Commonhold & Leasehold Reform Bill [Lords]

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Mr. Cash: I have listened to the Minister, but we have not yet had the benefit of hearing what technical amendments will be tabled on Report. For example, we do not know whether he has it in mind to provide that absent leaseholders might have their consent overridden by the court. We have heard nothing from the Minister to suggest how it could be done, and some would find that proposition fairly difficult to swallow.

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Serious problems have arisen on matters relating to trials in absentia and on other matters raised in the House.

I am not saying that circumstances will not arise in which it would be impossible to trace a leaseholder, but the courts might be able to bring some rules or principles to bear that could ease the passage of the absence of that person's vote. However, that raises some fairly difficult questions. A concession could be made, based on legal principles, under which the absence of a person from a country or the fact that someone could not be traced would mean that 100 per cent. consent was not needed. By the same token, however, one could stack up a whole series of other arguments for removing the unanimity rule, in which the difficulties would be less than that a person had been absent.

In a nutshell, I am saying that once the principle is breached, a number of other examples may be given, some of which will be more difficult than others. There will always be hard cases, but nevertheless a really recalcitrant person living in a block of flats could veto an entire project. In a democratic society—I trust that all members of the Committee are democrats—[Interruption.] I shall ignore my hon. Friend's comments.

The Minister has not answered my question. Indeed, I would go further. My proposal that Ministers could reflect on it and propose regulations to deal with it still remains reasonable. His arguments will have to be evaluated. Some of them have been heard for the first time. The Minister and his officials have been straining every nerve to come up with difficulties to ensure that the unanimity rule remains. I see that the hon. Gentleman is anxious to intervene.

Mr. Wills: I would like to clarify the point. Is the hon. Gentleman suggesting that the difficulties I have just outlined are invented, or does he accept that they might actually happen?

11.45 am

Mr. Cash: I have never doubted that there are certain difficulties. I am concerned about the principle. This Bill, which would otherwise be supported in all parts of the House and indeed all parts of the country, is vitiated by failure to recognise that the principle on which the Government are insisting—unanimity—has to give way to the more pragmatic and practical approach required—

Mr. Taylor: Would my hon. Friend like to join me in giving the Minister something to think about, possibly after he has reflected and taken the advice of his officials? This is an unusual area. It is my suggestion—which could be mistaken, but I believe I am right—that part III of the Community Land Act 1975 is still on the statute book and that it provides a mechanism for the acquisition of untraceable interests. I wonder whether, with the assistance of his officials and possibly with the concurrence of my hon. Friend the Member for Stone, we can leave the Minister with that thought even at this stage: here is a potential mechanism for the acquisition of the unwilling interest.

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Mr. Cash: I listened with great interest to my hon. Friend's remarks and vicariously pass on the thought to the Minister. I hope that he does not bat it away.

I turn to another important aspect of his analogies. He knows that management companies exist to run blocks of flats. Decisions are frequently taken—on the basis of the memorandum and articles of association, companies limited by guarantee and so on—about the manner in which tenants will want the running and administration of the flats to be carried out. I have little doubt that some Committee members are or have been members of such management committees or are subjected to their decisions from time to time.

Some of the issues are controversial and difficult. For example, where there are gardens attached to a block of flats there may be prohibitions on walking dogs, or on children going into the gardens. Decisions on such matters are taken not by unanimity but by majority vote under the terms of the memorandum and articles of association of the individual blocks of flats and the associated appurtenances and curtilages. The idea that unanimity is already regarded as a good idea is out of the question. I shall give way to the hon. Member for Bolton, South-East (Dr. Iddon)—oh, I see he just wanted some water. I thought that this was a new Labour gesture: when wishing to intervene, lift up a bottle of water.

Mr. Taylor: He had better not go to an auction.

Mr. Cash: Indeed. I hope that the Minister takes my point that the unanimity rules do not apply in the real world of the management of blocks of flats and there are many examples to show that some majority voting is essential.

Would it not be a good idea to consider the matter further? The official Opposition will think about what the Minister says and return to the subject on Report, as to press the amendment to a Division would shut off the opportunity for further consideration of this important matter. No doubt the hon. Member for Torbay will express his thoughts on the subject.

