HC Deb 25 June 1974 vol 875 cc1300-11

Strike out words in square brackets if inapplicable.

Note 4. If the Valuation Officer cetrifies that the rateable value would have been less but for the improvement by the amounts mentioned in the certificate, the rateable value will be reduced by those amounts for the purposes of the Leasehold Reform Act, 1967, except in the case where a proportion only of the cost was contributed by the tenant, in which case the amounts of the reductions will be proportionately reduced accordingly"'.—[Mr. Rossi.]

Brought up, and read the First time.

Mr. Rossi

I beg to move, That the clause be read a Second time.

Mr. Deputy Speaker

With this we can also discuss Amendment No. 86: In Clause 103, page 94, line 32, at end insert: '(2) After subsection (4) of section 1 of that Act shall be inserted:— (1) At any time the tenant may take the action provided in the Seventh Schedule to the Leasehold Reform Act 1967 for his rateable value to be adjusted and in all such cases the agreed rateable value or that determined by the Court or District Valuer shall be the rateable for the purposes of this Act ".'

Mr. Rossi

May I first thank you, Mr. Thomas, for allowing this to be taken as a new clause, and to be taken so early in the evening, so that due note can be taken publicly of its provisions. That would not be the case if it were to be taken later when we are considering Clause 103.

This clause is consequential upon another amendment successfully moved by the Opposition in Committee. It was an amendment which was, surprisingly, resisted by the Government who suffered a defeat. The defeat passed unnoticed in the world outside. That was surprising because this is a matter which will be of enormous importance to thousands of leaseholders.

What has happened as a result of the amendment to Clause 103 is that the holder of a long lease at a low rent will be able to buy his freehold or obtain an extension of his lease for 50 years if the rateable value of his property is £1,500 or less in the Greater London area, or £750 or less in the rest of the United Kingdom, and provided that the lease was granted before 23rd March 1965. Where the lease was granted after that date, then for the rateable values I have mentioned there were substituted £1,000 for Greater London and £500 for places outside Greater London.

That is a great extension of the right to enfranchise under the Leasehold Reform Act 1967, where the rateable values are £400 and £200 respectively. The defeat of the Government in Committee echoed a defeat they suffered on similar lines in Committee in 1967. On that occasion the Government on Report deleted the amendment. I am happy to see that on this occasion the Government, seeing the odium that was heaped on their head on the last occasion, have decided not to remove the amendment voted in against their wishes in Committee.

7.45 p.m.

This clause could not be dealt with in Committee, although it was laid in a more truncated form, because the successful amendment so altered Clause 103 that the words which this amendment sought to alter had disappeared. Therefore, the Chair had to rule that it was not possible to consider the amendment.

It is because of that that I move this clause now, the effect of which is to give a further benefit to leaseholders. Experience has shown that it has happened that leaseholders have carried out improvements to their properties, such as the building of a garage, an extension or the carrying out of a conversion, the result of which has been to increase the rateable value of the property.

If that rateable value was near to the ceiling beyond which they could not enfranchise, those improvements often took such properties over the line, and people found that by spending their own money on leasehold property they had disfranchised themselves. What we seek to do is to correct that situation by borrowing from a useful precedent—the Fifth Schedule to the 1957 Rent Act.

That schedule—it has now been repealed and appears in another form—when it was law related to tenants claiming security of tenure. There again, tenants in accommodation below certain rateable values are entitled to claim security of tenure and cannot be made to go simply on a notice to quit. The situation arose of tenants carrying out improvements to property and finding that they were taking the rateable value of the property over the security of the tenure limit, thus losing security of tenure by spending their own money.

I have borrowed heavily from the rule laid down in the Rent Act, aimed at protecting tenants and enabling them to maintain security of tenure, in this attempt to protect leaseholders so that they may remain within rateable value limits even though they may spend money on the property they occupy.

