Commonhold and Leasehold Reform Bill [Lords]

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Clause 134

Amendments of 1967 Act

Question proposed, That the clause stand part of the Bill.

Shona McIsaac: We have come to the part of the Bill in which I have a particular interest. Cleethorpes and neighbouring Grimsby are leasehold towns. I am pleased that the Government are amending the Leasehold Reform Act 1967, because many of the amendments will benefit residents in my constituency.

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However, we must debate some aspects of chapter 4, particularly forfeiture insurance, purchase price and marriage values. The Committee should realise their importance.

Of approximately 2 million leasehold properties in Britain, about half are leasehold houses. We spent a lot of time discussing flats, but it is just as important to discuss the issues as they relate to leasehold houses, even though fewer amendments affect them. I said in a previous sitting that an estimated 21,000 house leaseholders live in Grimsby and Cleethorpes. I shall not call them tenants—I have never agreed with the use that term.

Those people believe that they are homeowners because they have a mortgage; they feel that they have purchased their homes. They call themselves homeowners in the census. However, when it comes to calculating care costs, elderly people who want to go into residential homes are certainly regarded as homeowners, not tenants. I find it shocking that we are only now beginning to tackle some of the serious issues that affect house leaseholders, and some of the injustices arising from the 1967 Act.

I am indebted to one of my constituents, Dr. Alan Dowling, a local historian who has brought to my attention the fact that the problems of house leaseholders in Grimsby and Cleethorpes were first raised in Parliament in the 1880s. That led in 1883 to the setting up of the Grimsby branch of the Leasehold Enfranchisement Association, to campaign for leasehold land to be made freehold. Nothing came of the campaign because it did not suit the major landowners, but here I am, 120 years after the issues were first raised in Parliament. I hope that our debates on chapter 4 will enable me to redress some of the wrongs that have been fought over for so long and that affect 21,000 houses in Grimsby and Cleethorpes.

We must not underestimate the problem. The average cost of enfranchisement in my constituency is £10,000; although that figure is plucked out of thin air, it means that just a few landowners are sitting on £21 million. In the big building period of the early 20th century there were seven major landowners in Grimsby and Cleethorpes, one of which, Sidney Sussex college of the university of Cambridge, owned 5,000 leaseholds in my constituency. It is only fair to say that the college disposed of those assets some time ago, but that example shows what we are dealing with.

These days, because of voluntary disposals by landowners such as Sidney Sussex college, many of the relevant freeholders are offshore companies. Tracking them down can be difficult, and some extraordinary abuses go on. When we debate the proposals to amend the 1967 act, I intend to detail some harrowing constituency cases. I shall put the case forcefully, because the interests of 21,000 homeowners are at stake.

Mr. John Taylor (Solihull): I support the hon. Member for Cleethorpes, who expressed her arguments well. Her constituency and mine probably share few characteristics, but I understand her views, and if I had the honour to be the Member of Parliament for Cleethorpes I would have tried to make

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the same arguments as well as she has done. We have had evidence, mainly from places to the north of where I come from, of exploitation in connection with reversion. As the hon. Member for Burnley (Mr. Pike) and others made clear on Second Reading, reversion on very long leases—even 999-year leases—can be exploited if there are covenants for replacement of insurance and things of that nature.

Although there is not the same stress in my area as there is in the northern towns of England, we have been left with the residual consequences of the failures of the 1967 Act. As the Committee may know, I was a young lawyer at the time that Act was passed. In those days I did not have my own practice; I did what the partners in the firm told me to do, and they told me to do conveyancing. With the onset of the 1967 enfranchisements, people in my part of the world, predominantly with 99-year leases, sought to buy their freeholds. It became clear very quickly that whereas the right to acquire was as plain as a pikestaff, the value—or, more specifically, an appropriate price at which the leaseholder might buy the freehold—was, to say the least, a grey area. It became the ground for argument and litigation.

