Commonhold and Leasehold

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Mr. Taylor: On the subject of Alec Guinness, did the hon. Gentleman see ''The Bridge on the River Kwai?''

Mr. Cash: I thought that it would be a good idea to watch both films, but we must return to the matter under consideration. I made the point, somewhat graphically, to demonstrate that we do not need to engage in confrontational situations of the Zhivago type, because the world has moved on. Excluding the landlord by law, which is what is being done, is carrying things too far.

I do not know whether anyone in the Committee seriously believes that because a person has a substantial interest in property they should be specifically excluded. They are part of a process that should involve consultation—not necessarily a veto, as I said earlier—and the right to participate in the running of the company as a director. I do not see the virtue of excluding such people; it would be odd. The Minister may wish to reflect on that.

When I intervened earlier, the Chairman rightly pulled me up for going into detail about a letter, but I have more latitude when speaking to the amendment. We referred to the regulations. The Delegated Powers and Regulatory Reform Committee does not appear to have focused on the regulations relating to right-to-manage companies. I do not know whether that was an oversight or intentional, but the principle remains the same, and I should be grateful if the Minister would give it some thought.

Clause 72 is entitled

    ''RTM companies: membership and regulations''.

So many of the things to which the Minister referred will be worked out in the memorandum and articles of association of the RTM companies. That is where the balance lies between the various interests.

The clause states:

    ''A provision of the memorandum or articles of a RTM company has no effect to the extent that it is inconsistent with the regulations.''

I hope that hon. Members will forgive me, because I loathe going over the top on these matters but, rather like excluding the landlord, that absolute insistence on uniformity is going too far. We are saying what the template is, but we do not even know what the leasehold articles of association will contain.

Ms Keeble: If the hon. Gentleman wants to make points, I will deal with them when I reply.

Mr. Cash: Certainly. Let me put it the other way round. Irrespective of Mr. Zimmerman's letter and the point that I made about commonhold, it would be helpful if the draft articles of association could be made available. At least then we would know where we were going on the matter, which would be a step in the right direction.

My amendments are designed to tackle the problem of the landlord's status. The Government recognise

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that the landlord will continue to have an interest in the building, as we have discussed. It is right for the landlord to have that involvement, but the way in which the Government recognise that right is—in my judgment—wrong. The Bill proposes that the landlord should be a member of the RTM company with one vote, but, as I have said several times because I feel quite strongly, he would have no right to sit on the board. If he was allowed to sit on the board but did not want to, that would be one thing, but he will be excluded, which is rather sinister.

I wish that a Labour Member would give an example or some reasoning as to why they think, in this day and age, that members of the new Labour party who are landlords—[Interruption.] I think that the Minister who attended a previous sitting declared an interest as a landlord of the sort of property that we are discussing. If I lived in that block of flats, I would like to have the Minister on the board because we have good personal relations.

Shona McIsaac (Cleethorpes): Will the hon. Gentleman give way?

Mr. Cash: Of course. I am delighted to have sparked a response. It has been hard work: this is the third sitting.

Shona McIsaac: I have probably only just woken up.

Given that one of the biggest landlords in the country is the Duke of Westminster, will the hon. Gentleman estimate how much time that that landlord would have to spend attending myriad management meetings? Frankly, he would have to invent time travel to be able to attend them.

Mr. Cash: First, no one imagines that the word ''landlord'' necessarily means the landlord himself. It could be a representative and I do not believe that there is the slightest doubt about that. The important point is that in a smaller block of flats it would almost certainly be the landlord, because there would be a personal relationship of the sort that I described. That does not alter my argument about the necessity of avoiding the difficulties that arise when there is a clash of personalities or interests and the landlord is actively excluded. We are not talking about the Duke of Westminster in this context.

10.45 am

Mr. Bill Wiggin (Leominster): Having listened to the Minister and other members of the Committee, it is clear that the essence of the reform of leasehold is balance. The Bill should not focus solely on the Duke of Westminster who is just one landlord, but there is no reason why the Duke of Westminster should not turn up to a meeting if he wished to do so. He should not be excluded and the purpose of the amendment is to prevent him from being excluded. We are all concerned that the leasehold reform should not be seen as a way of pushing the freeholder out of that committee.

Mr. Cash: That is right. There are boards of directors in so many walks of life. That does not mean that every director must turn up on every occasion. It may be appropriate for him to turn up

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only once in a blue moon when his interests and what is going on with his block of flats demand it. I in no way decry the intervention of the hon. Member for Cleethorpes (Shona McIsaac). I do not blame her for having a shot at whomever she wanted to have a shot at.