The clause provides that Where the tenant, or any previous tenant, has … contributed to the cost of an improvement on the premises then the tenant may serve on the landlord a notice in the prescribed form. There is a prescribed form, which follows closely the form used in the Rent Act. The tenant serves that form on the landlord, requiring him to agree to a reduction of the rateable value that has been occasioned by the improvement work being carried out. Where, after a period of six weeks has elapsed and agreement has not been reached between the landlord and the tenant, the tenant has the right to go to the county court to determine whether improvements were carried out, what work was involved, and what was the proportion of the cost, the county court will answer those questions.

Taking the situation either when an agreement has been reached in writing between the landlord and tenant as to the improvements that have been carried out, or when a figure has been fixed by a county court in the absence of an agreement, the tenant then goes with the documentation to the valuation officer. The valuation officer is the officer who fixes rateable values, and he will certify the extent to which the rateable value has been affected by the improvements which have been carried out. For the purposes of enranchisement, the certified amount of rateable value is deducted from the increased rateable value and the tenant is not disfranchised by virtue of the value that he has added to the property by the work that he has himself carried out.

I hope that the House will agree that this is a long-required reform. It is a fair concept that a tenant or a leaseholder should not disfranchise himself by carrying out improvements to the property at his own expense. I have borrowed heavily on precedent in a similar situation, and I hope, therefore, that the amendment is technically correct. I trust that it commends itself to the House.

The Under Secretary of State for Wales (Mr. Edward Rowlands)

I hope that the hon. Member for Hornsey (Mr. Rossi) will not mind if I chide him gently at the image of the Opposition parading as leasehold reformers. I had the privilege of being associated with the Leasehold Reform Bill in 1967 and there was no greater campaigner than you, Mr. Deputy Speaker, on the issue. In the debates on the Leasehold Reform Bill in 1967 we heard from the Opposition terms such as "confiscation", "near Communism" and "the destruction of the sacrosanct law of contract". Yet the hon. Gentleman comes to the Dispatch Box today and says "We are now the real leasehold reformers, we are the champions of the leaseholders' cause".

Mr. Rossi

There are two aspects to this question. First, there is the universatility of the right to enfranchise and, secondly, there are the terms upon which enfranchisement should take place. There was never any disagreement on the Opposition side of the Committee on the universality of the concept. The matter was carried on a Division in Committee, the whole of the Opposition side being for universality. Virtually the whole of the Conservative Party voted for that principle when the Labour Party tried to do some thing different. Where we disagreed was on the price terms. We felt that the formula for the price was wrong, and we still think so, because it causes a distortion at the top end of the market. That is why we have not gone beyond £1,500 and £750.

Mr. Rowlands

Now it is emerging. During the whole time when the Conservatives were in office neither the hon. Gentleman nor any other member of the Government moved an amendment to alter the terms of compensation or the price mechanism under the Leasehold Reform Act 1967. It ill behoves Conservatives to speak now as champions of leasehold reform and to say that they want universal application but that they do not believe in the terms of compensation under the 1967 Act.

The hon. Member for Hornsey said that the provisions applied to a certain number of leaseholders but he did not explain precisely who they were and did not give specific examples. He cannot hide behind a shroud and say that he supports the principle of universality but dislikes the confiscatory provisions of the 1967 Act because neither he nor any other member of the Government at that time attempted to alter the compensation terms of the Leasehold Reform Bill. The Opposition are moving this amendment in the full knowledge that the terms of compensation, which were called "confiscatory" and "near Communism" are still in operation.

There was some measure of back-bench consensus on leasehold reform in 1967, to which the hon. Gentleman was party, but he had ample time between 1970 and 1974 to extend the provisions of the Leasehold Reform Act. He had ample chance to do so on the Housing and Planning Bill which was the precursor of this Bill. No such amendments appeared and no such amendments were carried in Committee. It is therefore improper for the hon. Gentleman to talk in those terms from the Dispatch Box. Had he moved an amendment to this effect in Committee what he said might have been more acceptable.

