part of the property so that he can block conversion? Is not that an absolute certainty that does not depend on the vagaries and unpredictability of the market?

Mr. Wills: A similar point was made by the hon. Member for Bath (Mr. Foster) some considerable time ago, and I shall deal with it in due course.

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As the hon. Member for Stone eventually got around to acknowledging, there are two good reasons for our persistence with the 100 per cent. threshold. If I may, I shall deal with the matter relatively briefly. Let us consider once again the nature of the problems that will arise if long leaseholders continue to live under the terms of their lease in a commonhold development. There will be two classes of occupant, so self-evidently there will be two management streams under two different statutory regimes. There will also be two sets of moneys to collect and two sets of accounts to produce, because the calculation of service charges for the remaining leaseholders will continue to be set by the terms of their lease, which is a legal contract.

Existing landlord and tenant legislation provides for appeals against the determination of service charges. There would be no such appeal for a commonhold, because commonhold assessments will be set by members of the association at a general meeting. That is why the two streams of accounts and two different sets of moneys would persist. There could be an almost infinite variety of tailor-made schemes to design and operate, and they would bring with them all the potential for the drafting problems that have helped to bring leases into such disrepute and which the Bill sets out to address.

This is a matter not of aesthetics—curiously, that is what the hon. Member for Stone appears to believe—but of practicality. As my hon. Friend the Member for Clwyd, West (Gareth Thomas) so cogently pointed out, complexity, burdensome bureaucracy and all the consequent costs should worry deeply anybody who is concerned about the future of commonhold. If anything will strangle commonhold at birth—another bit of the Opposition rhetoric that I recall from Second Reading—it is the complexity, bureaucracy and cost that would flow from accepting a hurdle of less than 100 per cent. for conversion.

Of course, there are issues in terms of minority holdings, which were mentioned by the hon. Member for Torbay and also the hon. Member for Bath, who referred to landlord blocking. However, all that discussion merely brushes aside the option now available under part 2: the right to enfranchise, which can be triggered by two thirds of leaseholders. Under the right-to-enfranchise provisions in part 2, the landlord's interest can be bought out regardless of whether those who must consent have done so. If the landlord is bought out under those provisions, in due course the right-to-enfranchise company can transform into commonhold, which would in itself stop the blocking potential of a landlord.

Of course important issues are involved, but we must consider what is most likely, in practical terms, to ensure that the new form of tenure takes hold. As we have said many times, in the end the market will decide. I do not want to rehearse those arguments at great length. I merely remind the House that if commonhold has the virtues that we believe it has, it will take root not only in new developments and redevelopments of existing properties without leaseholders, but in the conversion of existing leaseholds.

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I hope that the existence of the remedy in part 2 and all the changes that it makes possible, coupled with the fact that profound problems are associated with making the consent level less than 100 per cent., will enable the hon. Member for Torbay to withdraw the amendment.


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