§ Lords Amendment No. 15: In page 13, line 41, leave out "but".
§ Mr. SkeffingtonI beg to move, That this House doth agree with the Lords in the said Amendment.
Perhaps, Mr. Deputy Speaker, I may refer not only to this Amendment but to Amendments Nos. 16, 18, 19 and 54. They are all directed to the same point, and I think that the whole series will commend itself to the House.
§ Mr. Deputy SpeakerIf the House agrees, so be it.
§ Mr. SkeffingtonAmendments 15 and 16 are directed, as are the other Amendments, to a point raised by the Law Society. Clause 9(1,a) as now drafted provides what the price of enfranchisement is to be. This is the market price of the freehold property, subject to the 50-year extension. Some ingenious minds—and, indeed, those familiar with valuation practice—have suggested that the very right of enfranchisement itself might act as a depressant, or, even before the valuation started, a factor that might be thought to be taken into account. With the insertion of the words
but on the assumption that this Part of this Act conferred no right to acquire the freeholdthere cannot be a vicious circle of this type. I am advised that it is highly unlikely that the Lands Tribunal would have accepted that ingenious suggestion, but it has been thought better to provide against the possibility now in this way.Turning to Amendment No. 18, a similar point suggested by the Law 1588 Society is that it is always been implicit—and we have stated this, and I think that it has been generally accepted—that the leaseholder's right to extend the lease is subject to the landlord's right to terminate the lease for redevelopment during the period of the extension. Amendment No. 18 makes explicit and clear beyond doubt what was implicit and, I think, understood.
As at present drafted subsection (1,a) is open to the possible interpretation that if the lease had not already been extended the right to extend it could be treated as though it had been exhausted. This was never the Government's intention, nor do I believe that anyone has ever suggested that it would be fair and proper. Amendment No. 19 deals with that point. In passing I may say that Amendment No. 54, which I will move in due course, deals with a similar point with regard to Schedule 2, where a qualified leaseholder who has put in a claim for extension at the end of the lease is required to give up possession under Clause 17 or Clause 18—the redevelopment Clauses. An ambiguity exists here which, perhaps cannot be cleared up unless we leave out the words "had been" and insert "was to be" in Schedule 2.
I commend these Lords Amendments to the House.
§ Mr. Graham PageThe Parliamentary Secretary has put the Amendments as being, perhaps, merely drafting Amendments, but I should have liked him to have explained what effect they might have on the development value within the purchase price. These Amendments—Amendment No. 16, for example—make it quite clear that one assumes in ascertaining the price that there is a freehold to be valued—a freehold subject to an existing lease and subject to an extended lease. One must disregard the fact that the lessee has any particular right to acquire that extension. Amendment No. 16 values it merely as though the purchaser is a stranger—I assume that to be the intention. This means that someone is buying freehold land subject to a lease which can be determined at any moment for the purpose of development. When it is determined at any moment by the landlord for the purpose of development the landlord has to pay a certain sum in compensation for it. 1589 We have never yet been able to discover clearly from the Bill itself whether or not that sum then paid includes the development value of the property, so one goes back to the original scheme in Clause 9(1,a)—the formula for the price.
Does the tenant pay for the development value of the property or the land at that time, and then, if the landlord decides to develop, does he get that compensation back again? Or is that development value cut out of both transactions, in which case it would be all right? If it is cut out of both transactions or included in both transactions that is quite correct. But might it, by Amendment No. 16, be excluded in the first transaction and included in the second transaction, so that when calculating the compensation for the landlord one disregards the development value, the planning consents and so on that the property has, and values it just as a piece of land with no value at all, but when the landlord wants to get the use of the land back again for development, does he have to pay development value for doing so?
This point arises directly on these Amendments, particularly because in Amendment No. 18 the words have been inserted to make quite clear that we are to assume that the extended lease is subject to the landlord's rights under Clause 17, that is to say, we are to assume that this is a lease under which the landlord can get his property back. This is a very different valuation from a lease which is bound to last for 50 years and there is no right for the landlord to get the property back. The property has to be subject to a lease which can be terminated by the landlord. The query I have is, will the landlord then have to pay development value, or does he get out of paying that development value? The answer to that question will affect the valuation arising out of the assumption we are asked to make in Amendment No. 16.
