SERVICE CHARGES

HC Deb 20 May 1980 vol 985 cc409-61

Mr. Nicholas Scott (Chelsea)

I beg to move amendment No. 116, in page 84, line 27, at end insert— '(3) After Section 71 of the Rent Act 1977 there shall be inserted the following section:— 71A.—(1) This section applies where the landlord and/or the tenant request the Rent Officer, or as the case may be, the Rent Assessment Committee to register or re-register a rent which includes an amount in respect of the provision of services by the landlord. (2) The landlord shall supply the tenant with a written summary of the costs incurred or amounts defrayed in respect of the provision of the said services in the relevant period defined in subsection (5) below, not later than 14 days before the date fixed for the consultation by the Rent Officer or, as the case may be, the hearing before the Rent Assessment Committee. (3) The summary shall set out those costs or amounts and the way in which they reflect the provision of services to the tenant, and, if there are more than four flats in the building or the relevant cost or amounts relate to another building also it must;

1. (a) be certified by a qualified accountant as being sufficiently supported by accounts, receipts and other documents which have been produced to him; and
2. (b) contain such information as the Secretary of State may from time to time prescribe by Order.

(4) Where a tenant has obtained such a summary as is referred to in subsection (2), if, before the date fixed for the said consultation, or as the case may be, hearing, he requires the landlord in writing to afford him reasonable facilities for inspecting the accounts, receipts, and other documents supporting the summary and for taking copies or extracts from them, the landlord shall then make such facilities available to the tenant and the Rent Officer, or as the case may be, the Rent Assessment Committee shall postpone the said consultation or the said hearing until a date not earlier than 14 days after the date appointed by the landlord for such inspection. (5) The relevant period mentioned in subsection (2) above is:

1. (a) that specified in Schedule 17, paragraph 7(4)(a) to the Housing Act 1980;
2. (b) that specified in Schedule 17, paragraph 7(4)(b) to the Housing Act 1980.

(6) If the landlord shall fail to perform any duty imposed on him by subsections (2) or (4) above, the Rent Officer, or as the case may be, the Rent Assessment Committee, shall postpone the consultation or hearing until not earlier than 14 days after the landlord shall have performed such duties. (7)(i) Costs incurred in the provision of services by the landlord should only be taken into account by the Rent Officer, or as the case may be, the Rent Assesment Committee, to the extent that:

1. (a) the costs have been incurred in the provision of chargeable items to a reasonable standard; and
2. (b) the costs incurred in respect of the chargeable items, were reasonable,

(ii) The costs of carrying out works of improvements are to be deemed, by the Rent Officer, or as the case may be, the Rent Assessment Committee, to be reasonable only to the extent that they were undertaken:

1. (a) to comply with any of the provisions of the Housing Acts 1957 to 1969; or
2. (b) with the prior written consent of the recognised Tenants' Association or, if no such body exists, or it is not truly independent, of the tenant provided that, in the case of the tenant, such consent is not unreasonably withheld.

(iii) If the tenant is entitled to the benefit of the implied covenant provided by section 32 of the Housing Act 1961 in respect of his dwelling, no part of the costs incurred by the landlord or the carrying out of prescribed works to the rest of the building of which the tenants' dwelling forms a part or to any other buildings, shall be taken into account. The prescribed works for the purposes of this subsection shall be defined as works carried out:

1. (a) to keep in repair the structure and the exterior of the building (including drains, gutters and external pipes); and
2. (b) to keep in repair and proper working order the installations in the building—
1. (i) for the supply of gas, water and electricity and for sanitation (including basins, sinks, baths and sanitary conveniences but not, except as aforesaid, fixtures fittings and appliances for making use of the supply of gas, water and electricity); and
2. (ii) for space heating or heating water; and
3. (iii) for the provision of services which the landlord provides or is obliged to provide whether by statute or contract.

(8) A request under paragraph 7 above shall be deemed to be duly served on a landlord if it is served on any agent of the landlord named as such in the rent book or similar document, or on the person who receives the rent on behalf of the landlord; and a person on whom a request is so served shall forward it as soon as may be to the landlord. (9) (i) If any person without reasonable excuse fails to perform any duty imposed on him by the Schedule he shall be guilty of an offence and liable on summary conviction to a fine not exceeding £1,000. (ii) Where an offence under this Schedule which has been committeed by a body corporate is proved to have been committed with the consent of connivance of, or to be attributable to any neglect on the part of, a director, manager, secretary or other similar officer of the body corporate, or any person who was purporting to act in any such capacity, he, as well as the body corporate, shall be guilty of an offence and be liable to be proceeded against and punished accordingly. (iii) Where the affairs of a body corporate are managed by its members, subsection (2) above shall apply in relation to the acts and defaults of a member in connection with his functions of management as if he were a director of the body corporate. (10) For the purposes of this Section a qualified accountant shall be defined as set out in paragraph 17 of Schedule 15 to the Housing Act 1980 ".'.

Mr. Speaker

With this it will be convenient to take the following:

Amendment No. 94, in page 129, line 25, leave out Schedule 17 and insert—

'Service charge and relevant costs

1.—(1) For the purposes of this Schedule, a charge is an amount payable by the tenant of a flat of or in addition to the rent—

1. (a) which is payable, directly or indirectly, for services, repairs, maintenance or insurance or the landlord's cost of management; and
2. (b) the whole or part of which varies or may vary according to the relevant costs;

and the relevant costs are the costs or estimated costs (including overheads) incurred or to be incurred in any period (whether the period for which the service charge is payable or an earlier or late period) by or on behalf of the landlord or a superior landlord in connection with the matters for which the service charge is payable.

(2) Other expressions used in this Schedule are to be construed in accordance with paragraphs 24 to 31 below.

Limitation of service charge

2. The extent to which relevant costs are taken into account in determining the amount of a service charge payable for any period shall be limited in accordance with the following paragraphs, and the amount payable shall be limited accordingly; and where the service charge is payable before the relevant costs are incurred, any necessary adjustments shall be made by repayment, reduction of subsequent charges or otherwise.

(3)—(1) Costs incurred are to be taken into account only to the extent that they are reasonably incurred and costs incurred in the provision of services or the carrying out of works only to the extent that the services have been provided or the works carried out to a reasonable standard.

(2) The limitations imposed by this Schedule shall not apply to estimated costs representing a reasonable provision for future expenses of a non-annual nature, or a reasonable contribution towards a reserve fund in respect of future expenses until such time as the expenditure is incurred.

(3) The test of reasonableness is to be applied after the audited accounts are produced and actual costs incurred for the service charge year are known.

4.—(1) Where the costs to be incurred are for building repair or decoration works or the replacement of plant or machinery, fixtures or fittings, and are likely to exceed the amount prescribed by or under this paragraph, the procedure under paragraphs 5 and 6 below shall be complied with unless dispensed with under paragraph 8.

(2) The prescribed amount is £25 multiplied by the number of flats in the building or £500. whichever is the greater, but the Secretary of State may by order substitute a different amount for £25 or £500 or both, and such substitution may contain different amounts for different areas or regions.

(3) If the procedure under paragraphs 5 or 6 is not complied with any costs incurred beyond the prescribed amount shall not be taken into account unless relief is granted under paragraph 8.

5.—(1) The following procedure shall be observed where no recognised tenants' association exists.

(2) At least two estimates shall be obtained, one of them from a person wholly unconnected with the landlord.

(3) The landlord shall notify each tenant as registered in the landlord's records of the proposed works, the persons estimating, the amount of each estimate and the recommendation of the landlord. The landlord shall effect such notification by leaving at each flat a letter addressed to the tenant containing the requisite information, and such letter shall be sufficiently addressed if it is addressed to "the Tenant" generally and does not give the tenant's name. Each such letter shall contain a statement that the tenant has 14 days from the date of service either to approve the landlord's recommendation or to raise objections in writing and that if less than 50 per cent. of the tenants object, the works will be proceeded with and the cost of such works will be considered as reasonable.

(4) The landlord shall record the response to the letter and if less than 50 per cent of the tenants record objections he may order the works 21 days after the day of service.

(5) Where a building comprises some flats which have not been let on a long lease the landlord may record one vote for each unlet flat as if he were the tenant.

(6) If more than 50 per cent. of the tenants raise objections in writing the landlord shall, within 28 days of serving the letter, convene a meeting with the tenants to discuss the landlord's recommendation and/or any alternatives suggested by the tenants.

(7) If at such meeting more than 50 per cent. of the tenants accept the landlord's recommendation or any suggested alternative, the landlord may proceed with the work on the basis of his recommendation or the agreed alternative and the cost of such work shall be considered reasonable.

(8) In default of such agreement, the landlord may apply to the county court for directions, and the cost of such proceedings shall be allowed as relevant costs unless the court shall direct otherwise having regard to all the circumstances of the case and the conduct of the parties.

(9) This procedure shall not apply where the works are of an emergency nature or are required to be carried out under a statutory notice which has been served upon the landlord. In such instances the landlord shall advise each tenant in writing of the nature of the works, the estimated costs and the grounds upon which exemption from the full requirements are based.

6.—(1) The following shall be observed where a recognised tenants' association exists.

(2) The landlord shall advise the secretary of the tenants' association of the proposals for the work and the names of at least two persons who are to be approached to submit an estimate.

(3) The secretary of the tenants' association may within seven days of receipt of such advice inform the landlord of any other persons (not exceeding two) whom the tenants' association wish to be requested to submit an estimate or of any deletions required to the landlord's list

(4) The landlord shall obtain estimates for the work from the persons agreed with the tenants" association under sub-paragraph (3) above.

(5) Copies of estimates when received shall be served on the secretary of the tenants' association by hand or by post together with a letter setting out the landlord's recommendations and containing a statement that the association may within 14 days from the day of service accept the landlords recommendations lodge an objection or require a meeting to discuss the recommendations and that in default of doing so the tenants shall be deemed to have accepted the landlord's recommendations and the cost of such works shall be considered as reasonable.

(6) The association shall be under a duty to consult with the tenants in the building and to convey to the landlord the wishes of the tenants. If the association do not reply within the said period of 14 days the tenants shall be deemed to have accepted the landlord's recommendations and the costs incurred in carrying out the proposed works shall be considered reasonable.

(7) If a meeting is required by the tenants' association such meeting shall take place within 28 days of the landlord serving the estimates and letter, or such other period as may be agreed between the landlord and the secretary of the tenants' association.

(8) When the tenants' association object to the landlord's recommendations a meeting must be held within 28 days of the date of the objection to discuss alternative proposals. Failing agreement on such alternative proposals the landlord may apply to the county court for directions, the cost of such proceedings shall be relevant costs unless the Court shall direct otherwise having regard to all the circumstances of the case and the conduct of the parties.

(9) This procedure shall not apply where the works are of an emergency nature or are required to be carried out under a statutory notice which has been served upon the landlord. In such instances the landlord shall inform the secretary of the tenants' association in writing of the nature of the works, the estimated costs and the grounds upon which exemption from the full requirements are based.

7. For the purpose of paragraphs 5 and 6 above the landlord shall also mean his duly appointed agent, if any.

8. In any proceedings relating to a service charge the court may dispense with all or any of the requirements if it appears to the court that the landlord could not reasonably have been expected to comply with them or the court is of the opinion that notwithstanding that all or any of the requirements have not been complies with it is just and equitable to do so.

Estimation of Relevant Costs

9. —(1) The relevant costs shall be estimated annually in advance by or on behalf of the landlord such estimate to be certified by an approved person or body and adjusted to reflect the actual costs incurred after the end of the service charge year as reflected in the audited service charge accounts.

(2) The estimate shall form the basis of demands for payments in advance by the tenant and where appropriate, the landlord, on such periodic basis as shall be agreed by the parties or as is provided in the lease or underlease, such periods to be no less than quarterly.

(3) The audited account shall form the basis of demands or credits between the estimated costs and the actual costs.

(4) Where the existing lease provides for the payment of service charges in arrear such provisions shall cease to take effect at the commencement of the next service charge year after the commencement of this Schedule providing that any charges for former years not yet demanded shall be phased equally over a period of five years from the commencement of the next service charge year.

10.—(1) The estimate of service costs for the service charge year shall be produced by the landlord or his agent two months prior to the commencement of the service charge year and shall show by means of itemised headings the estimated costs for the year based upon previous expenditure for the item and adjusted for price rises, additions or deletions to services and any other relevant factors.

(2) The estimate shall include an amount to be set aside as a reserve fund and such amount shall be substantiated by means of a reserve fund calculation showing how the figure has been arrived at and when the works covered are likely to be carried out.

