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Baroness Maddock: Before the Minister sits down, the noble Lord, Lord Best, and I both asked about further consultation with the bodies that have been involved. The noble Lord explained what consultation had been carried out thus far. However, in relation to one or two of the technicalities concerning how the scheme works, it seems clear to me that it would still be worth continuing with those consultations between now and the next stage.
Lord Bassam of Brighton: We shall obviously continue the consultations. I have given as much detail as I can this afternoon. I appreciate that there will be requests for more information. Of course, we need to work very closely with all parties that have an interest in this matter to ensure that the scheme works most effectively.
Baroness Gardner of Parkes: I want to return to the self-financing aspect. I find it a little unrealistic to think that the custodial scheme will be fully financed from interest. All of us who have any money that earns interest find that, even with the present rate, it amounts to nothing. Therefore, I want to go into that
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a little more or ask the Minister to look into it before the next stage of the Bill. He was not a Member of your Lordships' House when we dealt with a leasehold Bill.
At that time, we had a Conservative government and it was stated that the scheme would be self-financing. I asked the then government to explain exactly what that meant. There were many different grounds on which one could apply to have one's lease extended. The reply was that the self-financing aspect would cover everything, even down to the milk for the office cat. That remark caused a sensation in your Lordships' House. Everyone was very worried about it and eventually a ceiling was put on what a private applicant to the leasehold tribunal could be asked to pay, no matter how long the proceedings lasted. Before that, there was a risk that a very rich landlord would drag out the process in order to prevent the leaseholder getting what he wanted.
Therefore, if this scheme is to be self-financing, there should be a clear-cut measure so that people know what is involved. I think that it is a little on the doubtful side to assume that the scheme will be financed by interest.
Lord Bassam of Brighton: That is a fair point. The noble Baroness is right, I was not a Member of the House during those Conservative days. I could make a cheap jibe about Conservative promises, but that would be unfair of me. Perhaps we should return with some illustrative figures at the next stage which may help to provide a measure of reassurance. I too would be interested in them.
Lord Lucas: I was the Minister at the time who made that remark. I can tell my noble friend that I was extremely glad that she fought on that and eventually won. We had been hobbled by the Treasury into saying that the matter would be self-financing. It was her and her colleagues' efforts that enabled us to achieve what we wanted in our discussions with the Treasury. I am sure that subterfuge is not unknown to the Benches opposite. It gave pleasure at the time anyway. Thank you.
I would appreciate the Minister writing to me on three matters. First, he said he did not have an estimate of the cost of the scheme, but he has run two pilots so he must have some idea. Perhaps he can let me know roughly where we are on that.
Secondly, the Minister's ministry runs a dispute resolution scheme in the construction sector which was put in place when I occupied his position. That has a strong element of binding about it. Will the Minister talk to colleagues involved in that and write to me saying why, in this case, binding is not appropriate? It was a fairly fractious sector and disputes were common and protracted. It appeared that binding was appropriate in those cases and I would very much like to know why we are not following that precedent now. There may be good reasons, but I would like an explanation.
Finally, he did not answer my question about why there is no real penalty on a landlord who does not pay over the deposit straightaway. Why, when one has
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taken a landlord through the courts, does he not simply have to do what he should have done in the first place without paying a penalty for having misbehaved?
Lord Bassam of Brighton: I apologise to the noble Lord for that last point. I had made a note of the question. It is probably best if I write to the noble Lord on all three points. The second point about binding is a valuable one. We may be able to draw on the earlier experience of the noble Lord. I said to the noble Baroness, Lady Gardner, that we would try to return with some illustrative costs to help all concerned. I shall put that in correspondence, which will be shared with all noble Lords who have participated in the debate.
Lord Lester of Herne Hill: On the matter of binding, will the Minister and his officials look at the recent judgment of the Court of Appeal explaining why alternative dispute resolution procedures cannot easily be treated as binding without being inimical to the purpose of the scheme itself? I believe that needs to be looked at too.