I trust that I have not confused the Joint Parliamentary Secretary too much. I admit that I am confused myself because we are faced with two or three Amendments to a formula which has been amended time and again as we have 1590 gone along yet we have never had an explanation of how the formula affects the development value of the property.
§ Mr. MacDermotPerhaps I may try to assist the hon. Member. In a case where the tenant enfranchises and acquires the property he does so and pays a price on the basis of the assumption made in the Bill. That assumption of the extended lease takes into account the right of a landlord to re-possess for redevelopment This will ensure—this is a point on which the Law Society was worried—that an enfranchising leaseholder does pay for the development value, if any, in the price.
Point No. 2 is where there is no enfranchisement but an extension of the lease. The landlord then does exercise his right to re-possess for the purpose of redevelopment. What does he have to pay? I think the question which is troubling the hon. Member is, does he have to pay anything for redevelopment value? The answer is "no", because that leaseholder has not acquired development value. All he has acquired is a right to an extended lease, a 50 years' lease, of bricks and mortar value. The landlord has to pay him out for that, but for nothing else. He does not have to pay for development value.
§ Mr. Graham PageBefore the hon. and learned Gentleman sits down, may I compliment him on that explanation which is the clearest explanation we have had on this Bill?
§ Question put and agreed to.
§ Subsequent Lords Amendment agreed to.
§
Lords Amendment No. 17: In page 13, line 41, after "tenancy" insert:
;and on the assumption that, during the period commencing on the date 25 years before the original term date, or at the relevant time (whichever is the later), and ending on the original term date, the rent payable under the tenancy was to be the letting value at the commencement of that period ascertained in accordance with section 15(2)(a) below;
§ 8.15 p.m.
§ Mr. MacDermotI beg to move, That this House doth disagree with the Lords in the said Amendment.
This Amendment is virtually identical with one which was put down by hon. Members opposite for Report, but not 1591 moved. Perhaps it was not called. Its effect is that the price of enfranchisement would be calculated on the assumption that the leaseholder has an extended lease but is liable to pay a modern ground rent from a date 25 years before the original term date or, if it be later, from the date of the service of his notice.
The result would be that the price of enfranchisement would be based on an up-to-date site value if the leaseholder were enfranchised during the last 25 years and would more nearly reflect that value if he were enfranchised earlier. In all the arguments we have had—and there have been many—about what should be the price for enfranchisement, I do not think that until this Amendment anyone has suggested that the price should be higher than the existing market value of the reversion, but this is what this ingenious Amendment would achieve, perhaps unwittingly.
The results would be somewhat curious if we take the case of an ordinary 99-year lease. For the first 40 years or so, about the first third of the lease anyway, the effect would be very slight because there would be so much of the lease remaining and it would be only the last 25 years which would be affected. The effect on the value of the lease and on the enfranchisement price would be marginal, but, during the period when there are about 60 to 25 years to run, the position would be that the enfranchising leaseholder would pay more than he has to pay under the present law or under a present agreement for the enfranchisement at full market value of the landlord's interest. For the last 25 years of the term the terms of the existing tenancy would he swept away completely and the leaseholder would pay the terminal site value, or something very near to it.
Apart from this objection, which certainly from the point of view of hon. Members on this side of the House would be quite fatal to the Amendment, there would be a further disadvantage in that it would discourage leaseholders from enfranchising until the very last years of the term. I do not think it would be to anyone's advantage and it might be worse from the landlord's point of view as he would be kept in suspense longer. Furthermore, it would hit the leaseholder hardest at the time when he is most vul- 1592 nerable, when the lease has 30 years or so to run. For these reasons, I advise the House to reject the Lords Amendment.
