Landlord and Tenant (No. 2) Bill

HC Deb 30 March 1987 vol 113 cc763-806

Order for Second Reading read.

3.33 pm

The Minister for Housing, Urban Affairs and Construction (Mr. John Patten)

I beg to move, That the Bill be now read a Second time.

It is not always that a Minister has the fairly pleasant experience of asking the House to give a Second Reading to a Bill that will probably command support in all parts of the Chamber. I very much hope that this may be such a Bill. We are also very lucky to have the hon. Member for Norwood (Mr. Fraser) leading for the Opposition, because he knows a great deal about the law in this sector. I wish him well in dealing with his speech with his remaining good eye. Gardening is a very dangerous pursuit indeed.

Mr. Peter Thurnham (Bolton, North-East)

Will my hon. Friend give way?

Mr. Patten

On the gardening point?

Mr. Thurnham

Yes. It is a question of support from the House. Perhaps the hon. Member for Norwood (Mr. Fraser) feels that there would be even greater support if the provisions of the Landlord and Tenant (No. 1) Bill could he incorporated in the Government's Landlord and Tenant (No. 2) Bill.

Mr. Patten

I shall come in a moment to the difficult issue of the Landlord and Tenant (No. 1) Bill. I have serious things to say to my hon. Friend about it.

The Landlord and Tenant (No. 2) Bill is a very important and far-reaching measure that is designed to help a large group of people, some, though by no means all — I stress that point — of whom have suffered real housing problems in recent years. Just as there are good and bad tenants, so there are good and bad landlords. The Bill is aimed at the latter.

The Bill has the peculiar name of the Landlord and Tenant (No. 2) Bill. Hon. Members may wonder what happened to the Landlord and Tenant (No. 1) Bill. My hon. Friend the Member for Bolton, North-East (Mr. Thurnham) introduced his Bill under the ten-minute rule and chose our title, causing us considerable inconvenience and massive public expenditure on the junking and reprinting of perfectly adequate Bills which we were about to put before the House. That does not mean that we are not, in a broad-minded way, prepared to consider the proposals in the Landlord and Tenant (No. 1) Bill. I have no doubt that my hon. Friend will seek to explain today exactly why we should follow the course proposed his Bill.

This Bill is about 500,000 households, a high proportion of them in London and the south-east. It is about households in privately owned flats. Many live in so-called mansion blocks — sometimes that is a good term, and sometimes a bad term for the state in which people live. The Bill applies also to the large number of purpose-built blocks of flats erected between the wars and in the last 20 years, and to converted houses. About two thirds of these households are long leaseholders and the remaining third are Rent Act tenants.

This is not the first time since 1979 that this Government have legislated to increase protection for residents in private flats. Our Housing Act 1980 included some useful new rights for tenants of flats paying variable service charges. However, evidence soon began to emerge of more deep-seated problems which needed to be tackled. The complaints will be familiar to hon. Members from constituency correspondence., particularly in London, and other areas, including south coast towns.

Some tenants suffer from excessive service charges and others from indifference or neglect by the landlord and his or her agents, from defective leases which make it impossible to get things done, from difficulties in contacting the landlord and from problems over greatly increased insurance and so on.

As a result of pressure we decided in 1984 to establish a committee, under the chairmanship of Mr. Edward Nugee QC, to collect evidence of the problems and to make recommendations about how to deal with them. The Bill is based almost entirely on that committee's recommendations, although in some important respects we have decided to go a little further than the committee suggested.

I should like to make two general points about the Bill before describing its contents briefly in the normal way. First, I see the Bill as a consumer protection measure. It gives an important range of new rights to a group of hard-pressed consumers who need help to deal with a particular set of problems. I stress that the Bill is even-handed. It is not in any sense an anti-landlord Bill. There is nothing in the Bill which the good and responsible landlord should fear. We want more good and responsible landlords, with the involvement of building societies, pension funds and others. The Bill is aimed at bad, irresponsible and neglectful landlords—no one else. We wish to protect the long leaseholders and the Rent Act tenants of those landlords.

Secondly, the Bill is further evidence of the Government's balanced approach to housing problems. The Bill shows again that where there are genuine difficulties or serious abuses we are ready to act to counter them. We believe that the provision of housing should be primarily a matter for the independent sector, but of course we are prepared to regulate the independent sector to give people statutory rights, where that is necessary.

I turn briefly to the Bill's content and show how that will be done.

Mr. David Winnick (Walsall, North)

At the beginning of his speech the Minister pointed out that the Bill had the full support of Members on both sides of the House. Does he not agree that the type of abuses with which he rightly intends to deal, and about which we have been pressing for action for some time, illustrates the need to ensure that other tenants, not necessarily covered by the Bill, continue to have the protection given to them by the Rent Act 1977? The Minister has suggested that such protection may disappear, in the unlikely event of this Government being returned. Does he not agree that that would present to so many people the tremendous dangers that he has been speaking about?

Mr. Patten

I am extremely glad that the Opposition are so interested in this important issue that as many as four Labour Members have turned up for the debate.

Mr. Winnick

Answer the point

Mr. Patten

I am about to do so.

Ministers have said time and time again, and I repeat it now, that we have no intention of upsetting the security of tenure of those who are presently living in secure accommodation in Britain. If I have said that once since I have held my present position, I must have said it a dozen times. Unfortunately, there are those who are too deaf to hear and those who seek by smear to alarm unnecessarily private sector tenants. We are used to such tactics—

Mr. Winnick

rose—

Mr. Nick Raynsford (Fulham)

rose—

Mr. Patten

I will not give way. It was a grevious mistake to give way once. I am trying, in my normal subfusc way, to get the Bill, which I believe has all-party agreement, through as quickly as possible this afternoon. Perhaps we could save the general roustabout tactics of the hon. Member for Walsall, North (Mr. Winnick) and his hon. Friends for other occasions.

Part I of the Bill gives tenants a right of first refusal where the landlord wishes to dispose of his interest in a block of flats. That is certainly not a new thought. The British Property Federation has already issued guidance to its Members suggesting that, when they wish to dispose of a block of flats, they should, where possible, give the residents the opportunity to bid for it when it goes on the market. I applaud the federation for its characteristically constructive approach to this matter.

The Nugee report suggested a procedure based on offer and counter offers that would give the tenants first refusal at a price to be negotiated between the parties within a set timetable. If the landlord fails to go through the procedure and sells to someone else, the tenants may buy back the property at the same price and on the same terms.

Part II enables any tenants of flats, whether long leaseholders or rack-renting tenants, to apply to the court for the appointment of a manager to assume responsibility for the management of the premises containing the flats where the landlord has failed to discharge his obligations under the terms of the lease. This gives residents a practical remedy in blocks that have been neglected and where the landlord, as sometimes is the case, has refused to put matters right.

Part III enables the majority—I stress majority—of leaseholders of flats in a block, let wholly or mainly on long leases, to apply to the court for an order to acquire compulsorily the landlord's interests where the landlord has failed to discharge his obligations and the appointment of a manager would not be an adequate remedy of last resort in cases where the landlord has behaved exceptionally badly. Alas, that is sometimes the case.

Part IV enables a court to vary the terms of a long lease of a flat in certain circumstances. It provides that, if a long lease fails to make satisfactory provision for the management of the flats, any party to the lease may apply to the court to vary it. This is an extremely important part of the Bill because it enables the landlord and the majority of long leaseholders of flats to apply to the court for an order to vary all the leases in the block where some changes affecting the entire block are desirable but where a minority of the leaseholders withhold their consent.

Mr. John Heddle (Mid-Staffordshire)

I am grateful to my hon. Friend for allowing me to intervene to ask a specific question. He has referred twice to a "majority of leaseholders". Does that mean the numerical majority or the majority when it comes to the aggregation of the rateable value of the properties? In London especially many properties are let on long lease or sold on long lease interests with high rateable values, with a few on low rateable values. What is my hon. Friend's definition of "majority"?

Mr. Patten

It is the definition that is set out in the Bill, which my hon. Friend will have read carefully. He has raised an issue that we shall have to consider extremely closely in Committee.

Sir Hugh Rossi (Hornsey and Wood Green)

My hon. Friend speaks repeatedly of blocks of flats, and it would seem from clause 3 that the only exclusion, apart from service occupancies, for example, is a tenant of more than 50 per cent. Of the total number of flats in the building. If a house has been converted into two flats only, is the right exercisable because each tenant will not be a tenant of more than 50 per cent. Of the building?

Mr. Patten

Such tenants may well be exempt in any event. I was careful in my introductory remarks to say that I was not referring only to mansion flats. I said — I quote from the introduction of my speech— the Bill applies also to the large number of purpose-built blocks of flats erected between the wars…and to converted houses".

We may have to return to the issue in some detail in Committee, but I am grateful to my hon. Friend for raising it now.

Part IV enables a court to vary the terms of a long lease of a flat in certain circumstances. It provides that, where a long lease fails to make satisfactory provision for the proper management of the flats, any party to the lease may apply to the court to vary it. This part of the Bill enables the landlord and a majority of long leaseholders of flats to apply to the court for an order to vary all the leases in the block—this relates to the issue raised by my hon. Friend the Member for Hornsey and Wood Green (Sir H. Rossi) — where some change affecting the block as a whole is desirable but where a minority withholds its consent. These provisions will help to overcome the common problem of defective leases, and it will enable landlords and residents to make changes to their leases which are desirable but not essential, such as setting up a sinking fund, which many would think to be an excellent idea, as a hedge against expenditure on major matters such as roofs, lifts, the refurbishment of common parts, damp coursing and drain repairs which are necessary in mansion blocks of flats.

Part V deals directly with the management of blocks of flats. There are those who criticise management companies that act on behalf of ground landlords, which have been the cause of problems in the past, as well as ground landlords. Clause 39 strengthens the provisions in section 18 to 30 of the Landlord and Tenant Act 1985 relating to flats and extends them to other residential dwellings. Clause 40 gives a recognised residents' association the right to be consulted about the appointment of managing agents. This provision is not the result of a recommendation in the Nugee report, but we thought it important to include it. In many mansion blocks of flats, groups of tenants have banded together in a tenants' association. If there is to be a change of managing agents, it would seem reasonable that they should be consulted.

Mr. John Wheeler (Westminster, North)

My hon. Friend will know that I served as a member of the Nugee committee. There was considerable evidence suggesting that many residents would feel more confident if they had some reasonable and balanced say on the appointment of managing agents. I say to my hon. Friend on behalf of my constituents that many thousands of people throughout the country, but especially in London, would much appreciate the extension of the Nugee committee's recommendations to include this part of the Bill.

Mr. Patten

I am grateful to my hon. Friend for what he has said, with characteristic generosity, as someone who gave such distinguished service to the Nugee committee.

Clause 41 extends the permissible objects of registered housing associations to the management of blocks of flats.

I need not detain the House long on parts VI and VII. Part VI extends a residential tenant's right to information about his or her landlord's name and address. It provides that the landlord's written demand for rent or service must contain an address in England or Wales at which notices may be served on him or her by the tenant. This is a problem, not just in London, but in the coalfield communities and the north-west. Part VI also inserts new provisions into section 3 of the Landlord and Tenant Act 1985, which make the former landlord — I stress the word "former" —liable for any breaches of obligations under the tenancies until such time as he or the new landlord notifies the tenant of the new landlord's name and address. In other words, there is no way in which a former landlord could or should slip out of the contractural obligations to which he or she is already party simply by failing to notify the tenants of a new landlord's name and address to whom he or she has sold the interest in the block of flats.

Part VII deals with miscellaneous points.

There are other matters that we have not yet been able to include within the Bill. The Nugee committee made a number of important recommendations about insurance and the treatment of service charges which are not yet, alas, covered in the Bill simply because there was not time. However, we propose to bring forward amendments during the Bill's passage through the House which will be drafted purely in the interests of tenants along the lines suggested by the Nugee committee.

The Nugee committee also recommended the appointment of housing assessors in the county court to provide residents with a much speedier means of obtaining legal redress. I know that that has upset many tenants in mansion flats — and I use that phrase generically to cover all such people affected by the Bill. That is an issue which needs to be considered in the context of the future of the civil justice system as a whole. I am pleased to be able to tell the House that the Lord Chancellor's civil justice review committee looked at that question and proposed "housing action", something along the lines of the small claims procedure which, if adopted—perhaps it will be—should go a long way to meeting the Nugee committee's recommendations about redress being sought much more easily by those who need it.

I must not conclude without paying tribute to the members of the Nugee committee and to its distinguished chairman for the effort that they put into collecting evidence and analysing the problems and for the extremely balanced way in which the committee formulated its proposals to reflect the considerable range of interests involved.

If the House will allow me, I should mention the prominent part played by a number of hon. Members in bringing the problems in this area to the attention of the House. I have already had the opportunity of thanking my hon. Friend the Member for Westminster, North (Mr. Wheeler), who was a member of the Nugee committee. I certainly could not forget, and generations of Ministers responsible for housing could not forget, the efforts made in the interest of mansion block tenants by my hon. Friend the Member for Kensington (Sir B. Rhys Williams). He has introduced more private Members' Bills than many of us could lay claim to over the years, and has done such a lot in the interests of his constituents, as has my hon. Friend the Member for Hampstead and Highgate (Sir G. Finsberg), who was a distinguished Minister responsible for housing and has shown great interest in this matter arid has focused public attention on the issues dealt with in the Bill.

Hon. Gentlemen's pressures led us to set up the Nugee committee in the first place. The committee reported, and we accepted its report on 8 April 1986. Less than a year later we are bringing forward a Bill to put its recommendations into effect. This is a token of our determination to help mansion block tenants with their problems. [Interruption.] I am sure that no one heard that comment. The word "bloody" would not be recorded by Hansard in any event.

