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Baroness Hamwee: Perhaps I may take this opportunity to ask the Government whether they have managed to make progress on the question of stamp duty. I raised that point at Second Reading. I confess that it occurred to me only late during the debate. The Minister said then that he believed that there would be no stamp duty on transfer from freehold to commonhold. I raise the point now because, as I understand the structure of the Bill, there will be a conversion from freehold. The consultation paper, at which I looked again after Second Reading, states that it would be possible to convert from some other status. Given the importance of the structure of what is proposed and the devastating effect that stamp duty would have on the transfer, it would be helpful if the Government were able to confirm that no stamp duty will apply.

The Parliamentary Secretary, Lord Chancellor's Department (Lord Bach): We are not able to settle this issue yet but we have it in mind and we expect to reply

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by the Report stage of the Bill. The noble Baroness's formal objection to Clause 2 standing part of the Bill has taken us slightly by surprise. That is why I cannot give a more satisfactory answer at this stage. However, I do not believe that she has much to fear.

Clause 2 agreed to.

Schedule 1 agreed to.

Clause 3 [Consent]:

Lord Williams of Elvel moved Amendment No. 1:


    Page 2, line 16, leave out ("anyone who") and insert ("at least 80 per cent. of the following classes of person").

The noble Lord said: This amendment stands in my name and that of the noble Earl, Lord Caithness. It may be for the convenience of the Committee if I speak also to Amendments Nos. 2 to 12, 18, 23 and 41. Other Members of the Committee will no doubt wish to have their own say on their amendments. The amendments to which I am speaking address the problems that other Members of the Committee are seeking to address in the same group of amendments, which is why the amendments have been grouped.

The problem that the Committee will wish to address is whether commonhold as set out in the Bill as drafted is meant to be a substitute for leasehold or is meant to be something in the far distant future to which we may never come. In order to go from leasehold to commonhold, there is no doubt that the freehold of the property has to be in the ownership of those who wish to form a commonhold association. In order to do that, a group of people will either get together and say this is what we want to do, or they will convert into commonhold from the present arrangements of an owned freehold and leaseholds subject to that freehold. It is the latter point that this amendment starts to address. It is quite clear that leasehold enfranchisement is the only way to get to ownership of a freehold.

The provisions of leasehold enfranchisement have up to now been very difficult. The record has not been widely accepted but, nevertheless, it is there and, to a certain extent, the Bill as drafted eases the progress towards leasehold enfranchisement.

Nevertheless, the criteria for leasehold enfranchisement are much less strict than the criteria for going from there to commonhold. If you ask for 100 per cent agreement for going to commonhold from all unit-holders, you will never get it. I would therefore argue with my noble friend that this measure, as it is presently drafted, is not only impractical but also defeats the Government's objective of trying to ensure that commonhold becomes, in the course of time, a substitute for leasehold; that we move out of what I hope my noble friend would agree is an out-of-date procedure--as many people have said of leasehold--and move on to something which is rather more up-to-date and internationally accepted, as was said on Second Reading.

My amendment, which is supported by the noble Earl, simply addresses the problem of what happens if you cannot achieve 100 per cent agreement of leasehold units for conversion to commonhold even

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where, under the leasehold enfranchisement rules, you have the freehold. You could have absentee leaseholders and all kinds of people who may or may not be around when the decision is made. I hope that my noble friend will be able to respond quite positively to the argument I have made and which I think the noble Earl supports. I beg to move.

3.45 p.m.

Lord Goodhart: My Amendment No. 3 is the next in this group but, as it raises a somewhat different point, perhaps I may leave it until the end. It is an amendment that I would have de-grouped had it not been for the fact that I understand that it is likely to be accepted by the Government.

I should start by making a declaration of interest--or, perhaps, a declaration of a rather peculiar reason why I do not have an interest. I am the leaseholder of a flat--which is not irrelevant--in one of the Regent's Park terraces. The Crown Estates Commission are the freeholders and I have a long lease at a fairly modest ground rent.

Lord Williams of Elvel: Am I right to understand that if we declared our interests at Second Reading that would carry through to the end of the Bill; that we do not need to repeat it?