§ Mr. Graham PageThe reason behind this Amendment, if I understand it correctly, is that in calculating the compensation we should look to the value of the asset which the tenant acquires rather than the value which is taken away from the landlord. The hon. and learned Gentleman said that this Amendment would sweep aside the terms of the lease—this from hon. Members opposite who are sweeping aside the terms of the whole of these leases. If they are doing that they should consider the proper compensation to be paid by the person who is gaining from it.
This Amendment would look to the value of the property in the hands of the tenant rather than the value of it as taken from the landlord because the tenant is being given the benefit of the Act. He is getting the house without payment. Therefore, he should pay for what he is getting in the land itself. What he is getting is the right, if he chooses, to relet that land on a long lease at an improved ground rent. It is that which their Lordships who introduced the Amendment wished to be taken into account rather than the value of the ground rent as taken away from the landlord.
There seems to be no reason why this should result in something higher than market value. I do not know whether the hon. and learned Gentleman was considering the market value of the whole property, the land and the house. I would not have thought that an occasion could arise where the formula set out in the Amendment could result in a price higher than the market value of the land and the house. If it did, there would be no harm in limiting it to that amount. That is what the Government should have secured by tabling an Amendment to the Lords Amendment.
The difficulty about taking a broad Amendment without any limitation as to the 25 years which appears in the Amendment is that that would undoubtedly delay the tenant's giving notice. It would also give great advantage to the tenant who had a longer time to run on his existing lease. Therefore, to make it fair, the 25 years was taken in judging the ground rent over that period.
1593 It is no answer to say that this would sweep aside the terms of the lease and disregard the ground rent under the existing lease. Of course it does. We are disregarding the whole lease under the provisions of the Bill. What we are looking for in the Amendment is fair compensation for what the tenant will receive. The Amendment recognises the principles of the Bill, however much we may disagree with them—the principle that the tenant owns the bricks and mortar and that he must pay only for the land. In fact, he is not paying for the land under the formula set out in subsection (1,a). He is not paying the value of the assets he is getting. He would be paying a reasonable sum for it—not paying for the bricks and mortar, but just paying for the reasonable value of his land when it gets into his hands—if the formula in the Amendment were adopted. A tenant who is getting all the benefits to be conferred by the Bill—his house free of any payment—should at least pay a fair sum for the land which he is acquiring.
§ Question put, That this House doth disagree with the Lords in the said Amendment:—
§ The House proceeded to a Division—
§ Mr. MacDermot(seated and covered): Mr. Deputy Speaker, I am informed that some of the police officers in the building have been calling a Count. This is a Division. I do not know whether in these circumstances you would think it right to call this Division off and to call a second Division.
§ Mr. Deputy SpeakerI am much obliged to the hon. and learned Gentleman. In these circumstances I propose
§ to call this Division off and to put the Question again.
§ Question put, That this House doth disagree with the Lords, in the said Amendment:—
§ The House proceeded to a Division—
§ 8.30 p.m.
§ The Parliamentary Secretary to the Treasury (Mr. John Silkin)(seated and covered): On a point of order, Mr. Deputy Speaker. I understand that when you gave instructions that the first Division was to be called off and the Question was to be put again, unfortunately a large number of hon. Members had already gone through the Lobbies and had, in fact, already been counted. In the circumstances, I am wondering whether the correct procedure might be now to call the present Division off and to start again and clear the Lobbies.
§ Mr. Deputy SpeakerI must apologise to the House if there has been any confusion as a result of the faulty ringing of the bells. I think that in the circumstances the right course would be for me to order the doors to be locked—"Lock the doors"—and then for the Lobbies to be cleared and for the Division to start afresh. I do not think I can put the Question again until the Lobbies have first been cleared. I will direct the Lobbies now to be cleared, and then in a few minutes I will put the Question again.
§ Question put, That this House doth disagree with the Lords in the said Amendment:—
§ The House divided: Ayes 176, Noes 95.
