DETERMINATION OF PRICE FOR LEASEHOLD ENFRANCHISEMENT (Hansard, 3 November 1986)

§ Mr. John Patten
I beg to move, as an amendment to Lords amendment No. 53, amendment (a), leave out subsection (3) and insert— `(3) The above amendments do not apply—

(a) where the price for enfranchisement has been determined, by agreement or otherwise, before the commencement of this section; or

(b) where the notice under section 8 of the Leasehold Reform Act 1967 (notice of desire to have the freehold) was given before the passing of this Act; or

(c) where notice under section 14 of that Act (notice of desire to have extended lease) was given before 5th March 1986.'.

This amendment fulfills the undertaking we gave that the Government would consider further the cut-off date after which the new valuation assumptions should apply to the enfranchisement of houses in the higher value bracket. The new clause was introduced into the Bill by my noble Friend Lord Coleraine and I am grateful to my noble Friend for his interest in the issue and for the advice that he has given me. The amendment provides that extension leases obtained by such leaseholders should be disregarded for the purposes of valuation under the Leasehold Reform Act 1967. This dealt with the consequences of the Hickman case, which revealed that long leaseholders in the higher rateable value bracket could obtain significantly advantageous terms for enfranchisement if they first obtained an extension lease. At the time of the Housing and Building Control Bill a couple of years ago it was said that if a case was brought before the courts and the outcome revealed that there was a problem we would consider amending legislation. The amendment of the noble Lord Coleraine gives us that opportunity.
Much anxiety was expressed in the Lords about how to deal with transition cases. We acknowledge that leaseholders whose cases are far advanced ought not to be deprived of the benefit of the Hickman terms. In that context we moved an amendment to subsection (3) at Third Reading in another place which excluded any case where the application for enfranchisement was made after Royal Assent. A handful of leaseholders had applied to extend their leases in the expectation of being able to benefit from the Hickman terms and in advance of the ruling in the Court of Appeal. At least two of these cases are in the constituency of my hon. Friend the Member for Kensington (Sir B. Rhys Williams) who is in the Chamber. I pay tribute to his efforts on behalf of his constituents to ensure that such leaseholders are not disadvantaged. I know that our present amendment will deal with such cases by excluding cases from the new valuation terms if the leaseholder applied for an extension as a preliminary to enfranchisement on or before the date of the Court of Appeal ruling.
Amendment (a) to Lords amendment No. 53 deals adequately with the problems presented by the Hickman case and I commend this approach to the House.

§ Mr. Simon Hughes
The Minister will know that his colleagues in the other place were pressed by my noble Friend Lord Ezra, who sought a later cut-off date. On behalf of my noble Friend, I am grateful to the Government for this amendment because it fulfills the undertaking that was given in the other place. Some people, including my noble Friend Lord Ezra, think that 762 it would have been possible for the date not to be 5 March 1986 but the date of the passing of the Act. It would appear that that view is tenable and proper. It was an alternative, but the Government have not accepted it. With the reservation that we would have preferred the date to be in a few days' time rather than a few weeks ago we welcome the amendment and the willingness of the Government to move in our direction.