As I pointed out to the hon. Gentleman in Committee, any improvement that has been carried out since 1965 which might increase the rateable value of a property has absolutely no effect on the right of enfranchisement. If the property were below the rateable value specified in the Act in 1965 it does not matter a jot what improvements have been made since and what enhancement of the rateable value has occurred. I am under the impression that the hon. Gentleman is a little confused on that issue.

If the hon. Gentleman is talking about improvements carried out before March 1965 and which before that date established rateable value limits on properties which disqualified them in 1965, I can deal with that, but if he is talking about an improvement paid for out of the lease-holder's own pocket after 1965, that does not disfranchise the leaseholder.

Mr. Rossi

If the wording of the amendment is defective one would, of course, wish to see it improved. The intention is that wherever and whenever any work is carried out by a leaseholder, the result of which is to increase the rateable value of his property, that increase shall be disregarded for the purpose of enfranchisement. Paragraph 3 (2) reads as follows: On any such application the valuation officer shall certify— (a) whether or not the improvement has affected the rateable value on the first day of April, nineteen hundred and seventy three. That is the date of the latest valuation list.

Perhaps the Minister is harking back to an amendment which we tabled in Committee in which we referred in specific terms to the Rent Act 1957 and the effect that the wording of the schedule in that Act had on the Leasehold Reform Act. Here we have brought the schedule up to date by referring to the current valuation list and any improvements carried out that affect that list.

Mr. Rowlands

I hope that most leaseholders are more sensible than the hon. Gentleman seems to suggest. He suggests that a leaseholder interested in enfranchisement would carry out improvements to the property before enfranchising, thereby taking his property outside the terms of the provisions of the Act. It would be far more logical for a leaseholder who intends to carry out certain improvements which may increase the rateable value and thereby take him outside the scope of the Act first to enfranchise himself.

If the hon. Gentleman is considering the matter in a futuristic sense, almost inevitably the householder would enfranchise first and improve afterwards. He would have great difficulty because any improvement carried out by a leaseholder must have the approval of the ground landlord. The ground landlord often will attempt to renegotiate the terms of the lease or to obtain extra benefit in ground rent—or he may just say "No". On the other hand, if we are to consider the matter retrospectively, I thought that Conservatives, judging from events in recent weeks, were opposed to retrospection almost as though it were one of the original sins.

8 p.m.

The impact of the clause would be to try to include those whose homes were excluded from the Leasehold Reform Act 1967 because they were improved before 1965 and therefore had their rateable values raised. The hon. Gentleman now suggests that, some years later, the county court should be asked to rule on whether improvements which had been carried out before 1965 created a situation where the property was improved to such an extent that it should be excluded from the provisions of the 1967 Act.

I am most sympathetic to leasehold reform, and indeed I have campaigned on this issue for many years. The hon. Gentleman is now dealing with somebody who has had his heart in this subject for many years. However, I must tell him that such proposals as are included in his clause are difficult to envisage in terms of the courts having to adjudicate retrospectively in respect of improvements carried out many years ago.

Mr. Douglas-Mann

I have listened with interest to my hon. Friend, but I hope that he will be able to give greater emphasis to what many Labour Members would like to see—that is, the abolition of rateable value limits on enfranchisement. The provisions are cumbersome and could usefully be swept away if we were to abolish all rateable value limits.

Mr. Rowlands

The blandishments and enticements of my hon. Friend are attractive. I appreciate that I can be chided on my record in the past in support of such abolition. I am saying that the cumbersome way in which the provisions are aimed at enabling more people to be enfranchised may or may not be best implemented by abolishing or altering the rateable value limit. I believe that the handful of cases where the provisions of the clause would apply would be adequately covered by the extension of rateable value limits. Therefore, there is no point in taking matters to the extreme in the cumbersome way envisaged here by trying to extend the provisions of the Leasehold Reform Act in respect of those who qualify under it.

I believe that the new clause would cause something of a nightmare in the county courts which would have to rule retrospectively on improvements predating 1965. Therefore, I hope that, in the light of my explanation, the hon. Gentleman will not press the matter.