1595| Division No. 494.] | AYES | [8.35 p.m. |
| Alldritt, Walter | Brown, Bob (N'c'tle-upon-Tyne, W.) | Davies, Ednyfed Hudson (Conway) |
| Allen, Scholefield | Buchan, Norman | Davies, Harold (Leek) |
| Anderson, Donald | Buchanan, Richard (G'gow, Sp'burn) | Davies, Ifor (Gower) |
| Archer, Peter | Cant, R. B. | Davies, S. O. (Merthyr) |
| Atkins, Ronald (Preston, N.) | Carter-Jones, Lewis | Dempsey, James |
| Atkinson, Norman (Tottenham) | Chapman, Donald | Dewar, Donald |
| Bacon, Rt. Hn. Alice | Coe, Denis | Dickens, James |
| Bagier, Gordon A. T. | Coleman, Donald | Dobson, Ray |
| Barnett, Joel | Conlan, Bernard | Doig, Peter |
| Beaney, Alan | Corbet, Mrs. Freda | Dunnett, Jack |
| Bidwell, Sydney | Craddock, George (Bradford, S.) | Dunwoody, Mrs. Gwyneth (Exeter) |
| Binns, John | Crawshaw, Richard | Edelman, Maurice |
| Blackburn, F. | Cullen, Mrs. Alice | Edwards, Rt. Hn. Ness (Caerphilly) |
| Booth, Albert | Dalyell, Tam | Edwards, William (Merioneth) |
| Boston, Terence | Davidson, Arthur (Accrlngton) | Ellis, John |
| Braddock, Mrs. E. M. | Davies, Dr. Ernest (Stretford) | Ensor, David |
| Brooks, Edwin | Davies, G. Elfed (Rhondda, E.) | Evans, Ioan L. (Birm'h'm, Yardley) |
| Finch, Harold | Leadbitter, Ted | Shaw, Arnold (Ilford, S.) |
| Fitch, Alan (Wigan) | Lewis, Arthur (W. Ham, N.) | Sheldon, Robert |
| Fletcher, Ted (Darlington) | Loughlin, Charles | Short, Mrs. Renée (W'hampton, N. E.) |
| Foot, Michael (Ebbw Vale) | MacDermot, Niall | Silkin, Rt. Hn. John (Deptford) |
| Ford, Ben | Macdonald, A. H. | Silkin, Hn. S. C. (Dulwich) |
| Freeson, Reginald | McGuire, Michael | Silverman, Julius (Aston) |
| Galpern, Sir Myer | Mackenzie, Alasdair (Ross & Crom'ty) | Silverman, Sydney (Nelson) |
| Gardner, Tony | Mackintosh, John P. | Skeffington, Arthur |
| Garrett, W. E. | McMillan, Tom (Glasgow, C.) | Slater, Joseph |
| Gourlay, Harry | Mahon, Peter (Preston, S.) | Small, William |
| Greenwood, Rt. Hn. Anthony | Manuel, Archie | Spriggs, Leslie |
| Gregory, Arnold | Mapp, Charles | Summerskill, Hn. Dr. Shirley |
| Grey, Charles (Durham) | Marquand, David | Swain, Thomas |
| Griffiths, David (Rother Valley) | Mellish, Robert | Symonds, J. B. |
| Griffiths, Rt. Hn. James (Llanelly) | Mendelson, J. J. | Tinn, James |
| Griffiths, Will (Exchange) | Miller, Dr. M. S. | Tomney, Frank |
| Grimond, Rt. Hn. J. | Milne, Edward (Blyth) | Urwin, T. W. |
| Hale, Leslie (Oldham, W.) | Mitchell, R. C. (S'th'pton, Test) | Varley, Eric G. |
| Hamilton, James (Bothwell) | Morgan, Elystan (Cardiganshire) | Wainwright, Edwin (Dearne Valley) |
| Hamling, William | Morris, Alfred (Wythenshawe) | Wainwright, Richard (Colne Valley) |
| Harrison, Walter (Wakefield) | Neal, Harold | Walden, Brian (All Saints) |
| Haseldine, Norman | Norwood, Christopher | Walker, Harold (Doncaster) |
| Heffer, Eric S. | O'Malley, Brian | Waliace, George |
| Hilton, W. S. | Orme, Stanley | Watkins, Tudor (Brecon & Radnor) |
| Hooley, Frank | Oswald, Thomas | Weitzman, David |
| Hooson, Emlyn | Owen, Will (Morpeth) | Wellbeloved, James |
| Horner, John | Padley, Walter | Whitaker, Ben |