Mr. Sanders: I understand what the Minister said about standardisation, a principle that the Government want to establish in the Bill. The explanatory notes, the Bill and the statements made show that the Government have faith in what they propose; it is one of the founding principles of commonhold.

I accept what the Minister said about previous failed attempts to establish commonhold, and that there are alternatives. However, the British Property Federation said:

    ''It is widely considered that achieving this 100 per cent. requirement will be impossible in practice.''

Our amendments were directed to that statement, although they, and the amendments tabled by the hon. Member for Stone and his hon. Friends, may not be the right ones. We want to give the matter more thought—I hope that the Minister will do so too—and return to it on Report.

Mr. Cash: I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

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Clause 3 ordered to stand part of the Bill.

Clause 4 ordered to stand part of the Bill.

Schedule 2

Land which may not be commonhold land

Mr. Cash: I beg to move amendment No. 43, in schedule 2, page 89, leave out lines 5 to 13.

The Chairman: With this we may take the following: New clause 6—Flying commonhold—

    '(1) Commonhold land may consist of, or include, a building, or part of a building, which is above or below other land.

    (2) Where subsection (1) applies, a positive covenant relating to the commonhold or the other land entered into between the commonhold association and the registered proprietor of an estate in the whole or part of the other land shall be enforceable by and against their successors in title if the covenant so provides.'

Mr. Cash: The explanatory notes indicate that certain land may not be commonhold land; that is prescribed by clause 4. Schedule 2(1) forbids the development of commonhold land at first-floor level or above unless all the land below it and down to the ground is subject to the same application. It is stated that that is to avoid the risk that attends flying freeholds at present, especially the problem of enforcing any covenants relating to access and support.

It means, in effect, that the Bill permits commonholds to be created only if they are grounded; that is to say, any commonhold above ground level must have beneath it commonhold land down to the ground, so in a mixed-use development of flats above shop premises it would not be possible to retain the commercial elements as freehold-leasehold and sell the flats as commonhold. The provision reflects the problems in English law with flying freeholds, which are not permitted because of the difficulty of establishing neutral rights of support, ingress and egress.

Flying commonholds are relatively common in the United States and Australia. Since commonhold is a new tenure as yet untried in this country, it seems sensible for the legislation to provide maximum flexibility in the structure to ease and encourage its use. I shall be interested to hear what the Minister has to say about my comparisons with what goes on in the US and Australia. He may not be able to respond immediately, but it is an interesting question. Why can it work there when it is not allowed to work here?

Ungrounded commonholds should be permitted where there is no requirement for rights of support or egress or ingress from adjoining property, and there should not be any problem as a result. Even where there might be issues such as rights of support, egress or ingress, the legislation should allow commonholds to be developed ungrounded for reasons of flexibility. The British Property Federation has suggested that if the legal and engineering ingenuity exists to overcome the perceived problems in developing a flying commonhold to the satisfaction of the lawyers, funders and prospective occupiers, it should be allowed the opportunity to do so. That might

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encourage developers of mixed-use buildings to consider using commonhold. It is reported that many are reluctant to consider developing the whole building as a commonhold because they are concerned that it might be perceived as limiting the investment value of the commercial element. To permit flying commonholds would enable the residential elements to be sold on a commonhold basis while the commercial elements are retained on a freehold-leasehold basis.

In the other place, in Committee, on Report and Third Reading, Lord Kingsland moved amendments to schedule 2 to allow for the conversion or development of flying commonholds in line with the proposals that I mentioned. On all occasions, Lord McIntosh of Haringey or Baroness Scotland of Asthal referred to the fact that the Law Commission was reviewing positive covenants affecting land, and asked that this technically complicated matter should be left for the commission to determine. I hope that I am not anticipating too exactly what the Minister will say.

During the debate on Third Reading, Baroness Scotland said that the Law Commission does not expect to go out to consultation on land obligations before 2003 because its work is contingent to an extent on the outcome of part 1 of the Bill. Given the fact that the work is under consideration, I do not doubt that I have anticipated what the Minister is about to say. However, it is important that we should bring the issue to the forefront of the Committee, because it is not to say that flying commonholders should not necessarily apply, but that a lot of thought must be given to the matter by the Law Commission, the Government and others in the field of property development. There is a strong case for limiting the instances of land that may not be commonhold to an absolute minimum and linking that to a delegated power to add to the list if necessary.

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