Mr. Rossi

I have the deepest sympathy for the Minister in having to argue that case. I know from a knowledge of his views on leasehold reform that he could not have had his heart in what he was saying and dutifully kept to his ministerial brief.

Mr. Rowlands

There is no ministerial brief.

Mr. Rossi

The hon. Gentleman dredged the bottom of the barrel in searching for arguments to rebut the clause. First, he complained that the proposal was too cumbersome. I would remind hint that it is taken from existing legislation—namely, the 1957 Act, which was supported by the Labour Party. There is a respectable precedent for this mechanism by adjusting rateable value where an injustice exists.

The hon. Gentleman said that because only a few cases were likely to arise we did not need to correct that injustice. Surely we should not take into account quantity in dealing with whether a situation is just or unjust. I know from the representations which I have received that there are a number of cases where leaseholder; have already penalised themselves by carrying out improvements which this clause would seek to assist in terms of relief.

So far as the future is concerned, the Minister believes that nobody will be so foolish as to improve accommodation before he enfranchises. In an ideal world when every body is his own lawyer and is well versed in legal intricacies of the law of landlord and tenant, no doubt that situation might obtain, but day in and day out people act in ignorance of the law. We are seeking to protect the person who has acted in ignorance of the law and who has lost for himself a valuable legal right.

If the problem is as simple as the Minister says it is, I cannot understand why he should resist this modest clause so vehemently. I ask my hon. Friends to support the provision.

Question put, That the clause be read a Second time:—

The House divided: Ayes 155, Noes 166.