| Howarth, Harry (Wellingborough) | Page, Derek (King's Lynn) | White, Mrs. Eirene |
| Howarth, Robert (Bolton, E.) | Pannell, Rt. Hn. Charles | Whitlock, William |
| Howie, W. | Park, Trevor | Wilkins, W. A. |
| Huckfield, Leslie | Parkyn, Brian (Bedford) | Willey, Rt. Hn. Frederick |
| Hughes, Emrys (Ayrshire, S.) | Pavitt, Laurence | Williams, Alan (Swansea, W.) |
| Hughes, Hector (Aberdeen, N.) | Pearson, Arthur (Pontypridd) | Williams, Clifford (Abertillery) |
| Hughes, Roy (Newport) | Pentland, Norman | Wilson, William (Coventry, S.) |
| Hunter, Adam | Perry, George H. (Nottingham, S.) | Winnick, David |
| Jackson, Peter M. (High Peak) | Price, Thomas (Westhoughton) | Winstanley, Dr. M. P. |
| Janner, Sir Barnett | Price, William (Rugby) | Winterbottom, R. E. |
| Jeger, Mrs. Lena (H'b'n & St.P'cras, S.) | Probert, Arthur | Woodburn, Rt. Hn. A. |
| Johnson, Carol (Lewisham, S.) | Rhodes, Geoffrey | Yates, Victor |
| Jones, Dan (Burnley) | Robinson, W. O. J. (Waith'stow, E.) | |
| Jones, J. Idwal (Wrexham) | Rogers, George (Kensington, N.) | TELLERS FOR THE AYES: |
| Jones, T. Alec (Rhondda, west) | Rowlands, E. (Cardiff, N.) | Mr. Joseph Harper and |
| Kerr, Russell (Feitham) | Ryan, John | Mr. Neil McBride. |
| NOES | ||
| Allason, James (Hemel Hempstead) | Heseltine, Michael | Pearson, Sir Frank (Clitheroe) |
| Astor, John | Hiley, Joseph | Percival, Ian |
| Awdry, Daniel | Hogg, Rt. Hn. Quintin | Pink, R. Bonner |
| Body, Richard | Holland, Philip | Pounder, Rafton |
| Brinton, Sir Tatton | Hordern, Peter | Price, David (Eastleigh) |
| Brown, Sir Edward (Bath) | Hornby, Richard | Prior, J. M. L. |
| Bullus, Sir Eric | Hunt, John | Pym, Francis |
| Clegg, Walter | Iremonger, T. L. | Quennell, Miss J. M. |
| Cooke, Robert | Irvine, Bryant Godman (Rye) | Renton, Rt. Hn. Sir David |
| Cooper-Key, Sir Neill | Jennings, J. C. (Burton) | Rippon, Rt. Hn. Geoffrey |
| Cordle, John | Jopling, Michael | Rodgers, Sir John (Sevenoaks) |
| Costain, A. P. | Lancaster, Col. C. G. | Rossi, Hugh (Hornsey) |
| Craddock, Sir Beresford (Spelthorne) | Lane, David | Royle, Anthony |
| Dalkeith, Earl of | Lloyd, Rt. Hn. Selwyn (Wirral) | Russell, Sir Ronald |
| Dance, James | Loveys, W. H. | Shaw, Michael (Sc'b'gh & Whitby) |
| Digby, Simon Wingfield | McMaster, Stanley | Silvester, Fred (Walthamstow, W.) |
| Elliot, Capt. Walter (Carshalton) | Maddan, Martin | Smith, John |
| Elliot, R. W. (N'c'tle-upon-Tyne, N.) | Maginnis, John E. | Stodart, Anthony |
| Errington, Sir Eric | Maude, Angus | Summers, Sir Spencer |
| Farr, John | Maxwell-Hyslop, R. J. | Taylor, Frank (Moss Side) |
| Fletcher-Cooke, Charles | Mills, Stratton (Belfast, N.) | Thatcher, Mrs. Margaret |
| Foster, Sir John | Miscampbell, Norman | van Straubenzee, W. R. |
| Gibson-Watt, David | Mitchell, David (Basingstoke) | Walker-Smith, Rt. Hn. Sir Derek |
| Grant-Ferris, R. | Monro, Hector | Ward, Dame Irene |
| Gresham Cooke, R. | Montgomery, Fergus | Weatherill, Bernard |
| Grieve, Percy | More, Jasper | Webster, David |
| Gurden, Harold | Morgan, Geraint (Denbigh) | Wills, Sir Gerald (Bridgwater) |
