CO-OWNERSHIP OF FLATS (Hansard, 11 July 1979)

§ 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 the leave of the House to introduce a Bill on co-ownership of flats that is similar to the Bills that I have introduced in previous Sessions. The purpose of the Bill is to provide a convenient statutory means by which the tenants of purpose-built blocks of flats may combine to purchase their landlords' interest in the property at a fair valuation. I recognise that the principle of my Bill involves an extension of the use of compulsory powers. As such it is obviously a proposal that the House will wish to consider with care.

There are two reasons why the Bill is now especially appropriate. The first reason is that the Leasehold Reform Act 1967 stopped short at housing and left the occupants of flats in the position of second-rate citizens unable to exercise the powers that were conferred under the Act on those people living in houses. That omission has become a matter of particular importance because of inflation and the operation of the fair rents principle.

The second reason is that the Government are currently proposing to give those who are living in the public sector the right to purchase their flats. The House must recognise that there is no valid reason why that power should be given to those living in council houses and council flats and not be extended to tenants in the private sector who live in flats.

Council tenants have security de facto. That is being recognised by the Government. However, protected tenants in blocks in private ownership have rights de jure. That is important, and their rights must not be allowed to be whittled away.

This is an urgent matter because in the constituency that I know best—Kensington—and in a number of other constituencies in inner London and in other 473 parts of the country money is seeking quick profits at the expense of the permanent residents in mansion blocks.

That tendency is especially inspired by those advising investors abroad who have no interest in protecting the fabric of society in Britain but who are hoping to make quick profits at the expense of the established residents. If they employ techniques that upset the residents, they can, in effect, make a mockery of tenants' security of tenure.

There are all too many examples already in central London of mansion blocks which were in regular private occupation by British citizens but which are now little better than long-stay hotels or service suites. The process is continuing, and the House should take note of it and act without delay to put a stop to it.

There is, of course, a conflict of principles here. The House is right to recognise the sanctity of contract and to be unwilling to introduce anything that appears to have the character of retrospective legislation. At the same time, we all recognise the benefits of home ownership and the importance of the self-respect which comes to people who know where they live and own their bricks and mortar. I do not believe that people living in flats should be turned into second-rate citizens.

My Bill requires investors in mansion blocks simply to reshuffle their portfolio without loss; but where the occupants are concerned, the Bill's aim is to ensure that they do not lose their homes, but have the opportunity to buy them.

I cannot examine, within the confines of a speech under the Ten Minutes Rule, all the points with which I would hope to deal if the House allowed me to take the Bill to Committee stage. I should like to mention, however, that the Bill would apply only to purpose-built blocks. I am not competent to frame a Bill, even if this was desirable, to extend the principle to very small conversions or to houses in owner-occupation and so on. It is best to tackle the mansion blacks, which are the particular target of foreign speculators at this time.

The powers could be used only by a tenants' association which had formed itself 474 into a company operating under rules which I aim to set down, or which, I hope, would be set down clearly in the Bill. There should be no doubt as to who would be liable and who would be responsible for the management of the block after the purchase had taken place.

The valuation of the block, at the time of purchase by the tenants, should be carried out on a basis that is plainly fair to the owner. I am not interested in introducing any element of confiscation or in providing some sort of bonus for the tenants at the owner's expense.

I do not like the concept of a windfall profit for the tenants: thus a provision should be entrenched in the Bill that if a tenant, having newly acquired his share of the block, sought to leave with a view to realising an immediate profit by giving vacant possession, the profit should accrue on a sliding scale to the company over a period of years, rather than to the tenant. Without this provision, the effect of the Bill might be to destabilise the very residents to whom one was trying to give security.

The Secretary of State for the Environment has shortly to decide on a compulsory purchase order issued by the Kensington and Chelsea borough council. I understand that other compulsory purchase orders have been issued by other borough councils in inner London facing the same situation as the Kensington and Chelsea council. I hope that the Secretary of State will support the initiatives taken by these local authorities. We hope to hear his view within a few weeks.

But even more useful than such action by the Secretary of State in these specific cases would be endorsement by the House of the general principle by approving my application to introduce this Bill today and by allowing it to make progress. In that way, the House would be issuing a warning to the speculators that we have taken note of the problem and that we are determined to act.