Previous Section Back to Table of Contents Lords Hansard Home Page


Lord Dubs: My Lords, the Minister said that my amendment, if accepted, would represent a Henry VIII provision. I obviously defer to noble Lords who have far more experience than I in those matters but I understand that a Henry VIII provision allows primary legislation to be amended subsequently by statutory instrument. That is clearly not the case here. I would argue that this is not a Henry VIII provision. It is an amendment which gives the Secretary of State powers to devise a scheme concerning self-management. No amendment to primary legislation is envisaged in that. We would have a detailed scheme setting out the

10 Jul 1996 : Column 355

terms under which leaseholders might self-manage, the conditions, the methods, the qualifying periods and that sort of detail. It is not a Henry VIII provision by any means.

Amendment No. 144 is very similar to many other provisions in legislation which simply give the Secretary of State the power to develop schemes or detailed proposals which do not affect the primary legislation itself. That is the first point.

Secondly, although I had not specified any scheme in the amendment or, indeed, set out any details of one, the Minister said that it was clear that I had something in mind comparable to an earlier amendment that I moved in Committee. Well, that may or may not be the outcome. I favour the approach set out in Amendment No. 144. I do so because I am not entirely sure about the detailed points which were raised as a result of the earlier amendment. Indeed, I was told that there were some technical defects in it.

Moreover, the amendment would leave the Secretary of State free to do whatever he wishes; in other words, it is possible that the Secretary of State could meet the Minister's point and that there would only be a right to self-manage if there was a defect in existing management. I should have thought, therefore, that my proposal goes further towards meeting the Government's objections than the Minister conceded a few moments ago.

I had hoped that there would be a little more sympathy for the suggested approach. It would enable a self-management scheme to be more limited. Indeed, if the Secretary of State so chose, it would enable a self-management scheme to be developed as a result of intensive consultation and might well limit the right to self-management to individuals living in flats which are not well managed. However, I see that the Minister shows no willingness to concede the point that I am making. I hope that he will agree with me at some point that it is not a Henry VIII clause. In the meantime, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 89 [Notice required to be given by landlord making disposal]:

Lord Lucas moved Amendment No. 145:


Page 62, line 11, leave out subsection (2).

The noble Lord said: My Lords, in moving the above amendment I shall, with the leave of the House, speak also to Amendments Nos. 146 and 147. Amendment No. 145 is a paving amendment for Amendment No. 147. Amendment No. 146 recasts the transitional provision in Clause 89 to cover all obligations, not just contracts: it is also consequential to the effect of Amendment No. 145.

In this Bill we have established criminal sanctions against landlords who fail to offer their tenants the right of first refusal when they wish to sell their interest. In the Bill as printed, those sanctions apply only to failure to serve notices under Section 5 of the Landlord and Tenant Act 1987--the primary offer. But, on reflection, that does not go quite far enough. A landlord might serve a Section 5 notice but then fail to follow the proper procedures

10 Jul 1996 : Column 356

subsequently. He might sell to a third party after Section 5 notices have been served, or sell on better terms within 12 months after negotiations with the tenants have broken down.

Therefore, Amendment No. 147 broadens the offence to cover contravening any prohibition or restriction in Sections 6 to 10 of the Landlord and Tenant Act 1987. These prohibitions refer to the sales to third parties which I have just described. The extension to the offence is set out in Amendment No. 147 as new Section 10A(1)(b), which is the only new element in this group of amendments. We believe that the principal responsibility for offering the right of first refusal lies with the vendor landlord. These amendments will ensure that he cannot avoid his obligations without penalty. I hope that the House agrees to them.

I have one further matter to mention before I move the amendment. I promised in Committee to return to the question of defining a "relevant disposal" for the purposes of the criminal offence. We have not yet been able to do this, but we intend to bring forward the necessary amendment on Third Reading. The noble Lord, Lord Dubs, may quail at introducing a 24-page amendment, but I fear that I may be doing exactly that. Indeed, very extensive amendments are necessary to various pieces of legislation and, indeed, to earlier legislation to achieve the effect that we desire.

We intend to lay the amendment on Monday. However, we will make available to all noble Lords who have spoken in Committee or on Report a draft of the proposed new clause on Friday so that they may have a chance over the weekend--that is, if they have nothing better to do--to look at it. If any noble Lords will not be in a position to receive mail directly from this House on Friday and would like to receive it by some other means, perhaps they will let me know and I shall ensure that that is done. I beg to move.

Lord Dubs: My Lords, perhaps I may comment briefly on what the Minister said about the definition of "relevant disposal". I am very pleased that the noble Lord is looking further into the matter. I thank him for his willingness to make the details of the proposed new clause available as early as possible. I hope that it comes out in the form that we would wish.

On Question, amendment agreed to.

Lord Lucas moved Amendment No. 146:


Page 62, line 39, leave out subsection (3) and insert--
("( ) The above amendment does not apply to a disposal made in pursuance of an obligation entered into before the commencement of this section.").

On Question, amendment agreed to.

