HL Deb 10 July 1996 vol 574 cc400-2

(".—(1) Section 54 of the Law of Property Act 1925 (creation of interests in land by parol) is amended as follows.

(2) For subsection (2) substitute—

"(2) Nothing in the foregoing provisions of this Part of this Act shall affect the creation or assignment by parol of leases of dwelling-houses taking effect in possession for a term not exceeding three years (whether or not the lessee is given power to extend the term).

(3) Nothing in the foregoing provisions of this Part of this Act shall affect the creation by parol of leases not falling within subsection (2) above taking effect in possession for a term not exceeding three years (whether or not the lessee is given power to extend the term) at the best rent which can be reasonably obtained." ").

The noble Baroness said: My Lords, this amendment may appear more mysterious than it is. In principle, the creation and assignment of every lease or tenancy has to be by deed. Section 54(2) of the Law of Property Act 1925 contains an exception relating to short leases.

Assignment by way of exchange is a right of secure tenants and tenants of housing associations. Comments made during the course of the Bill suggest that noble Lords would probably applaud the fact that in such situations consultation with a lawyer is rare. It is certainly the case that lawyers rarely become involved. It must be very rare for assignments to take place by deed. If they are not executed by way of deed, their validity must be in question.

Fairly recently, alterations to the formalities required to execute documents by way of deed have been made. Even companies were not wholly observing the formalities. The physical aspects of impressing a deed and so on are not now required. It is expecting quite a lot of tenants in this kind of situation to observe all the formalities.

Where an assignment takes place on family break-up a similar situation arises. There is no exception for assignments to be other than by deed, even though the grant of the tenancy need not be. That was drawn to my attention; and I understand that some comments were made in the Court of Appeal five years ago. However, it still appears to be the case that assignments are required to be by deed. Speaking as a lawyer, I am more than happy to advocate circumstances in which people do not need to involve lawyers and to suggest a change in the formalities required as set out in this amendment. I beg to move.

Earl Ferrers

My Lords, the noble Lord, Lord Dubs, complained that Amendment No. 163 was a starred amendment and appeared on the Marshalled List only today. Curiously enough, this amendment is also starred, which indicates that it, too, appeared on the Marshalled List only today. I grant that the amendment tabled by the noble Baroness, Lady Hamwee, does not run to 10 pages, as mine did. Her amendment involves a modest single clause. When I examined it, I thought that she might be aiming—

Lord Dubs

My Lords, perhaps I may intervene. There is a world of difference between a very long government amendment to a government Bill which has been going through both Houses of Parliament for months and an amendment tabled fairly late by a Member of an Opposition party. With respect, there is no comparison.

Earl Ferrers

My Lords, I can assure the noble Lord, Lord Dubs, that there is a comparison; the comparison is that they both appeared on the Order Paper today for the first time. I agree that the government amendment was a long one, but for reasons explained by my noble friend it had to be.

I was simply pointing out that the amendment of the noble Baroness appeared today and we have had to consider what it meant and so forth. I am not complaining. When we looked at the amendment I thought the noble Baroness was aiming to reverse the situation. She spoke of a divorce settlement in which a husband gave an oral undertaking to transfer the tenancy to his wife but that nothing was put down in writing and the wife was judged to have no defence to possession proceedings.

I have great sympathy for anyone who is forced to leave their home simply because an assignment was made orally rather than in writing. In practice, many short-term leases cannot be assigned because it is prohibited by the terms of the tenancy agreement or the statute. Not only that, but since the introduction of assured shorthold tenancies there are few advantages to the tenant in being able to assign the tenancy.

I have difficulty with the proposal that a tenant might be assigned a tenancy on the basis of an oral agreement. In most cases where assignment is allowed the landlord's agreement is required. The amendment would increase uncertainty in this area of the law and it may lead to an increase in the number of cases whereby a tenant unwittingly tries to assign the tenancy where the law or the terms of the tenancy specifically prevent that or where the landlord has not given his consent. That may well be good for the legal profession, of which the noble Baroness is a distinguished member, but it is unlikely to be good for the tenants.

The landlord should also be entitled to know who the tenant is. There is a strong case for requiring leases to be assigned in writing. But there are dangers in rushing to change—in this case 24 hours—laws which have been settled and go back hundreds of years. I therefore hope that the noble Baroness will consider withdrawing her amendment.

Baroness Hamwee

My Lords, I am grateful to the noble Lord, Lord Dubs, for springing to my defence. One of the worlds of difference between the two sides of the House is that the House by its nature is an amateur House and the part-time nature of our role has its own problems. However, we should appreciate the contributions made by those observing the workings of this House and another place from outside and who bring matters to our attention, which is precisely what happened here. In fact, I understand that the department had a copy of the clause and the notes from which I spoke on Monday. I accept that that is not very long when one looks at the amendment in the context of the working of the Law of Property Act 1925—I am not so sure about hundreds of years.

I am not convinced that what the Minister said went to the point of the requirement of the deed. However, I accept that this is something that has been established, though, as I said, probably not working very well, for quite a long time. It is not the sort of thing one would want to alter on the hoof. To that extent, I take the slap over the wrist that came from the Minister.

Earl Ferrers

My Lords, perhaps I can explain to the noble Baroness that I did not want to give her a slap over the wrist. It was a gentle nudge because the noble Lord, Lord Dubs, gave me a gentle nudge a little while earlier.

When I said that the statute goes back hundreds of years, I meant that the current provisions of assignment of land and property go back 300 years to the Statute of Frauds of 1677. That is why I thought it may be a little rushed to alter that.

Baroness Hamwee

My Lords, I accept that this should not be done on the hoof. When there is a circle of us, as soon as someone gives a nudge that nudge will go round and round. I shall not over-react for fear of keeping the nudge going. Nevertheless, it is a serious point. This is not the opportunity to address it, but I hope that the department will take the point seriously and, if it believes that it is worth looking at the law again to bring it up to date, that it will find another opportunity to do so. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Dubs moved Amendment No. 165: Before Clause 115, insert the following new clause—