Mr. Stephen Ross (Isle of Wight)

I congratulate the Minister on introducing the Bill. However, it is a little late in the Session. It might suffer an instant decline if there is an early general election.

Mr. Patten

Such is the all-party support that I know that the Bill will receive and such will be the excellence of the scrutiny that it will receive in Committee, I am sure that it will pass rapidly through to law in the interests of tenants. I am certain that no hon. Member, now or later, would want to vote against the Bill. However, I suppose that within the alliance there may well he internal tensions about which we are not yet privy which may lead alliance Members to vote against each other in the way we have seen from time to time. Alas and clack, the hon. Member for Isle of Wight (Mr. Ross) has made one of his valedictory appearances in the House. However, no SDP Member has been able to attend this afternoon. I dare say that were there to be a vote we would find alliance Members voting with the official Opposition, as they normally do. Dear oh dear, Mr. Deputy Speaker, I am afraid that I have allowed the hon. Member for Isle of Wight to introduce an unnecessarily political element into the debate. I must return to my normal, calm, consensual approach to matters and begin my peroration.

The present Government have done much more to promote housing rights than any other in post-war years. I want to itemise what we have done. We have given public sector tenants a whole range of rights. We have given them the right to security of tenure which they did not have before 1980, the right to buy their own homes, the right to get repairs done, and the right to be consulted about matters affecting their tenancies; and today sees the Second Reading of the Landlord and Tenant (No. 2) Bill which will significantly strengthen the rights of private leaseholders living in blocks of flats. A common thread that runs through the Government's housing policy is the objective of giving people more choice in the types of housing available to them and more influence over the way in which their housing is managed in the public sector or, as we are considering today, in the private sector.

The Bill provides a framework for the orderly management of flats in private ownership. All residents, whether they are long leaseholders or renting tenants, have a right to expect that their homes will be properly managed. I believe that our proposals will provide for that and will bring the general level of management of flats much closer to the standards already achieved by the many good landlords and managing agents in this country. I commend the Bill to the House.

3.57 pm

Mr. John Fraser (Norwood)

The Opposition welcome the Bill because it carries with it much that we have campaigned for and much that is Labour party policy, although I do not for one moment detract from the campaigning that has been carried out on both sides of the House. It was particularly significant that one of the first defeats of the Conservative Government in 1980 during the passage of the Housing Act 1980 was engineered by the hon. Member for Hampstead and Highgate (Sir G. Finsberg) and supported by the Opposition. Indeed, he would not have achieved that defeat without our assistance.

Sir Geoffrey Finsberg (Hampstead and Highgate)

As the hon. Gentleman put that on the record, I must state that I was a Minister in 1980. I actually did what he said in 1971.

Mr. Fraser

I beg the hon. Gentleman's pardon for not attributing his rebellion to the right period.

The Bill represents a great deal of what is Labour party policy, although I do not dissociate myself from criticisms made about the present law which have been raised by hon. Members on both sides of the House. If we have a criticism of the Bill—it is a constructive criticism—it is that it ought to go further along the road of leasehold enfranchisement.

I also welcome and endorse the Minister's remarks about the work and inventiveness of the Nugee committee which laid the foundations of the Bill. The committeee was bold, forthright and imaginative within its terms of reference. It did what many committees ought to do; it pushed its terms of reference to the limit, and I congratulate it on that. There were Labour nominees on the committee, including Mr. John Mills, as well as Conservative nominees, and it deserves rounded congratulations. The committee consulted properly and caught the mood of tenants in the way in which it set about the questionaires and the need to correct the gross abuses indulged in by some unscrupulous landlords and other abuses just as injurious to tenants resulting from plain incompetence and neglect by landlords with no ability to manage property.

The Nugee committee was also right to address itself to the defective constitution on which the relationship between landlord and tenant in a lease was often based. It is recognised that the contractual bundle of rights and obligations which constitute a lease have often turned out to be defective not because they were badly drafted but sometimes due to the passage of time and sometime because landlords, who have essentially dictated the terms of leases, have tended to draft them in such a way as to foist the maximum obligations on the tenant while accepting the minimum for themselves. For instance, it is by no means uncommon for a long lease to give the landlord no obligation to repair, although there is an obligation on the tenant to contribute to service charges, and it is commonplace for the landlord to have no obligation to repair unless a service charge is paid in advance. Many leases are also regarded by building societies as defective because the arrangements for insurance are inadequate, often not covering full replacement or the full range of risks. Policies may not be index linked and some leases do not oblige the landlord to produce the policy or to note the interest of the tenant on it.

In other cases, leases have become defective due to the collapse of management companies. In a recent case 20 or 30 tenants were deeply concerned because when the lease was originally established the landlord had taken no responsibility for management or repairs but had set up a management company responsible for services, insurance and repairs. That is common practice, but in that case the management company was struck off and ceased to exist as a result of incompetence on the part of the managers, with the result that no one is responsible for repairs or insurance, everything rests on the good will of the tenants and most of the leases are unsaleable.

It is good practice among landlords to form management companies and to vest them entirely in the tenants so that there is a coincidence of interests, partly to give tenants greater rights and partly to relieve landlords of responsibilities. A reasonable charge should be made for management, but there should be no profit in it. In some cases the landlords have run the managing company but then lost interest and the company has collapsed, to the consternation of the tenants whose interests often became unsaleable. I hope that the Bill will follow best practice so that wherever, possible management is in the hands of the tenants.

Following years of pressure and campaigning, the Bill is an essential addition to the law of landlord and tenant and redresses the imbalance which so often exists between the parties to a lease. I hope that the Minister will not blush or regard it as an attack when I say that it is a fine Bill and a remarkable conversion, giving private tenants the option to buy their blocks irrespective of the length of their leases. Clause 4 of the Bill is very much like clause four of the Labour party constitution in that it advocates the social ownership of property in the hands of the tenants. We are glad that the Government have come round to endorsing that aspect of our constitution. It has always been Labour party policy and it sits well beside our proposal to give private tenants the right to buy which has so far been denied to them. In the meantime, the Bill at least gives them the collective right to buy.

Mr. Wheeler

As the hon. Gentleman knows, I have long been involved in this subject. The Nugee committee explored very carefully the concept of the right to buy, but there is a difficulty. Every private sector resident has the right to buy in that he is free to seek to negotiate with the owner of the property and to discover whether the owner is prepared to sell. One or two constituents have written to me saying that they would like to buy, but when I ask whether they have approached the landlord, the answer usually is no. In cases in which the landlord is willing to sell, the landlord has been willing to allow time for residents to put forward a purchase package. This is the dilemma. If there were real evidence of a case to extend the law, I would agree with it, but has the hon. Gentleman found such a case? The Nugee committee did not seem to have found one, and I have not found one either.

Mr. Fraser

I think that it is a matter of judgment. The right to buy has been invested in local authority tenants. That is no longer a matter of serious dispute except in areas where there is an acute shortage of housing for rent, which is a special problem in areas such as London and particularly in the hon. Gentleman's constituency. The right was recognised in the Leasehold Reform Act 1967, which was described as "Rachmanism in reverse" by the now Lord Boyd-Carpenter, and is no longer in dispute at all, but I think that social progress has advanced sufficiently for both the collective and the individual right to buy to be extended to private tenants. No doubt that matter can be explored further in Committee. I was certainly not criticising the Government. Indeed, I was congratulating them.

Sir Hugh Rossi

During the passage of the 1967 legislation, I succeeded in Committee in removing the rateable value limits, but the Labour Government reinstated them on Report after representations from the universities and others. Despite many requests from the Conservative Opposition for flats to be included, the Labour Government resisted that proposal. Are we to understand that there has been a complete change in Labour party thinking and that the Labour party now advocates the removal of all rateable value limits and the extension of leasehold enfranchisement to all flats?

Mr. Fraser

I shall not give an unconditional answer to the hon. Gentleman's question about rateable value limits, but personally I see no logical case for them. As for the enfranchisement of leasehold interests, this has long been Labour party policy and I shall deal with it in more detail later in my speech.

The Bill is also remarkable as a denial of the supremacy of private landlordism which in other areas seems central to Conservative party policy. We believe that the management of rented premises is best carried out by responsible and accountable landlords, preferably the tenants themselves. We have supported the assured tenancy scheme because the landlords involved are responsible and are approved by Parliament. Incidentally, I saw the Minister on television recently—it is a great pity to have one's Sunday disturbed by seeing one's opponent on television—seeking to suggest that assured tenancies were somehow a substitute for the loss of hundreds of thousands of rented homes. Despite the fact that Members on both sides of the House have endorsed that development, it should be put on record that, during the past six years, it has provided only about two homes per week to rent. It is irrelevant to the central problem of providing homes to rent for those on low incomes.

This Bill is a denial of the supremacy of private landlordism. It is remarkable in that it gives the private right of compulsory purchase where landlords are dishonest and unscrupulous, or plain inadequate.

In part I no distinction is drawn between the option to be exercised by tenants, irrespective of whether they are long leaseholders or short leaseholders. The right of compulsory acquisition is invested only in the long leaseholder, rather than in leaseholders of all descriptions. However, it might be worth while to consider extending the right of compulsory acquisition across the hoard. Nevertheless, if it is restricted only to long leaseholders, it is still a remarkable conversion. It is worth having analogous developments in other areas of land law, including for business, as well as residential tenants. Those rights should exist in industry also.

The Minister has set out the details of the Bill and the way in which it matches the Nugee report. I do not intend to deal with the Bill in detail at any great length because we shall have the chance to do that in Committee. I have only a couple of observations. The provisions of part III should be available to all tenants. Part IV, dealing with the modification of covenants, is extremely important. Covenants are sometimes defective, but sometimes they have simply been overtaken by progress. The definition of a defective covenant should extend to leases under which there is insufficient provision for the improvement of the property, as well as for its management and repair. I shall give an example from a mansion block in my constituency which has a problem with its central heating system. One can repair a central heating system for as long as one likes, and manage it as well as one likes, but this system is plainly defective, out of date, and in need of modernisation. I have tried to get the landlord to agree to what the tenants want and to modernise and improve the heating system.

Therefore, the definition of that which is defective in the lease, in the light of progress and of developments, should include improvements as well, although there must be provisions to protect those tenants who cannot afford expensive improvements. However, double glazing, which cuts heating costs, and the provision of door entry systems are improvements and not repairs. The same is true of the modernisation of a heating system or the insulation of a roof. Many such measures should be available to landlords and tenants collectively. I hope that we shall consider that part of the Bill constructively to see whether it can be extended to sinking funds and improvements.

This is an important and welcome Bill, but if it is passed in the form in which it appears today it will be deficient. I say that in a constructive rather than a highly critical sense. A deficiency will remain in the inevitable disparity between landlord and tenant. In some circumstances, that relationship will be open to abuse. I do not castigate every landlord, but, in my experience, the balance is tipped almost unconsciously in favour of the landlord on almost every occasion, despite the fact that the landlord may be large, reputable or charitable. I define a charitable landlord as one whose constitution is accepted by the Charity Commissioners, and not one who is charitable in the humane sense. I believe that the hon. Member for Westminster, North (Mr. Wheeler) knows of some charitable landlords, but such landlords are sometimes among the hardest. They develop the longest schedules of dilapidations and create the largest surveyors' costs when drawing up the schedules. One has only to consider hospital foundations, Dulwich college or the Church Commissioners. Being a charitable landlord does not mean that one is the most benign landlord on earth.

We need further to redress the imbalance between landlord and tenant. The disparity of power applies to residential and commercial properties alike. It is about time that we put an end to the monstrous doctrine of privity of contract on leases, and to what is called the liability of the original lessee. That militates against the interests of the commercial and business tenant because somebody who signs a lease may be liable upon the terms of that lease for the rest of his life. Twenty or 30 years may go by and a perfectly innocent residential or business tenant who has no control and could never have any control over subsequent events under the lease may find himself liable for non-payment of rent or for the dilapidations.

Mr. John Patten

Is the hon. Gentleman aware that the Law Commission is currently considering that issue? We must wait and see what the commission proposes on privity in relation to private and residential lettings.

Mr. Fraser

Yes, I was aware of that. I often pressed the Minister's predecessor, the hon. Member for Eastbourne (Mr. Gow), to refer that matter to the Law Commission because I was so incensed about it.

Another example is the way in which the covenants can be balanced between the two parties. In a consumer contract, it is unthinkable that one may hire a car under a contract containing a provision that the hirer of the car will put and keep it in good repair, and that if one then hires a car with a defective engine the person hiring out the car expects one to replace the engine after having hired the car for a few days. However, in a landlord and tenant transaction, such a contract is perfectly thinkable. There have been cases in which a landlord has put into leases an obligation to put and keep in repair. However, the cladding may fall off the building or the heating system may be full of asbestos. Despite the fact that the landlord has developed the building, he puts on the tenant the obligation for putting right his own faults. That cannot be right.

I turn to a matter with which the Bill should certainly deal — the right of the long leaseholder to extend the lease of his flat. In the residential sector, the inability to extend one's lease will remain the outstanding opportunity for abuse of power by unscrupulous landlords. That opportunity for abuse will grow as the totality of leases gets shorter. As with every other unfair practice, it is no answer to say that the parties are free to reach a bargain between themselves. It is no answer to say, as did the hon. Member for Westminster, North, that they are free to negotiate. That is an illusory freedom. Equality of bargaining power does not exist. The Bill should recognise the inequality of power between landlord and tenant in this area, as it does in the areas of management and repair.

Therefore, the traditional party of the tenant, the Labour party, appeals to the traditional party of the landlord, the Conservative party, to modify the Bill and to tip the balance in favour of the enfranchisement of leasehold flats. The Government will say that that is not part of the Nugee report or recommendations. However, the committee could not recommend that because that was not within its terms of reference. Nevertheless, the opportunity to remedy the imbalance must be seized.

