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The Earl of Caithness: I am grateful to the Minister for that reply. May I take it that something to this effect will be in the regulations? He said that there would be consultation and that the Government have the power to bring in regulations. As the noble Lord is only too well aware, once the regulations come to this House they cannot be amended, but it would be a great help to all of those who are concerned about the matter to know that it would definitely be in in some shape or form.

Lord McIntosh of Haringey: I can certainly give that assurance.

Lord Kingsland: When gunfire comes from behind as well as in front, it is usually prudent to withdraw as decently as one may. I shall not seek to press the amendment this afternoon. I am pleased that the Minister has, in effect, supported the amendment of the noble Lord, Lord Williams, and my noble friend Lord Caithness; some satisfaction has been acquired. Meanwhile, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 133C to 136 not moved.]

Clause 78 agreed to.

Clause 79 [Claim notice: supplementary]:

Lord Kingsland moved Amendment No. 136A:

The noble Lord said: The amendment removes the subsection that states that a claim notice for the right to manage is not invalidated by inaccuracies in the particulars required. This is intended as a probing amendment. If a claim notice is not invalidated by inaccuracy, what requirement is there to be accurate? We appreciate that the intention may be to ensure that minor errors, such as spelling mistakes, errors in the precise postcode, or mixing up the leaseholders and their flat numbers, need not invalidate a claim. However, we would be interested to know how accurate a claim should be in the light of this subsection.

Amendment No. 136B was also in the group. This amendment requires a claim notice for the right to manage to be registered with the Land Registry, so that it will show up on any searches undertaken on behalf of the prospective purchaser of any flat or freehold. This proposal parallels the provision which is already in place for leasehold enfranchisement and lease extension, through the Leasehold Reform Regulations (1967) and the Leasehold Reform Regulations (1993), as they relate to Section 110 of the Land Registration Act 1925, which requires the vendor to ensure that all relevant information regarding title is registered with the Land Registry. I beg to move.

Lord McIntosh of Haringey: I am relieved to find that Amendment No. 136A is a probing amendment.

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We think subsection (1) of Clause 79 is a very important provision which we would not wish to lose. Subsection (1) says that any inaccuracy in the claim notice does not, of itself, invalidate that notice. We know from experience that many landlords will look for any excuse to reject a claim notice. The noble Lord, Lord Kingsland, suggests it could be a wrong postcode, a wrong flat number, or even a mis-spelt word, but that is obstructive behaviour which subsection (1) would prevent.

At the same time, as the Explanatory Notes to the Bill make clear, this subsection does not allow the leaseholder to get away with making a false claim. If the claim notice incorrectly claims that the leaseholders are entitled to acquire the right to manage, the landlord will be able to make a counter-notice disputing their eligibility to do so. We feel that a sensible balance has been struck.

The next amendment requires that the RTM company be required to register a claim notice. We are not convinced that there is any need for this. It is for a potential purchaser of any landlord's interest to make appropriate inquiries about the interest he is planning to buy. Vendors of freeholds will have duties to provide relevant information to prospective purchasers. If a purchaser is not given all of the right information, such as the existence of a claim notice, that would seem to be mis-selling and the purchaser should look to the vendor for redress. We do not see this as the responsibility of the RTM company.

Following the introduction of a right to manage, we would expect purchasers of freeholds, or their advisers, to be aware that the right may be exercisable where the property is eligible and make purchasing decisions on that basis.

Lord Kingsland: Amendment No. 136A was a probing amendment and therefore I have no intention whatever of pursuing it in substance. I would like to thank the noble Lord the Minister for his very full answer.

So far as Amendment No. 136B is concerned, I shall re-table it at Report stage and feel strongly inclined to put the matter to the vote if the Minister responds in like manner. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 136B not moved.]

Clauses 79 agreed to.

Clause 80 agreed to.

Clause 81 [Counter-notices]:

Lord Kingsland moved Amendment No. 137:

    Page 36, line 27, at end insert ("or

(c) that it is not just or convenient that the RTM company should acquire the right to manage,").

The noble Lord said: Grouped with this amendment are Amendments Nos. 138 to 140 and 147. The amendments to this clause are very important to this side of the Committee and its approach to this part of the Bill. We consider them essential to make the Bill compliant with the Human Rights Act.

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The Government's approach is to give lessees an absolute right to manage. It matters not on the Government's approach that the landlord is a paragon of virtue and carries out his management functions meticulously and cheaply. It matters not on the Government's approach that the lessees' whole purpose in acquiring a right to manage may be to avoid doing vital repairs to the building. No matter how good the landlord, no matter how disastrous the lessees' intentions might be, the lessees will have the right to manage.

It seems to us, on this side of the Committee, that the right solution is to have a much more flexible system. Everyone's objective must be to improve the quality of the country's housing stock and it is in the interests of both landlords and tenants to ensure that the management of property is the best possible.

The solution, in my view, is for the leasehold valuation tribunal to carry out a balancing exercise to determine whether a particular block is likely to be better managed by the landlord or by the tenants. In some cases, it may be clear that the tenants should have the right to manage. The landlord may for years impose exorbitant service charges for repairs which are lamentably carried out. In other cases, the landlord may have been first-class, but the leases in the building have only a few years to run and the tenants want to avoid carrying out extensive structural work that is essential to keep the building in good condition. Amendment No. 139 sets out a number of matters which would be relevant to the carrying out of a sensible balancing exercise.

If these amendments are not accepted, it seems to me that the Government will have great difficulty in showing that a landlord's human rights have not been infringed. As I said in setting out the Opposition's approach to this part of the Bill, the right to manage is a valuable one. Landlords quite legitimately, in order to manage blocks of flats, have those rights. It is justifiable to take away that right without paying compensation if the landlord is abusing his position. This kind of case would plainly satisfy the Duke of Westminster criteria set down by the European Court of Human Rights.

What is not justifiable is taking away not only the profits of managing but also potentially damaging the landlord's reversionary interest in cases where necessary repairs are likely to be postponed. There is simply no pressing social need for that kind of expropriation without compensation. That is why giving the leasehold valuation tribunal the power to carry out a balancing exercise is important. The message which needs to go out from this Committee is that Parliament condemns bad landlords but supports good landlords. I beg to move.

6.30 p.m.

Lord Goodhart: No doubt the noble Lord, Lord Kingsland, will not be surprised to hear that we on these Benches disagree very strongly indeed with this group of amendments. We believe that the whole purpose of the right to manage in Chapter 1 of Part II

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of the Bill is to get over the problems that have been shown up in the past few years by the necessity for proving that there has been mismanagement by the landlord. One gets round all that by making it a right for people to take over the management. We know that in many cases, if the landlord is a good landlord, they would certainly be well advised not to take over the management themselves. However, there will be many cases in which they do. It will be infinitely simpler and a great deal cheaper for them if they come along and say that they have the necessary number of qualifying tenants who agree that they want to take it over, and they then set up their RTM company.

These amendments would take us back to the existing system and would potentially make it enormously costly as one would need to have substantial litigation in order to establish one's right. One only has to look at Amendment No. 139 and at the list of issues that the leasehold valuation tribunal will have consider to see that the proceedings could stretch for days, if not weeks; the potential cost could be enormous. We believe that the effect of this group of amendments would be to effectively destroy the whole of the right-to-manage scheme.

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