(3) The estimate shall be agreed by the following procedure:

1. (a) Where no recognised tenants' association exists it shall be approved by an independent trustee and the landlord or his agent shall submit to the trustee such information as may be required to enable the trustee to certify approval. The trustees may require amendment to all or any of the figures before certifying the estimate. The estimate when circulated to the tenants shall have a certificate attached thereto which indicates the trustees approval;
2. (b) where a recognised tenants' association exists it shall be consulted on the content of the estimate within one month of the estimate being produced. The tenants' association and the landlord or his agent shall use their best endeavours to agree the estimate and failing agreement on any point the matter shall be referred to an independent trustee jointly agreed by the parties for determination. A certificate shall be attached to the estimate when circulated to the tenants indicating either that the estimate has been approved by the tenants' association or by the trustee if so referred; and
3. (c) failing agreement by the parties on the appointment of the independent trustee, the matter shall be referred to the President of 416 the Chartered Institute of Arbitrators for him to appoint the independent trustee.

(4) The procedure shall be completed and the estimate circulated to tenants within one month of the commencement of the service charge year unless an extension is agreed between the landlord and tenants or the recognised tenants' association.

(5) In this paragraph an independent trustee shall mean a person or body who is either a member of a recognised professional body whose members undertake the management of flats or who is a specialist in the administration and management of blocks of flats. He shall not be an officer employee or agent of the landlord. Such trustee shall be entitled to a fee not exceeding 1 per cent. of the certified estimate and such fee shall be allowed as relevant costs.

(6) Where the services to the building are already administered by a Maintenance Trustee who has no legal title in the building but who is a landlord by virtue of the definition of landlord in this Schedule, such Maintenance Trustee shall be regarded as the independent trustee for the purposes of this paragraph notwithstanding the provisions of sub-paragraph (5) but he shall not he entitled to the 1 per cent. fee if a fee is already being paid for his services.

Treatment of Reserve Funds

11.—(1) The reserve fund provision contained within the service charges shall be paid by the landlord or his agent to the trustee within one month of the landlord or his agent receiving payment from the tenant and shall be held by the trustee in trust for the tenants until required to be expended and shall in the meantime be placed on deposit or invested at interest in the manner provided below.

(2) The trustee may invest the reserve fund in the following manner:

1. (a) fixed date Government securities redeemable at par;
2. (b) deposit accounts with Clearing Banks; and
3. (c) loans to local authorities.

(3) All interest received shall be credited to the reserve fund.

(4) Any commissions received by the trustee shall be credited to the reserve fund.

(5) Withdrawals from the fund shall only be made against the certificate of the landlord's surveyor and the trustee shall satisfy himself that such withdrawals are to be expended on the purposes of the fund except that temporary withdrawals may be made in accordance with paragraph 18 of this Schedule.

(6) The trustee may amalgamate several such reserve funds for investment purposes provided that accurate records are kept for each individual fund.

(7) The trustee shall provide the service charge auditors with such information as they deem necessary in order to satisfy them that the reserve fund is properly accounted for.

(8) The trustee shall be entitled to a reasonable fee for his services which shall be allowed as relevant costs and may be deducted from the reserve fund held by him.

(9) In this paragraph the trustee shall mean a joint stock bank or insurance company or a public company which is a trust corporation as defined in the Trustee Act 1925 and who is independent of the landlord except for arrangements similar to those described in this paragraph or paragraph 10 in this Schedule except that where the landlord is already a maintenance trustee who has no title in the property or is a joint stock bank or insurance company, it may act as the trustee for the purposes of this paragraph but shall be entitled to no additional fee other than that already prescribed by the lease.

Information as to relevant costs

12. The landlord or his agent shall produce a detailed account showing the expenditure during the service charge year under suitable headings and a statement of the reserve fund showing additions, expenditure and interest received. Such account shall be audited by an approved person, and the account and auditor's report shall be circulated to each tenant within eight months of the end of the service charge year.

13.—(1) The tenant shall be entitled to view the vouchers which support the audited account by giving notice to the landlord or his agent not later than six weeks after the audited account has been circulated, except that where a recognised tenants' association exists this entitlement shall be exercised by an officer of the association on behalf of all the tenants.

(2) The landlord shall make available at his office or at the office of his agent all the vouchers for a period of two months following receipt of a notice under sub-paragraph (1) above.

(3) If any of the vouchers are held by any superior landlord, the landlord shall forward a copy of the tenant's or tenants' association's notice to the superior landlord. Upon receipt of such copy notice the superior landlord shall similarly make the vouchers available at his office or the office of his agent.

(4) Where the office of the landlord or superior landlord or their respective agent is outside a radius of 25 miles of the building, the vouchers or copies thereof shall be supplied by post if so requested by the tenant or tenants' association, and the reasonable cost of such copies shall be paid for the person serving the notice.

Effect of assignment

14. The assignment of a tenancy shall not affect the validity of a notice served under paragraph 13 above before the assignment but a person shall not be obliged to make facilities available more than once for the same flat and for the same period.

Determination of reasonableness

15. Any agreement made by a tenant of a flat, other than an arbitration agreement within the meaning of section 32 of the Arbitration Act 1950, shall be void insofar as it purports to provide for a determination in a particular manner or on particular evidence of any question whether costs for services, repairs, maintenance, insurance or management were reasonably incurred or whether services or works for which costs are incurred are of a reasonable standard except as provided for in this Schedule.

16. The County Court, on the application of the landlord or tenant of a flat, may by order, in relation to any chargeable items specified in the order, declare:

1. (a) that they have or have not been provided to a reasonable standard;
2. (b) that the amount alleged to be payable in respect of them is or is not reasonable; and may direct the amount to be paid by the tenant in consequence of the declaration; or, in respect of services or works not yet provided or carried out; and
3. (c) that the steps which the landlord intends to take in order to comply with any of the requirements of this Schedule are or are not reasonable in the circumstances.

Overseas landlords

17.—(1) An overseas landlord is a person or body whose place of business or whose registered offices are not within the United Kingdom.

(2) Where the landlord of a block of flats is an overseas landlord he shall by the 1st January 1981 appoint by deed a person or body whose place of business is or whose registered offices are within the United Kingdom to act in his place in all matters relating to service charges and consultation as contained within this Schedule and at all times thereafter maintain such an appointment.

(3) The landlord shall forthwith notify the tenants or the recognised tenants' association of such appointment.

Covenants and conditions to be implied in leases

18.—(1) By virtue of this Schedule the following covenants shall be implied by the landlord:

1. (a) That the service charge payments received from each tenant shall be paid into a bank account with a joint stock bank, such account to be operated solely for service charges and to be separate from the landlord's own moneys;
2. (b) that if more than one building's service charges are paid into the account, sufficient records shall be kept to identify the individual balances for each building;
3. (c) that the landlord shall pay into the said bank account service charges for any flats which are not let on a long lease by paying such a sum as will amount to the difference between the aggregate service charges payable in respect of the flats let on long lease and 100 per cent. of the relevant costs. Such payment is to be made at the agreed periodic dates as defined in paragraph 9(2) of this Schedule; and
4. (d) where there is a deficiency in such bank account due to arrears of service charges or to actual expenditure exceeding the estimate, the landlord shall apply to the trustee for a temporary loan from the reserve fund, and shall repay such loan immediately when the deficiency has been made good.

(2) It shall be an implied condition of any tenancy to which this Schedule applies that any interest charged on an overdraft in such bank account shall form part of the relevant costs provided such interest was not incurred by the landlord's failure to pay his contribution or to apply to the trustee for a loan in which case the interest shall be a charge on the landlord and shall not be allowed as relevant costs.

Insurance

19.—(1) Where a lease provides that the fire and other insurance for the building are to be placed through the landlord's nominated insurance company or through any particular insurance company or through the landlord's agency such provisions shall be of no effect.

(2) The landlord shall place the insurance with an insurance company of repute who normally undertake the insurance of buildings or at Lloyds and in placing the said insurance he shall have regard to the terms being offered and the premium being charged by the aforesaid.

(3) At least once in every five years the landlord shall obtain quotations from at least two insurance companies of repute who transact building insurance. A quotation from Lloyds shall be regarded as a quotation from one insurance company for the purposes of this sub-paragraph.

(4) Nothing contained within this paragraph shall prevent the landlord from entering into a long term agreement with an insurance company for a period not exceeding five years providing such agreement produces a reduction in premium.

(5) Such insurance may incorporate excess provisions of a usual nature.

(6) In whatever terms the insurance cover to be provided in respect of fire and other risks is expressed the landlord shall insure the building in the full cost of rebuilding together with agents and surveyors fees and costs of demolition and making due allowance for inflation during the rebuilding period.

Offenees

20.—(1) If any person without reasonable excuse fails to perform any duty imposed on him by this Schedule he shall be guilty of an offence and liable on summary conviction to a fine not exceeding £1,000.

(2) Where an offence under this Schedule which has been committed by a body corporate is proved to have been committed with the consent or connivance of, or to be attributable to any neglect on the part of a director, manager, secretary or similar officer of the body corporate, or any person who was purporting to act in any such capacity, he, as well as the body corporate shall be guilty of an offence and be liable to be proceeded against and punished accordingly.

(3) Where the affairs of a body corporate are managed by its members, sub-paragraph (2) above shall apply in relation to the acts and defaults of a member in connection with his functions of management as if he were a director of the body corporate.

Exceptions

21. This Schedule does not apply to service charges payable by the tenant of a flat the rent of which is registered under Part IV of the 1977 Act.

22. This Schedule does not apply where the service charges payable by the tenant for any service charge year are less than £75 in Greater London and £50 elsewhere, or where the building consists of four or less flats.

23. Only paragraphs 10 and 11 shall apply to service charges payable to an association or company the membership of which is wholly or mainly restricted to persons who are tenants in the same block of flats.

Definitions

24. A flat is a separate set of premises, whether or not on the same floor, which—

1. (a) forms part of a building;
2. (b) is divided horizontally from some other part of that building; and
3. (c) is constructed or adapted for use for the purposes of a dwelling and is occupied wholly or mainly as a private dwelling.

25.—(1) A qualified accountant is a person qualified for the purposes of paragraph 3(2) of Schedule 14, but subject to sub-paragraph (2) below.

(2) None of the following is a qualified accountant—

1. (a) a body corporate, except a Scottish firm;
2. (b) an officer or employee of the landlord or, where the landlord is a company, of a company which is the landlord's holding company or subsidiary (within the meaning of section 154 of the Companies Act 1948) or a subsidiary of the landlord's holding company; and
3. (c) a person who is a partner or employee of any such officer or employee.

26. "Landlord" includes any person who has a right to enforce payment of a service charge and, in relation to a flat occupied by a tenant under a right conferred by an enactment, also includes the person who, apart from that right, would be entitled to possession of the flat.

27. "Tenant" includes a person occupying a flat under a right conferred by an enactment, and, where the whole or any part of the flat is sublet shall except for the purpose of paragraphs 5 and 6 where appropriate include also the sub-tenant.

28. Service charge year is the period defined within the lease or failing such a definition shall be the period 1st January to 31st December in every year.

29. A "long lease" is a tenancy granted for a term of years certain exceeding twenty one years, whether or not the tenancy is (or may become) terminable before the end of that term by notice given by or to the tenant or by re-entry forfeiture or otherwise.

30.—(1) A recognised tenants' association is an association of tenants of flats in a building where not less than 50 per cent. of the flats have been let on long leases and where at least 60 per cent, of the tenants of such let flats are members of the association.

(2)If an association does not meet the requirements of sub-paragraph (1) they can be a recognised tenants' association if the landlord agrees in writing to treat them as such.

(3) Where an association satisfies the requirements of sub-paragraph (1) above, the secretary shall give written notice to the landlord together with a list of members. Annually there after the secretary shall supply the landlord with a current list of members to prove that the association continues to satisfy the requirements.

31. The county court or the Secretary of State may issue a certificate to the landlord certifying that a tenants' association shall be recognised notwithstanding that it does not meet the requirements of paragraph 28 and such certificate shall remain valid until upon an application made by the landlord or the association or any tenant the county court or the Secretary of State shall cancel the same.'.

Government amendments 96 to 105.

Mr. Scott

These amendments concern the privately rented sector, which has been in substantial decline since the turn of the century. I recognise the efforts that my right hon. and hon. Friends are making to revive it. I draw their attention to the largest block of flats in Europe, just down the river from this House—Dolphin Square. About 10 years ago it was bought by the Westminster city council, by the then chairman of the finance committee, who is now a Government Whip. Since then it has been run in the interests of the tenants on a nonprofit-making basis. It is exemplary in demonstrating how rented accommodation can be provided, with good facilities, at reasonable rent and wholly managed in the interests of the tenants. In London we should manage all our rented property as much in line with the management of Dolphin Square as we can. That may not be possible to achieve at once. Our amendments which were designed to achieve it have not been selected. We may have to pursue the narrower aim in this amendment and the Government amendments, and deal at this time only with service charges.

