HC Deb 11 March 2002 vol 381 cc650-75 4.30 pm
Mr. Adrian Sanders (Torbay)

I beg to move amendment No. 2, in page 2, line 22, leave out "anyone who".

Mr. Deputy Speaker (Sir Alan Haselhurst)

With this it will be convenient to discuss the following amendments: No. 3, in page 2, line 23, leave out "is".

No. 4, in page 2, line 25, leave out "is the registered proprietor" and insert— `not fewer than 75 per cent. of the registered proprietors'. No. 5, in page 2, line 27, after "(c)", insert "anyone who".

No. 6, in page 2, line 29, after "(d)", insert "anyone who".

No. 7, in page 2, line 30, after "(e)", insert "anyone who".

Mr. Sanders

There seems to be no compromise between those who want a majority to move to commonhold and the Government, who want 100 per cent. of people to do so.

Only a few things in life require 100 per cent. consent, but the Government seem to think it undesirable for a block of flats to contain both commonhold and long-leasehold units. We want the Bill to help with the establishment of commonhold, and to make it as easy as possible for people to become unit-holders in a commonhold association. Although that might be complicated and less than ideal in mixed blocks, we do not think it worth opposing in view of the benefits of commonhold.

The unanimity clause will make the Bill effective only in relation to new developments. I do not see how anything other than a spanking new development can ever gain the title commonhold as things stand.

It has been argued that a commonhold association would need to create separate accounts for service charges. Would that really be the case? Would the association not draw up a budget for works that would form the basis of service charges for both unit-holders and long leaseholders? There should be no need for separate accounts.

The Government fear that freeholders would be subject to compulsory buy-outs if their buildings became commonhold against their wishes. They could, by regulation, choose between being completely bought out and maintaining their flats as commonhold units and receiving compensation for the value of their freeholds.

All the Government's objections to majority consent can be countered. It has been claimed that an individual's property title would be interfered with against his or her will, but legal precedent allows for that. Under section 36 of the Landlord and Tenant Act 1987, the county court can make an order amending all leases in a building on the basis of majority support by the leaseholders. The argument in favour of clause 3 on the basis of possible legal challenges due to interference does not hold up.

Could the Government be concerned about precedent? As was said in Committee, precedent exists for not requiring 100 per cent. agreement. The best example is large-scale voluntary transfer, in which council house tenants can choose a new landlord. In that instance, unanimity among tenants is not required.

There are problems with achieving unanimity. For instance, there are the disparate interests of tenants, especially in large blocks. A small minority could stand in the way of the majority's realising their desire to convert to commonhold. Some people have mortgages, or other financial reasons for withholding consent. Prior disputes between neighbours may lead to one trying to spite the other by refusing to grant consent. Some people may refuse to consider commonhold simply because it is difficult. Older residents may not consider conversion worth the trouble, or they may be too ill or frail to participate.

Someone trying to sell a property probably would not wish to participate either. Absentee leaseholders who sub-let their property for investment purposes may not be interested in purchasing a commonhold. An unreasonable tenant could exact payments from fellow tenants to buy his or her agreement for a commonhold scheme. Hon. Members can probably think of other situations in which tenants could show such reluctance. In achieving the unanimity that the Bill demands, tenants could prove the last piece in the jigsaw.

Unanimity makes the concept of commonhold difficult, if not impossible, to achieve for existing tenants. We want a system in which a majority is sufficient to help establish commonhold. Although the Government want to achieve commonhold, they have yet to convince us that their mechanism is the right way to do so.

Mr. Wiggin

Before the last election, the Government promised to introduce these new laws without hesitation, but there is serious concern on both sides of the House that the unanimity requirement will make it even harder to bring about commonhold. Although the amendment was not tabled by my party, Conservatives are nevertheless greatly concerned that we have gone through this process only to discover that the Bill could go the way of its 80 predecessors because we have made it too difficult to achieve 100 per cent. consent.

Mr. Cash

As my hon. Friend may know, I addressed that very issue on Second Reading, and extensively in Committee. Perhaps because it had indeed been dealt with extensively, the amendment that we tabled was unfortunately not selected. Notwithstanding that, the issue goes to the heart of the Bill. If the Bill will not work because of the unanimity requirement, that is a very serious matter. I am therefore glad that my hon. Friend is addressing this issue, as shall I later on.

