CO-OWNERSHIP OF FLATS (Hansard, 22 February 1978)

§ Sir Brandon Rhys Williams (Kensington)

I beg to move That leave be given to bring in a Bill to give powers to residents of purpose built blocks of flats in private ownership jointly to purchase the premises of which their flats are part; to specify the procedures to be adopted; to make consequential provisions as to the management and upkeep of premises so purchased; and for connected purposes. I am seeking leave to introduce this Bill because in certain respects the occupants of flats seem to be second-rate citizens by comparison with the occupants of houses. I believe that this is an anomaly that the House should seek to rectify.

The immediate problem that concerns me arises partly from a difficult and urgent situation in Inner London, but a continuing problem is also arising from the application of the fair rents system. I do not complain about the application of that system, but at a time of inflation it leaves people in flats at a disadvantage, especially if they are living on fixed incomes. The owner of a house has a bulwark against inflation that may have a considerable value, but the tenant of a flat is unlikely to have found such a reliable hedge against the predictable rises in his rent and has to calculate that it is only a matter of time before he may be forced out, with nothing to sell to pay for another flat or house elsewhere.

The flat tenant's apparent security also becomes a sham if the policy for the management of the block is changed with a view to the realisation of the break-up value or an effective change of use. In Inner London it is possible very quickly to increase several times over the net return from an established mansion block by winkling out or driving out the tenants and turning over the accommodation to furnished letting. Thus stable, established communities in city centres are being destroyed and a new class of resident created, who has no interest or involvement in the local community and is merely seeking something comparable to an hotel for a short stay. I have no objection to new buildings being put up, if necessary, to cater for this market, but I object to existing flats being taken over from stable residential occupation and diverted to serve a transient community.

This area is a minefield of technicalities. I hope that the House will excuse 1443 me if I touch only briefly on the solution that I recommend within the confines of the Ten-Minute Rule.

The House has long agreed on the principles of security of tenure, of the enfranchisement of leasehold and of the need to provide special protection to the occupants of flats over, for instance, service charges.

The Conservative Party is dedicated to the idea of a property-owning democracy and the Government's recent Green Paper on housing policy lays emphasis on the importance of home ownership and the value of the co-ownership principle. I believe, therefore, that the general outline of my Bill is not controversial, but, as to the specific recommendatons, there is still room for a good deal of discussion and debate.

The object of my Bill is to give impetus to the moves already under way to give more powers to tenants' associations, and I wish to make certain specific suggestions of my own which I hope the House will think are of value.

Tenants' associations representing the occupants of flats in purpose-built blocks in private ownership should have the power to acquire the head lease of the block or the freehold, as appropriate, in certain closely specified circumstances. They should have this right at any time after the block has passed out of the ownership of the original builder.

A tenants' association, to qualify, should be able to speak for the occupants of at least 75 per cent. of the block in terms of rateable value. It would not be helpful if the regime were deeply divided inside the block before a move of this kind were made.

The price should be calculated by reference to the current fair rents for the block, capitalised on a basis to be laid down from time to time by the Lands Tribunal and obviously related to the current rate of interest.

The tenants' association should be formed as a company—a formula which is well established and understood—coming within the definition of a housing association and with a memorandum and articles following a specified model. There is a danger that tenants' associations might indulge in experimental forms of management, or there might be con- 1444 troversy over the remuneration of the officers of the company and such matters as that. Therefore, I think that it would be wise for Parliament to lay down a model memorandum and articles to be adopted by a tenants' association incorporating itself with a view to exercising the power that I envisage. Such a body should be eligible for loans or guarantees from the Housing Corporation—I believe that it would be eligible under existing legislation—from the local authority or from building societies or other appropriate sources of finance.

It might be desirable, where large sums of money are involved, for the Housing Corporation to take up a debenture and to appoint a debenture holder's trustee to ensure that the management of the block is continued on businesslike lines and that there is not a steady deterioration in the value of the block due to circumstances such as the tenants having over-reached themselves in making the initial purchase and having to recoup by skimping on the service charges afterwards, to the ultimate disadvantage of all concerned.

I hope that the House will approve the principle of my Bill. I recognise that it will be extremely difficult to achieve legislation in the present Session, but if it is clear that opinion here is moving in this direction, I believe that it would have a salutory effect on the market in mansion blocks particularly in the part of London which I represent, which has lately had an unhealthy and speculative character.