My hon. Friends and I believe that the rights conferred by the Labour Government in 1967 on long leaseholders of residential houses should, 20 years later, be conferred on the tenants of flats. That is Labour party policy. My hon. Friends and I believe that this legislative opportunity should be used to carry that policy into law.

In our policy statement "Homes for the Future" we stated that tenants should have, first, the right to hire and fire managing agents. The Bill goes some way to meeting that, but it could go further. Secondly, we stated that there should be maximum limits for management fees. The Bill may bring that about. We stated, thirdly, that tenants should have the right to see the freeholder's accounts and to have them audited by an auditor of the tenants' choice. That is still the right way to go about it. The auditor should not be the servant of either the landlord or the tenant; he should be independent. I see no reason why he should not be appointed by the tenants, just as shareholders appoint an auditor for their company.

Fourthly, we have said that tenants should have the right to correct defective convenants— for example, for repairs and insurance—and the Bill will do that. Fifthly, we have said that tenants should have the right collectively to buy the freehold and sixthly, the right to extend the lease in the same way as for leasehold houses.

My colleagues and I have taken every legislative opportunity to put that policy into law. Indeed, I have forgotten how many Bills I have presented. We have taken every opportunity to present private legislation and to amend Government legislation. Now we have the ideal opportunity to give long leasehold tenants of residential flats the right to extend their leases. We could provide the right collectively to enfranchise leaseholders whether or not the enfranchisement is triggered by the malpractice or incompetence of landlords.

Apart from the principle and the analogy with the Leasehold Reform Act 1967, there are other powerful reasons for allowing the extension of leases. First, when a lease has fewer than 50 years to run, the property becomes less mortgageable, so less saleable, unless the lessee takes a disproportionate drop in the price of the leasehold. Since the lessee will almost invariably want to buy another property, it is not fair to ask him to accept a reduced price. Secondly, a short lease puts the landlord in a unique position to extract an extortionate payment from the tenant. I shall not go through the long list of examples just from my constituency, but the conduct of some landlords has been unforgivable. Often when on an independent valuation the cost of extending the lease should be about £2,000, a premium of two or three times that sum is demanded. That is unforgivable and acts against both the public and the private interest.

Thirdly, a tenant's inability to extend the lease means that there is a disincentive to modernise. A failure to invest sufficiently in housing, whether public or private investment, is one of the greatest failures of present housing policy. Fourthly, the presence of the fag end of leases led to horrendous conditions in Brixton, north Kensington and many other parts of London and our big cities. We cannot afford to take the risk again, because the fag end of leases of flats will lead to the same squalid conditions that appeared in the inner cities 20 or 30 years ago.

We welcome the Bill, but we repeat that the reform of the law of landlord and tenant must go further. The Bill should not merely modify and check abuse and create rights which are triggered by abuse but should create new rights, such as the right collectively to buy the freehold whatever the circumstances and the right of an individual tenant to extend a lease by 50 years in exactly the same way as a tenant of a leasehold house can. The Bill should provide for the emancipation and enfranchisement of leaseholders in principle as well as in the circumstances outlined by the Nugee committee.

This is a valuable Bill and if the Government accept the Opposition's amendments, it will become invaluable.

4.23 pm

Sir Geoffrey Finsberg (Hampstead and Highgate)

Over the years the hon. Member for Norwood (Mr. Fraser) has certainly proved to be one of the most knowledgeable Labour Members on housing matters. Occasionally we wonder why he is not shadow Secretary of State for the Environment because his knowledge is so deep and detailed. On more than one occasion, I have crossed swords with him on matters of principle, but today there is not much between us, except perhaps on one issue.

The hon. Gentleman was correct to point out that until this Bill there were a variety of problems to do with service charges, which have been causing increasing difficulties. He then charmingly chided the Government side for appearing to be converted to Labour's clause four. He overlooks the fact that the right of tenants to purchase their block applies only if the landlord wishes to dispose of it. That is the difference between us. There is no conversion to clause 4.

The hon. Member for Walsall, North (Mr. Winnick) has temporarily left the Chamber but I trust that, perhaps after Second Reading, he may give us a dissertation. He said that we were late on the scene and that everything in relation to tenants' service charges had come from the Labour Government. Perhaps I could remind the House that the right hon. Member for Brent, East (Mr. Freeson), who, alas, is being pushed out by Mr. Livingstone, when he was Minister said: I shall not go into case histories, as we accept that the case put to us is sufficient material for us to digest in one debating session. I say that to illustrate that I should like to look into the potential for public accountability, to the tenants and maybe to the community at large, via the courts or by some other procedure for the running of the financial and other aspects of management of such properties. I could go on to other headings with which I am concerned, but I underline that the kind of headings that I have indicated already would rank high in the review that I should wish to achieve with a view to future legislative and policy action."—[Official Report, Standing Committee B, 11 June 1974; c. 384–85.] Five years later when the Labour Government ceased to exist nothing had emerged. I gave the right hon. Gentleman notice that I would refer to him. I am not doing so in any unpleasant way and I am sure that he meant what he said. However, the collective leadership of the Labour party ranked the problems and issues of private tenants at the bottom of the list and they did nothing. The hon. Member for Norwood referred to our belated conversion, but the rights to vet managing agents and to an independent audit of accounts were suggested years ago by the Conservative party. Nothing was done by the Labour Government. The facts prove it: they had five years to do something, but they did nothing. On that one issue the hon. Gentleman has exposed clearly that, now that Labour thinks there is electoral popularity for this measure, it will come round to the view expressed by Conservative Members for many years.

Mr. Heddle

Perhaps my hon. Friend's characteristic modesty will prevent him from saying that as a distinguished Minister in the Department of the Environment he introduced, in the Housing Bill 1980, on the Committee of which I was pleased to serve, protection to public sector tenants through the tenants' charter. Does he agree that he gave public sector tenants the same rights as tenants in the private sector, as my hon. Friend the Minister has just said? That is further confirmation that the Conservative party looks after the rights of both public and private sector tenants.

Sir Geoffrey Finsberg

Perhaps I should drop my mask of modesty and agree with my hon. Friend. The facts speak for themselves and no amount of long speeches from Labour Members or tendentious literature from the Labour party will do any more than show their facade. The facts show what Conservative Members have been pressing for and have been doing.

Mr. Raynsford

Will the hon. Gentleman give way?

Sir Geoffrey Finsberg

There will be plenty of time for the hon. Gentleman to make one of his notoriously long speeches, so I shall listen to it with great interest and I promise that I shall not interrupt him. I would not dare. I only wish that he would return to his previous incarnation running the Shelter Housing Advisory Committee where he did a first-class job. In those days, his speeches were not so long and they may have been wittier. We enjoyed them and our meetings with the hon. Gentleman when he wore that hat. After the general election I hope that he will wish to resume that task. which he did so well.

I welcome the Bill. If one issue has predominated in my work in the House, it has been the rights of private tenants. As my hon. Friend the Minister said, it was possible to extend some of that work to the rights of public tenants, many of whom were treated as serfs. As he said, for too many years now, private tenants have suffered from bad treatment by a minority of bad landlords and equally bad managing agents. I shall refer to a couple of letters about recent events that I think will considerably disturb the House, particularly as one is from a firm of solicitors. One would not normally expect nonsense to be written by them.

The first time that I attacked my Government was in 1971, as the hon. Member for Norwood said. I battled for a right to challenge service charge accounts, a right which, until then, had been non-existent. I had to fight my right hon. Friends. The then Minister was my right hon. Friend the Member for Brighton, Pavilion (Mr. Amery) and the junior Minister was my hon. Friend the Member for Birmingham, Hall Green (Sir R. Eyre). I beat them on the first vote. I was inexperienced then and did not know what would follow. The Whips became busy, and I lost the second vote, so my clause was not added to the Bill. However, my noble Friends in another place looked at the matter and were kind enough to make the first improvements.

The next occasion on which there was the possibility of legislation was in 1974. The Housing Act 1974 was introduced in that short Parliament and much progress was made. I was able to persuade some Opposition Members to join me. They were the more intelligent ones, who are now no longer in the parliamentary Labour party. Mr. George Cunningham and Mr. Bruce Douglas-Mann both gave me support, but it was not sufficient to override what the Minister was able to do, and the Minister won most Divisions by a majority of one. Then came 1980, when I had the privilege of being a departmental Minister. I could actually argue with officials from a position of some power. I could say to them that I was not interested in the difficulties that they told me about; all I wanted to know was how something could be done. As first-class civil servants, they found a way of doing it. A Back Bencher putting that point would find the argument against him to be overwhelming. He would not be in a position to say what I was able to say. Still not enough was done and loopholes have been emerging all the time.

As my hon. Friend the Minister said, the 1985 Act made more progress. In particular, it did something important for public sector tenants. It gave them the right to ask for some co-operative management of their blocks of flats. Some blocks of flats, especially in London, could be better managed by tenants than by local authorities, because tenants live in them and they know what they want. I hope to be able to encourage tenants in some of the blocks in my constituency to ask Camden council to permit them to manage their own blocks. I shall be fascinated to hear the response—if I get it. Camden council staff are refusing to answer letters from councillors or Members of Parliament. That is the most disgraceful thing that I have known. I hope that Camden council will not pay the staff who are indulging in such anti-democratic activities.

Mr. John Patten

Is my hon. Friend aware that in Committee, when the Housing and Planning Act 1986 was being considered, the hon. Members for Norwood (Mr. Fraser) and for Birmingham, Perry Barr (Mr. Rooker) strongly supported the right of tenants to apply to their local councils, such as Camden council, for the opportunity to manage their own blocks of flats? Does my hon. Friend suggest that, locally, Camden is not following Labour party national policy?

Sir Geoffrey Finsberg

I would not wish to upset the hon. Member for Norwood by trying to associate him with some of the people who lead Camden council. He is far too respectable to mix in their company. For example, he would not have issued an invitation to Sinn Fein to address the council. I have a feeling that official Labour party policy will be ignored on that issue.

We have now passed what I call the era of old-fashioned, evil landlords—the Sterns, the Bergers and the old Freshwater group — and some shady and less professional agents. My right hon. Friend the Secretary of State for the Environment set up a committee, under my distinguished constituent, Mr. Edward Nugee, on which my hon. Friend the Member for Westminster, North (Mr. Wheeler) also served. The committee inquired into the whole aspect of the management of privately owned flats, and blocks of flats in particular. The committee did a superb job. It brooded, it worked hard, and quickly came up with a variety of suggestions and many major proposals, which, as my hon. Friend has said, the Government have translated into the Bill.

The Government must have caused the parliamentary draftsmen to work fast and hard. They are the stumbling block. The business managers on either side of the House do not decide what Bills come to the House; the parliamentary draftsmen do. That is a sobering thought. The best laid schemes on both sides of the House can be frustrated by a lack of sufficient parliamentary draftsmen. I thank Mr. Nugee and the Government for working so hard and fast.

The major proposal relates to the right of refusal that may be exercised when a landlord decides to sell a block. Until now, it has been a difficult issue. I had a major case in my constituency. The Church Commissioners tried to sell a substantial block of property without even offering it to its tenants. The commissioners were about to conclude a deal with a company resident in the Channel Islands when news came to me. I created a certain amount of fuss, the Church Commissioners listened and it gave the tenants three months in which to raise the money and match the price. I am delighted to say that the tenants were able to do that. That was a matter of influencing—there was no right at all. I am glad that the Bill proposes that right.

I am also glad that tenants will now have a right to ask the court to appoint a manager when an owner fails to carry out his obligations. I first tried to obtain that right in 1974, and the then Government said, "It is not necessary. It cannot be done. We do not want it." They made sure that it was voted down. I am glad to note that it is now possible to appoint a manager.

I am also pleased that there now exists the right to acquire the freehold when a block is already owned by leaseholders and when a landlord has failed to perform his residual duties. I heard of a case in my constituency in which a block was falling into disrepair because the landlord would not do the minor repairs that were still his responsibility, even though he had no financial interest because he had sold off 99-year leases and there was no review of the ground rents. I am glad that it is now possible, with the court's approval, to acquire such blocks.

I am also pleased that there should be a right of consultation in the appointment of managing agents. There are still some unscrupulous managing agents. There were some bad ones and, as my hon. Friend the Minister said, there were some incompetent ones. We need more tightening up of their professionalism. I shall quote from a letter from one of my constituents who lives in a block called Eton place. I stress that the freeholders are not Eton college; it just happens that in that part of the world lots of places begin with an E. I hope that those hon. Members who considered the Housing Act 1974 will not object to my dotting names about, as the right hon. Member for Manchester, Gorton (Mr. Kaufman)—then representing Manchester, Ardwick — did in those days. He and I scattered the pages of Hansard with the names of blocks of flats in our constituencies. I shall not scatter more than a couple of names on this occasion. The letter from my constituent states: I am appalled by the state of the book-keeping which provides the information whereby lessees' service charges are levied, and the obstacles placed in my way both by the company and by the auditors, when I seek to exercise my rights to examine these accounts. The account should consist of:

1. (a) Items charged to lessees in the previous year and paid for by the company in the year under review. Invoices should be filed in order of payment and identified as 'brought forward'.
2. (b) Items charged and paid for in year under review, analysed according to the class of expenditure so as to agree with the classes shown in the audited accounts.
3. (c) Items charged in year under review and not yet paid for: copy invoices should appear with the accounts.
4. (d) The service charge would readily relate to b-a+c.

In our case, information has been withheld, vouchers are in disorder, and entries are unclear and, sometimes, wrongly made. There is no evidence that the auditor has sought to improve the methods whose probity he is there to confirm.

This is an important issue and it is right to put it on record. The managing agent is a firm called Parkgate, which manages several blocks of flats in that locality. It is, apparently, a subsidiary of the owning company. If the auditors have to be wholly unconnected with the owners, the same should apply to the managing agents. I shall return to that issue, but at the moment I want to try to establish a thread.