Service charges are a growing problem for those who live in central London. People here are more acutely aware of the problem than in other parts of the country. They are in competition with diplomats, business men, tourists and other short-stay visitors. However, all who live in rented accommodation face the problem in differing degrees.

Certainly I find in my constituency—and I know that my hon. Friends the Members for Kensington (Sir B. Rhys Williams), City of London and Westminster, South (Mr. Brooks), Paddington (Mr. Wheeler) and Fulham (Mr. Stevens) find it, too—that service charges are increasingly becoming a subject of abuse and exploitation and arouse fear and trepidation in those who are subject to them.

Government amendment No. 96 seeks to provide some comfort to those who are subject to service charges. I accept that it sets out terms which good landlords will follow. It provides a set of rules for good practice. But most of the good landlords in my constituency and elsewhere in inner London will already be following those rules of practice and will be trying to meet the aims and wishes of their tenants and the bad landlords will be able to follow the letter of the Government amendment and yet ignore all the wishes of their tenants. Those landlords will be able to tell their tenants that they intend to incur certain expenditure and they will be able to ignore any objections by tenants and go ahead with the work. There will be nothing that the law can do to prevent that. We must go further.

In order to persuade the House of my argument, I should explain how the service charge system is being exploited. In the regulated rented sector, services charges are non-variable and claims are made for services that are not provided. It is difficult for tenants to challenge that. In the first place, once a service charge has been fixed for services that are not provided, tenants cannot go back to the rent officer and challenge the charge without fear that he may alter the rent as well as the service charge. Tenants choose to sit quietly and accept that porters or central heating are not provided or lifts are not in action rather than go back to the rent officer and face another battle with the landlord who may say that the services are out of action temporarily, but in any case he wants an increased rent.

In the leasehold sector, the area of the market where long leases have been sold to tenants who have spent a substantial capital sum—perhaps their retirement savings—so that they may live in central London for a long time, service charges are increased substantially.

Once landlords have sold long leases, they receive a small ground rent, but have no other substantial financial interest in the block. In my experience, one of two things happens. Either the landlord neglects the block and it runs down and deteriorates, or he spends the tenants' money in tarting up the block and sells it to someone else at a profit, using the money that tenants have been compelled to pay. Tenants in my constituency are paying a service charge, but at the end of the year are asked to pay £2,000 or £3,000 on demand for expenditure that the landlord has incurred and which they have no right to challenge.

There are some landlords, both in the rented and the leasehold sector, who have behaved illegally and are fiddling service charges. I am not dealing with them, because if they behave illegally it ought to be possible to catch them. But even those who operate within the law are able to manipulate service charges in order to increase the profitability of their blocks, which is outside the original purpose of service charges.

Mr. Roger Moate (Faversham)

At some stage, will my hon. Friend relate the Government amendments to the situation he has described? I understand that it would be possible under the Government amendments for those charges to be challenged in court if they were thought to be unreasonable. Presumably there would be a statutory right of consultation before the work was done. Will he explain why the Government amendments would not deal satisfactorily with the situation he has described? It is a matter of great importance to many hon. Members.

10.45 pm

Mr. Scott

The difference between my amendments and the Government's amendments is precisely on that point. It is a question whether it is possible to challenge expenditure before it takes place, or whether it is accepted that the expenditure takes place and that once the money has been spent by the landlord a person can go to the county court and say that it is not reasonable. The burden of proof changes once the money has been spent. A tenant, or a tenant on behalf of a residents' association, then has to go to court and say that that expenditure was not reasonably incurred, whereas if there had to be some consultation beforehand the balance would be more in favour of the tenant. Anyone who knows what is happening in central London at present will know that the balance should be redressed in favour of the tenant.

Mr. Martin Stevens (Fulham)

Does my hon. Friend agree that the problem to which he refers, and about which I give him complete support, arises no less harshly for the weekly tenant when the majority of the flats in a block have been purchased by a tenant co-operative, leaving those tenants with long leases, and perhaps half a dozen tenants who prefer to remain as weekly tenants? They then find that their neighbours put up service charges to increase the value of the property, without spending the money on improving the flats of the weekly tenants. In due course, the weekly tenants are forced out and their neighbours gain a profit in the same way as would have been the case had all the costs been incurred by a 100 per cent. share landlord.

Mr. Scott

That is another aspect of the tangle into which we have fallen, and the Government amendments do little to extricate us from it.

There is a point at which landlords in these blocks who are able to increase service charges without any real constraints are able to persuade some people to vacate their flats, create voids, and thus increase the saleable value of the property and increase their profitability.

Amendment No. 116 relates to those flats within the regulated rent sector. In this amendment we ask that when a rent officer requests a hearing over a rent and an associated non-variable service charge, the tenants who live in the property should have two weeks' notice of the figures of expenditure that the landlord wants to incorporate into the service charge. At present they go to a hearing and are presented with figures. There is no period during which they can prepare their defence against the claims that are made by the landlord. A fornight's notice of claims should be a minimum requirement so that tenants can contest the landlord's claims for service charges which he says he wishes to claim, and the service that he says he has provided and will provide in the coming months and year.

I turn now to the question of flats that have been sold off on long leases. In ascending order of importance, amendment No. 94 asks four things. First, it asks that the insurance of these blocks should be subject every five years to competitive quotation. A number of the blocks in central London have built into the lease a rule that the insurance of the block should be placed through some sort of agent of the landlord, and that is not subject to competitive quotation. There is a very large block in my constituency whose tenants have themselves obtained competitive quotes from reputable Lloyds brokers, and they are less than 50 per cent of the price they are having to pay under the terms of their lease in order to insure the block. To ask that once every five years competitive quotes should have to be obtained is a minimal protection for those people against exploitation.

Secondly, the amendment asks that where the ownership of a block of flats is vested in a company outside the United Kingdom—and increasingly the blocks in my constituency and elsewhere in central London are being sold off to companies which have their bases in Liechtenstein. Monte Carlo, Saudi Arabia, and so on, and are able to avoid their responsibility for fulfilling the landlord's side of the covenant between landlord and tenant—that company should have to appoint by deed a company operating under United Kingdom law which would have to fulfil the landlord's covenant and be responsible under our laws to do so. Thirdly, where landlords are able—and this Bill will make it easier for them to do so—to collect sinking or reserve funds against major expenditure to be incurred in the future on such things as the replacement of the lifts or the repair of the boilers, that money should be paid to a trustee independent of the landlord or the tenant. We should not have the sort of position that arose recently in a block of flats in Marylebone, where the tenants were asked to pay for substantial capital expenditure of that sort, the block was then sold, the funds they had subscribed were mysteriously whisked away to some foreign part, and they were then asked to pay that money again. They were able to contest the matter successfully in the court, but they should not have been placed in that position in the first place. The money should have been protected, and so should the position of tenants who are asked to pay in advance for repairs and who either die or move out of the block. That money ought to be paid and protected on a trustee basis.

But the essential element in amendment No. 94 is that, when substantial expenditure in a block of flats is to be incurred, it is not good enough to say that the tenants can challenge that after the expenditure has taken place and plead in the county court that it was not reasonable. Why on earth should they not be able to be consulted before the expenditure takes place? I know that there are difficult tenants. There is also an increasing number of difficult landlords in central London who exploit these situations. Why should it not be possible to have a system of simple arbitration—to have someone appointed by the Institute of Arbitrators or any other body that the Government wish to appoint? I do not mind as long as it happens quickly, cleanly and simply.

If one cannot get the landlord and the tenant to agree on a major item of expenditure, there should be a case for arbitration. Tenants would quickly realise that the arbitrators would confirm any expenditure that was reasonable, and would quickly cease to challenge items of expenditure that had to be carried out in order to maintain the condition and quality of the block. It would stop the position that we have in several blocks in central London, where expenditure on the boilers, the lifts and the central plant of the block is ignored while the landlord spends money on tarting up the block and putting in pile carpets and mirrors round the reception area so that vacant flats can be sold at much higher prices. That is the sort of abuse that we are trying to stop, and I cannot imagine why the Government should not be seeking to support us in these proposals.

Mr, Douglas-Mann

I have been listening with great interest and very great sympathy to the hon. Gentleman's speech, but there is one point that I cannot find in his amendment which I thought might have been provided. I refer to some limitation on the level of managing agents' charges, which are frequently set by landlords at 10, 15 or 20 per cent. above the level of expenditure. Have I missed that in the hon. Gentleman's amendments, or is there any provision to prevent managing agents from charging sums vastly in excess of an appropriate rate?

Mr. Scott

Only the fact that the tenants' association should have some say in who is appointed as the managing agent. That seems to me to be an important advance.

Whatever these amendments may achieve, I do not believe that we will reach a satisfactory solution to the question of the large blocks in central London until there is a right to buy along the lines suggested by my hon. Friend the Member for Kensington (Sir B. Rhys Williams) or some other formula that will achieve the Dolphin Square solution. But, in the absence of such a scheme, our amendment will achieve a substantial improvement in the lot of private tenants.

Of course there are technical difficulties and improvements could be made to the amendments in another place if the Government accept in principle that they want to achieve the sort of advance that I have spoken about. On behalf of my constituents and on behalf of other private tenants in central London, I beg the Government to accept these amendments as representing a substantial improvement in the situation of those tenants.

When Mr. Herbert Morrison was chairman of the London Labour Party he threatened to build the Conservative Party out of London by building council houses. To an extent, he achieved that and I am profoundly worried that, unless something is done to protect the position of private tenants in central London, the policies of my right hon. and hon. Friends in the Government may do more to build the Conservative Party out of central London than Herbert Morrison ever did.

Mr. Tilley

The warning given by the hon. Member for Chelsea (Mr. Scott) to the Government is that, by this Bill, they may be evicting the Conservative voters out of central London. I hope that they do not do what was done in response to the electoral effect of the council house building of Herbert Morrison and his successors which was merely to alter the boundaries so that the old LCC boundaries became the GLC boundaries and gave the Conservatives a chance of gaining control in County Hall.

I do not think that any hon. Member would suggest that service charges are not an important part of the payments that have to be made by flat dwellers, particularly in inner London, or that any of us is an expert on service charges unless we happen to be lawyers who were involved in such matters day to day before becoming Members of the House.

It is no surprise to me, nor do I believe it to be a surprise to the House, that the two major amendments tabled by the "Gang of Five ", the alleged inner London Tory rebels, were written by other organisations. That is no discredit to those hon. Members, and indeed I was only too happy to add my name to amendment No. 116, which, as hon. Members will be aware, was composed and put forward to many hon. Members by the Campaign for Private Tenants' Rights.

Before coming to that matter, I wish to speak briefly to the slightly more controversial amendment No. 94 which was, I am sure, drafted by Holding and Man agement Ltd which is a maintainee trustee company for a large number of flats in London and other parts of England. The amendment is pages long. We should have been glad for an amendment of such length in Committee to enable us to discuss these matters in the required detail. The amendment contains more words than the report prepared by the hon. Member for St. Marylebone (Mr. Baker) for destroying the Inner London Education Authority—the only other great document to which the hon. Member has attached his name recently.

11pm

In some ways the amendment is an improvement. However, the House should be uneasy about it if only because it is drafted by a maintenance trustee company which clearly has an interest. Parts of the amendment are deliberately aimed at extending the influence of such companies. It states that where there is a maintenance trustee it must be appointed as an arbitrator. Legislation which is designed to extend the business of a type of company might be undesirable. In the view of some solicitors representing private tenants, the company errs on the side of landlords and a director of the company has acquired the freehold of a block.

We must ensure that the obligations enshrined in the amendment are included in the Bill, but there are doubts about whether a company of that type should be imposed on the tenants. There is no reason why tenants should not create a maintenance company if they wish. Their interests could be better served by having a direct relationship with the landlord.

I hope that the House will be cautious about accepting amendments drafted by people who have a clear interest. With that caveat, I believe that amendment No. 94 represents an improvement.

Because only five Conservative rebels attached their names to amendment No. 116, I was able to add mine as its sixth supporter. The amendment was drafted not by hon. Members but by the Campaign for Private Tenants' Rights. That organisation, which is London based, has done an immense amount of good in the last few weeks by alerting private tenants to the problems created by the Bill. The actions of the campaign have not met with complete approval by the Government Front Bench. I warn Government Back Benchers who support the amendment about the views of their ministerial guides and mentors on the organisation which they so bravely support.