Mr. Wiggin

I am grateful for that intervention. Throughout our proceedings on the Bill—my hon. Friend will doubtless express the point better than me—we have done everything that we can to co-operate. We all agree that commonhold is a positive measure that should be introduced properly and speedily, but unanimity is an unnecessary stumbling block.

Even the vice-chairman of the Federation of Private Residents Associations said, "The one big disappointment with the Bill is the extreme difficulty it poses for converting existing long leaseholds into commonholds. The Government have said that you will have to get 100 per cent. consent from the leaseholders in the property, and in many cases of larger blocks of flats this will be practically impossible to achieve." He is absolutely right. His organisation is also anxious to ensure that the reforms do not render unmanageable existing residents' owned and managed leaseholds, thereby enabling groups to mount coups within blocks.

The 100 per cent. rule will lead to all manner of problems, and anyone who wants residential leasehold to be abolished will be as uneasy as I am about such a commitment. I look forward to hearing the Minister explain why the rule is a good idea. The Bill risks repeating the failure of its 80 predecessors during the previous century, and unless we get it right, we will be tinkering at the edges and failing to give leaseholders the means to win their own homes.

Andrew Selous (South-West Bedfordshire)

I find it astonishing that the Government are not prepared to accept the amendment, because their failure to do so will mean that almost no leaseholders will be able to benefit from the opportunity to achieve commonhold status. It beggars belief, and I shall listen carefully to what the Minister says to try to justify his insistence on unanimity or the 100 per cent. rule.

The Government's position is strange for several reasons. In company law, we are well used to minority shareholders being bought out. They are treated fairly by the law and compensated, but they are not allowed to hold up a company takeover that has been agreed by the majority of shareholders. That is established custom and commercial practice in English law, so the Government have no reason to claim that they could not similarly vary rights in the property field.

We will have cases in which the majority of leaseholders in a block—or even all, bar one—want to convert to commonhold status, but are prevented from doing so. If just one person holds out, they could effectively demand a ransom from all the others. The dissenting leaseholder could extort considerable sums of money for their agreement to allow all the other leaseholders to convert.

Mr. Don Foster (Bath)

Does the hon. Gentleman agree that the situation could be even worse than he describes? The landlord is included in the list of those eligible to vote, so 100 per cent. of the leaseholders could vote to convert to commonhold but that would still be prevented under the Government's proposals.

Andrew Selous

The hon. Gentleman is right. Indeed, one mortgage company or secured creditor on one leasehold property in a block could put a stop to conversion. As I have said, it beggars belief that the Government are not prepared to move on this issue. The Opposition support the Bill and wish to see it work, and even at this late stage I hope that the Minister will bear in mind our views and, possibly, those of some Labour Members.

The Government have said that it would not be right to vary the legal title of property owners. However, as I said in Committee, I fail to see how the Government can use the defence that they are unwilling to vary the rights of leaseholders in the rest of the UK when one considers what is happening in Scotland, with owners of large estates having the title to their property varied under measures passing through the Scottish Parliament.

I did some research on the subject and discovered that other jurisdictions around the world do not require unanimity for the conversion to commonhold status. In Honolulu—a somewhat exotic location—under legislation of 1998, the law requires only that 25 owners of units in a condominium development, or at least 50 per cent., need to agree to the conversion. Other jurisdictions do not require unanimity and the onus is now on the Minister to explain why it is uniquely a problem in the UK.

4.45 pm
Mr. Mark Field

I was not on the Committee that considered the Bill. I would like to make a brief declaration, which probably has a certain significance given the importance of this issue in my central London constituency. I own property, a house in Belgravia, in what is typically Grosvenor property land. However, it is a freehold. It was for that reason that I decided to buy the property and not to buy anything else, even on a long Grosvenor lease. I wanted to put that on the record at the outset in discussing these complicated issues, which are of great importance to many people who live in my constituency and in the surrounding area.