Shona McIsaac: It was you, actually.

Mr. Cash: In that case, it was wide of the mark. By no stretch of the imagination am I the Duke of Westminster.

Dr. Julian Lewis (New Forest, East): But you deserve to be.

Mr. Cash: That is another story.

I do not see why a person should be excluded, and I am astonished that not one member of the Government is prepared to acknowledge that the policy of exclusion is unjustified or is prepared even to justify it. The Minister has not justified it. However, the only proper way to recognise the landlord's legitimate interest is to allow him to sit on the board of directors. The extent of his right would be no more than to attend the general meetings and, if the circumstances were such, to be outvoted on the board by the tenant members every time, as I pointed out earlier. It does not follow because the landlord is on the board that he will win the votes or exercise any control or intimidation.

I mentioned the veto earlier. If the landlord tried to pursue interests that were inimical to the interests of the tenants, he would be outvoted. I am worried for new Labour, because there is a Stalinism here. I find it peculiar and do not understand it. The amendment is important in many ways for that reason. The landlord should be allowed to sit on the board of directors, especially if the Government persist in their avowed intention to allow buildings with commercial premises to be made subject to the residential tenants' right to manage. The landlord should be allowed some input into the management if he so wishes. The landlord may not be interested in being a director, particularly where there are long leases with substantial periods to run before expiry. If the reversion is to fall in the near future it must be right to give the landlord the opportunity to take part in the decision-making process. I do not understand the reason for the omission in the Bill.

Ms Keeble: I am grateful to the hon. Gentleman for raising those points. I should have waited to hear them first. I am sure that he will be relieved to hear that I do not intend to go back over my speaking notes, which I should have read out at the end. May I also apologise to the Committee? I should have declared my interest when I first spoke. My husband and I live in a house in London that is a leasehold property.

Mr. Cash: I think that we all do.

Ms Keeble: I am sure that we virtually all do.

In the context of these discussions I should also declare a formal interest in that as a leaseholder I enfranchised myself, along with other leaseholders. I have been through quite a lot of the process that we are talking about. [Interruption.] I gather that other hon. Members have too.

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I am grateful to the hon. Member for Solihull (Mr. Taylor) for his advice on lawyers. We clearly want arrangements for the ownership and management of properties that will work to the benefit of all the parties involved. The right to manage will probably be more immediately attractive to leaseholders because it will provide them with a degree of involvement that they have not had previously, without having to go for enfranchisement, which they might not want to do for a variety of reasons. However, that does not mean that it has to be seen in a confrontational way. I completely take the point that Opposition Members have made. That approach underpins the fact that this is a no-fault right. I have spoken about that quite often and so I will not go into it in great detail again.

The hon. Member for Solihull gave an interesting explanation of how the management committee of his property pinned the landlord down. In this instance we are dealing with a slightly different arrangement because it is a company. The members can elect as their directors people from among their membership. I will return to that when I deal with the arguments of the hon. Member for Stone. His main thrust was that he sensed that the landlords were being excluded. Further explanation is needed. I completely take the points made by the hon. Member for Solihull about the deserted spouse. I am sure that he will get a full response. I will ensure that our officials also look at the leasehold side.

The hon. Member for Stone pointed out that it is a two-way relationship. That is right. It is part of the principle underpinning the no-fault right to manage. It is a new and important right that will address many of the concerns that have been raised. The fact that people thought that it was all or nothing encouraged a more antagonistic approach between freeholders and leaseholders on decisions about companies. This no-fault right to manage is important progress.

The hon. Gentleman also asked about the constitution and regulations. We recognise that the constitutional right to manage a company is a fundamental part of the framework that the Bill puts in place. It is important that these matters are subject to careful consideration. We consider that that is best served by the Bill's approach, which will allow us to work out the constitutions in detail after consultation with the interested parties before carrying out a wider public consultation on the draft regulations. The work is under way and, expecting great interest in the matter, I asked the officials to bring the drafts to the Committee. The usual protocol is that we ask your permission to circulate them, Mr. Hurst. If you agree, perhaps they can be distributed when we break for lunch. I emphasise that the documents are drafts and I welcome comments on them from hon. Members or as part of the consultation exercise to be carried out later in the year.

 
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Prepared 17 January 2002