In Committee, the Under-Secretary of State for the Environment said: I hope that the Johnny-come-lately organisation that is exploiting the fears of tenants—the Campaign for Private Tenants' Rights—can be put in its proper context, because it took no interest in this matter until it decided to take a political view on the Bill. I presume that nobody here is being accused of taking a political view. The Under-Secretary went on to say: It began most of its activities on shortholds and then, by the way, suddenly found—rather like the Poujadistes—that it could perhaps get monetary support and applause on service charges. He continued: I was somewhat irritated about the Campaign for Private Tenants' Rights only because I have received letters from old ladies in my constituency who are scared to death by the lying propaganda of that organisation. I shall not forgive anybody "— he did not in that remark exclude even his right hon. and hon. Friends— for scaring my constituents with total lies. It is time that organisation learnt that if it makes a point reasonably, sensibly and honestly, people will take note of it."—[Official Report. Standing Committee F, 29 April 1980; cc. 2509–14.] Those were the remarks of a junior Minister about that organisation. It is stretching the imagination of the House to see the hon. Member for Chelsea and his colleagues in rebellion as Poujadistes. We could think of no way in which they would resemble populist French shopkeepers. But the point is made, and the warning is there.

I wish to make it clear that, while we accept most of amendment No. 94 because it improves the Bill, we are not in any way convinced that it is an improvement on the present position. We fully support amendment No. 116 because we were convinced long before Conservative Members that the Campaign for Private Tenants' Rights had the matter right. [Interruption.] I am not trying to make a party political point. It is important to put the matter in context.

We have been treated in the press to reports of the great rebellion. The Sunday Times said: Tory backbenchers rebel at raw deal for tenants. The Financial Times said: Backbenchers make move to amend Housing Bill. The Sunday Times article referred to the hon. Member for Chelsea by name not even by the title of "Mister", which may be a breach of privilege in the House—when it said: Scott lists points which will make the life of the private tenant more difficult. The review period for fair rents is being reduced from three years to two, so that rents will rise more rapidly. I am sure that hon. Members will remember how the issues of fair rent phasing, which could have been raised earlier tonight under the guillotine, were so hotly contested by the inner London Tory rebels.

An article in the Financial Times by Elinor Goodman reads: Five Tory MPs for London constituencies are making a last-minute bid today to persuade the Government to amend the Housing Bill. They want the particular problems of inner urban areas to be taken into account. At the end of a campaign to change the Bill more radically, the deputation is likely to concentrate today on the more limited aim of improving control private tenants and leaseholders have over their service charges. How right was that report about the limited aim at the end of a campaign of which the five Members and their tenants and constituents have not seen the beginning.

The Under-Secretary of State, the hon. Member for Hampstead (Mr. Finsberg), rightly described the alleged Poujadistes as "Johnny-come-latelys". There is no doubt in the mind of anyone who is aware of the problems that the Bill will create for tenants in inner London that, important though service charges may be—and no one would detract from that—they pale into insignificance beside the two issues of security of tenure and rent levels.

If the "Gang of Five" of inner London rebels did not make a single—

Mr. Douglas Hogg (Grantham)

More clichés.

Mr. Tilley

It is not more clichés; it is the same one.

Mr. Hogg

That does not make it any better.

Mr. Tilley

If they did not raise a peep on those issues, they cannot claim in any way to be representing the problems that their constituents, who are private tenants, will have to face. They say fine words in the constituencies.

I am ready to speak from the local press. The Paddington Mercury quotes the hon. Member for Paddington (Mr. Wheeler). We have not heard it here. All I am asking is that what is said at meetings should be repeated here, but we have not heard a word of it. The hon. Member for Paddington is quoted as saying that he found himself in a ' state of rebellion ' against the Government over certain aspects of the Bill. So far it has been a very quiet rebellion. ' Over the years I have heard nobody who has anything to say in favour ' "—

Mr. John Wheeler (Paddington)

If the hon. Gentleman will sit down, I will commence the state of rebellion from this side of the House.

Mr. Tilley

I was hoping that the hon. Gentleman would rise to the provocation. He clearly has. The quotation goes on: ' Over the years I have heard nobody who has anything to say in favour of keeping the private rented sector at all ', he said ' It is dying and the sooner it goes the better '. Will the hon. Gentleman tell the House whether that is a misquotation? I realise that being misquoted is the lowest form of hindsight, but it is sometimes necessary. Will he say whether that is what he believes and whether he will vote on the basis of that statement not only on this amendment, but on the Bill as a whole? Otherwise he will stand accused of saying one thing to his constituents and to the local press and another in this House and of voting in another way.

I am still on the matter of service charges, although I admit that I have had to broaden the issue somewhat to make my point. There used to be another "Gang of Five". In January 1979 the West London Observer, under the heading Charter wanted for private tenants ", reported: Five local Tory MPs have launched a campaign to obtain a charter for private tenants. It suggests setting up landlord-tenant courts, giving tenants' associations the right to buy ". I know that the hon. Member for Chelsea complained that his "Dolphin Square" amendment was not called. The article goes on to list seven points:

1. " 1. Landlord-Tenant Courts: …
2. 2. Recognition of Tenants' Associations: …
3. 3. Right of Purchase by Tenants' Associations: …
4. 4. Extension of Security of Tenure: …
5. 5. Shortholds: …
6. 6. Tax incentives on lettings: …
7. 7. Tax Credit Scheme ".

The membership has changed slightly. The inner core—the hon. Members for St. Marylebone, Kensington (Sir B. Rhys Williams) and Chelsea—is still there. They have been added to in the new group by the hon. Members for Paddington and Fulham (Mr. Stevens). The two who have left are the hon. Member for the City of London and Westminster, South (Mr. Brooke), who is now a Whip—I am not asking him to leap to the defence of himself or the other members—and the hon. Member for Hampstead.

Of those seven items, which they called a charter for private tenants in order to get publicity, only one—shorthold—which we believe will be harmful to private tenants, has been put into practice by the Department of the Environment in which the hon. Member for Hampstead is a Minister. The other six items have been forgotten.

Mr. Toby Jessel (Twickenham)

On a point of order, Mr. Deputy Speaker. Is it in order for an hon. Member, being one of six main signatories to an amendment being debated, to devote the major part of his speech to attacking the other five signatories?

Mr. Deputy Speaker (Mr. Bryant Godman Irvine)

The content of an hon. Member's speech is not a matter for the Chair as long as it is in order.

Mr. Tilley

It may bring some comfort to the hon. Member for Twickenham (Mr. Jessel) if I say that I am coming to the end of my remarks. I did not speak at great length on amendment No. 116 because it was explained so well by the hon. Member for Chelsea. I shall be delighted, like my hon. Friends, to support the amendment on that basis.

11.15 pm

I was giving the House some indication of the background to the situation and putting in context the alleged rebellion by Conservative Back Benchers in support of private tenants' rights. I should like to repeat, for the benefit of the hon. Member for Grantham (Mr. Hogg), the point I have already made, that issues affecting private tenants in inner London are security and rents. On those issues there has not been a pipsqueak of rebellion by Conservative Members. We are grateful for some small sign of dissatisfaction on service charges. That will have our support in the Lobbies as soon as the opportunity arises.

Mr. Wheeler

I am glad to return to the amendment so ably moved by my hon. Friend the Member for Chelsea (Mr. Scott). He presented the case for the amendment very well. I entirely support it. I believe that several of my hon. Friends will also support it.

I shall be perfectly frank. Some aspects of the Bill cause a great deal of worry to the residents of inner London in particular. It is no exaggeration to say that many tenants, especially the elderly, in inner London are in a state of fear. It behoves my right hon. Friends and hon. Friends on the Front Bench to say what they think will happen to the tenants of inner London—a truly unique place in the private rented sector.

The tenant in inner London competes for his home with companies that wish to rent property, with foreign nationals and with people who possess substantial sums of money to pay the ever increasing rents. Many aspects of the Bill are worrying. I wish that we could deal with them in the House, but that is not possible. I disapprove of the reduction of the rent reviews from three years to two years. That may be appropriate in some parts of the country, but it is not in London.

Rents in London are rising. The rent on the average flat in my constituency is between £2,000 and £2,500 a year. On top of that figure, there will be rates of £600 or £700 and water rates of about £100. Additionally, there is the problem of the service charge, which may amount to between £1,000 and £1,500. How can ordinary British people live and work in the heart of their capital and belong to it when these are the charges and costs that devolve upon them?

The amendment is intended to bring back a sense of fairness to people living in the capital. I refer, in particular, to a new addition—the provisions for landlords to produce an estimate or expenditure summary and to consult on the estimate. That is the key to the amendment. Nothing can be more important to those living in the great mansion blocks of inner London. In my constituency, I can point to an instance of landlords proposing to spend £2 million without any consultation with the tenants of the block. One can imagine the fear that prevails among the elderly residents of that block.

The amendment improves substantially the Government's own schedule. Those of us who believe in it urge the Government to accept the amendment in the names of Members for inner London constituencies.

We live with this problem on a daily basis. We know the fear and concern that exist in the community. We fear greatly that unless there is recognition of this problem and its uniqueness, the British who live in inner London will be driven out of inner London.

I could go on about other aspects of this matter, but I shall not do so because other hon. Members wish to contribute to the debate in its closing moments. I simply say that in the near future, if there is to be any honest recognition of the problems of the private rented sector in inner London, that recognition must come through special legislation tailor-made for the inner London tenant. It is long overdue. That is the answer.

In addition, we must recognise that most people now wish to own their home, in one of the many forms available to them. Perhaps the co-operative is the answer. We have heard the illustration of that in Dolphin Square. That was a co-operative created by the Westminster city council. That council expresses its concern about what will happen to its residents arising from the Bill.

But that is for the future—for the near future, one hopes. Tonight this House is asked to support a new schedule. I commend that schedule to the House. I believe it will be a significant contribution to the well-being of the tenants of inner London. I hope that the Government Front Bench will accept it.

Mr. Douglas-Mann

I listened with sympathy to what the hon. Member for Paddington (Mr. Wheeler) said, but I find it a little difficult to reconcile it with his support for the other shorthold measures in the Bill.

Until 1957, I was a rent-controlled tenant of a flat in Marylebone, just adjoining the hon. Gentleman's constituency, until I was driven out by the Rent Act 1957. The flat was subsequently sold. When I last heard about it, it had changed hands for about £60,000. That was a consequence of the Rent Act 1957. However, I shall refrain from pursuing that element of the issue. I want to concentrate on the two new schedules.

I support both of the new schedules. I support amendment No. 116 most enthusiastically, because, from trying to assist tenants before rent officers and rent assessment committees, I know how easy it is for the landlord to contend that services have been or will be provided, or will be provided to a better standard, and how difficult it is for the tenant, with the very limited support of the legal aid that is available under the green form scheme, to challenge the assessments presented by the landlord.

I know how inadequate is the protection now provided for tenants when a service charge is presented by alleged professionals before a rent officer or rent assessment committee. The tenant has a very inadequate opportunity to test the validity of the estimates or to ensure that the services continue to be provided. It is very difficult to get a mandatory injunction under section 32 of the Housing Act 1961 and to ensure that landlords continue to maintain the premises in accordance with the standards which they have said they would maintain. Before the rent officer, it is virtually impossible.

I dissent from the views of my hon. Friend the Member for Lambeth, Central (Mr. Tilley) in that I support quite enthusiastically amendment No. 94. When I intervened during the speech of the hon. Member for Chelsea (Mr. Scott), I was unaware of the point which my hon. Friend has made about the origins of the drafting of the amendment. As a lawyer it surprised me that there was no provision in it to restrict the amount that could be charged by a managing agent to a certain percentage of the level of costs incurred. That is a serious omission. However, the proposed schedule is a great improvement when compared with the provisions in the Bill. It could be further improved.

I was not a member of the Committee that considered the Bill and I have not carried out a detailed textual comparison of the provisions of schedule 17 with section 124 and schedule 12 of the Housing Act 1974. Those provisions in the 1974 Act have been a tremendous advantage to the tenants of residential flats in London. The Under-Secretary of State, the hon. Member for Hampstead (Mr. Finsberg), was responsible for initiating amendments to that legislation. My hon. Friends the Members for Salford, East (Mr. Allaun) and Islington, South and Finsbury (Mr. Cunningham) and I supported him, and the amendments were carried despite the opposition of the Government of the day. The hon. Gentleman seems to have resiled slightly from the enthusiasm for reform of those days.

