Leasehold Flats Reform (Hansard, 14 July 1982)

§ Mr. John Fraser (Norwood)

I beg to move, That leave be given to bring in a Bill to reform the law relating to long leasehold flats; to provide for the right to extend leases and to establish a Commission to recommend further reforms; and for related purposes. I ask leave to introduce a measure of leasehold reform for the benefit of those who are the owner-occupiers of flats and maisonettes, but for the sake of brevity I shall refer only to flat owners.

In 1967, Parliament passed the Leasehold Reform Act, which enables the resident owners of leasehold houses, as opposed to flats, to extend their leases by up to 50 years, or to buy the freehold. At that time some of the Tory defenders of landlords called it "Rachmanism in reverse". However, the Act was a great success, and it was strengthened only recently by the present Government in the Housing Act 1980.

However, the 1967 Act contained one important omission: it did not apply to flats and maisonettes. Now the problems of those who own flats are becoming more acute as leases grow shorter and less saleable and as defects in the form of leases become more apparent. This problem exists not only in urban areas and cities, but it is also quite acute in some seaside areas where houses have been converted to flats.

In the Bill I propose three reforms. The first is to give every resident owner of a flat the right to call for an extension of the lease by 50 years on reasonable terms. The 1967 Act created that right for leasehold house occupiers, and in my view it should be extended to flat owners. The selling of flats started in large numbers in the 1930s, because of the pressures on land, and those leases, some of which were granted for 99 years and others for shorter periods, are now less than 50 years old and as the leases grow shorter they become less mortgageable and less saleable and people's mobility is put in jeopardy. The greatest asset of lessees is withering, and there is evidence that landlords are not merely unreasonable but sometimes guilty of downright exploitation in the terms on which they give a renewal or extension. The bargaining power between landlord and tenant is usually unequal, and it needs to be remedied by law. The citizen's security of his home is a sacred right, and I want to protect and extend it.

Secondly, a number of covenants need to be implied into leases of flats and maisonettes so as to cure defects that have become apparent. Let me give some examples of the way in which those defects impair the transferability or value of a leasehold flat. In some cases, the landlord has the power to repair the main structure of which the flat forms a part, but although he has the power to do that, there is no obligation on him because of the drafting of the 1050 leases, even although the landlord recovers all his expenses from the tenant. I propose that a clause that puts an obligation on the landlord to repair the main structure should be implied in every lease.

In other cases, although landlords may reserve the right in leases to carry out insurance themselves, many of them do not undertake to insure for the full replacement value, nor are they willing to note on their policies the interest of lessees and mortgagees. As a result, the property may not be fully insured, or there is the unnecessary expense of double insurance, or in some cases actual resistance by building societies to grant mortgages on them.

Thirdly, landlords sometimes charge excessive fees for licences to assign. My opinion, on the whole, is that the licence to assign can be dispensed with altogether. I see no reason why the landlord's permission is needed in ordinary cases. It is a relic of serfdom which, in my view, should now go.

There is a fourth point, that many covenants in leases should be mutually enforceable. So I propose a number of implied covenants to deal with these problems.

Lastly, I propose a step towards a major reform in leasehold law. At present, it is difficult to legislate for freehold flats. The law needs a thorough reappraisal. I propose that long leasehold tenants generally should collectively have the right that is given to leasehold houseowners individually—that is, the right to own, control, and manage the freeholds of the properties in which they live. Many enlightened property developers do this in new developments now. The drafting of such a scheme is ambitious. There is not the facility in a Private Member's Bill to do that. I therefore suggest the establishment of a commission to look into the possibility, on the one hand, of freehold flats, and on the other hand of the establishment of a condominium for the management of leasehold blocks. That practice is common in the United States and in many parts of Europe.

I believe that the relationship between a man and a woman and their home and land is fundamental. This Bill will make that relationship more secure and more free from exploitation and abuse, and I ask the leave of the House to introduce a Bill for those purposes.