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Baroness Gardner of Parkes: I find Schedule 6 quite difficult to understand. In particular, it refers to premises excluded from the right to manage. Paragraph 1(1)(b) states that if you have a garage it should be part of the residential premises. Does that mean that that would be enfranchisable with whatever else one was enfranchising?

Lord Monson: Having prepared a vigorous speech in support of Amendment No. 84A, standing in the name of the noble Lord, Lord Kingsland, which he chose not to move, perhaps I may at least console myself by pointing out that Amendment No. 91A has a drafting error. It should refer to line 17 and not line 18.

Lord Kingsland: I made a mistake. I thought it was another amendment and that is why I ducked it. If I had looked at the right amendment I would have moved it. I apologise.

Lord Jacobs: I should like to raise the issue of the 25 per cent, which has a relevance here, but probably an even greater relevance when we come to the right to enfranchise.

One of the difficulties with the original clause in the previous Bill was that it said "over 10 per cent" and everybody realised that they would need a building of 11 floors--11 storeys--before you could enfranchise. On reconsideration, however, you would in some cases have needed buildings of over 21 floors because, in most cases, certainly in London, retail shops have basements which are usually used for storage.

There is also the question about garages, as raised by the noble Baroness, Lady Gardner. It would be helpful, whether it is done for this clause, but certainly for the enfranchisement, to look again at the wording to see whether it is possible to exclude from all calculations garages and such spaces but also basement use; otherwise we may have the situation--I am aware of a number of blocks that I have looked at in London--where there is a row of shops and a full basement below but a total of only six or seven storeys. Those would not come within the 25 per cent, because that area has to be taken into account.

I would therefore ask the Minister whether he could look at the idea of perhaps excluding basement storage or, alternatively, to say that where there is basement storage the percentage might have to be increased.

Lord Kingsland: I rise to speak to my Amendment No. 91A. Given the arguments that have been put forward as to the benefits of the right-to-manage leaseholds, we do not see why it should not apply to local authority properties, just as for private blocks of flats or those owned by residential social landlords. Local authority leaseholders have been subject to the poor management of their blocks by local authorities and have campaigned hard to gain the benefit of those

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rights given to others whose situations are identical, except that they are in respect of freeholders and not local authorities. Extending rights under leasehold reform to local authority leaseholders should be seen as the logical extension of the right to buy.

Lord Whitty: I shall deal with Amendment No. 91, with which Amendment No. 93 is associated. It provides for two further changes. The deletion in the first part of his amendment would cause me significant concern because it deals with the division of the freehold. Some Members of the Committee may remember a scam which was run by some less scrupulous landlords following the 1993 Act. Their trick was to divide the freehold of a single block of flats into a number of parcels, which effectively--and in some cases quite explicitly--made it impossible to enfranchise the block. For that reason, the Housing Act 1996 introduced provisions to deal with that abuse.

Those provisions stated that it was not possible to enfranchise a property which was made up of more than one freehold if it was possible to enfranchise each of the freeholds separately. That in turn made clear the converse: that if it is not possible to enfranchise separate freehold parts of a single block, it is possible to enfranchise them altogether. Paragraph 2 of Schedule 6 mirrors the provisions of the 1993 Act. They are therefore needed to ensure that the same sharp practice that was used to frustrate enfranchisement cannot be used in the same way to frustrate the right-to-manage. I hope that explains the first point of this amendment.

Paragraph 6 of Schedule 6 is there for a good reason. There are a number of circumstances where the right-to-manage will be lost. This will happen mainly where the leaseholders have proved unable to run their affairs properly. Unless we provide otherwise, there would be nothing to prevent those leaseholders immediately embarking on a second or subsequent go at the right-to-manage. It would be wrong to allow for repeat acquisition of a right in this way; an unfettered right to re-acquire right-to-manage would mean that there was no real incentive on the leaseholders to make sure that they were managing the property correctly in the first place.