I confess that I had some strong reservations initially about the confiscatory element of some of the proposals, but it seems that the requirement for unanimity on commonhold effectively runs the risk of putting a coach and horses through the entire intention of the Bill. That seems a foolish way of moving forward. On the basis that we are to have reform legislation that is supported both by the Conservative and by the Liberal Democrat Opposition, we should at least ensure that such legislation works.

This issue goes almost to the root of the question whether commonhold itself will be popular. Under the current Bill—I know that this has been discussed by a number of colleagues—it will be very difficult for any existing building to be converted into commonhold if a very small minority of dissident tenants object. A dissident tenant may even be in league with the freeholder in order to try to stop the process going through. In essence, if we do not throw away the unanimity rule, we will run the risk of the entire legislation beginning to fall apart.

Mr. Wiggin

Does my hon. Friend not feel that a person might think it worth while to block the commonhold procedures to receive the money? It is in the interests of any individual faced with a commonhold procedure to say to their fellow leaseholders, "Give me the money." They can wreck, to use the trendy term, the commonhold procedures. It is almost worth their while to put up that sort of resistance. That will have such a bad effect on the whole thing. At the same time if that one person does not ask for the money, more fool him. We should not be legislating to open opportunities of blackmail within small communities or blocks of flats.

Mr. Field

I thank my hon. Friend for what was a rather long intervention. I could see the Deputy Speaker's eyebrow being raised. We are all wreckers now perhaps, but I think that my hon. Friend's point is spot on.

I agree with what my hon. Friend the Member for South-West Bedfordshire (Andrew Selous) said. I hope that I will be able to join him on the fact-finding mission to Honolulu at some point to discover how these processes work in foreign jurisdictions. He made a point in relation to company law. It is already established that if 90 per cent. of shareholders agree to a takeover, the position is regularised by the remaining 10 per cent. also being subject to the offer, even if they have voted against it. It should not be beyond the wit of the Government and indeed of legislators to find a similar formula where a small minority try to oppose the proposal for a commonhold.

I hope that the Government will rethink the provision. If we allow the unanimity rule to remain in place, realistically the great intent of the Bill will entirely fall apart, and in 10 or 15 years' time commonhold will be remembered as a small part of a Bill that was supposed yet again to sort out property law but that succeeded only in making it more complicated.

Gareth Thomas (Clwyd, West)

I sat on the Standing Committee, and I confess that there were times during the Committee stage when I would have liked to be part of a fact-finding mission to Hawaii or Honolulu.

The fact remains that there has been ample opportunity to test the argument on the unanimity point. I am prepared to accept that the Government have considered the position carefully in this place and another place. I have taken the opportunity to re-read the Official Report— particularly the first Sitting of the Committee, when my hon. Friend the Minister outlined the Government's position. The Government take the view not that it is impossible to draft an appropriately worded amendment or to formulate a form of words that would enable a dual scheme to exist, but that it would be contrary to the purpose behind the Bill to introduce that degree of complexity. If commonhold has one great advantage—I speak as a lawyer who has knowledge of this area of law—it is that it does away with some of the complexity inherent in the current tenure of leasehold, and that it introduces a system of tenure based firmly on parity of interest, uniformity of structure, and standardisation, as far as possible, of the documentation."—[Official Report, Standing Committee D, 15 January 2002; c. 18.1 Those were the words of my hon. Friend the Minister on this issue in Committee.

The Government are adopting a pragmatic approach. I well understand that there would be extreme difficulties in allowing long leaseholders to co-exist with commonholders, and that serious practical problems would arise that would undermine the attractiveness of that form of tenure.

Andrew Selous

Will the hon. Gentleman be kind enough to tell the House how many existing leasehold developments will be able to convert to commonhold status under the Bill in it current form? Is not the reality of the Bill that the only new commonhold developments will be new developments? We are selling the commonhold path to existing leaseholders up and down the country, but they will not be able to take the commonhold route. How many commonhold developments does the hon. Gentleman estimate there will be?

