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Lord Dubs moved Amendment No. 255CA:


After Clause 105, insert the following new clause--

Review of extension of collective enfranchisement

(".--(1) The Secretary of State shall keep under review the effect of this Part together with the Leasehold Reform, Housing and Urban Development Act 1993 on the extension of the right to collective enfranchisement.
(2) In conducting the review, the Secretary of State shall--
(a) consider new or better ways of exercising the right of collective enfranchisement; and
(b) consult such bodies as he considers representative of the interests of leaseholders.
(3) The Secretary of State shall, within a period of two years after the date on which this Act is passed, make a report of the review carried out by him under subsection (1), and shall lay before each House of Parliament a copy of the report made by him.").

The noble Lord said: This amendment stands in my name and that of the noble Lord, Lord Meston. There is a great deal of concern about how well the 1993 Act has been working as regards enfranchisement. Concern has also been expressed this afternoon as to how well the changes proposed in this Bill will work.

The purpose of the amendment is to ensure that within a two-year period after the Act is passed, the Secretary of State will carry out a review and will report on the way in which the measures--that is, the 1993 Act and the Bill--are working as regards leasehold matters. I share the anxiety of those who say that the last Act could not have worked well because of the small number of instances of enfranchisement that are known and that leaseholders are finding it too difficult to put into practice the provisions which the 1993 Act should have given them. I contend that they will also find it difficult to deal with the changes proposed in this measure. Let me repeat the figure that I quoted earlier. It is my understanding that 65 per cent. of leaseholders will not be able to become enfranchised because of the measures in this Bill together with the measures in the 1993 Act.

The purpose of the amendment is to put that proposition to the test--unfortunately, only after the event--so that the Secretary of State will publish the results of a full review to see how well the measures are working. I believe that it is a sensible course. We shall then have some objective--I hope--information which will enable us to judge whether further changes are

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needed or whether the fears expressed today by several Members of the Committee in relation to the Bill are borne out in the event. I beg to move.

Lord Strabolgi: I support the amendment. The noble Viscount, Lord Montgomery of Alamein--I am sorry to see that he is no longer in his place--said rightly that the Act was not working very well. Indeed, as my noble friend Lord Dubs pointed out, there have been very few cases of leasehold enfranchisement. I understand there have been only a few dozen. Therefore, it is crucial that the Government now have a commitment to a thoroughgoing review.

If the Government's stated intention is still to make long leaseholders the full owners of their homes, they must now commit themselves to examining how the restrictions of the 1993 Act are serving to frustrate that aim--there will be further frustrations as a result of the present Bill--and how landlords are using loopholes to deprive leaseholders of their right to buy. It is clear that leasehold as a form of tenure has not come to an end. A commitment must be given to examining how the process of enfranchisement can be made simpler, cheaper and fairer, and so allow more leaseholders to become the full owners of their homes.

What the Government continually say they want to do, although they do the opposite in legislation, is to bring the leasehold system of this country to an end, so that we can enter into the kind of tenure that is held on the Continent and in other countries, such as Australia. It is much more successful than the old-fashioned, 19th century system which still persists in this country. The Government believe in bringing it to an end. Therefore, it is time that there was a full examination of the legislation that has been brought in during their term of office to see whether we can make further improvements and ensure that the aim to which they subscribe can be fully realised.

Lord Lucas: I agree entirely with the noble Lord, Lord Dubs, that it is our responsibility to keep the effects of our legislation under constant review. That is especially so with such an important and complex piece of legislation as the 1993 Act.

That is exactly what the Government have been doing. Let me explain briefly two ways in which we are seeking to achieve it. First, at the outset we established the Leasehold Enfranchisement Advisory Service. We have already discussed the value of that body in debating a previous amendment with a view to strengthening its activities. Not only has it provided an excellent advice service to leaseholders and freeholders in relation to the enfranchisement procedures, but it also has a non-political role in advising the Government about the effectiveness of those procedures. It can do that because of its contact with an enormous number of leaseholders interested in enfranchisement. It received 4,000 inquiries in 1994 and nearly 5,000 in 1995.

It was largely at the prompting of LEAS that the Government took action in this Bill to deal with the avoidance device of the creation of flying freeholds. I can assure the noble Lord that we shall continue to rely on its very helpful and sound advice. We shall also

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consult groups representing leaseholders and freeholders, as we have done in the course of the preparatory work for this Bill and during its passage through Parliament.

Secondly, we have commissioned a substantial research project which is being undertaken by staff from Sheffield Hallam University into the experiences of a sample of leaseholders drawn from inquirers to the Leasehold Enfranchisement Advisory Service who have shown an interest in enfranchisement. That study is understandably quite a lengthy process, but I expect that a full report will be made to the department in the spring of 1997.

In moving his amendment, the noble Lord, Lord Dubs, suggested that the 1993 Act had proved ineffective and over-complicated and that that was why so few leaseholders had made use of the new powers. He quoted a figure of 65 per cent. who cannot enfranchise. I do not recognise that figure and do not know the basis of it. Perhaps the noble Lord will write and enlighten me. The 1993 Act was brought forward on the basis of principle--hence all the qualifying conditions. It is not something that we intend to change just to get the numbers up.

I have to admit that the Government are faced with two difficulties in trying to refute the claim that the 1993 Act has proved ineffective. First, if leaseholders do proceed to enfranchisement, then, although they may be using the provisions of the 1993 Act, they may have come to a private agreement with their landlord. The Government have no automatic knowledge of how many such agreements there have been.

Secondly, it may be that in many cases the exact procedures of the legislation are not closely followed. The two parties form a degree of mutual trust and come to a purely private arrangement. That does not mean that the legislation has proved unsuccessful because it is quite likely that in many cases, without the knowledge of the legislative powers as a reserve, no such private deal would have been reached.

Those qualifications apart, the evidence that we have available suggests that there is far more activity going on than many of the critics of the Act would lead one to believe. I do not wish to prejudge the results of our research project, but the preliminary results of one part of the research, which was a survey of inquirers to LEAS, indicate that of those wishing to enfranchise, 18 per cent. had completed the process. That represented 67 cases of completed enfranchisement. Further evidence has been made available from LEAS itself, which has sought information from its own list of professional advisers, principally those solicitors and valuers working in this area. This has produced evidence of 164 completed cases of enfranchisement involving nearly 1000 flats and 154 cases of lease extension. This is, of course, only a very partial survey but it does indicate considerable activity.

There have also been 39 cases under the 1993 Act provisions where there have been disputes resolved by the leasehold valuation tribunals. Although this is not a large number in itself, the resolution of some difficult

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issues, such as the share of marriage value between landlord and leaseholders, has established some important ground rules which will add a degree of certainty for prospective enfranchisers.

I accept that the numbers we have for successful enfranchisement is not large in relation to the 1 million or so leaseholders that exist, but the Government have never claimed that progress would be rapid. For example, there are still cases of enfranchisement being completed under the original 1967 Leasehold Reform Act provisions, so it is still early days. However, we do think that the evidence we have available suggests that there is a great deal of interest about enfranchisement among leaseholders and that the level of activity is markedly accelerating.

The provisions in this Bill will enable more leaseholders to acquire their freeholds in a number of ways and we will, of course, keep the legislative framework under close review. I do not rule out further research work being commissioned.

I do not, however, think that it would serve any useful purpose to place a requirement on the statute book requiring such a review to take place. With the assurances I have given to the noble Lord, Lord Dubs, I hope he will feel able to withdraw his amendment.


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