That said, one failure should not disqualify them forever. Aside from other considerations, there will inevitably be some turnover in the block and a point will come when there will be a new set of leaseholders who wish to exercise the right-to-manage. For that reason, we have chosen that disqualification should last for four years. This is the typical amount of time taken for a substantial turnover of leaseholders within a block to take place. From that perspective, the seven-year period proposed by the amendment of the noble Lord, Lord Kingsland, would be too long.

In a case where turnover is more rapid than that, or there are other good reasons why leaseholders might reasonably be allowed a further opportunity more quickly to exercise the right-to-manage, we still have the fall-back position of a leasehold valuation tribunal

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being asked to dispense with the bar. I hope that that explains the inclusion of those provisions and why there should be no deletion of them.

Before going on to the amendment of the noble Lord, Lord Kingsland, I shall address the question posed by the noble Baroness, Lady Gardner of Parkes, in relation to the garage. Where the garage is let as part of a flat, its floor area is counted as residential when working out the relative residential and non-residential parts. Likewise, presumably if the garage is part of the commercial premises it counts on the other side. I agree that there are complexities, as the noble Lord, Lord Jacobs, pointed out, and one might look at a way of expressing that more succinctly. However, the totality of the property which was in the residential part should count towards the residential quota and likewise on the other side of the equation.

I now come to Amendment No. 91A tabled by the noble Lord, Lord Kingsland. This is probably where I have to declare a personal interest. Indeed, if the amendment were passed, I should probably have to declare a personal interest in many parts of the Bill because my wife is a leaseholder of a local authority property. However, I would hope that that would not be the only reason that he would not press his amendment.

We want all local authority tenants and leaseholders to influence and take control of the management of their homes. As regards the local authority leaseholders, there is already in existing legislation a range of opportunities to enable them to do this. The Government are working to extend the opportunities for participation through the best value regime and tenant and leaseholder participation compacts, all of which are operating within the local authority sector to improve local housing management and the various options available to tenants and leaseholders in local authority property. We have already broadened the Government's tenant empowerment grants programme to help leaseholders and other tenants to look at the options for involvement, and to support groups which set up tenant management organisations under the existing local authority right-to-manage.

Because there is such a wide range, therefore, of existing options open to all local authority tenants, including leaseholders, we do not believe it would be right to overlap those with a right which can be exercised by the leaseholders only within those blocks and estates. That would lead to competition between different groups of tenants and leaseholders in a particular block owned by the local authority, and there would also be a legal conflict between the existing broader rights and this one, which would be a narrower one for leaseholders only. That kind of competition and potential conflict would not be to anyone's benefit and certainly not to the benefit of the better management of local authority property with greater tenant and leaseholder involvement.

The amendments put forward by the noble Lord, Lord Kingsland, also suggest that we should prevent a claim to acquire a right-to-manage being made for a property within two years of an earlier claim having

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been withdrawn. This relates to my earlier point that we cannot see any justification for doing this. Where the right has been acquired and lost, there will have been some kind of fault or failing and it is only right that, in such circumstances, the leaseholders involved should have to wait. However, the withdrawal of a claim notice would not necessarily mean any fault or failing. The landlord will not have had the management taken away, and will be entitled to receive all the costs incurred in dealing with the abortive attempt.

I hope that that deals with all the amendments in this group, and that they will not be pursued.

7 p.m.

Baroness Hamwee: With regard to paragraph 4 of Schedule 4, the Minister spoke about the possibility of conflict. However, there is much potential for conflict now between tenants and leaseholders who often have different interests. He mentioned work that is going on to help tenants in the issue of management. I am not aware of anything like as much energy going into dealing with the position of leaseholders. It is a difficult area and I am obliged to the noble Lord, Lord Kingsland, for drawing our attention to it.

I wonder whether the Minister knows and, if he does not, whether it is possible to tell Members of the Committee at a later stage what kind of numbers we are talking about. The provision for the number of qualifying flats is a criterion which will affect how leaseholders might fall within--indeed, whether they would or not--because so many blocks will contain a large number of tenants rather than leaseholders. It would be helpful if the Minister could give the Committee some idea of the scale.

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