Gareth Thomas

I cannot answer that question—nor, realistically, do I think the hon. Gentleman expected me to. I hope that my hon. Friend the Minister will have a stab at it. Surely the point is that such schemes have a reputation for being too unwieldy and complex and for being the scene of constant dispute, and that they will therefore be a disincentive for the take-up of commonhold. I refer to the practical difficulties that arise when there are two statutory sets of regimes and two sets of money that have to be accounted for. Indeed, when conversion takes place it will be necessary for those who consent to conversion to find the extra money to buy out the freehold interests of those who are not consenting. Again, that would add to the cost of allowing a lower threshold. The commonhold community statement, which is an essential part of the regime, would become unwieldy and unnecessarily complicated.

Mr. Wiggin

As I understand what the hon. Gentleman has said, to achieve commonhold, other tenants or people living in the same block of flats would be obliged to buy the flat of the person who did not consent to the commonhold. Does that not add to the cost? Will the hon. Gentleman explain what he means?

Gareth Thomas

The hon. Gentleman did not mishear me. That is how I understand the position. Those who convert would have to find the means to buy the freehold in respect of the co-existing leaseholds. Another complication that would arise is that existing leases would have to be amended to take into account the dual regime.

I am sure that the Government have considered the disquiet that Labour Members have voiced and weighed the pros and cons. The Bill's purpose is to introduce a simple form of tenure, so this provision must be considered in the context of the radical reforms relating to the right to manage that the Government are introducing in other parts of the Bill. In many respects, those reforms will deal with the problems that have been raised, but to cut across the Bill's purpose by introducing a large element of complexity would be entirely undesirable.

Mr. Cash

I am fascinated and slightly appalled by what I have heard—or not heard—from Labour Members. On Second Reading, the hon. Member for Brent, North (Mr. Gardiner) and other Labour Members made powerful speeches saying that the Bill could not possibly succeed with the unanimity provision in it. I cannot say that I was persuaded by what they said, because I made exactly the same points on Second Reading. Indeed, as the Minister will no doubt remember, I made similar points in Committee and perhaps so forcefully that the amendment that we tabled was not selected. I was sorry about that, because I have great sympathy for the principles that underlie these amendments. However, other matters also require elaboration.

The unanimity rule simply will not work. The hon. Member for Clwyd, West (Gareth Thomas) was no doubt persuaded to speak by the Whips.

Gareth Thomas

indicated dissent.

Mr. Cash

Perish the thought that he was so persuaded. However, does the absence of the other Members who spoke so strongly on Second Reading mean that they have suddenly changed their minds or have the Minister's gentle charms persuaded them to think again?

Mr. Wills

indicated assent.

Mr. Cash

We must therefore conclude that Labour Members were persuaded to think again. However, I do not think that logic lay at the heart of that conversion. It probably had much more to do with the embarrassment of seeing the Government being harried and hunted like a fox on the question whether the Bill would work at all. I do not believe for a minute that it is possible for the Bill to work in relation to anything other than new developments and circumstances unless the unanimity rule is removed.

We should consider how the questions of consent that are referred to in the amendments arise. Clause 3(1) refers to consent and states: An application under section 2 may not be made in respect of a freehold estate in land without the consent of anyone who—

  1. (a) is the registered proprietor of the freehold estate in the whole or part of the land,
  2. (b) is the registered proprietor of a leasehold estate in the whole or part of the land granted for a term of more than 21 years,
  3. (c) is the registered proprietor of a charge over the whole or part of the land,
  4. (d) is registered as a cautioner in respect of the whole or part of the land,
  5. (e) falls within any other class of person which may be prescribed."
[Interruption.] If the Minister has something to say, perhaps he would be kind enough to say it now.

5 pm

Mr. Wills

In due course.

Mr. Cash

He will in due course.

The restrictions are confined to the consent of anyone in certain circumstances, as described in the Bill. The problem arises as to whether that might prevent the Bill from working at all. The arrangements that I believe ought to apply should be directed towards ensuring that the proposals are workable.

Will commonhold be popular? Irrespective of my earlier comments about Labour Members, hon. Members from all parts of the House, and even many people outside, believe that the requirement of unanimity is unnecessary, counter-productive and will put a needless fetter on the use of commonhold.