I welcome something that I asked for more than a decade ago, which is that tenants — I use that word generically in the way that my hon. Friend used the word "blocks" — should be able to take their cases to the county court and should not be required to go to the High Court. That is because it is possible for too many landlords to get cases to the High Court knowing that tenants probably could not afford to take them there. Even if tenants knew that they would win, they could not afford to lay out the money. If the landlord happened to lose, the costs would be added to the service charges. I am delighted that the Bill will outlaw that and says that cases should go to the county court. This will be a real benefit.

I am also delighted that what I call the musical chairs syndrome has come to an end and that where a statutory notice has been served it will not be possible for an owner rapidly to sell to somebody else so that the whole process has to start over and over again. I, and I am sure other hon. Members, have had cases where there has been a change of ownership perhaps four or five times merely to dodge the statutory notice. I have a specific question to put to the Minister and I shall be grateful to hear his answer when he winds up. He has said that notices will be served providing the name and address of the landlord. I welcome that, but I suggest that there is an anomaly. I refer my hon. Friend to schedule 2 on page 56. Paragraph 2(c) talks about consultation and says: 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… If my hon. Friend looks at clause 43(b) on page 42 he will see that it says: if that address is not in England and Wales, an address in England and Wales at which notices… Why can both of those not specifically say England and Wales or the United Kingdom? There is no clear reason why they cannot. I hope that my hon. Friend will not say that the reason is as laid down on page 49. Clause 58(4) says: This Act extends to England and Wales only. My hon. Friend has already broken that by referring to the United Kingdom in schedule 2. I shall be grateful for my hon. Friend's answer to that when he winds up. I hope that he will find it possible to say that it should be "United Kingdom" in both instances. I do not see why someone with an office in Scotland should be excluded. I see no Scottish hon. Members present, otherwise I might get some support on that issue.

Mr. John Fraser

There is a practical point here. One sometimes needs leave to serve out of the jurisdiction of the landlord in Scotland. If the landlord has an address in England or Wales, one can start proceedings without any procedural impediment.

Sir Geoffrey Finsberg

The hon. Gentleman confirms my view that the country would be better off without lawyers. He knows that I do not mean that personally. As there are more non-lawyers than lawyers in the House, that should be a popular remark.

I should like to make three final points, two of which will need changes in the Bill. I hope that when he replies to the debate my hon. Friend will give us his preliminary view.

My first point relates to my constituency and to blocks of flats called the Etons. I have had what I regard as an impertinent letter from a firm of solicitors called Higby Hargreaves. Suddenly, residents in these blocks of flats have been told that they must pay for the privilege of parking their cars in the forecourt. The residents have said that that has never happened in all the years that they have been there. I wrote and queried this and received a response which I do not regard as a response that a Member of Parliament ought to receive. The letter says: Thank you for your letter of the 24th of March. Our clients are extremely surprised. You are obviously under a misapprehension as to the situation and true facts in relation to the parking facilities at the Etons. For your information the position is set out below. Our clients Linthaven Limited hold a long leasehold interest in certain areas in the grounds of the Etons. The Lease is held from the owners of the freehold and landlords Shellpoint Trustees Limited with whom our clients have no connection whatsoever. Our clients Lease was drafted and prepared with the rights of flat owners in mind to the extent that such rights exist. How very odd that somebody should sell the lease of bits of the ground to a third party with whom it is said that he is unconnected. I have a suspicious mind and I believe that it was done quite deliberately in order to get round limitations on regulated rents and service charges, and to find another way that would probably take them outside the present Rent Acts and regulations. The letter says that as my constituent will no doubt tell you the form of Lease applicable to the flats at the Etons does not grant the flat owners and occupiers any specific parking rights. In fact the Lease includes words which in the opinion of Counsel prohibit car parking on the estate. Notwithstanding the absence of specific rights car parking has taken place over the years on a haphazard and uncontrolled basis including use by non-residents. I have known those blocks of flats for 40 years. If there were no parking rights, how odd it is that up to now no one has tried to do anything about it. There have certainly been no complaints from the people who live there. The letter goes on: This may have benefited some residents but has also probably been to the disadvantage of others who would like the regular use of a reserved space. Although there are some 360 flats at the Etons there are spaces for only approximately 80 vehicles. Clearly some form of control is needed. Doubtless that control will be charged for at very high rates. The letter continues: It is important to note that our clients agents…"— we have another agent here— …Aspen Estates have received no less that 26 applications for Licences for reserved spaces to date. I was trying to think of a kinder word than blackmail but I cannot think of one.

Mr. John Fraser

Whitemail.

Sir Geoffrey Finsberg

No, that would bring me into the realms of something called the Race Relations Board. Hon. Members will appreciate the pressure on people who are told that action will be taken against those who do not buy a parking space. The letter goes on: A number of spaces have been reserved by our clients free of charge for disabled residents as stated in the circular letter sent…Should it transpire that certain residents are indeed able to establish that they have the right to park a vehicle then an exception will of course be made to the new scheme in appropriate cases. The firm of Higby Hargreaves says that it has had counsel's opinion. Now it says that perhaps that opinion is wrong, but if it is wrong those who challenge it, not everybody, will get some sort of exception. The next part of the letter shows the ignorance of the firm that has written it. It says: Neither we nor our clients can see that the matter has any relevance whatsoever to the debate concerning service charges and long leaseholders in Parliament on the 30th of March next. Indeed our clients feel that your efforts would be better directed in endeavours to increase parking facilities in the locality as a whole.

Mr. John Patten

Impertinence.

Sir Geoffrey Finsberg

It is impertinence. It shows the ignorance of those solicitors. They should know that Parliament cannot create parking spaces — that is the responsibility of Camden borough council. The letter might mean that the firm wishes me to ignore the views expressed to me by a large number of my constituents who reside there. I should like to know whether there is a way of stopping this Machiavellian method of getting more income and whether my ministerisal colleagues will at least consider this aspect before the Bill is debated in the other place.

My second point is equally serious. It concerns the London borough of Camden, which is substantially increasing parking and garage charges on council estates only for those council tenants who have bought their council property. This, again, is discrimination. I should like to know whether Camden can be stopped either by existing legislation or by measures in the Bill. We must stop this unscrupulous method of penalising those who have exercised the right which Parliament gave them and which, as the hon. Member for Norwood said, is no longer a matter of dispute, except where there are areas of scarcity, but this cannot apply where sales have already taken place. I hope that my hon. Friend the Minister will consider that point.

Mr. Allen McKay (Barnsley, West and Penistone)

Will the hon. Gentleman consider another anomaly which appears to have arisen for people who have bought their homes in relation to VAT on garages? A council tenant does not pay VAT on a garage when he purchases his home, but a person who becomes an owner-occupier must.

Sir Geoffrey Finsberg

I note that the hon. Gentleman is now returning to his Front-Bench place as a Whip. I sympathise with what he says. I imagine that because one case involves a sale to a tenant and the other to an outsider, different regulations apply. Because I am not responsible for policy-making, I must leave that point to my ministerial colleagues. They will doubtless say that this is a matter for the Treasury and will refer it to the Treasury. I hope that a way around this can be found to put people on the same equitable basis.

I come to my third point. I am sure that, because we have plenty of time, the House will not mind if I continue.

Mr. Raynsford

Will the hon. Gentleman give way?

Sir Geoffrey Finsberg

I shall certainly give way this time. If I was less than polite earlier to the hon. Gentleman, I apologise.

Mr. Raynsford

I am grateful to the hon. Gentleman. I wanted to ask him whether he felt that, having chided me for having made long speeches — I think my longest speech was 18 minutes—and having reached 30 minutes himself, he might withdraw that earlier remark.

Sir Geoffrey Finsberg

In this case it is quality, not quantity. The hon. Gentleman has made many more long speeches than me.

I come to my last points. The hon. Member for Walsall, North, who has now left the Chamber, raised an old canard and tried to imply that the Government were planning to remove security of tenure from private tenants as soon as they could. My hon. Friend the Minister knocked that one down for about the 33rd time. This sort of scare tactic is not confined to the hon. Member for Walsall, North. The Camden housing aid centre, which is part of Camden borough council, sent a long letter and a questionnaire to every private tenant. Among a lot of other verbiage the letter said: The Government is proposing to limit Housing Benefit on 'unreasonable' private sector rents. This means that the Council may not be able to pay you if your rent is not registered by the Rent Officer and is seen as too high. The letter asked tenants to respond, but it failed to say that the council already has the power if the rent is not registered to refer it to the rent officer for registration. If there is any problem, therefore, Camden has the right to do that. If the borough council has not done so, it has failed in its duty and unnecessarily scared a substantial number of tenants. That is appalling. Tenants in Camden should read and re-read the letters which they receive from Camden borough council, most of which are based on half truths.

I hope that, as my hon. Friend the Minister said, the Bill will he passed quickly. I hope that he will add other clauses to it and will specifically consider my two suggestions. I wish the Bill well.

4.55 pm

Mr. Stephen Ross (Isle of Wight)

I hope that the hon. Member for Hampstead and Highgate (Sir G. Finsberg) has not opened a loophole for other private landlords or managing agents. I am thinking particularly of the parking spaces in front of the block of flats where I live. I hope that what he said does not happen there. I very much agree with his point, but I hope that other people do not jump on to that bandwagon. I hope that that idea is shot down quickly.

I should like to add my congratulations to the members of the Nugee committee, including of course Mr. Nugee himself. I congratulate also the hon. Member for Eastbourne (Mr. Gow), the Minister's predecessor, who set up the committee, and the hon. Member for Kensington (Sir B. Rhys Williams), who has done a great deal and whose persistence with 10-minute Bills on common ownership is well known to me. I was pleased to sponsor his legislation on a number of occasions. The hon. Gentleman must be delighted to be welcoming this legislation.

I intervened—the Minister must have good hearing to have heard me—to say that it was a bit late in the Session to introduce this legislation. I welcomed the commitment to bring in the Bill which was expressed in the Queen's Speech, but we are almost into April. We shall, therefore, need to get our skates on to get it passed. I promise that the Bill will not be held up by the alliance, but I think that the Minister must agree that its introduction is late.

The greatest number of leasehold flats, as the Minister said, is in London, but the number is growing elsewhere, as is the dissatisfaction of long leaseholders. I can think of at least half a dozen blocks in my constituency where the leaseholders are dissatisfied. I declare an interest as the owner of a long leasehold, purpose-built flat in a block which is well known to several other hon. Members and is not far from the Palace of Westminster. I was originally a statutory tenant with a very satisfactory landlord. Suddenly, some 10 years ago, the tenants read that the block had been sold, then sold again and, for all I know, sold several times since. I certainly do not know who the present freeholders are, although I agree that I have not tried very hard to find out. Now, under the Bill, I can find out if I wish to do so. The freeholders were certainly at one time registered in the Channel Islands.

Everything is done through the freeholders' appointed agents. It has taken many years of hard endeavour by a few people holding office in our tenants' association—I pay tribute to them—to sort out matters so that the current position is, on the whole. reasonably satisfactory. It has taken many years to achieve, but we now feel that we are treated more fairly and honestly. We have had to appoint other agents to check what the landlords' agents were doing and had to pay substantial fees. We have had the chance to check and re-check figures which have been provided for us many times. A number of loopholes have been discovered and many things have been put in order. On the whole, the matter has been resolved reasonably satisfactorily. I shall not name the agents, who are well known in this part of London.

Our greatest concern has lain with the ever-increasing service charges, the maintenance costs and the establishment and future control of a sinking fund. A sinking fund has now been established. The Bill covers these matters, or will do so under the promised regulations, and is therefore much to be welcomed. Part I, dealing with the notice of sale and counter notice, is extremely complicated and needs reading with much care. The hon. Member for Hornsey and Wood Green (Sir H. Rossi) clearly demonstrated that. I suspect that the block in which I live is split almost 50/50 between long leaseholders and statutory tenants, so presumably we might not qualify if we wished as tenants to buy the freehold of the block.

I am not entirely clear about the role of the rent assessment committee covered by clause 13. It certainly seems to be required to fill the need for arbitration in the case of a defective lease, but can it, in dispute, fix the price of the freehold interest? I suspect not. How would that be done? Is it not a matter for the lands tribunal? That seems to be the appropriate body. I can foresee arguments about that going on ad infinitum, with valuers for the landlord putting in one price, and valuers for the tenants putting in another. Will the rent assessment committee fix that price? I have read the clause carefully, but that is not clear. I am not sure about it, but I am told by the Opposition Front Bench that it is the job of the Committee. Perhaps the Minister will clarify that in his winding-up speech.

I am also told that there is a possible loophole whereby landlords may be able to set themselves up as registered charities. I believe that that was mentioned by the hon.. Member for Hampstead and Highgate. That exemption is included in clause 4 of the Bill, and it seems to be inviting trouble.

I welcome part II, as long as it means what I think it means. Some managing agents are literally appalling, and the speech made by the hon. Member for Hampstead and Highgate confirmed that. Such agents deserve to be sacked. Does the definition of what comprises management need tightening? I think it does.

Clause 40, which deals with the rights of tenants to be consulted about the appointment of managing agents, does not appear to cover the grounds for their dismissal, except in cases in which they are under reappointment. The clause is very loosely worded.

I also commend part III, although the 90 per cent. qualification rule in clause 24(3)(c) will be a difficult one to meet in many cases.

Parts IV, V and VI cover most of the recommendations contained in Nugee—and, in some cases, go beyond them—although no mention is made of the right to extend the terms of a lease which is nearing expiration. The hon. Member for Norwood (Mr. Fraser) went into that matter in great depth, and I promise him our support if he can table amendments to the Bill in Committee on this issue. While the Bill is before the House, the matter of a lease that is nearing expiration should be considered. I suspect that I shall be told that that is outside the scope of the Bill, but we now have art opportunity to take action on the expiration of leases, and we should do something about that now.