In those days, the only forum that could unlock the dispute for the leaseholder—whose right was clear, but whose price was not—was the Lands Tribunal. Although many people fought shy of the costs of contesting the matter in that forum, in my area, predictably, there were those who were not frightened by those costs: they fought, they got their valuation, and they acquired. Those trailblazers who were not deterred by the cost of going to the Lands Tribunal eventually served the purpose of clearing the way for others. They might have done that unwittingly—they acted in their own interests—but such was result of their actions.

After the Lands Tribunal had delivered a sufficient body of decisions, the state of the market was clear to leaseholder and to freehold reversioner alike. When there were enough decisions to give a guide, the disputation ceased. That it stopped was not because the Act—or, rather, the politicians who produced it—had been politically courageous enough to introduce a price mechanism. They had not. They ducked the issue and citizens had to dispute their way to a body of decisions that gave clear guidance.

That is the story of the 1967 Act, which is now rather a long way upstream. Now I—no longer a young lawyer, but the Member of Parliament for Solihull—am experiencing a nightmare revisited. Mr. Chairman, we are going to do it again. I am not being a party politician. I am appealing to worthy members of all parties when I say that I am old enough to know why the 1967 Act was deficient: it did not contain a price mechanism or a sufficiently defined formula to make things clear to our citizens who, when considering the most important asset they will own in their lives, rightly aspire to move up from leasehold to freehold. That is a very big deal for those people—it involves their home and their life savings.

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We have a huge responsibility: we legislators are in a position to make the law. We can make it precise and clear, to the profound convenience of our constituents who live out there and to whom we are responsible—or we can leave it as a dog's breakfast and stand condemned as another generation of cowardly politicians who would not get to grips with the issue. We must grasp it now. My constituents are probably up for another fight in the Lands Tribunal. I venture to suggest that the constituents of the hon. Member for Cleethorpes are not.

Shona McIsaac: The hon. Gentleman is quite right. Such is the nature of the property and the community in Grimsby and Cleethorpes that my constituents do not litigate—either they simply cave in, or they lose their homes.

11.45 am

Mr. Taylor: The hon. Lady makes the point elegantly and seriously on behalf of her constituents.

My message is fairly clear. The 1967 Act gave a right, clearly, but did nothing about valuation. The Bill runs the risk of doing exactly the same. I am old enough and ugly enough and have no parliamentary ambition other than to serve as a responsible legislator. I claim in aid my modest experience as a politician and my 22 years as a solicitor. That I am obviously much nearer the end of my career than the beginning that makes it even more important that I should say this. In such a situation, I run the risk of saying nothing about a flaw in the Bill that I know about. I have, however, averted that risk, because I do know and I am telling the Committee.

In the last sitting, the Minister told me that her officials had examined the possibility of finding a formulation that would provide guidance on price and value, but had found the problem too difficult. They found it too difficult in 1967 as well. I will not be fobbed off with that argument twice. I do not accept it. I appeal again to the Minister—tell your officials what to do. You are—I am sorry, I lost the correct pronoun, such is the extent of my concern. I address my remarks to you, Mr. Illsley—the hon. Lady is a Minister of the Crown and is in a position to instruct her officials. These might be her words: ''I am not satisfied that you cannot find a formula. You must find one. Go back and think again.''

There is time to find a formula. The Conservative party will not mock a raft of Government amendments tabled on Report. I make it my personal responsibility to ensure that my party will not mock a rewriting of the provisions. We will not say, ''You are doing this on the hoof by tabling a raft of amendments on Report.'' We will say, ''Thank you for reconsidering. The new Labour Government are bigger than we thought they were. We thought that you were just our political opponents but we can now see that you are something more than that. You have acquired some maturity in Government and you are able to think again.''

If the Government do that, they will rise above politics and into statecraft. I wonder whether new Labour is up to statecraft, even if it is very, very good at presentation. This might be a test. If the

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Government rise above politics, I shall be on my feet on Report to congratulate them. However, I remain unsure. I am not content, and I look to the Minister. In 18 years I have disobeyed the Conservative Whip only three times, and that was only because I did not understand it on those occasions. However, I certainly understand this matter. If a price mechanism is not introduced on Report, although I have only one vote in the House, it will be used against the Bill on Third Reading.

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Prepared 22 January 2002