I know from the experience of my professional colleagues, my partners, the extent to which the tenants of private residential flats in London, especially those who have bought their leases, are finding that their landlords are carrying out improvements to the property at their expense with a view to selling the flats at much higher prices.

I am aware of many abuses, to some of which the hon. Member for Chelsea referred—for example, the appropriation of interest on reserve funds, the lack of control over the manner in which these funds are invested and the lack of means of ensuring that the funds are kept secure.

One of the features of the schedule that interests me is the section on covenants and conditions to be implied in leases. If the amendment is not carried—I hope that it is, and I shall be supporting it—I hope that in the near future we shall have a Bill—preferably a Government measure, but failing that an all-party Private Member's Bill—to provide for standard covenants and conditions to be implied in leases.

The drafting of many of the leases on flats in London and elsewhere has improved over the years in the interests of the landlords. In many instances, bad drafting was a great disadvantage to the tenant. In many instances, there is no way in which a tenant who leases a a flat in a block can effectively compel the undertaking of repairing obligations if the landlord disappears, goes into liquidation or fails to comply. In those circumstances, the only people against whom the obligations can be enforced are other lessees.

It is important in the interests of any lessee in a block of flats that he should in the last resort be able to compel the performance of repairing obligations by other lessees. That can be done only by statute. Well-drafted leases have been coming into force only in recent years. That is something that needs to be provided for in future, and the schedule deals with it in a somewhat preliminary form. It is however, a good start

I strongly support the hon. Member for Chelsea in his plea for a greater statutory obligation to consult. I hope that the Government find it possible to accept that obligations of the sort contained in the schedule should be enforceable by statute, and that they can go much further than the existing provisions in the Bill. I refer especially to the passage about offences. As I understand it, there were no provisions for penalties in the 1974 Act. The introduction of penalties in schedule 17 is welcome. However, the penalty of £200 is trifling in comparison with the profit to be gained by ignoring the provisions. I think that the Minister will accept that the penalties are inadequate, and that they should be increased.

As my hon. Friend the Member for Lambeth, Central pointed out, the amendment was drafted in a manner that was not wholly disinterested. That may account for some of the omissions. However, I welcome the amendment. It improves the Bill. I hope that hon. Members of all parties will support both amendments.

11.30 pm

Sir B. Rhys Williams

I warmly support my hon. Friend the Member for Chelsea (Mr. Scott), and I congratulate him on the amendments. It is some time since Members of Parliament for inner London constituencies drew the attention of the House to the problem of service charges and the House made an attempt to deal with the issue some years ago. However, great distrust still exists between tenants and landlords. The law clearly needs to be strengthened in favour of the tenants.

An acute social problem is developing not only in inner London but in Greater London. Hundreds of mansion blocks, many of them at least 40 years old, and others that are up to 100 years old, are falling into decay. In some cases, the decay is quite rapid. In the centre of London—particularly in Kensington—the problem is different. Overseas speculators are trying to acquire the freeholds of such blocks, with the intention of completely changing their characters. They wish to turn them over to luxury service lettings and so on. In such blocks, the relationship between the landlord and the tenant is in need of urgent attention.

A social problem affects the whole of our society. Blocks are becoming run down. A great deal of money will be needed if they are to remain habitable: we cannot allow London to become lined with mansion slums. The money could come from the landlord. However, in 99 cases out of 100, the landlord is sickened by years of rent control. He does not have the wherewithal to carry out the necessary maintenance. The money could be obtained from ratepayers or taxpayers. However, that solution is unlikely to commend itself to hon. Members on either side of the House. Therefore, the money will have to come from the tenants. But they will not pay the necessary sums of money if we continue to treat them as we do.

It is important that tenants should have the right to challenge proposals affecting the block in which they live, particularly if large items of capital expenditure are involved. They should have the right to investigate the landlord's policy, and to satisfy themselves that they are getting a fair deal. Many landlords are completely out of touch with their tenants. Some deal with their tenants through an agent; consequently there is a very bad relationship. Even if the landlord makes a reasonable proposal, the tenants do not believe that it is fair. The landlord may be openly accused of paying a builder too much money in order to get kick-backs from him at the tenant's expense. There may sometimes be truth in such allegations. However, the tenants have no means of resassuring themselves as to the facts of the matter.

The tenants may believe that the landlord is deliberately following a policy of improving the appearance of the block at the expense of his sitting tenants. When vacancies arise he can then get a higher price for the flats. He might be aiming to deceive people into believing that the general character of the block is better than it is. I could give other examples, but I shall not do so as other hon. Members wish to speak.

We must tackle the intense distrust that exists between tenant and landlord. Such distrust cannot be put right by encouraging the parties to go to court. That would appear to be the intention behind the Government's amendments. I know that my right hon. and hon. Friends recognise the existence of this problem, but I do not believe that the proposals they have made in the Bill go nearly far enough. Of course, allowing the tenants' association to purchase the block is by far the most satisfactory outcome, and this is what we must aim for in the end. But for the present at least the tenants must be assured of receiving a fair deal.

The Minister will probably say that my hon. Friend's amendments are defective in certain respects, and indeed that may be so. But their intention is right, and something must be done. Therefore, I hope that we shall get a forthcoming response from the Minister. However, if my hon. Friend the Member for Chelsea thinks it necessary to divide the House, I shall certainly support him.

Mr. Arthur Lewis

I had not intended to speak until I heard the speech of the hon. Member for Kensington (Sir. B. Rhys Williams). He said that some of the landlords cannot afford to stop mansions from deteriorating. My mind goes back over the years to the Freshwater group, and Mr. Stern who went broke to the tune of £380 million. He then passed over his house, worth about £250,000, to his wife. He also passed over his four cars. Now he is living in the lap of luxury.

That is just one case. Dare I mention the late Sir Eric Miller, who had hon. Members from both sides of the House as directors of his company? They were all doing very nicely, thank you. This sort of thing has been going on for years. Both sides of the House have been involved, and they have allowed it to continue. Those whom I have mentioned have been given knighthoods, peerages, and have become great men.

I have been a Member of this House long enough to know that the Tory Party believes that if someone makes a lot of profit he is very good and very successful. It does not matter how one makes that profit, just as long as one makes it. Only last week we heard that the banks were making hundreds of millions of pounds in profits. Today we heard that one of the oil companies has made £750 million. What does the Tory Party want? [HON. MEMBERS: "Get to the point."] I am coming to the point.

These landlords obviously want to make a big profit, and they are not concerned if they rook the tenants. They have been rooking them for years. The only difference is that, whereas it used to be tenants in the East End of London and the poorer areas who were rooked, it is now becoming prevalent for tenants in Chelsea and Kensington to be rooked, and the well-to-do are finding it difficult to pay their £40 a week, with £20 on top of that. Some of the workers in my area would like to see a salary of £60 a week, let alone paying it in rent and service charges.

The hon. Member for Kensington mentioned the number of foreigners coming here. That is true. Plenty of Arabs come and they are allowed to buy up anything and everything. Governments of both parties have allowed that.

The establishment of phoney companies in places such as Liechtenstein has been mentioned. But was it not this Government who allowed export of capital? Of course the Arabs find it very profitable to come in and make money at the expense of these tenants.

I therefore support these amendments. It is a pity that such proposals did not come sooner. However, I do not believe that the Government will accept the amendment of the hon. Member for Chelsea for reasons real or imaginary. I hope that my right hon. and hon. Friends will vote in favour of the amendment, but I doubt it. I believe that both Front Benches will renege. There are guilty consciences on both Front Benches. I hope that the hon. Gentleman will press his amendment to a Division, and that some of my hon. Friends will join us in the Lobby.

Mr. Stevens

I heartily support the amendment moved by my hon. Friend the Member for Chelsea (Mr. Scott).

I am entranced if not mystified by the speeches in support of the amendment, particularly those by the hon. Members for Lambeth, Central (Mr. Tilley) and Newham, North-West (Mr. Lewis). It was difficult to tell whether their support for our amendment was greater than their chagrin that it was our amendment and not theirs.

The part of the speech of the hon. Member for Lambeth, Central that I liked best was when I believe that he included me in his description of a "Gang of Five". It gave me a spurious feeling of self-importance. I do not know whether "gang" is the appropriate word. Perhaps had the hon. Gentleman said "a West End club of five "it would have been more appropriate, but that would not have enabled him to say what rotten rebels we were. We are quite good rebels when the time is appropriate. However, with every word from the Opposition Benches my blood cools a little. No doubt I shall be able to work myself up to take the apropriate action when we have heard the speech of my hon. Friend the Minister.

I wish to pursue only one point, which was touched on by my hon. Friend the Member for Kensington (Sir B. Rhys Williams). All of us who represent inner London seats have come to recognise—and we have put this privately to Ministers—that the housing problems in inner London are quite different from and much more acute than those that affect other parts of the country. We argue that my right hon. Friend should consider legislation in a general way peculiar to inner London. I recognise that that is extremely difficult. It may seem to penalise others and give favoured treatment to a small number of boroughs. Although we claim that our problems are unique, hon. Members from other constituencies may well feel that they are not and that their constituencies have the same or worse difficulties. However, I ask that in the whole range of housing legislation my right hon. Friend should consider taking further powers. In a given local authority area, if certain criteria that he would lay down applied, he would be empowered to make regulations that enabled him to impose the provisions that we are arguing for. If those criteria were found to apply not only to the half a dozen inner London constituencies but in other parts of the country, those areas would also benefit from the provisions.

I do not want to get off the subject of the amendments, but there are many provisions in the Bill that, admirable and well intentioned though they may be, run the risk of causing damage by accident. The more that London Members study the Bill and the problems that will arise from it, the more that we find ourselves at odds with hon. Members on both sides, because they do not have the same problems in their constituencies that we face in London.

The Government will solve the overall housing problem in central London only if they accept that special legislation is necessary. I suggest that we should approach it by way of regulations so that London does not appear to be specially favoured or specially penalised.

11.45 pm

Mr. Geoffrey Finsberg

It would be churlish of me not to try to lower the blood pressure of my hon. Friend the Member for Fulham (Mr. Stevens) and it may help the House if I explain the situation as the Government see it.

I shall try to pick up some of the points that have been made, and I assure my hon. Friend the Member for Chelsea (Mr. Scott), who moved the amendment in a caring way, that I have tried to arrange my thoughts in a fairly set pattern in order to assist him by explaining how the Government see the situation.

Before coming to the main case, there are two other points that I should deal with. First, I do not withdraw any words that I have used about the Campaign for Private Tenants' Rights, which has deliberately scared constituents in all parts of London by the lies that it has told about shorthold and service charges and by claiming that tenants will lose security of tenure. I pay no heed to that organisation.

Secondly, my hon. Friend the Member for Paddington (Mr. Wheeler) spoke about the fear of elderly tenants. He will agree that there is nothing in the legislation that is designed to harm the interests of private tenants. We are at one in our belief that the problems of a city such as London can be aided only by an increase in the number of private tenants and not by a continued rundown. One example of our determination in this matter, even in difficult times, was the announcement by my hon. Friend the Minister for Housing and Construction a few weeks ago of substantial increases in the rent allowances available for private tenants in inner London.

It would be right for me to start my response to my hon. Friends by reminding the House of the extent of the Government's proposals. Little has been said about them. I take first what is in schedule 17. Where a tenant or a long leaseholder pays a variable service charge in respect of services or works for which he is contractually liable to pay and which the landlord is required to provide under the terms of the lease, the basic protection that schedule 17 gives him is that he cannot be made to pay for what is not reasonable.

If a landlord has spent money and can be challenged on the reasonableness of that in the county court, his money will be at stake. He will have to satisfy the court that he had expended the money reasonably. The tenants' money will not be at risk, because the landlord will have spent his own money and if the court holds the expenditure to have been unreasonable, the landlord will not be able to reclaim it.

I assure my hon. Friend that two of the points that he raised are covered in the provisions that we are making. He spoke about the monstrous charges of up to 40 per cent, that are being made in some parts of London by so-called reputable managing agents. They would fall to be held to be reasonable by the county court. I cannot believe that any county court would hold a 40 per cent. management charge as reasonable. Equally, insurance premiums of the style that my hon. Friend has mentioned will also be held—

Mr. Douglas Hogg

I understand that the landlord goes to the county court to recover his service charges. Is it for him to show that the service charges were reasonably levied; or is it for the tenant to show that they were unreasonable in extent? Where does the onus of proof lie?