There are also problems of forfeiture for a lessee who loses a legal dispute with the landlord, and we trust that a few other matters will receive attention as part of the civil law review that the Lord Chancellor's Department is undertaking.

We are disappointed not to see certain other measures included in the Bill, of which two were suggested by the committee of inquiry itself. Nugee urged the Government to amend housing legislation so as to enable local authorities to apply to blocks of flats the minimum housing standards that already relate to houses. That is in paragraph 8.14 of the report. It is interesting to note that that proposal has been endorsed by the city of Westminster, which also proposes that the Health and Safety at Work etc. Act should cover residents and visitors. Nugee also recommended that all service charge moneys that have been collected but not yet expended should be held in a trust account with suitable safeguards. That is in paragraph 8.16 of the report.

One or two other omissions also disappointed us. We had hoped for a right for lessees in a wholly leasehold block to manage the property for themselves, and for guidelines for the preparation and annual updating of five-year estimates of expenditure that would take into account a schedule of major works. Such a programme is especially necessary when there is no sinking fund. We also want a right of veto for tenants who are opposed to works that constitute further development within the curtilage of the block. That is going on now with penthouse developments in certain parts of London in particular. Nugee recommended a code of guidance; I know that city of Westminster officials have prepared one, and I congratulate them on that.

I am not sure about the position of the Royal Institute of Chartered Surveyors, of which I happen to be a member. Its draft code of guidance has not yet been produced, but one is necessary in the current situation.

A great strength of the Bill is that its principal innovations have been given most thorough consideration. The right of first option, the provision for appointing a receiver and manager and the provisions for amending defective leases are enlightened reforms. They show the Government's recognition that the balance of rights in a block of flats must be adjusted to reflect the balance of financial commitment in the equity. The detailed drafting of the Bill should do much to ensure that its beneficiaries are those who occupy the flats and not the speculators who trade in people's homes and strip them of their assets as if they were ordinary commodities.

By comparison, those parts of the Bill that deal with service charges seem tentative and imprecise. We hope that it will be possible to enhance the Bill's effectiveness in that area in Committee.

All in all, the Bill promises to be a civilising influence in the jungle of property speculation and is greatly to be welcomed; I welcome it on behalf of the whole alliance.

5.7 pm

Sir Brandon Rhys Williams (Kensington)

I am pleased to be able to make a contribution on this happy occasion. I should like to thank hon. Members for their generous remarks about my own campaign to help people living in privately-owned flats. I should like to say, too, that I have been much helped by hon. Members in all parts of the House and to mention particularly the support I have had from the hon. Member for Isle of Wight (Mr. Ross), who has consistently supported my campaigns for more than 10 years for various reforms affecting tenants. I am grateful to him and to all hon. Members who have supported and advised me from time to time.

I would like to take a further opportunity of congratulating Nugee and his committee on an excellent job, and in particular the Minister on coming forward with this well drafted Bill so quickly after the Nugee recommendations were made. When we saw that the Queen's Speech contained an undertaking that a Bill on these lines was coming forward, of course, we all rejoiced; but I do not think that we blame the Department for taking some time in producing the Bill. Indeed, we still await some clauses that have not yet appeared, which I am sure will be welcome when they do.

The Minister is to be congratulated on other things—particularly in going beyond Nugee and adding the provision for opening up the statutory right to buy, which is obviously a landmark; and also on obtaining all-party support for the Bill. I congratulate him on the work he has done to make certain that the whole House is behind this measure, and is seen to be behind it. Continuity of policy is absolutely vital for the proper management of property. It is in the interests of all concerned that we should know what we think and make our views known quite clearly to the country.

If I have a criticism of the Bill, it is that it does not go quite far enough. It is not a very severe criticism, because we still have a lot to learn when we see how the Bill works in actual practice. As a result of a boundary revision I became the hon. Member for North Kensington, in 1974. It brought home to me immediately that there was something fundamentally wrong with the relationships between landlords and tenants, particularly in the private sector, because the cost of accommodation was so hard for many people to find, but particularly because the status of tenants in relation to landlords seemed to me to be an utter anachronism. My observation was that tenants, for some reason, were regarded as second-rate citizens; it was not thought necessary to treat them as people with first-class rights in the property in which they lived.

It is 900 years since the Norman conquest, and, as I have said in the House before, it really is time that we stopped playing Normans and Saxons where property is concerned. Tenants do not belong to a second-rate social stratum. Even long leaseholders—until this Bill—have found themselves at a disadvantage in dealing with the freeholders and their managing agents. This is something that the House is now putting right, and it is an important development.

On the question of the status of the tenants, when I was first entrusted with the responsibility of representing north Kensington I devised what I thought could be adopted as completely new standard forms of tenure, which would put the owners of the property and the residents in the property on to an equal footing. First, I conceived the shorthold idea, which I think I introduced to the House for the first time in 1976, and which then became part of statute law in 1980. I rather regret that at that time we did not have all-party consensus on the reform of housing law, and the shorthold idea has not really taken root. It was controversial at the time, and there is still a good deal of suspicion that, after some change of Government at some time in the future, shortholders might find themselves being enfranchised; the landlords, who had thought that they could count on getting vacant possession of their property at the end of the shorthold period, might then discover that they were stuck—and never able to get vacant possession again. I hope that shorthold will take root, because it offers a facility for the many people who want decent accommodation and want to know where they stand, but do not look for permanent tenure.

I also thought of the idea of a new, standard longhold tenure, and I regret that I have not proceeded as far as I should have liked with that idea. The Department of the Environment has tumbled to the fact that we need a mechanism to reform the conditions on which long leases are drafted, and part IV provides for the revision of unsatisfactory clauses in long leases. That is an admirable development and I am sure that many owners and residents will be glad to have the chance to revise the terms of leases granting long tenure even when there is no question of outright purchase.

I also thought of a form of tenure that I call commonhold, which would be particularly useful for people living in large conversions and mansion blocks. The House must concede that living in a flat is not the same as living in a house in a street that happens to have been built perpendicularly. A resident of a flat has different responsibilities to his neighbours from those that the resident of a house has to other people in the same street, and it seemed to me that we needed to establish a permanent, satisfactory and equal relationship between the owner of a block and the occupants of the flats in it.

After studying the matter, I concluded that the only lasting solution to the endless disputes about which I was hearing so much would be for the tenants to establish a company with the right to buy the whole property, so that they could act as their own landlords, but in a special relationship that would protect the rights of individuals as well as looking after the property.

Mr. John Patten

I am grateful to my hon. Friend for giving way and I was also grateful for his kind remarks. I could have sat here and listened to them all afternoon.

Is my hon. Friend aware that the Lord Chancellor has set up, under the chairmanship of a Law Commissioner, an inquiry into the possibility of strata title and condominium-style arrangements? Would not that be part and parcel of my hon. Friend's commonhold approach?

Sir Brandon Rhys Williams

I am grateful for the opportunity to explain my views, because I have given this aspect some study. Under my proposal for a commonhold arrangement, everyone who was a resident and had a splinter of the whole property would also appear on the other side as one of the shareholders in the company that owned the property. My invented word "commonhold" seemed to me to describe that two-sided relationship.

The idea of a flying freehold is an attempt to eliminate the owner of the block, so that, like a street of freehold houses, the block consists of people who own their own property in their own right. I know that the Lord Chancellor is working on a formula to make covenants positive, so that, when someone acquires a strata title or a flying freehold, he accepts certain obligations to the people living alongside him in the block. It would probably never be necessary to impose such obligations on the freeholders of houses, because they do not have such a close relationship with other residents in their street.

It would not be fair for the Lord Chancellor and his team to pinch the word, "commonhold", as I understand that they are thinking of doing, to describe the new concept that they may introduce. Flying freeholds, as practised in Australia and elsewhere, give the resident of a flat complete independence. The intention is to eliminate the landlords and not to retain them in the form of a landlord company of which the tenants constitute part owners.

Before my hon. Friend the Minister intervened I was saying that I welcome the idea of a tenants' company, rather than a partnership or a loose arrangement developing out of a coffee morning and turning into a band of friends with a common purpose. The limited company is a well-understood concept; people know that a company must produce annual reports and proper accounts and have a board of directors, shareholders and so on.

I believe that it would be advisable to set up the owners of even a very small property in the form of a company, though the Bill does not specify that possibility. I think that it is necessary, both for the proper management of the finances of a commonhold property, and for the proper management of the premises, which will require continuity of competent, if not qualified, professional advice and supervision.

I know that building societies welcome the idea of flying freeholds because they are the nearest thing to freehold houses, which are the type of property on which the societies are most used to making advances. However, I have been warned that flying freeholds have been found difficult in practice in Australia and I suspect that this will be an inadequate formula for the older blocks, where the most serious problems are likely to arise. I hope that my hon. Friend the Minister will consider that aspect.

Where the cost of accommodation is concerned, we cannot defy market forces indefinitely. The application of rent controls over a long period has tended to diminish the supply of property and has exacerbated the unhappy relationships between owners and residents. Although we cannot defy market forces indefinitely, we can legitimately modify market conditions to some extent.

I should like to say just a word about the possibility of decontrolling rents. The House will welcome the categorical statement of my hon. Friend the Minister, who repeated earlier today what he has said before on this subject. We should reassure people living in flats that nothing in the Bill is likely to add enormously to the cost of their accommodation.

A diver cannot remain at the bottom of the sea indefinitely, because there is something unnatural about living at the bottom of the sea. There is also something unnatural about living in a housing market that is subject to Government control. However, just as we cannot bring up a diver too quickly, because he will die if we do so, we must not attempt to decontrol rents suddenly—in a big bang—because, if we did, we should kill a lot of people who would not be able to find the money to pay for their accommodation and would have to make sudden changes in their way of life, which would be unwelcome and socially unacceptable.

However, as we move towards new forms of tenure and try to encourage the building of new flats, we must find ways of enabling tenants to pay. I do not welcome big subsidies from here or there, and obviously the ideal way is to increase the supply of property so that the balance of supply and demand reaches a satisfactory equilibrium. However, we shall not reach that point for some time and we have to find for those people who are living in rented accommodation an equivalent of the mortgage interest relief, which puts people in a better position to buy a freehold than to become a tenant. I am not sure that I can see in the Bill an easy place to interpolate a reform of the tax structure affecting people living in flats or contemplating building them. However, we must achieve an equal balance between the option to purchase and the option to rent.

I know that my hon. Friend the Minister is thinking about improving the mechanisms under which landlords and tenants operate, and I should like to see a code of practice for managing agents. I hope that proposals will be made by the Royal Institution of Chartered Surveyors or the Department of the Environment. It will not be easy, because the conditions in large and small blocks, old and new blocks and blocks with different forms of tenure—mixed regimes and so on—are so very variable. But an accepted code of practice would help managing agents, and would also assist the courts to decide whether agents were falling down on their responsibilities.

I should also like to see a standard memorandum and articles for commonhold companies. The Department may consider acting to bring out such documents—or at least stimulating their production by company law experts. In my series of Bills I suggested a draft memorandum and articles which tenants' associations could easily adopt, and which would guide them in the running of the company that owned the property on behalf of the residents. That would also assist developers thinking of putting new properties on the market on a basis that would conform to the idea of commonhold ownership from the start.

We should give more thought to the point made by the hon. Member for Norwood (Mr. Fraser) about the right to extend a lease. Many of my constituents are concerned about that; however, it immediately brings up the question of the life span of the property. In Kensington a number of blocks are reaching the point where it would probably be better to demolish them than to spend hundreds of thousands, or even millions, of pounds on extending their life for a few years. However, it is difficult to obtain the agreement of all concerned to a demolition; even reaching the decision that demolition should take place in 10, 20 or 30 years is not at all easy. I therefore welcome the fact that the Nugee committee drew attention to the need for the setting up of sinking funds I hope that the tax background for tenants' companies or associations to set up such funds will be favourable, so that there is enough money to solve the problems that will arise when the blocks are demolished.

Finally, let me say a few words about the right to buy. In my earlier Bills I invariably relied on the right to buy by a properly constituted tenants' association as the solution to the problems that, unfortunately, are all too common in large conversions and mansion blocks. The Government's compromise is to confine the right to buy to the residents by exercising their right of pre-emption, and also—for the long leaseholders—at the direction of the court. I feel that that is a satisfactory resting place for the time being.

I understand that it is the Government's view that a long leaseholder is someone who has already acquired a substantial stake in the property by agreement with the owner, which a short-term tenant will not have done. A long leaseholder is therefore a rather different type of resident from, for instance, a statutory tenants who has not put out any capital as a starting point in the negotiation. I rather think that the same consideration underlay the Labour party's decision in its own leasehold reform, giving the right of enfranchisement for houses in 1967.

I understand the logic of that decision and there is a great deal to be said in favour of it. In the course of time, however, the courts will no doubt extend by precedent the conditions in which residents are enabled to obtain judgments in their favour when they are seeking to buy their properties. We can only wait and see how case law develops over the years.

I think it will not be unsatisfactory if the movement towards ownership by the residents is somewhat slow in maturing. Some people, if they were given the right to buy immediately, might overreach themselves in their enthusiasm to end an unhappy relationship with the landlord. Having obtained the money to buy the property, they might then discover that they had not enough money to make it into a satisfactory place in which to live. The last thing that we want is to find in a few years' time that tenants associations all over London—and in other parts of the country—have acquired their properties and then come to wish that they had not, because they were not able to afford to keep it up or did not appreciate the difficulties of managing a mansion block to the satisfaction of all concerned.

Let us therefore leave it to the courts for the time being to discern the circumstances in which tenants can make a success of owning their properties and it is in the interests of all concerned that they should have the right to buy despite any reluctance to sell on the part of the landlord.

