Warden Co-ownership Society (Rickmansworth) Ltd. (Hansard, 11 November 1982)

§ Mr. Richard Page (Hertfordshire, South-West)

In the 1979 Conservative election manifesto one of our main planks was that we would introduce for council house tenants the right to buy. I am delighted by the energy and skill with which my hon. Friend the Under-Secretary and his colleagues in the Department of the Environment have pursued that course. Over 300,000 families now enjoy the right to live in their own home. It is true Socialism when everyone can own a little part of Great Britain.

Generous discounts have been offered as a reward for years of paying rent, but we should not go too far down that route. When someone gets something for nothing he does not value it as much as if he had worked to pay for it.

The legislation also allowed co-ownership society members to buy their houses. Over 200 such groups have managed to do that. I do not know the average membership in the groups, but the number of such individuals who own their homes must now run to thousands. But the co-ownership rules state that all members must agree to the sales. In a few co-ownership societies a few—although, thankfully, not too many—members are blocking sales, sometimes wilfully.

Nothing points up a problem more than an example. I wish to draw attention to the problems facing the Warden Co-ownership Housing Society (Rickmansworth) Ltd., where in 74 flats 73 owners wish to buy and only one objects.

My hon. Friend the Under-Secretary wrote to me in January 1982 stating that he was anxious that the arrangements made for co-ownership should not disadvantage any members". I would fight to support that principle. The 73 other occupiers of the block of flats would also agree. That is why they have made a serious of generous offers to the individual. They have offered to purchase his dwelling and give it to him, to lease it to him or to allow him to pay any amount as a token rent to his chosen charity. The offers read like a full perm on a football pool coupon. With each offer is the full recognition that the sale should not disadvantage Mr. Theobald.

I contacted Mr. Theobald to tell him that I should be raising the matter and to ask whether there could be an eleventh hour recantation or, failing that, to ask his reasons for refusal. I regret that neither was forthcoming.

Co-ownership, with its associated rules, is mid-way between renting and buying. It is useful as a half-way stage for people who cannot make the full leap from renting to home ownership. That is why the nature of its structure forestalls any argument against the principle of home ownership by individuals.

It is not for me to take up the time of the House in speculating at great length why someone would not wish to take part in the scheme. Perhaps the reason hinges on something as simple as welcoming the power to frustrate the wishes of 73 people and their families.

I first started on this trail in April 1981, when my original approach was replied to by my hon. Friend the Under-Secretary of State for Health and Social Security. 763 In his letter he said that housing societies could sell their homes. There was no question of any further legislation. There would have to be an agreement so that a solution could be reached.

Since then the matters have passed to the hands of my hon. Friend the Under-Secretary of State for the Environment. My file has grown fatter and fatter as the problem has bounced like the proverbial shuttlecock from the Department of the Environment to the Registrar of Friendly Societies, across to the Housing Corporation and then back again.

I say as delicately as possible to my hon. Friend that the time has now come to put the good people who make up the Warden Co-ownership Society (Rickmansworth) Ltd. out of their two years' suspense. There should be a circular permitting them to buy their own homes with the proviso that adequate safeguards for any dissenters will be issued through my hon. Friend's Department and the Housing Corporation in the near future.

§ The Under-Secretary of State for the Environment (Sir George Young)

I am grateful to my hon. Friend the Member for Hertfordshire, South-West (Mr. Page) for raising this significant problem. I commend him for the eloquent and reasoned way in which he has made his case. He has done exactly what we have come to expect of him, which is to pursue the interests of his constituents as diligently as possible. I regret that so far we have not been able to resolve the problem. His file may have got fatter and fatter, but I have got thinner and thinner grappling with the problem and trying to resolve it satisfactorily.

As my hon. Friend knows, I met him and members of the Warden co-ownership housing society of Rickmansworth in June to discuss the difficulty faced by the society over the persistent refusal of one of its members to co-operate in the sale of the society's properties to the members.

It might be helpful to the House if I first explain some of the general background to co-ownership societies and the power that they have under the Housing Act 1980 to dispose of their properties.

Co-ownership is the oldest form of shared ownership provided by housing associations. Some 38,000 co-ownership flats and houses have been provided by societies in England, Scotland and Wales. Co-ownership housing was planned and developed by non-profit-making societies with Housing Corporation and building society loans. As estates were completed the residents took responsibility for both mortgages and management through elected management committees responsible to the co-owners for their affairs and for running the estate, although agents have often been employed for day-to-day management.

Co-ownership societies have operated within a well-tried legal framework. They are industrial and provident societies, registered with the Registrar of Friendly Societies. The members of each society jointly own their land and property.

Only the co-owners themselves can be members, and their society's rules must be approved by the Housing Corporation. Co-ownership societies are therefore constitued on fully mutual rules. That implies that they should not do anything to favour one section of the membership to the disadvantage of another. The Registrar 764 of Friendly Societies has a role of general oversight over industrial and provident societies and it is for him to see that their activities are compatible with their rules.

Apart from option mortgage subsidy, from which most co-ownership societies have benefited, they have received no Government subsidy. Any loans made to them by the Housing Corporation have been charged at commercial rates. Co-ownership societies are therefore independent self-governing bodies.

When in 1980 we were considering the extent to which we should confer the right to buy, we took the view that a power to sell would be consistent with the fully mutual nature of co-ownerships; and section 122 of the 1980 Act provides co-ownerships with such a right to sell their properties to their members, subject to obtaining the consent of the Housing Corporation to the disposal.