Sir Derek Walker-Smith (Hertfordshire, East)

Before my hon. Friend answers that question, will he tell the House if there is any guidance in the Bill—I cannot see any—for the county court as to the criterion of reasonableness? I know that the concept of reasonableness is very familiar to the common law, but there should be some guidelines written into the Bill for the county courts

Mr. Douglas-Mann

rose—

Mr. Finsberg

With respect. I cannot give way. These are interventions on interventions, and I should like to answer the various points as I go along.

This is an important issue, and I shall deal with the points made by my hon, Friend the Member for Grantham (Mr. Hogg) and my right hon. and learned Friend the Member for Hertfordshire, East (Sir D. Walker-Smith) because they are germane to what is being discussed

Mr. Douglas-Mann

rose—

Mr. Finsberg

With respect, I wish to give the House a reasoned case as to why I believe that what the Government are doing is helpful to private tenants.

It is for the court to decide what is reasonable. If the court decided that a particular item had been provided to a very low standard, it could further decide that the landlord could not recover the full costs, or possibly any costs, in respect of that item. If the court decided that the work had been carried out to an unreasonably high standard—we all know that such cases exist—the court could limit the cost to be borne by the tenant to what was reasonable.

If the tenant is to consider challenging costs on these grounds, he must have access to information about the costs. We have considerably increased the rights of tenants to obtain information. We have removed the present limit of £80 a year below which a tenant does not have a right to a summary of costs. That is because a tenant might pay less than £80 one year, and more than £80 another, so he might not be able to get all the information he needs. We must remember that costs that are relevant to a service charge will not usually all be incurred in the year of the service charge. We have drafted our provisions with particular care to ensure that a tenant will always be able to obtain whatever information he needs.

We are examining matters to see whether there is more that we can do. We are considering whether we can legislate to require landlords to give 14 days notice, before rent officer consultations or rent assessment hearings, of the service charge expenditure on which their service charge is based. I have reason to hope that we shall be able to move an appropriate amendment to cover that point when the Bill gets to another place.

But it is fair to say that the summary of costs might turn out not to be sufficiently detailed, so we have provided a new right for the tenant to inspect the accounts and the receipts on which they were based. In addition to the overall limitation of costs to what is reasonable, there are now new and much stronger requirements for consultation on proposed works.

Mr. Scott

I am getting confused, because my hon. Friend interjected a remark which seemed to apply to the regulated rent sector, while his general themes seem to apply to the long leasehold service charges and the judgment as to what is reasonable. Will he clear that up, and in particular establish the point that my right hon. and learned Friend the Member for Hertfordshire, East (Sir D. Walker-Smith) raised about reasonableness? From whose point of view is the expenditure in the long leasehold case judged to be reasonable? The tenants want the block to be maintained in a reasonable condition for them to enjoy their tenancy. The landlord may very well say that he wants it to be maintained or developed in a reasonable way so that he can sell it all at a profit. From whose point of view is this judgment to be taken? Some sort of guidance must be given.

Mr. Finsberg

I shall cover later the points that my hon. Friend has made. I had already, from conversations I had with him, anticipated a couple of the points that he has mentioned.

I said that I thought the provisions had been misunderstood. I should like to point out that we have provided a new sanction for non-compliance. This is a very important sanction. There will be a prescribed sum for any block of flats, which will be either £25 for every flat in the block, or £500, whichever is the larger. If the landlord carries out works costing more than that amount without first consulting those who have to pay—unless there was an emergency—he will not be able to recover more than that amount, even if the actual cost was, in the event, reasonable. Whichever way one looks at it, I suggest to the House that this is a very effective weapon to place in the tenants' hands. If they are not consulted on major works, they will not have to pay the full cost. This is an entirely new provision.

Those are the basic provisions already in the Bill. The amendments that we have tabled will do two things. Amendments Nos. 96 to 98 clarify the requirements for consultation by making them explicit. At present, they are implicit, but I suggest that they have not been properly understood, particularly in the press. I promised in Committee that we would come back to this. The landlord will have to provide two estimates and a notice describing the works to be carried out, and inviting observations on the works and the estimates. The notice must give the name and address in the United Kingdom of the persons to whom the observations must be sent, and must state the date by which they are to be received, allowing at least one month. This will be a very specific invitation to comment. The landlord must then have regard to any observations received from the tenants or a recognised tenants' association. There is nothing to prevent tenants from independently obtaining other estimates for the work and giving them to the landlord as part of their observations. If a landlord then chose to disregard the tenants' observations or any lower estimate that they had obtained, he would not be entitled to recover the costs unless he could show the court that he had acted reasonably in doing so. The landlord would therefore, I suggest, have to be very sure of his ground before committing himself to what might well be unjustified expenditure.

The second set of Government amendments gives greater rights to a recognised tenants' association by extending the right to obtain a summary of costs and inspect accounts to the secretary of the association, who might or might not be a tenant in the block, thus enabling him to act on behalf of other individual tenants.

We intend to table three further amendments in another place. The first will increase the maximum penalty for failure to provide a summary or permit inspection from the present £200 to £500.

The hon. Member for Mitcham and Morden (Mr. Douglas-Mann) will perhaps recall that one of the reasons why the service charge provisions in the 1974 Act were defective was that his own Government were not prepared to cooperate in making them effective. He knows that as a fact, and that is why he voted with me in Committee.

While we are about it, we are making similar increases in the penalties in sections 121 and 122 of the 1974 Act. These are those provisions which require the managing agent or the person collecting the rents to disclose the landlord's identity. This has been a source of worry. Section 122 requires a new landlord to inform the tenants of his name and address.

Secondly, we wish to avoid a possible loophole in the legislation which at present would enable a landlord to set up a tenants' management company which was not democratically controlled with the object of evading the provisions of the schedule altogether.

Thirdly, we propose to give rights to Rent Act tenants on non-variable registered rents to obtain information about the landlord's costs. They do not have such a right under the existing legislation nor under the Bill as drafted. This would put them in a stronger position to argue their case to the rent officer when the rent was being re-registered.

12 midnight

While these provisions add up to what, I suggest to the House, is a substantial package of rights for tenants and long leaseholders—which will apply regardless of the wide variety of terms which leases contain in practice—there are other points which my hon. Friend the Member for Chelsea has mentioned that need further consideration.

He specifically mentioned overseas landlords who are a growing menace. He also specifically mentioned the insurance cartels and though I hope that I have partially satisfied him on that point that does not prevent us from having a further look at it. We shall look at advance payments and I shall have more to say on that in a moment. We shall also have a further look at the question of consultations in advance of fixing service charges. Again, there is more I wish to say about that.

What we have not tried to do in our schedule is to impose rigid requirements into every existing lease of a flat and I would like just to look at the effects of my hon. Friend's amendments. They would go much further by providing a set of rules for consultation, advance payments and sinking funds which would have to be followed in every block with more than four flats regardless of the circumstances or the terms of the leases.

Let me demonstrate to the House how this might operate from the point of view of a tenant. We start two months before the service charge year begins when the landlord must give me and every other tenant of the block an itemised estimate based on last year's costs suitably adjusted. The estimate must—I repeat "must" because that is what the amendment says—include a contribution to a sinking fund for future works.

Many leases provide for sinking funds as a means of spreading costs of major works over a long period. That may well be sensible in many cases, but to oblige every long leaseholder to contribute to a sinking fund even where the lease does not provide for it would, I suggest, be unjustified. If there were no recognised tenants' association, in my block, the estimate must first have been approved by an independent trustee—let us call him Trustee A.

He is defined as a member of a professional body who is a specialist in the management of flats. He must be independent of the landlord but he would have been appointed by the landlord. That is where our first so-called trustee enters into it. He will be entitled to a I per cent. fee based upon the estimate and that fee would be paid for by the tenants.

If we have a recognised association the estimate would not have to be approved by the trustee, but the association must be consulted within one month. The association and the landlord pursue their best endeavours to agree the estimate. If they cannot reach agreement, the estimate must be referred to an independent trustee. He must be jointly agreed and if agreement cannot be reached the president of the Institute of Arbitrators is asked to appoint him.

Whether there is an association or not, all this has to be completed within one month of the beginning of the service charge year unless an extension is agreed. If an extension is not agreed, what happens? In the meantime, how much is to be paid in service charges?

Our proposals have been criticised because they do not prevent the landlord from obtaining advance payments. I should mention the recent High Court decision which has been much in the news, Frobisher versus Kiloran Trust, which ruled that under the existing legislation advance payments are not recoverable. That was not, however, the intention. We have drafted our proposals to make it clear that such payments are recoverable, but this will be the case only to the extent that the lease makes specific provision for it. I still have to say, as I did in Committee, that we want to see evidence of leases which entitle landlords to demand vast advance payments with little or no justification. It is going too far the other way to provide that advance payments be obligatory in all cases. I am sure that landlords would welcome that, but I am not certain that my hon. Friends want that and I am pretty certain that tenants do not.

We have examined estimates for the year. What about the estimates for works? I have sympathy with my hon. Friend the Member for Chelsea because tenants can sometimes be landed with a situation without being consulted. We do not believe that my hon. Friend has the answer, nor do we believe that we have, yet.

Consultation will be needed for estimates for works, particularly where the cost exceeds the prescribed amount that we have provided in the Bill. If there is no association the landlord will have to provide me, as a tenant, and every tenant with two estimates for the work, together with his recommendation, giving 14 days to approve or object in writing to his recommendation. If fewer than 50 per cent. of us object, the work will be begun and the cost will be considered reasonable.

I said "us" but that might not be correct. The people who are being consulted are the long leaseholders. In the amended schedule the landlords have a vote for every flat that has not been sold on a long lease. Consequently, if fewer than half of the flats in my block have been sold, even if we all object to the estimate, the landlords will settle the matter and the cost will be considered reasonable.

I do not know whether that will be the end of the matter or if it is still intended that the court could rule after the work has been done that the work or the cost is not reasonable. This is a legal nightmare through which we must find a layman's way. We are still looking for that way.

What happens if I live in a block where most of the flats have been sold and more than 50 per cent. of us object to the proposal? The landlord will call us to a meeting within 28 days to discuss his recommendations and alternative proposals. A hall might not be available, but we shall cope. However, someone must pay the hiring cost of the hall. In order to find a framework which is satisfactory in every detail, we must impose upon a substantial number of landlords and tenants who do not want the imposition a detailed provision which will be of less help than my hon. Friends want.

If we proceed for four weeks and then another month, the estimate will already be out of date. Estimates are not often held for more than a month. By the time one gets a fresh estimate the costs will have risen and the tenants will have to meet more of the cost. That is not the way which is of most help to the tenants.

Let us assume that the landlord has gone through the process and that the tenants have expressed their views. We must still take into account the views of individual tenants and those conveyed through an association. We must be aware that an association does not necessarily speak for all the tenants. We had a battle in Committee on the public sector tenants. It is wrong to say that only an association can speak for tenants in the private sector.

Then there is a compulsory sinking fund. That will be held in trust by a trustee—an independent body such as a bank or insurance company—and a charge will be made for services to be met by the tenants. Blocks of flats have arrangements agreed by all concerned. An independent maintenance trustee is a party to the arrangement.

I am not criticising, as the hon. Member for Lambeth, Central (Mr. Tilley) did rather cheaply, the fact that the organisation that prepared the amendment is wicked because it hopes that it might receive fees. He mentioned that one of its directors was connected with a property company. [Interruption.] Those were his words, and he does not deny that. It was not a helpful remark. I am entirely in favour of people entering into sensible, practical arrangements. I do not think that schemes that are bound to be extremely complicated should be imposed wholesale by statute. That is why I suggest to my hon. Friends that their proposals are not necessarily the best way forward to achieve either what they want or what the Government want.

There are five major objections that I hope my hon. Friends will consider. The schedule would override all leases, however reasonable. It would be imposed on all blocks with more than four flats. It would make advance payments and sinking funds obligatory in all cases. It could prevent landlords from carrying out their contractual obligations. My hon. Friend the Member for Chelsea and I share many things, one of which is that neither of us is a lawyer. It would certainly provide a lawyers' paradise.

I received a letter today from a tenant in Portland Place, specifically drawing attention to three provisions in the schedule that the lady, as an ex-chairman of a tenants' association, feels would not be helpful. I am sure that those points have not occurred to my hon. Friend, as they are put so explicitly in the letter, making the position as problematical as I thought it might be. First, the landlords could be given a casting vote in situations where their interests seriously conflict with those of the tenants; secondly, the schedule restricts the right to scrutinise the accounts to an officer of the association, and therefore deprives long leaseholders who do not belong to the association of their rights; thirdly, it would perpetuate the life of incompetent and ill-qualified associations, which would readily become the tools of the landlord.