Along with other hon. Members on both sides of the House, I believe that it is vital for us to pass the Bill as quickly as possible. I wish it a happy passage.

5.25 pm

Mr. Nick Raynsford (Fulham)

This is the only housing legislation that we shall consider in the current Session. That should be seen in the context of the designation of 1987 by the United Nations as the international year of shelter for the homeless. An important question is posed: are the Government doing all that they could, or should, to tackle the fundamental problem presented by the astronomical rise in homelessness? The urgency of that problem has been placed in context by the designation of this week as national housing week. A series of activities is taking place, starting from today, to highlight the extent of housing needs and housing deprivation in London and in other parts of the country.

It is a sad comment on the Government's record that the international year of shelter for the homeless will almost certainly see the highest level of homelessness in Britain since records began shortly after the end of the last war. It will almost certainly also see more homeless families in bed-and-breakfast accommodation than ever before. Such people are subjected to appalling and often slum-like conditions. They are exposed to severe risks of fire and other accidents, and overcrowding makes it difficult for them to lead any kind of real family life. But—here is the final insult—for all the horror and blight that such conditions cast on the lives of those families, it costs the state far more to keep them in such accommodation than it would to build new houses. The surge in the number of homeless people in bed-and-breakfast accommodation, and in the cost of that accommodation, is an extraordinary comment on the impact of the Government's housing policies after eight years in office.

The country is spending more and more money on lining the pockets of greedy landlords running bed-and-breakfast establishments of a very poor standard, exploiting the misery of the homeless and ripping off the state into the bargain.

The fact that Government policy has led to such circumstances can only be described as deplorable. It is the politics of the loony Right to go on subsidising the landlords of bed-and-breakfast hovels, rather than building the houses that we know are needed. We have the worst level of housebuilding in the public sector recorded in any peace-time year since the end of the first world war, and yet more families are living in those appalling conditions. If ever there was a comment on the lunacy—the loony Right ideology—of the Government's policies it is reflected in those figures.

Measures should have been taken this year to tackle the housing crisis and to control standards in bed-and-breakfast and other multi-occupied establishments. My hon. Friend the Member for Swansea, East (Mr. Anderson) introduced a private Member's Bill to try to tackle these problems. Had the Government been prepared to give it time, something would have been done about those problems. However, the Government have neglected the real problems of our time and have allowed the crisis to become even worse.

The reason for acute homelessness is the shortage of rented accommodation. Since this Government have been in office, the number of homes that are available to rent in Britain has declined by about 1 million. It has been the steepest ever decline in our history. That is a shameful record and it has now come home to roost. This Bill tries to tackle some of the abuses and problems that arise in certain parts of the housing market. However, we also need measures that will lead to an increase in the supply of rented housing to meet the needs of so many people who, without the provision of homes to rent, will become homeless.

Why is there such a shortage of homes to rent? The Government are in an unfortunate position. Ideologically, they believe that if it were given the opportunity, the free market would provide housing. However, Conservative Members know only too well that it does not work like that. Their 1957 measure led to the greatest ever loss of housing in the rented market, plus the arrival of Mr. Rachman and his infamous exploitation of tenants. When they were elected, this Government promised that they would stimulate the private rented market by a series of measures, including the shorthold tenancies that had been advocated for many years by the hon. Member for Kensington (Sir B. Rhys Williams).

I sympathise with the hon. Gentleman's wish to try to stimulate the private rented market by the introduction of shorthold tenancies, but the reason for the failure of shorthold tenancies does not lie in the explanation that he offered—that the measure has been politically controversial. The reason for the failure of shorthold tenancies is that no landlord who is able to let accommodation and obtain a far higher rent without the tenant enjoying security of tenure would dream of letting under the shorthold conditions that the hon. Gentleman advocated and that the Housing Act 1980 brought on to the statute book. In London at the moment, many landlords are letting accommodation on terms that evade the provisions of the Rent Acts and that enable them to charge extortionate rents and deny any rights to tenants. While freedom to exploit tenants exists, very few landlords will let their property on conditions that are subject to regulation.

If there is a free market, as Conservative Members in their ideological conviction wish, the outcome leads inexorably and inevitably to the greatest exploitation of shortage: the bed-and-breakfast hotel. The bed-and-breakfast hotel is very much the symbol of the free market. it is where the largest amount of profit can be made by landlords who exploit the misery of the homeless. I am afraid that that is the answer to a Government who believe that all we have to do is to free the private market and housing will be provided. Instead, there is squalor, exploitation and human misery.

The Government, with their strange ideological views, say that action is needed to stimulate private landlords to produce lettings. However, in the glossy promotional leaflets that they produce for other reasons, the Government try to pretend that there is no crisis. The other day I came across an extraordinary Government document that deals with the proposal to establish a Community trade marks office in the docklands area. In this glossy promotional leaflet that extols the virtues of locating the trade marks office in Britain—a principle that I fully support—I could not but notice an extraordinary comment on housing and the justification given for coming to docklands, which was because of the housing to be found there. It says: Inexpensive housing is available in plenty both in and out of London. If the Government believe that that is so, how do they reconcile it with the number of homeless families who are living in bed-and-breakfast hotels? Have they ever thought that there is a conflict between the reality of life in London at the moment and the image that is presented in their glossy brochures?

Conservative Members put forward another argument about the supply of rented housing: that if landlords were able to obtain a reasonable return on their investment they would provide more homes. The properties that are the subject of this Bill disprove their case overwhelmingly The evidence of the past 20 years shows exactly what happens when landlords are enabled to maximise their return. They do not continue to let their property. Wherever possible, they try to break up mansion blocks and to sell as many of them as possible to maximise their capital gain.

The history that has been documented by the Nugee committee is the history of exploitation by landlords, often the very unscrupulous ones who were named by the hon. Member for Hampstead and Highgate (Sir G. Finsberg). They began that process in the 1960s. Probably there were others before them, but for the first time they achieved public notoriety in the 1960s.

In recent years, their successors have seized on the opportunity to buy properties on a rising property market when capital values were increasing. Flats have been left empty—the vacancy rate is appalling—and when capital values have been at their highest landlords have seized the opportunity to sell them and make a capital gain, despite the fact that rent levels in many of these properties was very high. Many of my constituents who live in mansion blocks are paying through the teeth for the pleasure of living in them. Despite that, the owners of mansion blocks have had no incentive to continue to let their property. They have tried to break them up and make capital gains. By doing so, they have reduced the amount of accommodation that is available to rent.

We need to consider the extent to which the measures in this Bill will address the problems. They go some way towards tackling some of the problems that face tenants who are renting accommodation in blocks of flats. However, they do not tackle some of the other fundamental problems to which I have referred—homelessness or empty housing. I am sorry that the Minister for Housing, Urban Affairs and Construction is not in the Chamber at the moment. He has the interesting habit of leaving the Chamber when I speak on housing matters. I hope that there is no connection between those two facts. He spoke on the radio this morning about empty property. His justification for the Government's policy of not doing more for the homeless was that if only empty council properties were brought back into use the problem would be solved.

The answer is very different. There are too many empty council properties and something must be done about it, but local authorities are by no means the worst offenders. The owners of mansion blocks keep far more properties empty than does any local authority in London. The worst offenders of all are Government Departments. The figures show that 6.5 per cent. Of Government Department property is empty, compared with 3.5 per cent. Of empty local authority property.

The Metropolitan police figures are a disgrace. The answers that the Home Secretary has given to my parliamentary questions during the past month reveal that, of 3,203 residential properties owned by the Metropolitan police, 573 are vacant. That is a vacancy rate of 18 per cent. The Home Secretary ought to be ashamed of that. So should the Secretary of State for the Environment and the Minister for Housing. They should stop criticising local authorities and others for keeping property empty until they have put their own house in order. If they do not, everybody will know that they are being hypocritical and that, although they are accusing others of keeping property empty, they have by far the worst record.

Mr. Stephen Ross

Has the hon. Gentleman included prison officers' housing? At one time, more than 100 prison officers' houses in my constituency were vacant.

Mr. Raynsford

As I do not have a prison in my constituency, I have not pursued that matter, but I know that my hon. Friend the Member for Hammersmith (Mr. Soley) has been doing so in relation to properties adjoining Wormwood Scrubs prison. I gather from my hon. Friend that there is a severe problem relating to prison officers' housing, although the hon. Member for Isle of Wight (Mr. Ross)—who has constituency experience of it—will know more about the extent of the problem than I do.

Mr. John Fraser

Brixton prison is on the edge of my constituency. Not only are there many vacant prison officers' houses, but when a prison officer dies in service the Home Office sets about evicting his widow.

Mr. Raynsford

That is right. The Government encourage homelessness by leaving properties empty and compound the problem by making homeless the people who live in such accommodation.

We have had enough of listening to the pious platitudes of the Minister for Housing, Urban Affairs and Construction, who has presided over an appalling crisis of homelessness and has done little or nothing to tackle it. He is guilty of the grossest hyprocrisy in accusing local authorities of keeping too many properties empty—and I agree that there is a problem—when he has a far greater problem in his own back yard.

The Bill is designed to facilitate the acquisition by tenants of the ownership of their flats under certain circumstances. They will have the right of first refusal if the landlord decides to sell, and compulsory acquisition powers will apply in certain circumstances. Those compulsory acquisition powers will be somewhat tortuous and difficult to put into effect, because a number of conditions will have to be met to the satisfaction of a court. The landlord must be in breach of one or more of the obligations owed to the leaseholder, the circumstances must be such that the breach is likely to continue, and the problems must be unlikely to be adequately remedied by the appointment of a manager under part II of the Bill.

Those three conditions will provide a golden opportunity for a landlord who wishes to evade the provisions of the Bill to do so. They will provide endless opportunities for prevarication, and some landlords will pretend that action is being taken to remedy problems when it is not. They will involve lengthy legal procedures that will be very costly to the tenants, who will have no guarantee of success at the end.

Although I regard the Bill as a step in the right direction, I am far from satisified that it will give tenants and leaseholders who have been subjected to injustice, and who have suffered unhappiness at the hands of their landlord in the past, the swift remedy that they deserve. Labour Members prefer the concept of a much more straightforward procedure that allows leaseholders, either individually or collectively, to acquire the full interest in the property. We are pledged to extend tenants' rights in that way, and it is important that people should know that we have been in the forefront in this regard.

The hon. Member for Hampstead and Highgate talked about his contribution in introducing the Housing Act 1980. He is only too well aware that most of the provisions relating to tenants' rights in the 1980 Act had already been prepared by the Labour party in 1979. The Government inherited measures put forward by the Labour party that would have been introduced had Labour remained in office.

We seek simpler and more straightforward measures to enable the occupiers of blocks of flats to acquire possession of their properties. They should not have to go through the complex procedure of satisfying a court that a landlord has fallen down on his obligations and that the problem is not likely to be remedied by any other measure. Equally, there should be provision for the finance to be made available to help tenants to acquire their blocks. A great deal could be done to encourage tenants to take cooperative control of a block that has been badly managed when, given the opportunity, they could do a far better job themselves.

Today I had the pleasure of taking part in a visit to various sites in central London organised by the Campaign for Homes in Central London. The aim was to illustrate the current problems confronting people looking for housing. We saw a successful housing co-operative in operation—interestingly, in what were originally police houses. The co-operative is organising its own affairs very successfully and wants to acquire an adjoining site to provide more housing, but it is being thwarted by the reluctance of the London residuary body to make the land available at an affordable price. There is a strong case for enabling co-operatives to take over control.

I question the ability of the county courts to carry out satisfactorily the functions that the Bill gives them. They would have to deal not only with compulsory acquisition powers but with the appointment of managers and with various variations in the terms of other leases. There are many grounds for believing that county courts are already overburdened with the obligation to deal efficiently with housing cases and that, in many cases, people do not benefit from the standard of justice that they deserve. In the past, a case has been made for new specialist housing courts that could examine housing matters in rather more detail, and with greater expertise than the county courts.

The Nugee committee recommended that housing assessors should be available within the framework of the county courts. We have no evidence as to whether the Government are considering housing assessors, but we have evidence that the Lord Chancellor's Department is not keen on the establishment of housing courts. Indeed, it has rejected that proposal and is considering less satisfactory options.

Does the Minister believe that the considerable additional responsibilities that the Bill will give to the county courts will he discharged as well as they would be by a specialist housing court? Will he consider the establishment of a housing court to provide a more effective channel for the settlement of landlord-tenant disputes and other housing matters?

I do not wish to incur the wrath of the hon. Member for Hampstead by speaking for too long. In conclusion, therefore, I stress that Labour Members welcome the introduction of the Bill but believe that it has two fundamental weaknesses. First, it does not go far enough to extend the rights of tenants in blocks of flats and, secondly, it does not tackle any of the fundamental housing problems that face us at the moment. The Government try to give the impression of taking action on housing, but they are deafeningly silent on the critical problems of homelessness, overcrowding, lack of investment, decay in the housing stock and the worsening housing crisis over which they are presiding.

5.49 pm

Mr. Peter Thurnham (Bolton, North-East)

The hon. Member for Fulham (Mr. Raynsford) was in danger of making a speech that exceeded his longest to date—although, I am glad to say, only by a minute or two. I feared that he was settling in for a serious attempt to do that.

I welcome the Bill, even though it does not go quite as far as I would like to incorporate the proposals that I put forward in my ten-minute Bill on 25 February. I hope that there will be time for the Government to consider including my proposals, even if there is a shortage of draftsmen's time. Perhaps a shortage of draftsmen's time has prevented that so far, but if we do not have an early election I hope that there will be time to incorporate in this Bill my modest proposals.