As my hon. Friend the Minister for Housing and Construction explained in the House on 19 May 1980, when the Housing Act was under consideration, we were very conscious that in some societies a few residents, particularly elderly people, who could not easily raise mortgages, might not be willing or able to buy their homes. Because of this we felt it necessary to make the sale of properties by co-ownership societies subject to certain safeguards.

In this connection, I must stress that we attached great importance to striking the right balance between furthering the legitimate desire of many co-owners to purchase their own homes and ensuring that in providing for this, we did not unfairly disadvantage a vulnerable minority who, for perfectly good reasons, might be unwilling or unable to buy. We therefore agreed with the Housing Corporation that a number of safeguards should be imposed on co-ownership society sales. These are described in Housing Corporation circulars 10(3)/80 and 12/81.

Briefly, the first safeguard is that a decision by any society to sell its property must be taken only when all the members have been given the opportunity to participate in that decision. Secondly, the majority as defined in the society's rules, which normally means three-quarters of those voting at a special general meeting called to discuss a proposed sale, must support a decision to sell. Thirdly, consent for a society to sell should generally be conditional on the whole of the society's mortgage debt being repaid.

This would normally lead to 100 per cent. individual ownership. Where it did not do so, co-owners who were unwilling or unable to buy could continue as a co-ownership society, provided that they were sufficient in number to form a viable society. The minimum number is generally held to be seven to form a viable society.

The consent of the Housing Corporation is required for sales by a co-ownership society. The corporation is thus responsible both for seeing that the conditions which I have mentioned are complied with and for approving the arrangements made by societies in cases where some members are unwilling or unable to buy.

The options which the corporation is prepared to accept in such cases are set out in the circulars to which I have referred. They are, first, that the majority of members who are ready, willing and able to buy, also bear the share of the costs of the minority unable to meet the full cost of purchase. In other words, the minority have their homes partly or entirely paid for by the purchasing majority. This option applies where the dissenting minority are unable to sustain a viable co-ownership society in their own right, as would be the case if they numbered fewer than seven. 765 Where a sufficient number of members unwilling to purchase remain to form a viable society, arrangements have to be agreed for the apportionment of the society's liabilities and assets between the parties.

Secondly, if arrangements for sales in the case of unwilling purchasers unable to form a viable society are not accepted, the dissenting minority may be offered an alternative tenancy from a management company formed by the purchasing co-owners, or from another landlord, such as a local authority or another registered housing association.

I think that these arrangements for sales in cases where the minority dissenting from sales cannot form a viable co-ownership society, represent a very reasonable attempt to preserve the delicate balance between the aspirations of the majority to buy their homes and the interests of that dissenting minority. In agreeing to these arrangements we did, however, assume that the parties concerned would act reasonably and responsibly. Sadly, as my hon. Friend has illustrated, this does not now appear always to be so.

In the case of the Warden society, on whose behalf my hon. Friend has spoken so eloquently, we appear to be faced with what I can only describe as the capricious behaviour of an individual who, for reasons which are to say the least, obscure, refuses to accept any of the generous alternative proposals which the society has put forward. I must therefore agree that in this case, and in any similar ones where a decision to sell which has been agreed by the required majority of a society's membership is being unreasonably withheld, the Housing Act 1980 is not working as we had intended; and I think that we are bound to re-examine the arrangements predicated on reasonableness, mutual goodwill and common sense to see how we can deal with cases where these are not forthcoming.

While we have considerable sympathy for the Warden society in this case, and are doing our best to find a solution, I must stress that the circumstances described by my hon. Friend are exceptional.

We understand from the Housing Corporation that 844 co-ownership societies are registered with it and 766 potentially able to apply for approval to sell their properties. Seven hundred and fifty-nine societies, covering more than 29,000 dwellings, have done so. Sales of more than 16,000 dwellings in 483 societies had been completed by 5 November 1982. The corporation has helped to negotiate solutions in a number of cases where a small minority were opposed to sales and, to its knowledge, few such cases, including that of the Warden society, remain unresolved. The corporation is always ready to try to help so far as possible with such cases when invited to do so by the societies concerned.

As I have said, we are most anxious to find a solution to the problem of sales in the case of the Warden society and any others in similar circumstances. As my hon. Friend is well aware, we are giving urgent consideration to the issues involved but since we are trying to maintain a delicate balance between what may in other cases be perfectly legitimate opposing interests and because the issues are complex, there are, I fear, no easy solutions.

There are, for example, difficult questions to resolve on the extent to which we would be justified in imposing solutions on dissenting members of fully mutual societies which in the first place voluntarily undertook joint ownership of their properties. If solutions were to be imposed, we should need to establish a satisfactory legal and tenure position for any co-owner who, having refused to co-operate in sales or in any alternative arrangements, continued to occupy his or her property after all the other co-owners had purchased theirs and the society had effectively ceased to exist.

I fully understand the frustration and anxiety of both my hon. Friend and his constituents and his entirely admirable desire to press vigorously for an early resolution. I am grateful to him for the points that he has raised tonight. They are most helpful. I assure him that we will take them fully into account in our continuing and urgent efforts to find appropriate solutions. I can assure him that we are determined to press ahead as quickly as we can to resolve the complex problems that I have described.