|Commonhold and Leasehold Bill [Lords]
Shona McIsaac: Does my hon. Friend agree that in many parts of the country people do not have a choice between leasehold and freehold if the entire area is leasehold?
Ms Keeble: I certainly agree that we do not have options for flats. We have introduced commonhold as a form of tenure, and we believe that it will be the tenure of choice. If some people have bought out the freehold of their leasehold properties, there are freehold properties in which people have enfranchised themselves on the market in different areas. If people buy a long lease, it cannot be argued that they buy the same thing as a freehold property, and that is what several of our discussions have centred around.
The Bill is designed to provide people with more options to manage their properties or enfranchise. We have provided a different form of tenure for flats, but we cannot pretend away the fact that if people buy a long lease, they do not buy a freehold; that is a different type of purchase.
Andrew Selous: Will the Minister specifically respond to the clear worked example given by the hon. Member for Cleethorpes? I am a little puzzled about how the Minister can say that leaseholders could enrich themselves, given what they originally paid and continued to pay. That worked example, with the original price paid, ground rent, improvements and so on, was demonstrated extremely clearly, so I shall not go through it again.
Ms Keeble: I cannot pretend to have taken down all the figures that my hon. Friend the Member for Cleethorpes gave, but I will ensure that the case she set out is considered carefully. If leaseholders could buy out the freehold of property cheaply, so enfranchising themselves, and sell on the property at the current
Column Number: 208market price—a freehold property price—there would be an opportunity for substantial windfall profits. Some might say that that is perfectly justifiable. In some circumstances, it would be possible for a leaseholder to realise a windfall profit. Our position throughout has been to prevent windfall profits, recognise property rights on both sides of the equation, and prevent abuses. Our approach to marriage value has followed those principles.
Mr. Sanders: Will the Minister give way?
Ms Keeble: I keep trying to wind up, but each time I am interrupted. I shall just finish my point so that hon. Members have an opportunity to speak. We regard marriage value as a legitimate element of the price payable for a freehold or longer lease, and our arguments hold water.
Mr. Sanders: With respect, I do not think that the Minister fully understands marriage value. There is no windfall if marriage value is removed, because marriage value comes on top of the market price, and it is a notional market. My argument is that if marriage value is removed, people pay the market price; that is fair, equal and open to everyone. I do not know where the Minister's idea of a windfall comes in. The windfall is there for freeholders in the marriage value—it is their bounty. To return to the example of cars, someone who drives a car for three years and offers to buy it when the three years are up will pay more for it—perhaps £6,000 when the value is £5,000—because he is trying to enfranchise himself. The windfall goes to the freeholder, not the leaseholder.
Ms Keeble: Perhaps I did not make myself clear. I was talking about what happens when there is no marriage value. Our arrangements will prevent windfall profits and respect property rights on both sides, prevent abuses and operate equitably.
Mr. Cash: As the Minister said, we went through several of the arguments when we discussed clause 132 on Tuesday morning, and they also arise in relation to clauses 124 and 125. I said then that we would reconsider the matter in the light of the Minister's comments, particularly on the new clause. She has now given us an extensive explanation, and the best thing that I can say is that the Opposition are reserving their position. Our previous proposals will be subject to and without prejudice to our discussions on Report.
About 64 per cent. of respondents in the consultation process, the vast majority of whom were leaseholders, wanted marriage value to be abolished altogether. The issue was extensively discussed in the House of Lords. However, all members of the Committee understand—and the hon. Member for Cleethorpes has come to recognise—that marriage value, however contentious, is part of the accepted norms. That is not to say that we shall not continue to consider the matter until Report stage.
Shona McIsaac: Does the hon. Gentleman agree that I said that if we were to compensate the landlord, there would have to be a much simpler, clearer way of doing so—one that the enfranchising leaseholder could understand? The method, but not necessarily the principle, is flawed
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Mr. Cash: The hon. Lady went through some complicated calculations to arrive at her earlier figures, and we might apply them to a £25,000 house in her constituency. If matters were dealt with not by the respective lessee and the freeholder but—as would inevitably be the case, particularly if those concerned were less well-off—by agents on their behalf, the costs would soon begin to escalate. I am reserving our position on the matter and need add no more for the time being.
Mr. Sanders: In the light of the discussion, I reserve our right to return to the matter on Report. I therefore beg leave to withdraw the motion.
Motion and clause, by leave, withdrawn.
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