I am glad that the Bill is supported by the Opposition parties. The hon. Member for Norwood (Mr. Fraser) said that the Labour party supports the right to buy. Will he please communicate with Labour party councillors in Bolton who do not appear to have received the message? Those councillors must still be under the influence of the former Member for Bolton, West, Mrs. Taylor, who was the Opposition spokesman for housing. She said that the right to buy would be given over her dead body.

If the Labour party has been converted, I ask the hon. Member for Norwood to tell Bolton councillors because they appear to be the most recalcitrant council in the country in cases of defective title when every other council takes steps to help tenants in that position. I hope that the hon. Member will communicate soon with Bolton councillors. A right-to-buy action group will be meeting on 3 April to ask for a statement from Bolton councillors about the right to buy and Bolton council's obligation to reconsider its position.

It was good to hear from the alliance spokesman, who appears to have departed—perhaps because his party had so little to say before. The recent booklet "The Time has Come" might have included some reference to the right to buy, but it did not. That proves what a low priority the subject has for the alliance.

As a result of introducing my Landlord and Tenant Bill, I have received a number of representations on the subject. I shall now address my remarks to the Government's Bill. Over the years freedoms have been introduced to help people gain more control over their lives. I am pleased that that is particularly so in housing. The Housing Act 1980 gave council tenants the right to buy their homes, at least where there is no defective title, which I attempted to remedy in my Bill.

Schedule 19 of the Housing Act introduces help for leaseholders of private flats in challenging service charges levied by their landlords. The latter provisions and other helpful measures in previous Acts were consolidated in the Landlord and Tenant Act 1985.

For many years there has been pressure from both sides of the House and from all sides of the professions to give more rights to private tenants and leaseholders. The Royal Institution of Chartered Surveyors working party set up in 1983 made recommendations about the management of blocks of flats to the then Minister of Housing, the right hon. Member for Tonbridge and Mailing (Mr. Stanley). That committee, headed by Mr. James, the senior surveyor of Grosvenor Estates, included representatives of the Law Society, estate agents, landlords and tenants.

I hope that my hon. Friend the Minister will say whether the rights in part V arid elsewhere in the Bill for recognised residents' associations to be consulted on the appointment of management agents is also fully available to tenants of public housing. I have spoken recently to residents' associations on council estates and I believe that they should be given full rights to examine all options for the management of their estates.

I have also heard of problems experienced by tenants in shopping precincts. Will the Minister consider extending the rights to cover such tenants? I have experienced a series of problems at Harwood shopping precinct in my constituency where the company under the control of Mr. Horrocks has proved to be unto-operative in its relationship with the tenants.

The James committee called for changes in the law to allow leaseholders to challenge the appointment of managing agents and the cost of fees and insurance premiums, and to provide standardised leases and a system of voluntary arbitration for defective clauses in existing leases. In particular, the James committee called for the creation of sinking funds to cover the cost of renovations and major repairs where there is no provision in leases. It stressed the importance of such funds being held independently and for them to be attached to the block rather than to individual landlords. There have been instances of receivers claiming such funds when a landlord goes into liquidation or goes bankrupt. The committee also said that it was unjust that such funds should be taxed as income. I hope that those points will be noted by the Government in drafting their promised additional amendments to the Bill.

The Nugee committee supported most of the James committee's recommendations, which the Government accepted and added some welcome proposals of their own in drafting their Bill. Part II solidifies the principle which the courts have already implemented in appointing receiver managers to take over the management of blocks when the management has broken down. That is formal acceptance at last of the principle that leaseholders, even with short leases, have a greater interest and therefore a greater investment in the property than the reversionary landlord.

Part III is the natural extension of that principle and gives the right of compulsory purchase when a long-term solution to negligence and mismanagement is required. I believe that some guidance is required on how the ultimate management should be undertaken. It is no good residents jumping out of the frying pan of incompetence into the fire of ignorance and disunity.

Clause 41 gives to housing associations the powers to manage blocks of flats. These may prove useful sources of expertise with which leaseholders could happily cooperate. It is of particular importance for finance to be channelled to housing associations so that they can take on the role on a permanent basis, or as a temporary measure while bringing a block back on the rails. I ask the Government to provide a fund to provide bridging loans for residents to allow them to implement part I's pre-emptive purchase arrangements as well as the compulsory arrangements under part I.

I speak as a leaseholder who has recently joined other residents of a London block in purchasing the freehold voluntarily from the owner. Fortunately, we were in a position to arrange the finance and to be confident of arrangements for the efficient management of the building afterwards. Others may not be so lucky. We should help them and so ensure the success of the Government's legislation.

A number of hon. Members and the Federation of Private Residents' Associations, which represents 200 associations of private tenants throughout the country and was represented on the Nugee committee, would like the Bill to go further. The federation is concerned about flat dwellers in private blocks still being treated as second class citizens, as my hon. Friend the Member for Kensington (Sir B. Rhys Williams) said. The federation says that, as council tenants have a right to buy, it would like the powers under parts I and III to be increased for private tenants. The federation is worried about leaseholders whose leases are getting too short to be saleable and would like the Leasehold Reform Act to be extended to flats, especially because of the current research into the legal implications of flying freeholders and their strata titles, to which my hon. Friend the Member for Kensington referred.

My Bill was unopposed and was supported by a former Solicitor-General and two former Environment Ministers. It is designed to extend the council tenant's right to buy when the title is defective. My Bill also intends to give fair market value to landlords when their property is compulsorily purchased. My Bill is truly for landlords and tenants, and I hope that the Government will accept my proposals as amendments to their Bill.

5.58 pm

Mr. Alfred Dubs (Battersea)

Ever since I was elected in 1979 I have been constantly shocked at the problems of long leaseholders living in flats in my constituency. Many of the experiences described to me are nothing short of a scandal. Accordingly, in common with other hon. Members, I introduced a private Member's Bill on the subject. Mine was intended to deal specifically with many of the points covered by the Government's Bill.

When I introduced my Bill I was delighted that the Government responded so quickly. Between the notice of my Bill appearing on the Order Paper and the date on which I was given leave to present it, the Government announced their response to the Nugee report. They did that with such haste that on the day that I left the House to address a meeting of leaseholders in Battersea the written answer, which I had not then received, had arrived at the Battersea Conservative Association offices and I was able to quote it at the meeting. I think that that haste had something to do with the local elections.

Many other aspects of housing worry us. On Wednesday, I hope to have the Minister's support for a private Member's Bill to protect the position of house buyers—that is, owner-occupiers. I hope that the Minister will accept that with the same enthusiasm as he has put forward his present measures.

Over the years I have had frequent meetings with leaseholders in Battersea. I am fully aware that the system has worked best when groups of residents have got together to acquire the title of the flats in their block. They are fairly happy and contented and in contrast to those leaseholders whose difficulties I shall shortly enumerate.

Many long leaseholders in the community by no means represent the well off—some are elderly and others are desperately poor. Many find the additional burdens thrust upon them by freeholders impossible to cope with. In Battersea, leaseholders are to be found in mansion blocks, as described by the Minister, and also in houses that have been converted into flats. That is a fairly common form of tenure in many parts of London.

I shall describe the main complaints that I have received and I shall judge the effectiveness of the Government's proposals in that context. One complaint is that repairs are simply not carried out by the freeholder or, if started, are not completed. The result is that scaffolding remains on the blocks, bits may fall off and, despite the efforts of the leaseholders, they are unable to get the repair job either started or, if started, completed. If there is a dispute between the leaseholders and the freeholder, a leaseholder cannot move because, while a dispute is in progress, nobody wants to buy the lease.

I have received complaints about high service charges. I have also received complaints regarding insurance; and, indeed, the Minister has said that a proposal on this matter will be forthcoming, but not in the Bill.

Mr. John Patten

Because of the extreme complexity of the problem, we have been unable, with the Bill as printed, to introduce the necessary clauses. However, at a later stage, when the Bill is in Committee, we hope to introduce clauses which I hope will be satisfactory to the hon. Gentleman.

Mr. Dubs

I accept the Minister's answer. It is better to have the necessary clauses added to the Bill in Committee.

I have received strong complaints about the size of sinking funds for repairs and the way in which such funds have been managed. Leaseholders have complained that sometimes proper accounts are not available or indeed no form of accounts is available. There is the ever-repeated complaint that the management of some of the blocks is quite unsatisfactory. Sometimes leaseholders are simply unable to make contact with the freeholder. They may be unable to find the freeholder or sometimes the freeholder is not known. A device is sometimes used wherein there is a head freeholder, then an intermediate leaseholder and then those leaseholders living in the block. The two layers above the leaseholders make it even more difficult for the leaseholders to make contact with the people who own the freehold.

One notorious incident occurred when a small block of flats was bought by a company that paid £800 for the leasehold of each flat. Within weeks the freeholder was offering to sell the leaseholds for more than £6,000 to each of the leaseholders. Sometimes an individual leaseholder has been negotiating to buy the freehold when, in the middle of negotiations, the freeholder has simply decided, unbeknown to the leaseholder, to sell to a property company and has not bothered to tell the leaseholder.

A notorious case in my constituency involved a house which had been converted to three flats. One was empty and the other flats were occupied on leasehold. The empty flat had extremely bad dry rot, but apparently the freeholder had run out of money and could not carry out the repairs. The result was that dry rot was affecting the other flats. The leaseholders were desperate because they were aware that their asset was depreciating day by day, possibly to the point where the building became valueless, but, at the time, there was nothing they could do.

There is also the difficult instance where someone has bought the leasehold and, having moved in, is given, without warning, a hefty repairs bill for a backlog of repairs. It may be argued that in such circumstances the solicitor who carried out the conveyancing should have discovered that problem. Nevertheless, I have received complaints about that.

There have been instances when pensioners, who were ordinary tenants, have been persuaded to safeguard themselves in old age by becoming leaseholders. Once they did so, they discovered they could not afford their repair bills and ended up worse off than if they had remained as tenants. Over and over again one hears the cry that if the only recourse is to go to law, people cannot afford litigation and have doubts as to whether they will be properly covered by legal aid.

I am satisfied that the Bill goes a long way to help to tackle those evils. With this measure the Government are departing from what I regard as their utter free market policy on housing. I welcome this different, somewhat interventionist approach by the Government. It goes against the thrust of Government thinking on other aspects of housing.

I believe that three problems remain which are not adequately dealt with by this measure. They have been referred to in passing by other hon. Members this afternoon. I would like the provision of a full right to buy, provided that a significant number of leaseholders wish to exercise that right. I would prefer that rather than the burden being on the leaseholder to prove that the landlord or freeholder is behaving negligently. That is difficult to prove and may not work in the courts. I would prefer there to be a proper right to buy for leaseholders living in such blocks.

I share the concern expressed by my hon. Friend the Member for Norwood (Mr. Fraser) about what will happen at the end of long leases. What happens in the last few years of a lease when it is impossible to sell that lease to someone else? People are stuck in a property and are seriously worried about what will happen at the end when they must meet the obligations attached to the expiry of that lease. A right to renew a lease would give people some sense of security, would stop properties becoming dilapidated and, philosophically, be on par with the other aspects, especially the limited right to buy, described by the Minister. I urge the Minister to give people the right to renew a lease in the same way as he has given them a limited right to buy.

I am worried about the existence of mixed forms or tenure in blocks—a mixture of private tenants and leaseholders. The safeguards in this legislation apply to blocks that are occupied by long leaseholders and I do not believe that those safeguards will apply equally where there is a mixture of leaseholder and private tenant. Some tenants have been in blocks for a long time. They may be elderly and may not be in a position to convert their tenure to a leasehold if that is what they desire. However, some may wish to do so, and I believe that it would he better if they had a right to buy as well. Whereas leaseholders will now have a right of say in the management of blocks, tenants will not have that right. I am interested in how the Minister will cope with problems of mixed tenure in such blocks. I hope he will consider that problem sympathetically in Committee.

This Bill is a long overdue reform. It will help long leaseholders, but it does not allow the Minister to escape the fact that there is a major housing crisis in London affecting people in other forms of tenure. I wish the Minister would turn his mind to that problem. Nevertheless, I welcome this reform. I welcome the fact that many long leaseholders in my constituency and elsewhere in the country will be able to face their housing prospects more cheerfully when this Bill is on the statute book.

6.9 pm

Mr. John Fraser

With the leave of the House, Mr. Deputy Speaker, I shall reply on behalf of the Opposition. I shall speak for only a few minutes to underline some of the points that have arisen during the debate.

I hope that the Government will take on board the fears that have been expressed about the ability of the county courts to handle housing cases. Much depends on the quality of the registrar and the judge, and we must have registrars and judges with perhaps a little more training and aptitude to deal with housing cases. They must be prepared to push these cases forward and not allow procedural impediments to hinder justice. If the Minister talks to practitioners, he will find that there is wide variation between one court arid another. I found that when I was a consumer Minister and involved in small claims procedures. Some small claims courts work extremely well and others extremely badly. They work badly when the registrar does not enter into the spirit of the small claims court concept. I hope that the Minister will talk to the Lord Chancellor's Department about the most constructive use of registrars and judges in implementing the rights that will be created by the Bill and the other rights that exist in housing law to achieve proper justice for tenants.

Secondly, we shall need to examine—

Mr. Thurnham

The hon Gentleman has spoken so well and so wisely this afternoon that I feel that it will be useful to intervene to say that a quiet word from him to his colleagues in Bolton would be of enormous help in ensuring that tenants obtain the justice that they deserve and of which they have been deprived. I think that he would find his colleagues only too keen to find an opportunity to get off the hook on which they are caught.

Mr. Fraser

I might take the opportunity to visit Bolton to familiarise myself with the local housing problems. I understand that the problem under the right-to-buy legislation did not stem from resistance by the council. Apparently the council had a great many leasehold interests, and the hon. Gentleman will remember that the 1980 Act did not give the right to buy in such circumstances. I confess that I do not know the detail of the defective title problem that exists in Bolton, but I am sure that the hon. Gentleman will have a chance to make his voice heard in Committee. If the Government are keen enough to deal with these matters, they will provide the right remedy where a council has a defective title and does not want to find itself caught in the middle of a dispute between those who may have a claim on the property and the tenant who has a claim under the right to buy. I hope that the hon. Gentleman will develop the argument constructively in Committee, not now.