§ Sir Brandon Rhys Williams (Kensington)
I thank my hon. Friend for moving amendment (a) to Lords amendment No. 53, introduced in the other place by Lord Coleraine. It was detected that in its original form the amendment would have retrospective effect. That fact was brought to my attention and it was also raised by a number of eloquent speakers in the other place, who made a convincing case for an amendment to the third subsection of the original amendment. I pay tribute to Lord Skelmersdale and Baroness Hooper, who gave this matter a great deal of their personal attention. They came forward with what is a satisfactory solution for the time being. I am most grateful to them for their work on this rather recondite and certainly difficult issue.
Justice is now being done for people who were being frustrated by long delays in the process of negotiations in pursuit of their statutory rights, which were confirmed by the Hickman judgment. Although my right hon. and hon. Friends have decided that they want to change the basis of the law and accept Lord Coleraine's amendment in principle, there is no doubt that my constituents and several others in similar circumstances were perfectly within the terms of the statute when they initiated their negotiations.
This incident touches on a matter which is fortunately of only limited application in practice, but it raises questions about valuation in the wider context of the purchase of property under the legal provisions enabling leasehold enfranchisement. Here, a means of dealing with a handful of hard cases which would have been created by the original amendment has been found. I welcome amendment (a) and hope that it will be accepted.
However, there are important issues in connection with valuation still remaining to he clarified, to which the House would have to return. I refer to the valuation of mansion blocks and substantial conversions. Amendment (a) also leaves the matter open with regard to the present state of the law affecting the anomalous status of holders of long leases in the highest rateable value properties, many of which are to be found in Kensington.
I hope that my noble Friends and my right hon. and hon. Friends will direct their minds to rectifying the quite unfair discrimination which still prevents a significant number of people from enjoying the benefits of home ownership for no clearly discernible reason. I hope that I shall have other opportunities to raise this matter in the coming Session.

§ Mr. John Mark Taylor (Solihull)
I welcome Lords amendment No. 53 and the Government's amendment (a).
In 1967, when some of us were addressing this problem elsewhere, we felt that the Leasehold Reform Act 1967, while giving a right, left something to be desired in terms of establishing a price. It was firm and clear in one virtue but left ground for disputation in an important part of the transaction—how much should be paid.
763 We do well in the new clause to return to the problems and considerations of long leaseholders. Most people agree that we should, whenever possible, facilitate the enfranchisement of long leaseholders of dwelling houses and enable them to become freeholders. Consideration for long leaseholders of flats is long overdue. We have the Nugee report, and I urge my hon. Friend the Minister to proceed with it. He knows that there can be oppression and unfairness when responsibility for management services and the ownership of the freehold reversion are in the same hands and out of reach of leaseholders. I am sure that that will be his advice.
I urge the Government to deal with those problems and hope that, as far as possible, they will feel able to implement the Nugee recommendations. Many of my constituents in Solihull own long leases on flats and would like the Government to consider these matters soon and sympathetically.

§ Mr. John Fraser
We welcome Government amendment (a), which removes an undesirable aspect of retrospection from Lord Coleraine's amendment. Like many other people — but we did it first — we will be pressing for leasehold enfranchisement for flats in the next Session of Parliament.

§ Mr. John Patten
I wonder whether there will be opportunities in the next Session for these matters to be raised. We will have to wait to see what is in the Queen's Speech.
My hon. Friend the Member for Solihull (Mr. Taylor) is quite right to press me about the importance of doing something about Nugee, which received an all-party welcome in the House. We are intent on doing something about it as soon as possible. We look forward to my hon. Friend's advice. I know that, as my hon. Friend is a lawyer and an expert in local government as well as national government affairs, we shall benefit from his interest, which goes back to 1967. I welcome his support for amendment (a), just as I welcome the generalised support which it received from the hon. Members for Norwood (Mr. Fraser) and for Southwark and Bermondsey (Mr. Hughes).
I am sorry that we cannot be as accommodating of Lord Ezra as we would have liked. It is reasonable that leaseholders who sought to extend their leases many months ago as a prelude to enfranchisement, but who have been unable to complete negotiations, should have the benefit of the Hickman valuation terms. It would not be fair to freeholders, however, if leaseholders who submitted section 14 notices comparatively recently, following the considerable publicity that attended the Court of Appeal judgment on 4 March, should be able to benefit from the anomaly in the Leasehold Reform Act 1967.
Nevertheless, nobody could be more right than my hon. Friend the Member for Kensington (Sir B. Rhys Williams) when he said that this is a recondite subject. I have had to go up a fairly steep learning curve on this subject and I regard recondite as an understatement. When and if a Government Bill is brought forward, as we pledged, on the issues raised by Nugee, I do not doubt that my recondite studies will multiply through the night.