"REQUIREMENTS RELATING TO TENANCY DEPOSITS
(1) Any tenancy deposit paid to a person in connection with a shorthold tenancy must, as from the time when it is received, be dealt with in accordance with an authorised scheme.
(2) No person may require the payment of a tenancy deposit in connection with a shorthold tenancy which is not to be subject to the requirement in subsection (1).
(3) No person may, in connection with a shorthold tenancy, require a deposit which consists of property other than money.
(4) In subsection (3) "deposit" means a transfer of property intended to be held (by the landlord or otherwise) as security for
(a) the performance of any obligations of the tenant, or
(b) the discharge of any liability of his,
arising under or in connection with the tenancy.
(5) Subsections (1) to (4) apply despite any agreement to the contrary.
(6) If a tenancy deposit is required in connection with a shorthold tenancy, the landlord must give the person by whom the deposit is to be payable such information about
(a) the authorised scheme which is to apply to the deposit, and
(b) the operation of provisions of this Chapter in relation to the deposit,
as may be prescribed.
The information must be given in such manner, and by such time, as may be prescribed.
(7) In subsection (6) "prescribed" means prescribed by an order made by the appropriate national authority."
After Clause 186, insert the following new clause
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"PROCEEDINGS RELATING TO TENANCY DEPOSITS
(1) Where a tenancy deposit has been paid in connection with a shorthold tenancy, the tenant may make an application under subsection (2) if
(a) section (Requirements relating to tenancy deposits)(6) has not been complied with in relation to the deposit, or
(b) the tenant has been notified that a particular authorised scheme is to apply to the deposit but has been unable to obtain confirmation from the scheme administrator that the deposit is being held in accordance with that scheme.
(2) An application under this subsection is an application to a county court for an order requiring the landlord to attend the court to give evidence showing that the deposit is for the time being held in accordance with an authorised scheme.
(3) Subsection (4) applies if the court makes such an order and
(a) the person ordered to attend the court fails to attend, or
(b) the court is not satisfied that the deposit is being held in accordance with an authorised scheme.
(4) The court must, as it thinks fit, either
(a) order the person who appears to the court to be holding the deposit to repay it to the tenant, or
(b) order that person to pay the deposit into the designated account held by the scheme administrator under an authorised custodial scheme,
within the period of 14 days beginning with the date of the making of the order.
(5) Where any deposit given in connection with a shorthold tenancy could not be lawfully required as a result of section (Requirements relating to tenancy deposits)(3), the property in question is recoverable from the person holding it by the person by whom it was given as a deposit.
(6) In subsection (5) "deposit" has the meaning given by section (Requirements relating to tenancy deposits)(4)."
After Clause 186, insert the following new clause
"SANCTIONS FOR NON-COMPLIANCE
(1) If a tenancy deposit has been paid in connection with a shorthold tenancy, no section 21 notice may be given in relation to the tenancy until such time as the deposit is held in accordance with an authorised scheme.
(2) If section (Requirements relating to tenancy deposits)(6) is not complied with in relation to a deposit given in connection with a shorthold tenancy, no section 21 notice may be given in relation to the tenancy until such time as that provision is complied with.
(3) If any order made under section (Proceedings relating to tenancy deposits)(4)(a) or (b) is not complied with by the person holding the deposit, that person is liable, as from the end of the period of 14 days mentioned in that subsection, to pay to the tenant a sum of money equal to three times the amount that was required to be repaid or paid by virtue of the order.
(4) That sum is recoverable by the tenant as a debt due to him from that person.
(5) If any deposit given in connection with a shorthold tenancy could not be lawfully required as a result of section (Requirements relating to tenancy deposits)(3), no section 21 notice may be given in relation to the tenancy until such time as the property in question is returned to the person by whom it was given as a deposit.
(6) In subsection (5) "deposit" has the meaning given by section (Requirements relating to tenancy deposits)(4).
(7) In this section a "section 21 notice" means a notice under section 21(1)(b) or (4)(a) of the Housing Act 1988 (recovery of possession on termination of shorthold tenancy)."
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