Secondly, we must consider the Bill carefully to ensure that its drafting does not provide an opportunity for landlords unreasonably to erect delays in the exercise of tenants' rights. The Minister nods his head in approval, but on Saturday morning I took the opportunity with Mr. David Ward, the prospective parliamentary candidate for Chelsea, to inspect some empty privately-owned properties in Chelsea. There are 8,000 such properties in the Royal borough of Kensington and Chelsea. We looked at six of them, just off the King's Road, which have been empty for about 25 years, and which I am sure merit the Minister's wholesale disapproval.

When the local authority stepped in to make a compulsory purchase order with a view to bringing the homes back into use for housing purposes, the landlord made a few repairs or a desultory start on repairs, with the result that the inquiry and CPO procedure were abandoned. This has happened on many occasions, and when it does a local authority has to take up the issue time and again. We must not have laws that create rights in favour of tenants that can be defeated by token action by the landlord to prevent rights being exercised. This is why I say that we need robust, common-sense registrars and judges who will not be hoodwinked by token responses by landlords and who will allow the rights of tenants to be exercised.

Thirdly, it is important that the Bill should address itself to improvements, deterioration, sinking funds, audits and the necessity to ensure that tenants' funds, especially when placed in sinking funds, are properly protected. Protection can be offered by the setting up of trust funds. It might be as well if the Minister had a word with the Chancellor of the Exchequer before he presents the Finance Bill to ensure that the tax treatment of sinking funds is not unfavourable to tenants. The moneys that are directed to sinking funds belong to tenants, not landlords, and they should be regarded as being held on trust for them.

There has emerged from the debate a common view that the right to extend a lease should be granted by legislation, and preferably by the Bill. It is not too difficult to devise such legislation, and it would be within the long title because it would be a variation of the lease. Therefore, an extension would be within the long title. The legislation analogy and precedent is contained in the Leasehold Reform Act 1967. I hope that one of our achievements in Committee will be to add the extension of a lease to the other rights proposed by the Bill.

Finally, it is right that we should try to encourage the collective acquisition of freeholds by long leaseholders and tenants, and especially by long leaseholders. We could start by saying that in all new developments the tenants would automatically have a right to acquire the freehold.

The main and central reason for the division between freehold and leasehold is that our legal system does not allow flats to be disposed of except by means of the grant of a lease. This means that the maximum interest that a tenant can have in a property is a leasehold interest. If the law allowed it and we willed it, the tenant could have an even greater right. He could have his present right of a lease and an inalienable share, along with the lease, in the freehold reversion. We could make a good start by emulating the example of many other countries if at the very least we provided that in new developments that should be the order of things, with that being the constitutional relationship of the tenant or long leaseholder to the land and building upon and in which he lives.

I welcome the Bill, which I hope to improve and extend in Committee. I hope that it makes rapid progress through the House.

6.17 pm

The Parliamentary Under-Secretary of State for Wales (Mr. Mark Robinson)

It is a privilege to be called to take up the remarks of the hon. Member for Norwood (Mr. Fraser), who has great experience of the matters that we are discussing. The degree of consensus that has emerged during the debate should be put on record. Hon. Members on both sides of the House have arrived at a consensus with the possible exception of the hon. Member for Fulham (Mr. Raynsford), who chose largely to ignore the Bill and to subject the House to a repeat of many of his well-rehearsed and well-trodden arguments on housing policy in general. That is a pity given the detailed make-up of the Bill and the wide consensus that exists.

The Bill is important to many hon. Members, including my hon. Friend the Member for Hove (Mr. Sainsbury), who has received many representations and made many representations to us on the problems facing his constituents who are living in privately owned flats. The speech of the hon. Member for Battersea (Mr. Dubs) underlined many of the reasons why the Government have thought it necessary to introduce the Bill.

In drafting the Bill our aim has been to maintain a balance between the rightful interests of the residents of flats and those of landlords. The Bill makes clear our commitment to giving flat dwellers the necessary statutory rights to deal with landlords who refuse persistently to meet their obligations under a lease. Equally, we recognise that there are many landlords providing a good service to their tenants and abiding by the terms of their leases. Such landlords have nothing to fear from the Bill. Our aim is to deter bad landlords while giving encouragement to those who are mindful of and responsive to the needs of their tenants. My hon. Friend the Member for Kensington (Sir B. Rhys Williams) was right to say that, although the Bill may not go as far as some would want, we shall undoubtedly learn as we go along with it. The Bill will make an important contribution to the many reforming changes that we have already introduced to protect the tenant.

If we were to go as far as the hon. Member for Norwood wishes, there is a real danger that the rights of leaseholders could disappear altogether. If that happened, the system of leasehold as we know it could be in danger of disappearing. That may he the hon. Gentleman's aim but that is not what the Government are seeking to achieve through the Bill, which is intended to establish a fair and stable equilibrium between landlord and tenant.

I seek the indulgence of the House to say a few words on insurance, which is of a special concern to Members who represent constituencies in south Wales. Several Opposition Members representing south Wales constituencies have made representations to my right hon. Friend the Secretary of State and myself concerning that problem. It is a pity that none of them has been able to take part in the debate this afternoon, particularly the hon. Member for Caerphilly (Mr. Davies), who has been especially vociferous about the problems facing tenants in connection with insurance. In that respect, I am referring to householders, and in Committee we shall give an undertaking to give leaseholders of houses similar rights in relation to their property's insurance as leaseholders of flats are to he given as a result of the Nugee committee's recommendations.

I am especially pleased that we have undertaken to do that because I am aware from my mailbag, both as a constituency Member and as a Minister, of the difficulties which many leasehold house owners run into over the tied insurance of their houses. Those difficulties most frequently arise as a result of the poor or incompetent management of their leasehold portfolios on the part of a small minority of ground landlords. In common with the main aim of the Bill, the insurance clauses will be designed to help safeguard the interests of leasehold house owners and flat dwellers alike with regard to their tied insurance, while continuing to recognise that landlords must be able to protect their reversionary interest in leasehold property.

I would like to say a little about the way in which our proposals on insurance would work with regard to leasehold house owners. The additional protection we intend to give such leaseholders will take a number of forms. First, our proposals would give leasehold house owners a right to challenge the terms of the insurance they are required by their leases to take out. If a leaseholder can demonstrate that his insurance is unsatisfactory, or that the premiums required are excessive, the court would be empowered to make an order requiring the landlord to nominate a different insurance company from the one originally nominated.

Secondly, in order that leaseholders can mount an effective challenge, they will be entitled to know specific details about the insurance of their homes, including the extent of cover provided by the policy. Leaseholders will also be entitled to inspect the insurance policy, and to take a copy of it.

Thirdly, where the terms of a lease are themselves defective in relation to insurance, leasehold house owners will have a right to apply to the court to have their leases varied. That right will be analogous to the right that leaseholders of flats will be given by part IV of the Bill. It would not be possible for the courts to use this right to vary a lease to take away a landlord's ability to nominate the insurance company, nor to require landlords to offer leaseholders a choice of insurers.

I am sure that those additional rights will be welcomed by leasehold house owners in areas, such as south Wales. with a great number of houses held on leases.

I would like to reply to some of the specific points raised by hon. Members during the debate. The hon. Member for Norwood referred to defective leases. He argued that part IV should be extended to allow tenants to apply to the courts to amend their leases to allow improvements to be made to the block. I am glad to be able to reassure the lion. Gentleman that the Bill already covers that. Clause 36 allows tenants to ask the court to vary the leases, whether or not the variation relates to the defect in the leases, where that is supported by a substantial majority of the parties and not opposed by more than a small minority. That provision should be used, for instance, to seek the setting up of a sinking fund, which was one of the examples cited by the hon. Gentleman.

My hon. Friend the Member for Hampstead and Highgate (Sir G. Finsberg) asked why clause 44 relates to England and Wales whereas schedule 2 refers to the United Kingdom. Clause 44 requires the landlord to furnish the tenants with an address in England and Wales for the service of notices. That is necessary to ensure that notices in proceedings can be served without having to obtain the court's leave to serve outside the court's jurisdiction. However, schedule 2 requires that an address be given simply for communications and the limitation to England and Wales is, therefore, unnecessary. Schedule 2 simply follows the existing provisions of the Landlord and Tenant Act 1985 which refer to the United Kingdom.

My hon. Friend also raised the problem of car parking charges at a block of flats in his constituency. That must be a matter for the leases concerned and, ultimately, it may be for the courts to decide whether such charges are payable.

Sir Geoffrey Finsberg

I hope that my hon. Friend is not going to brush that aside as simply as that. I asked the Minister to consider that matter and not to say simply that it is up to the courts. As the hon. Member for Isle of Wight (Mr. Ross) said, if that is a loophole, it will spread very rapidly. I do not ask for a commitment at this stage of the legislation but I do ask for more than what I already know. I ask the Minister to consider it carefully.

Mr. Robinson

I am sure that my hon. Friend the Minister for Housing, Urban Affairs and Construction will look at that point and we shall look at it in Committee.

The hon. Member for Isle of Wight (Mr. Ross) suggested that landlords might set themselves up as charities to avoid the provisions of the Bill. With respect, that seems unlikely to be a problem. Even if the Charity Commissioners registered such a landlord, he would then have to prove that the block was part of his functional land since investment land of charities is not exempt from the Bill. It is wholly improbable that a landlord would be able to do that.

The role of the rent assessment committee is to settle disputes about price and other terms of sale in cases where the landlord has defaulted on the right of first refusal and under the right of compulsory acquisition in part III. Rent assessment committees, sitting as leasehold valuation tribunals, already have analogous functions under the Leasehold Reform Act 1967.

As for matters recommended by Nugee which are not in the Bill, we have already said that we intend to bring forward amendments to deal with service charges held on trust. We cannot, I am afraid, undertake to tackle in this Bill the complex question of local authority powers on enforcement in relation to blocks of flats.

Several hon. Members have asked about the role of managing agents. We entirely share the view of the Nugee committee that management agencies, where they are employed by the landlord, must be responsible to the landlord alone. Requiring management agents to account both to the landlord and to the tenants is, in our view, a recipe for confusion. Making the agents solely accountable to the tenant would also be inappropriate. In our view, anything that obscures the fact that the responsibility for managing the block rests with the landlord will, at the end of the day, be to the disadvantage of the tenants. However, we agree that tenants should have a right to express a view on the choice and performance of managing agents. Clause 40 gives recognised residents associations certain rights to be consulted.

The hon. Members for Norwood and for Isle of Wight raised the possibility of extension leases for flats and maisonettes. The Bill is primarily concerned with the management of blocks of flats. The Nugee committee did not consider that on management grounds it could recommend a right to an extension lease for flats and maisonettes similar to that for leaseholders of houses under the Leasehold Reform Act 1967. Moreover, as the committee pointed out, a right to an extension lease could well exacerbate the problems of management by enabling people to obtain extensions to their leases which went beyond the economic life of the block.

There is undoubtedly evidence of concern about the ability of leaseholders of flats to dispose of the remainder of a lease at the price they expect, as the unexpired portion of the lease dwindles, because the person who is intending to buy the lease cannot readily find mortgage finance. That is a problem that has been highlighted by the Building Societies Association in its report "Leaseholds—time for a change". We are in touch with the Building Societies Association about the desirability of as flexible an approach as possible by building societies when considering applications for mortgages or leases which have less than about 50 years to run. However, the key to the problem is not a short-term pallative, such as a once-only right to a 50-year extension, which is what the Leasehold Reform Act 1967 provides for leaseholders of houses. That would merely postpone the day of reckoning.

To impose such a solution on ground landlords who have entered into agreements on the basis of the terms which have been settled seems to us an unwarrantable interference. We must be certain that we do nothing to undermine the confidence of ground landlords of existing developments. For the future, we must look for a more fundamental approach to the whole system of ownership of flats. I hope that the working group set up by the Lord Chancellor will pave the way for this. We need to see what it proposes and how it will relate to this problem.

My hon. Friend the Member for Hampstead and Highgate and the hon. Member for Battersea raised the problem of collective right to buy. Part I of the Bill gives tenants a right of first refusal to buy collectively the landlord's interest in the property where he is proposing to sell. This right applies to all qualifying tenants, whether long leasehold or renting, because it seemed to us that there were many blocks with a mixed pattern of tenure where it would be unrealistic to attempt to distinguish between long leaseholds and renting tenants to achieve our objective. However, our measures are aimed primarily at the problems which have emerged for long leaseholders in mansion blocks and elsewhere, and the further arrangements under part III for tenants to apply to court for an acquisition order if the landlord has failed in his duty apply only to blocks which are wholly or mainly long leasehold. We see no reason to go further than this and give leaseholders a right to acquire the freehold against the wishes of the freeholder irrespective of whether he has behaved badly or well. This would undermine the confidence of ground landlords, many of whom perform their duties satisfactorily.

In conclusion, in the main we have had a constructive debate and many interesting points have come out in the course of the debate. I am certain that we shall return to those points when we consider the Bill in Committee. My hon. Friend the Minister for Housing, Urban Affairs and Construction and myself will be considering some of the points in the course of our discussions. However, I fear that I must tell my hon. Friend the Member for Bolton, North-East (Mr. Thurnham) that our discussions may not include his earlier Bill, the Landlord and Tenant Bill. That said, I hope that the House will give the Bill a Second Reading.

Question put and agreed to,.

Bill accordingly read a Second time, and committed to a Standing Committee pursuant to Standing Order No. 61 (Committal of Bills).