| Hall-Davis, A. G. F. | Murton, Oscar | Worsley, Marcus |
| Harris, Frederic (Croydon, N.W.) | Nabarro, Sir Gerald | Younger, Hn. George |
| Harrison, Col. Sir Harwood (Eye) | Osborn, John (Hallam) | |
| Hawkins, Paul | Osborne, Sir Cyril (Louth) | TELLERS FOR THE NOES: |
| Hay, John | Page, Graham (Crosby) | Mr. Anthony Grant and |
| Heald, Rt. Hn. Sir Lionel | Page, John (Harrow, W.) | Mr. Timothy Kitson. |
§ Sir Derek Walker-Smith (Hertfordshire, East)On a point of order, Mr. Deputy Speaker. Before we proceed with these important deliberations, are we to be vouchsafed any explanation of the curious circumstances which led to so many of us being shut up in the Lobby for so long?
§ Mr. Deputy SpeakerI have caused inquiries to be made as to what happened when the bells inadvertently rang for a Count instead of for a Division.
§ Sir D. Walker-SmithFurther to that point of order, Mr. Deputy Speaker. As your announcement was that there was a Division, can you tell the House from what time the necessary minutes started to be counted? Presumably it was from immediately the erroneous signal was corrected to the right one. But in spite of that we seemed to be kept in the Division Lobby far longer than would be justified by that particular matter.
§ 8.45 p.m.
§ Mr. Deputy SpeakerI have already expressed my regrets to the House for any inconvenience that was caused to right hon. and hon. Members. As I understand the position at the moment—I am still awaiting a full explanation—when I first called the Division by some inadvertence the bells sounded for a Count and an announcement to that effect was made, with the result that a number of hon. Members, but not all, thought that there was a Count and not a Division. Some hon. Members went through the Lobby under the impression that there was a Division, and on the second occasion when a Division was called some hon. Members thought that having been through the Division Lobby once there was no need for them to go through again. Therefore, so that the matter could be regularised I ordered the Division Lobbies to be cleared and the Division to be started afresh.
§ Mr. Michael Foot (Ebbw Vale)Further to that point of order, Mr. Deputy Speaker. Can those of us who have voted four times now go home?
§ Sir D. Walker-SmithI am very much obliged to you, Mr. Deputy Speaker, for that clear and candid explanation of these peculiar circumstances. I certainly did not raise the question in any spirit of criticism. After all, to err is human, 1598 as we are constantly reminded by the presence of the Government Front Bench. It is, after all, a very suitably confusing end—though it is not quite the end—to a very confusing Bill.
§ Mr. Michael Jopling (Westmorland)Further to that point of order, Mr. Deputy Speaker. As you have said that you will institute an inquiry about what went wrong, may we take it that you will make a statement to the House tomorrow about what has happened?
§ Mr. Deputy SpeakerI do not think that that would be in accordance with precedent.
§ Dame Irene Ward (Tynemouth)It would be a good idea.
§ Subsequent Lords Amendment agreed to.