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Baroness Gardner of Parkes: I have views on this regular upgrading. It worries me in the same way as an upward-only rent review. Having had property in Australia, I saw very clearly that there was a huge

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division between those who lived in the block and wanted the luxury entrance, and those who perhaps because they were working away or for some other reason had sub-let their property. Those people were barely getting a return on the service charge and the upgrading that was envisaged. Maintenance is very important, but definition of upgrading is the most difficult feature.

Baroness Hamwee: Although I understand what underlies the noble Lord's amendment, and his concerns and those of the British Property Federation, I, too, find difficulty with the words. "Regular upgrading" sounds a little like estate-agent speak. When I first read it, it suggested a new kitchen every 10 years. I am sure that that is not what is meant, but I find difficulty in construing the words of the legislative term.

Lord Selsdon: I, too, have some difficulty with this. There is not a great problem with the new buildings but as regards many existing buildings some have reserve funds included in the service charge but others do not. Most service charges were based on original rateable values but there are now awful argument about the lifts. It often happens that the people who do not pay for the lifts do not want them to be upgraded. They must be maintained annually under a maintenance contract and have the appropriate insurance. In some areas, normal external redecoration is required every five years and internally every seven years.

Upgrading causes a major problem when some parts of a building are falling down and it is protected by English Heritage. Other buildings may have little foundation and suffer from hump and heave and cracks. There will be those who would like to have a roof which did not leak but who are required to replace it with old tiles which will always leak. It is the term "upgrading" that I do not like. Neither do I like the term often used by the noble Lord opposite, "modernization", which seems to be things spelt with a zee.

Lord Lea of Crondall: Does the Minister intend to cover the following point? I have not read the new memorandum of association of commonhold which we have just received from the Printed Paper Office, but presumably in secondary legislation or in some other way there will have to be a benchmarking of the standards of maintenance. If not, all the problems of company law, imposing the liability on the two or three residents who do not want to pay and so forth will be a nightmare. I speak as the chairman of a residents' association, as I mentioned at Second Reading. The problem of ensuring that we facilitate the necessary legal structures is very important. It arises in a number of places in the Bill and it certainly arises here.

Lord Bach: Yes, we will try to make clear what my noble friend Lord Lea asks for. As he knows, we accept that the memorandum that is in existence at the moment is a draft only. The three amendments would all reduce a degree of certainty dictated by our policy

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and provided for us by the draftsmen by adding words and phrases which would bring no discernible advantage if they were employed in the Bill.

Amendments Nos. 25 and 39 would both introduce a duty regularly to upgrade. We agree with what the noble Baroness, Lady Gardner, said and we are not quite sure what it means. We are not aware that it is a term of art among developers. It is not a term regularly used in leases or other contracts. Furthermore, it has the distinct disadvantage of being impossible to define accurately, as the noble Lord, Lord Kingsland, admitted, in both its parts; "regularly" and "upgrade". The duties with which it would be allied are all well understood and readily ascertainable; in other words, to insure, to repair and to maintain. In any event, regular upgrading, even if it were possible to say what it exactly what it means, is not something that one would expect to impose on freeholders.

Commonhold brings with it certain duties and responsibilities. It is a concept of freehold in itself and we have no desire to impose further on the freehold concept, thus risking making commonhold less easy to sell as a unit than might have been the case. We are therefore not in favour of those amendments.

Amendment No. 82 to Clause 66 would add the words "where practicable". Practicability seems to us to be a predefinition of decisions relating to rebuilding and reinstatement and therefore it would add nothing to the clause. We therefore ask the noble Lord to withdraw the amendment.

Baroness Hamwee: When the Minister responds to the points made by the noble Lord, Lord Lea, will he distinguish between the obligations that relate to the whole building and those that relate to individual units? I had intended to say that one of my concerns about the first of the amendments related to the duty that would be imposed on the individual unit-holder as regards what he did within his own unit which may not affect the structure of the building. It would be helpful to have that distinction.

Lord Bach: We will make that distinction in our reply.

Lord Bridges: The phrase "regular upgrading" might well mean that if a building held in commonhold had an aerial on top for reception of television, a new aerial would be required when digital television was introduced. I am not sure that such provision needs to be in a community statement but occupants of the building would clearly want to discuss that question and decide whether they wanted to pay for it before it appeared in their budget. That is one way in which I imagine it would be handled in practice.

Lord Kingsland: It might be said that the amendments have received a very moderate "hello" from your Lordships. My amendment has received a very moderate greeting from the Committee. In those circumstances, I shall of course withdraw my amendment and, in so doing, reflect upon some new

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formula that I may table at Report stage to meet what I still believe to be a desirable need. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

The Earl of Caithness moved Amendment No. 26:

    Page 7, line 27, at end insert--

("( ) Notwithstanding these duties, the commonhold association shall always be responsible for the structure of the building, including repairs and insurance of the structure on a full reinstatement basis.").

The noble Earl said: In moving Amendment No. 26 I should like to speak at the same time to Amendments Nos. 38, 40 and 61. We return to a point that I and the noble Lord, Lord McIntosh of Haringey, debated earlier: the standardisation of the commonhold association statement. Since we debated this matter in a previous amendment my noble friend Lord Selsdon has hurried to the Printed Paper Office and provided me with a copy, for which I thank him. However, I do not believe that my problem is yet solved, since in the brief time that I have had to read through it I do not see an obligation on the commonhold association to maintain the structure and internal walls of the building. The statement refers to common parts but does not define them. I hope that the Minister will be able to clarify the situation.

Amendment No. 26 refers to insurance of the structure of the building. Although insurance is dealt with in paragraph 49 of the draft statement, it refers to,

    "insurance, including public liability insurance in respect of the common parts".

Does that refer to the structure of the building? That is the principal point which underlies the four amendments.

When I moved Amendment No. 19 the noble Lord, Lord McIntosh, said that it would not be possible to contract out of what would be in the model association statement. Yet in Clause 14(2) it is provided that,

    "A commonhold community statement must make provision imposing duties in respect of insurance, repair and maintenance of each commonhold unit".

If that statement is binding on both parties, what is the purpose of having it in the Bill? I beg to move.

Lord Williams of Elvel: There is a distinction between the structure of the building and its contents. I agree with the noble Earl that obligatory insurance of the structure of the building should be imposed only on the commonhold association and that unit-holders' fixtures, fittings and contents can be insured by the unit-holders themselves. That clear distinction goes to the heart of a commonhold association. It is also sensible that a single body should be responsible for the integrity of the building as far as concerns insurance. I support the noble Earl's amendment.

6.15 p.m.

Lord Bach: These amendments appear to have been tabled as a result of a misunderstanding. If passed Amendment No. 26 would give rise to an unfortunate unintended consequence and duplicate a provision already in the Bill that is designed to fulfil the

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presumed intention of the noble Earl. In its present form the amendment would make the commonhold association responsible for the insurance and maintenance of commonhold houses, detached or otherwise, and other independent buildings such as detached business units. It may be that the noble Earl intends to restrict the force of the amendment to flatted properties, in which case he will find that the provisions of Clause 25 already require the commonhold association to insure and maintain the common parts. In the case of flats, but not necessarily houses, that includes the structure of the building. If I am right in what I have said, I hope that that also deals with the other amendments in this group.

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