There would be no service charge legislation on the statute book if I had not battled for it in 1972. That is my first point, and it is a fact that is recognised by a substantial number of tenants in London. The one party from which I will take absolutely no stick is the Opposition party, who battled for years to deny private tenants any service charge rights—and it knows that that is true. I believe that, through our proposals and the proposals that will be introduced in another place, we are getting nearer to the best position for private tenants. I accept that we do not go as far as my hon. Friends would wish. [Interruption.] I am sorry if I am battling through long conversations of Opposition Members who are listening. We have gone a long way. I hope that my hon. Friends will accept that we shall consider further the points raised. If we can possibly find a way to meet their points by the time the Bill reaches another place, we shall do so. I cannot promise them that we will be able to do so because it is not as easy as they would like or as I would like. We are very anxious to meet my hon. Friend's points.

12.15 am

Mr. Scott

If in introducing the amendment I had been able to quote to my hon. Friend the letter that I have had from my constituents and others in London critical of the Bill, I could have done better than the one letter that he has quoted with some criticisms of the schedule that Back-Benchers have tabled.

On amendment No. 94, when the Bill gets to another place will my hon. Friend ensure that there is consultation in advance? I appreciate the specific commitment that he has given on amendment No. 116, but the essence of amendment No. 94, the heart of the matter, is that there will be not an informing of the tenants and then, if necessary, an ignoring of their point of view, but a giving of the right of real challenge and a sort of arbitration or referee before the landlord can continue with that expenditure. That seems to me to be the essence of the amendment.

Mr. Finsberg

I had hoped that I had said to my hon. Friend that we would give not only that point but the other points that he made the utmost care and consideration. We do not differ from my hon. Friend on the principle. I shall continue to have meetings with him and his colleagues to see whether we can find a way round this issue that will not only stand up in law, but will be satisfactory and will operate to the benefit of the only people in whom we are interested—the private tenants. I hope that my hon. Friend will understand that I cannot say that we will legislate. I cannot say to him something about which I am not certain. All I can say is that the best possible will is there. We shall continue to see what we can do to assist him. I cannot say more than that.

I hope that, in view of the series of points that I have made, which we shall examine afresh with my hon. Friend and his colleagues, he will not wish to press the amendment on this occasion.

Mr. Scott

On a point of order, Mr. Deputy Speaker. With the leave of the House, and in the light of the undertaking given on the regulated sector, I beg to ask leave to withdraw amendment No. 116 on the understanding that I might have a Division on amendment No. 94.

Mr. Tilley

Further to that point of order, Mr. Deputy Speaker. As one of the signatories to amendment No. 116, I insist that we have a Division on it.

Mr. Kaufman

I should like to intervene for a moment. In doing so, I declare an interest. I am a leaseholder as a payer of service charges in central London and the honourary president of the Charlbert Court leaseholders' association in the constituency of the hon. Member for St. Marylebone (Mr. Baker) to whom I look for assistance in these matters and who I am pleased to see has signed amendment No. 116 without my having to lobby him. I do not vote against the hon. Gentleman, because I vote in my own constituency for an even better candidate, but the hon. Gentleman is elected to Parliament without my vote against him.

I do not want to intervene in any way in the merits of the argument; nor do I wish to attempt to drive any wedges between hon. Members on the Government's Back Benches and their Front Bench. What they will do will be for them to decide. I hope that the Secretary of State and the Minister will not get irritable in the circumstances.

Mr. Scott

I should like to make clear what the right hon. Gentleman and his lion. Friends are doing. They are preventing us from accepting a specific and clear undertaking from the Government Front Bench on service charges in the regulated rent sector and having a Division on service charges in the long leasehold sector. That is the effect of the right hon. Gentleman speaking at this time.

Mr Kaufman

I assure the hon. Gentleman that is not my intention. Nothing that I say can prevent a Division. I understand parliamentary procedure as well as he does. I also know that many of my hon. Friends will not be here in another five minutes. The hon. Gentleman should know that if he is interested in a Division.

The hon. Gentleman has put down his amendments, but the House is custodian of the amendments as well as the hon. Gentleman. I do not wish to prevent a Division, but the hon. Gentleman cannot have two Divisions. When the Opposition tabled amendments in Committee on service charges, we received assurances from the Government that have not been fufilled on the Floor of the House. I am, therefore, not too trusting of assurances of what will happen in a matter of weeks when an inconvenient amendment has been disposed of and the Government are no longer concerned about what may happen in a Division on the Floor of the House.

The best way of ensuring that a Government fulfil their commitment to reconsider, as I found as a Minister, is through one's hon. Friends inserting an amendment into a Bill which, if found not to be entirely satisfactory, the Government have to replace with something better rather than leave the Bill in its present position. That was done to me. I found it salutary. I learnt the lesson.

The Secretary of State for the Environment (Mr. Michael Heseltine)

Will the right hon. Gentleman give way?

Mr. Kaufman

No. I will not give way to the right hon. Gentleman. I am attempting to make a point that is in no way polemical about what happened to me when I tried to disregard what my hon. Friends were pressing upon me by offering an assurance which they regarded as going some way towards the objective but which was nevertheless unsatisfactory. My hon. Friends decided that the best way of making sure that the Front Bench fulfilled the commitment was by carrying the amendment and compelling the Government to accept an amendment and insert it into a Bill instead of the Government getting away

from the House into the freedom of the Department. I do not regard the assurances that the Under-Secretary of State has given as assurances that can be relied upon. Once this Bill gets away to the other place, it is outside our control. All that will remain is a guillotined hour on Lords amendments when the measure returns to this House.

Without attempting to intervene on the merits, except to declare my interest, I merely wish to state that if hon. Members on both sides of the House want something genuine done about service charges—as someone who pays those charges, I want something done—the best way is to write an amendment, even if it is technically defective, into the Bill. In that way, one will compel the Government to act and to fulfil their assurances.

Mr. Neil Thorne (Ilford, South)

As a chartered surveyor and a property owner on a modest scale, I must declare an interest. I should like to congratulate my Friends the Members for Chelsea (Mr. Scott), for Paddington (Mr. Wheeler), for Kensington (Sir B. Rhys Williams) and for Fulham (Mr. Stevens) on the able manner in which they presented the amendment.

It being twenty-jour minutes past Twelve o'clock, Mr. DEPUTY SPEAKER proceeded, pursuant to the Order [16 April] and the Resolution [yesterday], to put forthwith the Question already proposed from the Chair.

Question put, That the amendment be made:—

The House divided: Ayes 227, Noes 288.

Division No. 3181	AYES	[12.24 pm
Adams, Allen	Brown, Robert C. (Newcastle W)	Cunliffe, Lawrence
Allaun, Frank	Brown, Ronald W. (Hackney S)	Cunningham, George (Islington S)
Alton, David	Brown, Ron (Edinburgh, Leith)	Cunningham, Dr John (Whitehaven)
Anderson, Donald	Buchan, Norman	Dalyell, Tarn
Archer, Rt Hon Peter	Callaghan, Jim (Middleton & P)	Davidson, Arthur
Ashley, Rt Hon Jack	Campbell, Ian	Davies, Rt Hon Denzil (Llanelli)
Ashton, Joe	Campbell-Savours, Dale	Davies, Ifor (Gower)
Atkinson, Norman (H'gey, Tott'ham)	Canavan, Dennis	Davis, Clinton (Hackney Central)
Bagier, Gordon A. T	Cant, R. B.	Davis, Terry (B'rm'ham, Stechford)
Barnett, Guy (Greenwich)	Carter-Jones, Lewis	Deakins, Eric
Barnett, Rt Hon Joel (Heywood)	Cartwright, John	Dean, Joseph (Leeds West)
Beith, A. J	Clark, Dr David (South Shields)	Dempsey, James
Benn, Rt Hon Anthony Wedgwood	Cocks, Rt Hon Michael (Bristol S)	Dewar, Donald
Bennett, Andrew (Stockport N)	Cohen, Stanley	Dobson, Frank
Bidwell, Sydney	Coleman, Donald	Dormand, Jack
Booth, Rt Hon Albert	Conlan, Bernard	Douglas, Dick
Bradley, Tom	Cook, Robin F.	Douglas-Mann, Bruce
Bray, Dr Jeremy	Cowans, Harry	Dubs, Alfred
Brown, Hugh D. (Provan)	Cryer, Bob	Duffy, A. E. P.
Dunn, James A. (Liverpool, Kirkdale)	Lambie, David	Rooker, J. W.
Dunnett, Jack	Lamborn, Harry	Ross, Ernest (Dundee West)
Dunwoody, Mrs Gwyneth	Lamond, James	Ross, Wm. (Londonderry)
Eastham, Ken	Leadbitter, Ted	Rowlands, Ted
Ellis, Raymond (NE Derbyshire)	Leighton, Ronald	Ryman, John
English, Michael	Lestor, Miss Joan (Eton & Slough)	Sandelson, Neville
Ennals, Rt Hon David	Lewis, Arthur (Newham North West)	Sever, John
Evans, loan (Aberdare)	Lewis, Ron (Carlisle)	Sheerman, Barry
Ewing, Harry	Lltherland, Robert	Sheldon, Rt Hon Robert (A'ton-u-L)
Faulds, Andrew	Lofthouse, Geoffrey	Shore, Rt Hon Peter (Step and Pop)
Field, Frank	Lyon, Alexander (York)	Silkin, Rt Hon John (Deptford)
Flannery, Martin	Lyons, Edward (Bradford West)	Silkin, Rt Hon S. C. (Dulwich)
Fletcher, Ted (Darlington)	Mabon, Rt Hon Dr J Dickson	Silverman, Julius
Foot, Rt Hon Michael	McCusker, H.	Skinner, Dennis
Ford, Ben	McDonald, Dr Oonagh	Smith, Cyril (Rochdale)
Forrester, John	McElhone, Frank	Smith, Rt Hon J. (North Lanarkshire)
Fraser, John (Lambeth, Norwood)	McGuIre, Michael (Ince)	Snape, Peter
Freeson, Rt Hon Reginald	McKay, Allen (Penistone)	Soley, Clive
Freud, Clement	McKelvey, William	Spearing, Nigel
Garrett, John (Norwich S)	Maclennan, Robert	Spriggs, Leslie
Garrett, W. E. (Wallsend)	McNamara, Kevin	Siallard, A. W.
George, Bruce	McWilliam, John	Steel, Rt Hon David
Gilbert, Rt Hon Dr John	Magee, Bryan	Stoddart, David
Ginsburg, David	Marks, Kenneth	Strang, Gavin
Graham, Ted	Marshall, David (Gl'sgow. Shettles'n)	Straw, Jack
Grant, George (Morpeth)	Marshall, Dr Edmund (Goole)	Summerskill, Hon Dr Shirley
Grant, John (Islington C)	Marshall, Jim (Leicester South)	Taylor, Mrs Ann (Bolton West)
Hamilton, James (Bothwell)	Mason, Rt Hon Roy	Thomas, Dafydd (Merioneth)
Hamilton, W. W. (Central Fife)	Meacher, Michael	Thomas, Jeffrey (Abertlllery)
Hardy, Peter	Millan, Rt Hon Bruce	Thomas, Dr Roger (Carmarthen)
Harrison, Rt Hon Walter	Miller, Dr M. S. (East Kilbride)	Tilley, John
Hart, Rt Hon Dame Judith	Mitchell, Austin (Grimsby)	Tinn, James
Hattersley, Rt Hon Roy	Mitchell, R. C. (Solon, Itchen)	Torney, Tom
Haynes, Frank	Morris, Rt Hon Alfred (Wythenshawe)	Urwin, Rt Hon Tom
Heifer, Eric S.	Morris, Rt Hon Charles (Openshaw)	Varley, Rt Hon Eric G.
Hogg, Norman (E Dunbartonshire)	Morris, Rt Hon John (Aberavon)	Wainwright, Edwin (Dearne Valley)
Holland, Stuart (L'beth, Vauxhall)	Moyle, Rt Hon Roland	Wainwright, Richard (Colne Valley)
Home Robertson, John	Newens, Stanley	Watkins, David
Homewood, William	Oakes, Rt Hon Gordon	Weetch, Ken
Hooley, Frank	Ogden, Eric	Wellbeloved, James
Horam, John	O'Halloran, Michael	Welsh, Michael
Howell, Rt Hon Denis (B'ham, Sm H)	O'Neill, Martin	White, Frank R. (Bury & Radcliffe)
Howells, Geraint	Orme, Rt Hon Stanley	Whitehead, Phillip
Huckfield, Les	Owen, Rt Hon Dr David	Whillock, William
Hudson, Davies, Gwilym Ednyfed	Palmer, Arthur	Wigley, Dafydd
Hughes, Mark (Durham)	Park, George	Williams, Rt Hon Alan (Swansea W)
Hughes, Robert (Aberdeen North)	Parry, Robert	Williams, Sir Thomas (Warrington)
Hughes, Roy (Newport)	Penhaligon, David	Wilson, Rt Hon Sir Harold (Huyton)
Janner, Hon Greville	Powell, Raymond (Ogmore)	Wilson, William (Coventry SE)
Jay, Rt Hon Douglas	Prescott, John	Winnick, David
John, Brynmor	Price, Christopher (Lewisham West)	Woodall, Alec
Jones, Rt Hon Alec (Rhondda)	Race, Reg	Woolmer, Kenneth
Jones, Barry (East Flint)	Richardson, Jo	Wrigglesworth, Ian
Jones, Dan (Burnley)	Roberts, Albert (Normanton)	Young, David (Bolton East)
Kaufman, Rt Hon Gerald	Roberts, Allan (Bootle)
Kerr, Russell	Roberts, Ernest (Hackney North)	TELLERS FOR THE AYES:
Kilroy-Sllk, Robert	Roberts, Gwilym (Cannock)	Mr. Hugh McCartney and
Kinnock, Neil	Rodgers, Rt Hon William	Mr. George Morton.
NOES
Adley, Robert	Boscawen, Hon Robert	Chalker, Mrs Lynda
Aitken, Jonathan	Bottomley, Peter (Woolwich West)	Channon, Paul
Alexander, Richard	Boyson, Dr Rhodes	Chapman, Sydney
Alison, Michael	Braine, Sir Bernard	Churchill, W. S.
Amery, Rt Hon Julian	Bright, Graham	Clark, Hon Alan (Plymouth, Sutton)
Ancram, Michael	Brinton, Tim	Clark, Sir William (Croydon South)
Arnold, Tom	Brocklebank-Fowier, Christopher	Clarke, Kenneth (Rushcliffe)
Aspinwall, Jack	Brooke, Hon Peter	Clegg, Sir Walter
Atkins, Robert (Preston North)	Brotherton, Michael	Cockeram, Eric
Atkinson, David (B'mouth, East)	Brown, Michael (Brlgg & Sc'thorpe)	Colvin, Michael
Baker, Nicholas (North Dorset)	Browne, John (Winchester)	Cope, John
Banks, Robert	Bruce-Gardyne, John	Come, John
Beaumont-Dark, Anthony	Bryan, Sir Paul	Costain, A. P.
Bell, Sir Ronald	Buchanan-Smith, Hon Alick	Critchley, Julian
Bendall, Vivian	Buck, Antony	Crouch, David
Benyon, Thomas (Abingdon)	Budgen, Nick	Dickens, Geoffrey
Benyon, W. (Buckingham)	Bulmer, Esmond	Dorrell, Stephen
Best, Keith	Burder, F. A.	Douglas-Hamilton, Lord James
Bitten, Rt Hon John	Butcher, John	Dover, Denshore
Biggs-Davison, John	Butler, Hon Adam	du Cann, Rt Hon Edward
Blackburn, John	Cadbury, Jocelyn	Dunn, Robert (Dartford)
Blaker, Peter	Carlisle, John (Luton West)	Durant, Tony
Body, Richard	Carlisle, Kenneth (Lincoln)	Eden, Rt Hon Sir John
Bonsor, Sir Nicholas	Carlisle, Rt Hon Mark (Runcorn)	Edwards, Rt Hon N. (Pembroke)