Division No. 52.] AYES [8.10 p.m.
Allason James (Hemel Hempstead) Gurden, Harold Orr, Capt. L. P. S.
Atkins, Rt. Hn. Humphrey (Spelthorne) Hall, Sir John Page, Rt. Hn. Graham (Crosby)
Banks, Robert Hampson, Dr. Keith Pardoe, John
Beith, A. J. Hawkins, Paul Percival, Ian
Bell, Ronald Henderson, J.S.B.(Dunbartonshire, E.) Prior, Rt. Hn. James
Benyon, W. Higgins, Terence Rathbone, Tim
Biggs-Davison, John Holland, Philip Rhys Williams, Sir Brandon
Boardman, Tom (Leicester, S.) Hooson, Emlyn Ridley, Hn. Nicholas
Boscawen, Hon. Robert Howell, Ralph (Norfolk, North) Rifkind, Malcolm
Bowden, Andrew (Brighton, Kemptown) Howells, Geraint (Cardigan) Ross, Stephen (Isle of Wight)
Brittan, Leon Hunt, John Rossi, Hugh (Hornsey)
Budgen, Nick Hurd, Douglas Rost, Peter (Derbyshire, S.-E.)
Bulmer, Esmond Hutchison, Michael Clark Sainsbury, Tim
Butler, Adam (Bosworth) Iremonger, T. L. Scott-Hopkins, James
Carr, Rt. Hn. Robert Johnston, Russell (Inverness) Shaw, Giles (Pudsey)
Chalker, Mrs. Lynda Jopling, Michael Shaw, Michael (Scarborough)
Chataway, Rt. Hn. Christopher Kaberry, Sir Donald Shelton, William (L'mb'th,Streath'm)
Clark, A. K. M. (Plymouth, Sutton) Kershaw, Anthony Shersby, Michael
Clegg, Walter Kilfedder, James A. Silvester, Fred
Cooke, Robert (Bristol, W.) King, Evelyn (Dorset, S.) Sinclair, Sir George
Cope, John Knight, Mrs. Jill Skeet, T. H. H.
Cormack, Patrick Knox, David Smith, Cyril (Rochdale)
Corrie, John Lamont, Norman Spence, John
Costain, A. P. Lane, David Spicer, Michael (Worcestershire, S.)
Crowder, F. P. Latham, Michael (Melton) Stanbrook, Ivor
Dean, Paul (Somerset, N.) Lawrence, Ivan Stanley, John
Deedes, Rt. Hn. W. F. Le Marchant, Spencer Steen, Anthony (L'pool, Wavertree)
Dixon, Piers Lester, Jim (Beeston) Stradling Thomas, John
Drayson, Burnaby Lewis, Kenneth (Rtland & Stmford) Taylor, Edward M. (Glgow, C'cart)
Durant. Tony Lloyd, Ian (Havant & Waterloo) Taylor, Robert (Croydon, N.W.)
Elliott, Sir William Loveridge, John Tebbit, Norman
Emery, Peter Luce, Richard Temple-Morris, Peter
Fairgrieve, Russell MacArthur, Ian Thatcher, Rt. Hn. Margaret
Farr, John MacGregor, John Thorpe, Rt. Hn. Jeremy
Fenner, Mrs. Peggy Macmillan, Rt. Hn. M. (Farnham) Townsend, C. D.
Fidler, Michael McNair-Wilson, Michael (Newbury) Tyler, Paul
Fisher, Sir Nigel Mather, Carol van Straubenzee, W. R.
Fletcher-Cooke, Charles Maude, Angus Viggers, Peter
Fookes, Miss Janet Maxwell-Hyslop, R. J. Waddington, David
Fowler, Norman (Sutton C'Field) Mayhew,Patrick(RoyalT'bridgeWells) Walder, David (Clitheroe)
Fox, Marcus Meyer, Sir Anthony Walker-Smith, Rt. Hn. Sir Derek
Freud, Clement Miller, Hal (B'grove & R'ditch) Wall, Patrick
Gardiner,George (Reigale&Banstead) Mills, Peter Walters, Dennis
Gardner, Edward (S. Fylde) Miscampbell, Norman Weatherill, Bernard
Gilmour, Sir John (Fife, E.) Mitchell, David (Basingstoke) Winstanley, Dr. Michael
Godber, Rt. Hn. Joseph Molyneaux, James Winterton, Nicholas
Gow, Ian (Eastbourne) Money, Ernie Wood, Rt. Hn. Richard
Gower, Sir Raymond (Barry) Moore, J. E. M. (Croydon, C.) Woodhouse, Hn. Christopher
Grant, Anthony (Harrow, C.) Morgan, Geraint Young, Sir George (Ealing, Acton)
Gray, Hamish Morris, Michael (Northampton, S.)
Grieve, Percy Neubert, Michael TELLERS FOR THE AYES
Grimond, Rt. Hn. J. Newton, Tony (Braintree) Dr. Gerard Vaughan and
Grist, Ian Oppenheim, Mrs. Sally Mr. Cecil Parkinson
Allaun, Frank Carmichael, Neil Dunn, James A.
Armstrong, Ernest Carter-Jones, Lewis Dunnett, Jack