Lord Goodhart: What I have to say is something that I did not appreciate at Second Reading. At Second Reading, I thought I had an interest. The Bill does not bind the Crown; none of this legislation binds the Crown. The Crown has given an undertaking that it will voluntarily agree to grant the same rights to leaseholders as would have applied if the Act had applied to the Crown. Unfortunately, there is an exemption from this which applies to certain particularly sensitive buildings--such as the terraces in Regent's Park--and I therefore have no possibility of deriving any benefit from the Bill.

I turn to the amendment moved by the noble Lord, Lord Williams of Elvel. Although I entirely sympathise with the reasons behind it, I have very serious difficulties in seeing how it can be practicable to achieve its aims. Quite plainly, it would not be possible to have a block of flats split up into some kind of checkerboard pattern, with some of the flats being commonhold and some being ordinary leasehold. In this respect, it is different from collective enfranchisement because you can and do have some leaseholders acquiring the freehold and becoming the landlords of those who remain leaseholders, but that does not in any way change the status and position of the leaseholders. The only way forward, therefore, would be to convert a whole block in commonhold over the heads of the existing leaseholders and require them to convert their own flats into commonhold. Otherwise, what is to be done with a leaseholder who does not want to convert? We cannot compel them to convert because that may cost them money that they cannot afford. For instance, they would have to

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participate in any collective enfranchisement. They cannot, therefore, be compelled to join the commonhold association.

Where there is a very large majority in favour of conversion to commonhold it may be possible to treat the flats of dissenters as if those flats were common parts with the commonhold association as the landlord. The rent under the lease could then be paid to the commonhold association and when the lease fell in the commonhold association could sell the flats as commonhold units. That might be workable, but it would be fairly complicated. It would mean elaborate drafting, and I do not see it as a practicable possibility in the Bill. It may be that we should get commonhold going on a relatively straightforward basis and, when it has proved itself, we can proceed to allow conversion without unanimity on the basis that I have mentioned; namely, that the dissenting leaseholders would simply be treated as though their flats were common parts that had been leased to them.

Amendment No. 3 raises a technical point: why on earth is it necessary to get the consent of a registered proprietor of an interest over the land if that interest is not affected? The notes refer to an easement; for example, the easement of a neighbouring owner who has a right to use a drain across the commonhold land. The commonhold association would not have legal rights to stop the use of the drain by the neighbour, and it is wholly immaterial to the neighbour whether the land through which the drain runs is commonhold or freehold. In that situation I see no possible reason why the consent of the neighbour should be necessary simply by reason of the fact that he has an easement over the land which is not likely to be affected.

Baroness Gardner of Parkes: I support the amendment moved by the noble Lord, Lord Williams. It would be quite impossible to get 100 per cent agreement and it is, therefore, an unnecessary obstacle put in the way of commonhold. I do not agree with the noble Lord, Lord Goodhart, that the property of such people can be treated as common parts, and so on. If the 80 per cent rule were implemented surely the position of the other 20 per cent who did not wish to be involved in any way would not be changed; they would continue to hold leases that would be part of the commonhold until such time as they ran out. I cannot see this as anything other than a major difficulty being created out of nothing, and I agree with the noble Lord, Lord Williams, that 100 per cent is not required.

Baroness Hanham: I support my noble friend Lady Gardner. I am concerned that if the amendment of the noble Lord, Lord Williams, is not accepted commonhold will just fall. I do not believe there is any possibility that any block of flats will ever achieve 100 per cent support for commonhold, not simply because the people in those flats will not vote for it but, as so often, particularly in London, they are not in them; they are owned by companies, overseas investors and the original landlords. There are a number of reasons why people would not join the commonhold. If this amendment, or the following amendment in the name of the noble Lord, Lord

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Richard, is not accepted, we must find some way to ensure that 100 per cent sign-up to commonhold is not required. Otherwise, the Committee may as well join in the Report stage of the Special Educational Needs and Disability Bill in the Chamber--in a great deal more comfort than we have here--because the whole thing will be a non-starter.


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