Eggar, Timothy	Lawson, Nigel	Ridsdale, Julian
Emery, Peter	Lee, John	Rifkind, Malcolm
Fairbalrn, Nicholas	Lennox-Boyd, Hon Mark	Roberts, Michael (Cardiff NW)
Fairgrieve, Russell	Lester, Jim (Beeston)	Roberts, Wyn (Conway)
Faith, Mrs Sheila	Lewis, Kenneth (Rutland)	Rossi, Hugh
Farr, John	Lloyd, Ian (Havant&Waterloo)	Rost. Peter
Fell, Anthony	Lloyd, Peter (Fareham)	Royle, Sir Anthony
Fenner, Mrs Peggy	Loveridge, John	Sainsbury, Hon Timothy
Finsberg, Geoffrey	Luce, Richard	Shaw, Giles (Pudsey)
Fisher, Sir Nigel	Lyell, Nicholas	Shaw, Michael (Scarborough)
Fletcher, Alexander (Edinburgh N)	McCrindle, Robert	Shelton, William (Streatham)
Fletcher-Cooke, Charles	Macfarlane, Neil	Shepherd, Colin (Hereford)
Forman, Nigel	MacGregor, John	Shepherd, Richard(Aldrldge-Br'hills)
Fowler, Rt Hon Norman	MacKay, John (Argyll)	Shersby, Michael
Fox, Marcus	Macmillan, Rt Hon M. (Farnham)	Silvester, Fred
Fraser, Peter (South Angus)	McNair-Wilson, Michael (Newbury)	Sims, Roger
Fry, Peter	McNair-Wilson, Patrick (New Forest)	Skeet, T. H. H.
Galbraith, Hon T. G. D.	McQuarrie, Albert	Smith, Dudley (War. and Leam'ton)
Gardiner, George (Reigate)	Madel, David	Speed, Keith
Gardner, Edward (South Fylde)	Major, John	Speller, Tony
Garel-Jones, Tristan	Marland, Paul	Spence, John
Gilmour, Rt Hon Sir Ian	Marlow, Tony	Spicer, Jim (West Dorset)
Glyn, Or Alan	Marshall, Michael (Arundel)	Spicer, Michael (S Worcestershire)
Goodhew, Victor	Marten, Neil (Banbury)	Sproat, lain
Goodlad, Alastair	Mates, Michael	Stainton, Keith
Gow, Ian	Mather, Carol	Stanbrook, Ivor
Gower, Sir Raymond	Maude, Rt Hon Angus	Stanley, John
Grant, Anthony (Harrow C)	Mawby, Ray	Stewart, Ian (HItchIn)
Gray, Hamiah	Mawhinney, Dr Brian	Stewart, John (East Renfrewshire)
Greenway, Harry	Maxwell-Hyslop, Robin	Stokes, John
Grieve, Percy	Mayhew, Patrick	Stradling Thomas, J.
Griffiths, Eldon (Bury St Edmunds)	Mellor, David	Tapsell, Peter
Griffiths, Peter (Portsmouth N)	Meyer, Sir Anthony	Taylor, Robert (Croydon NW)
Grist, Ian	Miller, Hal (Bromsgrove&Reddltch)	Taylor, Teddy (Southend East)
Grylls, Michael	Mills, lain (Meriden)	Tebbit, Norman
Gummer, John Selwyn	Miscampbell, Norman	Temple-Morris, Peter
Hamilton, Hon Archie (Eps'm&Ew'll)	Mitchell, David (Basingstoke)	Thomas, Rt Hon Peter (Hendon S)
Hamilton, Michael (Salisbury)	Monro, Hector	Thompson, Donald
Hampson, Or Keith	Montgomery, Fergus	Thorne, Neil (Ilford South)
Hannam, John	Moore, John	Thornton, Malcolm
Haselhurst, Alan	Morris, Michael (Northampton, Sth)	Townend, John (Bridlington)
Hastings, Stephen	Morrison, Hon Charles (Devizes)	Townsend, Cyril D. (Bexleyhealh)
Havers, Rt Hon Sir Michael	Morrison, Hon Peter (City of Chester)	Trippier, David
Hawkins, Paul	Mudd, David	Trotter, Neville
Hawksley, Warren	Murphy, Christopher	van Straubenzee, W. R.
Hayhoe, Barney	Myles, David	Vaughan, Dr Gerard
Heddle, John	Needham, Richard	Viggers, Peter
Henderson, Barry Heseltine, Rt Hon Michael	Nelson, Anthony Neubert, Michael	Waddinglon, David Wakeham, John
Hicks, Robert	Newton, Tony	Waldegrave, Hon William
Higgins, Rt Hon Terence L.	Nott, Rt Hon John	Walker, Rt Hon Peter (Worcester)
Hill, James	Onslow, Cranley	Walker, Bill (Perth&E Perthshire)
Hogg, Hon Douglas (Grantham)	Oppenheim, Rt Hon Mrs Sally	Walker-Smith, Rt Hon Sir Derek
Holland, Philip (Carlton)	Page, John (Harrow West)	Wall, Patrick
Hooson, Tom	Page, Rt Hon Sir R. Graham	Waller, Gary
Hordern, Peter	Page, Richard (SW Hertfordshire)	Walters, Dennis
Howell, Ralph (North Norfolk)	Parris, Matthew	Ward, John
Hunt, David (Wirral)	Patten, Christopher (Bath)	Warren, Kenneth
Kurd, Hon Douglas	Patten, John (Oxford)	Watson, John
Irving, Charles (Cheltenham)	Pawsey, James	Wells, John (Maidstone)
Jenkin, Rt Hon Patrick	Percival, Sir Ian	Wells, Bowen (Hert'rd&Stev'nage)
Johnson Smith, Geoffrey	Pink, R. Bonner	Whitney, Raymond
Jopling, Rt Hon Michael	Pollock Alexander	Wickenden, Keith
Kellett-Bowman, Mrs Elaine	Porter, George	Wiggin, Jerry
Kimball, Marcus	Price, David (Eastleigh)	Wilkinson, John
King, Rt Hon Tom	Prior, Rt Hon James	Williams, Dclwyn (Montgomery)
Kitson, Sir Timothy	Proctor, K. Harvey	Winterton, Nicholas
Knight, Mrs Jill	Raison, Timothy	Young, Sir George (Acton)
Knox, David	Rathbone, Tim	Younger, Rt Hon George
Lamont, Norman	Rathbone, Tim
Lang, Ian	Rees, Peter (Dover and Deal)
Langford-Holt, Sir John	Rees-Davies, W. R.	TELLERS FOR THE NOES:
Latham, Michael	Renton, Tim	Mr. Spencer Le Marchant and
Lawrence, Ivan	Rhodes James, Robert	Mr. Anthony Berry.

Question accordingly negatived.

Mr. DEPUTY SPEAKER then proceeded to put forthwith the Questions necessary for the disposal of the business to be concluded at twenty-four minutes past Twelve o'clock.

Mr. Deputy Speaker

Would it be for the convenience of the House if I put amendment Nos. 96 to 105 together formally?

Amendments made:

No. 96, in page 130, leave out lines 22 to 31 and insert— ' (3) A notice accompanied by a copy of the estimates shall be given to each of the tenants concerned or shall be displayed in the building so as to be likely to come to the notice of all those tenants and, if there is a recognised tenants' association for the building, the notice and copy of the estimates shall also be given to the secretary of the association. (4) The notice shall describe the works to be carried out and invite observations on them and on the estimates and shall state the name and the address in the United Kingdom of the person to whom the observations may be sent and the date by which they are to be received. (5) The date stated in the notice shall not be earlier than one month after the date on which it is given or displayed as required by subparagraph (3) above. (6) The landlord shall have regard to any observations received in pursuance of the notice and, unless the works are urgently required, they shall not be begun earlier than the date specified in the notice. (7) For the purposes of this paragraph the tenants concerned are all the landlord's tenants of flats in the building by whom a service charge is payable to which the costs of the proposed works are relevant.

No. 97, in page 130, line 32, after "court" insert— if satisfied that the landlord acted reasonably.

No. 98, in page 130, line 33, leave out from ' requirements ' to end of line 35.

No. 99, in page 130, line 37, leave out ' the tenant ' and insert ' a tenant, or if there is a recognised tenants' association for the building, either its secretary or the tenant'.

No. 100, in page 130, line 40, after second ' payable ' insert ' by the tenant '.

No. 101, in page 131, line 1, after ' tenant ', insert ' or the secretary '.

No. 102, in page 131, line 7, after ' tenant ', insert ' or secretary '.

No. 103, in page 131, line 26, after ' tenant's ', insert ' or secretary's '.

No. 104, in page 131, line 34, after ' tenant ', insert ' or secretary '.

No. 105, in page 133, line 20, leave out ' 3(2) ' and insert ' 3 '.—[Mr. Stanley.]

It being after twenty-four minutes past Twelve o'clock, further consideration of the Bill stood adjourned, pursuant to Order [16 April].

Bill, as amended (in the Standing Committee), to be further considered this day.