Ashton, Joe Clemltson, Ivor Dunwoody, Mrs. Gwyneth
Atkins, Rt.Hn.Humphrey(Spelthorne) Cocks, Michael Eadie, Alex
Atkinson, Norman Coleman, Donald Edelman, Maurice
Bagier, Gordon A. T. Concannon, J. D. Edge, Geoff
Barnett, Guy (Greenwich) Cook, Robert F. (Edinburgh, C.) Edwards, Robert (W'hampton, S.E.)
Barnett, Joel (Heywood & Royton) Craigen, J. M. (G'gow, Maryhill) Evans, Ioan (Aberdare)
Bates, Alf Crawshaw, Richard Ewing, Harry (St'ling.F'klrk&G'm'th)
Benn, Rt. Hn. Anthony Wedgwood Cronin, John Fernyhough, Rt. Hn. E.
Bennett, Andrew F. (Stockport, N.) Cryer, G. R. Flannery, Martin
Bldwell, Sydney Cunningham, G. (Isl'ngt'n & F'sb'ry) Fletcher, Raymond (Ilkeston)
Bishop, E. S. Davidson, Arthur Fletcher, Ted (Darlington)
Blenkinsop, Arthur Davies, Bryan (Enfield, V.) Forrester, John
Boardman, H. Davles, Ifor (Gower) Fowler, Gerry (The Wrekin)
Booth, Albert Davis, Clinton (Hackney, C.) Freeson, Reginald
Bradley, Tom Dean, Joseph (Leeds, W.) Gaipern, Sir Myer
Broughton, Sir Alfred Dempsey, James Garrett, W. E. (Wallsend)
Brown, Hugh D. (Glasgow, Provan) Doig, Peter Ginsburg, David
Buchan, Norman Dormand, J. D. Goiding, John
Callaghan, Jim (M'dd'ton & Pr'wich) Douglas-Mann, Bruce Graham, Ted
Campbell, Ian Duffy, A. E. P. Grant, George (Morpeth)
Hamilton, William (Fife, C.) McElhone, Frank Sillars, James
Hamling, William MacFarquhar, Roderick Silverman, Julius
Hardy, Peter McGuire, Michael Skinner, Dennis
Harper, Joseph McNamara, Kevin Small, William
Harrison, Walter (Wakefield) Madden, M. O. F. Snape, Peter
Hatton. Frank Magee, Bryan Spearing, Nigel
Heffer, Eric S. Marks, Kenneth Spriggs, Leslie
Hooley, Frank Marquand, David Stallard, A. W.
Howell, Denis (B'ham, Small Heath) Marshall, Dr. Edmund (Goole) Stoddart, David (Swindon)
Hughes, Mark (Durham) Meacher, Michael Stott, Roger
Hughes, Roy (Newport) Mellish, Rt. Hn. Robert Thomas, D. E. (Merioneth)
Irving, Rt. Hn. Sydney (Dartford) Mikardo, Ian Thomas, Jeffrey (Abertillery)
Janner, Greville Millan, Bruce Thorne, Stan (Preston, S.)
Jay, Rt. Hn. Douglas Mitchell, R. C. (S'hampton, Itcher) Tinn, James
Jeger, Mrs. Lena Moonman, Eric Tomlinson, John
John, Brynmor Newens, Stanley (Harlow) Torney, Tom
Johnson, James (K'ston uponHull, W) Ogden, Eric Wainwright, Edwin (Dearne Valley)
Johnson, Walter (Derby, S.) O'Halloran, Michael Walker, Harold (Doncaster)
Jones, Barry (Flint, E.) O'Malley, Brian Walker, Terry (Kingswood)
Jones, Dan (Burnley) Park, George (Coventry, N.E.) Watkins, David
Jones, Gwynoro (Carmarthen) Parker, John (Dagenham) Watt, Hamish
Jones, Alec (Rhondda) Parry, Robert Weitzman, David
Kaufman, Gerald Pavitt, Laurie White, James
Kelley, Richard Peart, Rt. Hn. Fred Whitlock, William
Kerr, Russell Phipps, Dr. Colin Williams, Alan Lee (Hvrng, Hchurch)
Kinnock, Neil Roberts, Albert (Normanton) Wilson, William (Coventry, S.E.)
Lamborn, Harry Roderick, Caerwyn E. Wise, Mrs. Audrey
Lamond, James Rodgers, George (Chorley) Woodall, Alec
Latham, Arthur(CltyofW'minsterP'ton) Ross, Rt. Hn. William (Kilmarnock) Woof, Robert
Lawson,George (Motherwell&Wishaw) Rowlands, Edward Wrigglesworth, Ian
Loughlin, Charles Selby, Harry
Loyden, Eddie Shaw, Arnold (Redbridge, Ilford, S.) TELLERS FOR THE NOES:
Lyons, Edward (Bradford, W.) Sheldon, Robert (Ashton-under-Lyne ) Mr. Tom Cox and
Mabon, Dr. J. Dickson Short, Mrs. Renée (W'hamp'n, N.E.) Mr. James Hamilton.
McCartney, Hugh Silkin, Rt.Hn.S.C.(S'hwark,Dulwich)

Question accordingly negatived.

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