Lord Lucas moved Amendment No. 147:


After Clause 89, insert the following new clause--

Offence of failure to comply with requirements of Part I

(".--(1) After section 10 of the Landlord and Tenant Act 1987 insert--
"Offence of failure to comply with requirements of Part I.
10A.--(1) A landlord commits an offence if, without reasonable excuse, he makes a relevant disposal affecting premises to which this Part applies--

10 Jul 1996 : Column 357


(a) without having first complied with the requirements of section 5 as regards the service of notices on the qualifying tenants of flats contained in the premises, or
(b) in contravention of any prohibition or restriction imposed by sections 6 to 10.
(2) A person guilty of an offence under this section is liable on summary conviction to a fine not exceeding level 5 on the standard scale.
(3) Where an offence under this section committed by a body corporate is proved--
(a) to have been committed with the consent or connivance of a director, manager, secretary or other similar officer of the body corporate, or a person purporting to act in such a capacity, or
(b) to be due to any neglect on the part of such an officer or person,
he, as well as the body corporate, is guilty of the offence and liable to be proceeded against and punished accordingly.
Where the affairs of a body corporate are managed by its members, the above provision applies in relation to the acts and defaults of a member in connection with his functions of management as if he were a director of the body corporate.
(4) Proceedings for an offence under this section may be brought by a local housing authority (within the meaning of section 1 of the Housing Act 1985).
(5) Nothing in this section affects the validity of the disposal.".
(2) The above amendment does not apply to a disposal made in pursuance of an obligation entered into before the commencement of this section.").

On Question, amendment agreed to.

6.45 p.m.

Lord Dubs moved Amendment No. 149:


After Clause 94, insert the following new clause--

Registration of rental deposit money

(".--(1) The Secretary of State may by order make a scheme or schemes authorising the registration and holding of all rental deposit monies charged by landlords letting residential properties.
(2) The Secretary of State may at any time by order vary or revoke a scheme.
(3) An order under subsection (1) shall be made by statutory instrument and shall be subject to approval by resolution of both Houses of Parliament.").

The noble Lord said: My Lords, we had a debate in Committee about elements of the point raised in this amendment; namely, that there should be a scheme to protect the rent deposits paid by tenants so that there would be some safeguards for the money being held. The Minister was not too convinced at that time about the proposals and, therefore, we have now brought forward an amendment which is somewhat different in form. It would enable the Secretary of State to develop a scheme which would authorise,


    "the registration and holding of all rental deposit monies charged by landlords letting residential properties".
After all, it was recognised in our earlier debate that landlords can hold considerable sums of money. Indeed, on finishing their tenancies when their time is up and they wish to leave, some tenants have experienced difficulties in securing the money held on deposit. I do not believe that there would be any weakening of the position of landlords if there were a scheme to safeguard the way in which such deposits are held.

10 Jul 1996 : Column 358

Tenants fail to get their money back at the end of a tenancy because sometimes there may be a letting company involved which acts like a bunch of cowboys or, indeed, which may have collapsed. Alternatively, the landlords sometimes claims damage to the property which is disputed by the applicant. The National Association of Citizens Advice Bureaux has pointed out that this is likely to be a matter of one or two months' rent and certainly not an insignificant sum of money. That is especially so if the individual concerned wishes to utilise that sum of money as a deposit for another property into which he or she might move.

Unlike other countries, we have no specific system as yet for tackling what is a growing problem: how tenants get their rent deposits back. The problem has damaged the image of the private rented sector and, indeed, is a sign that yet more modernisation is urgently needed. As we discussed earlier in Committee, other countries have recognised the need to modernise their whole private rented sector by tackling the problem of rental deposits and disputes. I believe that reference was made on the last occasion to a scheme in New South Wales which was developed in 1977, called the "rental bond scheme". I understand that such a scheme is favoured by both citizens advice bureaux and the National Consumer Council. It is an independent and impartial custodian of rental bonds taken on private residential tenancies.

From people who have examined the scheme in New South Wales, I understand that it has performed very well; that it is efficient and cost-effective; that it has not developed any significant faults; and that there are no major criticisms of it. Indeed, it has handled a large amount of money, and by all standards it has worked well.

I do not want to go into all the details of the scheme but it is more than a custodial service for holding money. It is also linked to tenancy services and to a tenants' advice and advocacy programme. There is also a residential tenancies tribunal. As I have said, I do not want to go into too much detail. However, the board in New South Wales has reduced bureaucracy and the need for court action. It has also reduced the number of disputes. It has therefore become popular not just with tenants but also with estate agents because it has saved time and it has taken away the unpleasant air of controversy which sometimes surrounds arguments about the return of moneys.

The moneys received by landlords are deposited with the rental bond board. At the end of the tenancy either party can claim the deposit. If the landlord does not claim within seven days, the full bond is returned to the tenant. Evidence from the board suggests that the return of deposits is on the whole dealt with in a satisfactory manner. Far from being bureaucratic, the system speeds up the process of the return of the money. There are some impressive statistics which show how well the system has worked. I understand that it has had all-party support in New South Wales.

At an earlier stage the Minister suggested that the small claims court offered a cheap and relatively simple way of dealing with disputes. However, I do not think

10 Jul 1996 : Column 359

that is as good a system. There are many doubts about whether the small claims system in county courts works as well as all that. Certainly evidence from the National Audit Office shows that 49 per cent. of plaintiffs surveyed thought the small claims procedure was either fairly or very slow. Fewer than 40 per cent. of arbitration cases were completed within six months, and one in five plaintiffs found that their case took more than a year to complete.

The small claims procedure has its faults. It may be cheap but it is not free. It takes rather a long time, whereas the New South Wales system works quickly, has all the advantages of a small claims court and appears to have none of the disadvantages. I think what we have here is an approach which is sensible and which should work well. The amendment would give the Secretary of State the power to develop such a scheme. The experience of New South Wales could be considered and the scheme could be amended in the light of different circumstances in this country. It would deal with a problem which has caused much upset and much anxiety to many tenants. It seems to me that there are simple ways of dealing with that anxiety, but doing nothing is not one of them. I beg to move.


Next Section Back to Table of Contents Lords Hansard Home Page