Co-ownership of Flats (Hansard, 7 April 1981)

§ Sir Brandon Rhys Williams (Kensington)

I beg to move, That leave be given to bring in a Bill to give powers to residents of flats in private ownership in purpose-built blocks and in certain conversions jointly to purchase the premises of which their flats are part; to specify the procedures to be adopted; to amend the Housing Act 1980 in respect of the powers of local authorities to acquire land in certain circumstances for the purpose of its disposal to residents of flats built thereon acting as joint purchasers; to make consequential provisions as to the management and upkeep of premises so purchased; and for connected purposes. The purpose of the Bill is to provide a convenient statutory means by which the tenants of blocks of flats can come together to purchase their landlord's interest at a fair valuation. It is natural justice that residents of flats in private ownership should have similar rights to those now enjoyed by tenants of houses on long leases and by tenants in council flats. For tenants in privately owned premises, Parliament has already given security of tenure and a measure of control over rents.

Unfortunately, inflation is making those concessions of little value to people in retirement, or those who are unable to keep pace with changes in money values. If they owned their houses they would have an asset that would protect them to a considerable extent against inflation, but in private ownership a tenant who has to surrender the lease of his flat can take nothing out with which to procure other accommodation.

That is a serious social problem for many people, including those who may have thought themselves relatively well-to-do. When they can no longer keep pace with the rise in rents, service charges and rates and have to seek other accommodation, they find that they have nothing to sell with which to procure themselves another home. They often fall to supplementary benefit level to procure accommodation.

There are a number of other reasons why Parliament should act now. One is the continuing drift of the electorate out of inner London. I calculate that if the decline continues at the rate at which it has been proceeding for the past three or five years, one-third of the electorate of inner London will have moved out over the next 10 years. That is not just a problem for inner London Members; it is of concern to the whole country.

Unhappily, we are also seeing more and more bitter disputes over service charges. Although the Department sought to improve the rights of tenants in disputes over service charges in their legislation last year, there are still many disputes and a great deal of bad blood and unhappiness.

Once again, we are seeing the creeping hotels threat. Landlords seek by various means—some of them not at all clean—to evict long-stay tenants from blocks of flats so that the character of the buildings can be changed and they can be turned into flats for short-term letting to overseas visitors, sometimes only for a few days at a time.

Perhaps the most important factor that needs the attention of the Department is the deterioration of many of the older mansion blocks, and even some of the postwar blocks, where the landlords do not have the inclination—or perhaps do not have the means—to keep their properties up to an acceptable standard. The central London blocks are part of our heritage. It is foolish to 817 allow the deterioration of those blocks to continue because we cannot solve the problems of the relationships between the landlords and the tenants.

Where will the money come from to maintain the blocks in a decent condition? Local authorities cannot be expected to provide an endless source of grants for conversion or improvement of blocks of flats. In many cases the landlord cannot or will not do it. Only the tenants can be expected to find the money, but they will not do it and will resist to the end while they think that the money they are spending on the improvement or maintenance of their blocks is accruing to a landlord for whom they have no time. They will not find the necessary money unless they have a permanent stake in the block. It is a matter of human nature, which the Department of the Environment should understand.

Perhaps the most important element in the Bill is valuation. I do not suggest that there should be any element of expropriation. I should like the valuation to be scrupulously fair, so that if a landlord is required to sell his property to his tenants he suffers nothing except the necessity to reshuffle his portfolio of assets.

I therefore propose that the Bill should specify that the owner should receive half the vacant possession value. I believe that on that basis the majority of owners would think that they had had a fair deal and would be quite willing to sell. In the terms of valuation we should recognise that having conferred security of tenure on the tenants we must not let that right be withdrawn again through inflation. We meant the tenants to have a real asset when we gave them security, and that asset must be taken into account when the valuation is made.

Tenants seeking to acquire their properties should be required to form themselves into a company in order to manage the block. Partnership schemes and loose associations would not be appropriate, because things could go badly wrong after the property had been bought and we would not succeed in maintaining the quality of the block if the tenants, having bought it, fell out among themselves.

The operations of a small company, however, are well understood in this country. The people concerned would know that they had to produce proper accounts and hold regular meetings, and that shareholders would have their rights. I should like to include in the Bill a model form of memorandum and articles for tenants' associations seeking to form companies to acquire their mansion blocks. That may be of use even if the Bill does not go through.

We should also specify that there should be no windfall capital gains. I suggest that the profit on a flat that falls vacant in the early years should accrue to the company or be shared between the tenant leaving the flat and the company. Otherwise, we should give tenants an incentive to sell in order to secure their vacant possession value, and that would unsettle the very people whom the Bill is intended to provide with greater security of tenure.

818 The types of property in which tenants would have the right contained in the Bill must be clearly specified. I propose that they should be purpose-built blocks or conversions consisting of not less than four fully self-contained flats. There should be no question of single flats or parts of premises in owner-occupation being eligible for inclusion in co-owenership schemes.

I should also like to include in the Bill something about the powers of local authorities. A tantalising section in the Housing Act 1980 confers on local authorities the power to use compulsory purchase orders to acquire land for immediate resale for the provision of housing accommodation.

I interpret that section to mean that local authorities may acquire land with mansion blocks or flats already standing on it; but there could be some doubt about that interpretation and I should like to clarify the section by saying that CPOs may be used by local authorities to acquire properties for immediate sale to a properly constituted tenants' association where they are satisfied that the property is deteriorating because of the relationship between the tenants and the landlord, or where they find that it is gradually being withdrawn from regular residential occupation. The local authority should then have the right to intervene, and I hope that the Department would recognise the need and confirm the CPO.

I recognise that the problem that I am seeking to deal with in the Bill is not a vital one in the majority of constituencies, because mansion blocks are a feature of inner London and of certain other areas only; but it is a matter of great significance to tens of thousands of people in London who are anxious about the future of their homes. I therefore hope that the House will give me leave to introduce the Bill.