Under the Bill in its present form it will be difficult to convert any existing building into commonhold. Only if everyone with an interest in the building consents to conversion will it be permitted. Thus the consent of every single leaseholder will be necessary, as will that of every single finance house that holds a mortgage for any flat in the block, that of any single judgment creditor who has a charging order over a flat in the block and that of the freeholder. Any of those persons can exercise a veto over conversion.

The key point remains whether the word "anyone" is appropriate in these circumstances. Whenever a veto applies, we will be up against the awkward customer. In any sort of collective activity—whether in a golf club or in relation to charging orders on repairing roads—there is always someone who may want to exercise his rights. I mentioned in Committee that there are already precedents for the exercise of similar rights. For example, a line of garages may abut on to a road and some people in the road may want to carry on with developments. Under many enactments it has been prescribed that those on that road should not be held to ransom by any one person who might try to hold out on the grounds suggested by the hon. Member for Clwyd, West—to gain through an increase in the value of a flat so that he could be bought out.

The application of the unanimity rule will frustrate the entire object of the process. The result will be, in practice, that commonhold will be limited to new developments. I shall be interested to hear the Minister's arguments that that will not happen. No doubt he has given it a great deal of thought.

Mr. Wiggin

I hope so.

Mr. Cash

We hope so, as my hon. Friend says. In fact, we are more than dubious; we are convinced that it will not be possible for the Bill to work.

We support this important Bill in principle, but it simply will not work given the stubborn attitude of the Minister and the Government. It is very retrograde for the Minister to take such an obtuse and stubborn position. Indeed, that has been the case throughout consideration in the House of Lords and in Committee, but not, curiously enough, in respect of one or two other matters, on which the Government have moved towards our position. For example, on leasehold and forfeiture, Labour Back Benchers argued just as strongly with respect to unanimity, and the Government moved on that issue, yet we see no movement whatever on this issue. I am intrigued, as well as puzzled and appalled, about the way in which the Government are sowing the seeds of the destruction of their own Bill in this way.

Gareth Thomas

As the hon. Gentleman has said, the Government have given way and made concessions on other contentious issues. Does not that rather undermine his point that the Government's opposition on this issue is not principled and that they are stubborn?

Mr. Cash

Our support for the Bill is principled. Indeed, that is why we took the line that we took on Second Reading and why we dealt with the Bill so responsively in Committee, but we are now on Report and I am fascinated to know why some of the more vociferous objectors on this issue from the Government Benches are not prepared to come to the Chamber, or perhaps they are not able to do so. Perhaps they are incapacitated in some way by the Whips or someone else.

The gentle giant of the Whips Office has been most considerate throughout the consideration of the Bill and he has worked as well as possible through the usual channels. We register no personal complaint against him. What worries me is the health and well-being of Labour Back Benchers; he seems to have leant on them in a manner that suggests that he has been highly effective in his discreet fashion; otherwise Labour Members would be jumping to their feet, as they did on Second Reading, but there is no sign of them now. In fact, I think that I am right to say that at least one hon. Gentleman, who is sitting on the Labour Back Benches at the moment in unaccustomed monk-like silence, expressed himself vociferously on Second Reading, but he does not seem to feel it necessary to do so on this occasion.

Mr. Kevin Barron (Rother Valley)

At this stage.

Mr. Cash

I am delighted to hear those words. They are very important because they suggest that, in due course, we may perhaps have a blast of 25 pounders or better from Labour Members on other matters.

This is a question of principle, which is why I raised the issue on Second Reading—the occasion on which the principles of a Bill are debated. If it then becomes apparent that its entrails make a Bill unworkable, the Government effectively undermine their own legislation. The arrangements that they propose in clause 3 will prevent their Bill, which we support, from working effectively. That is not only counter-productive, but extremely foolish. We do not know how many people will take up the proposals, but given all the people who live in blocks of flats throughout the country, I would guess that we must talking about millions of our fellow citizens. It is so obvious. We concede the principle of the Bill and we want o work, but we find that the Government are bent on the destruction of their own proposals. Although there will always be awkward people, arrangements in law mean that a majority vote ensures a proper decision.

The Minister referred to the nature of commonhold, ociations and how they will operate. I think that I heard a say—at any rate, it was implied in what he said t we must have regard to the balance of opinion in occisions taken by a commonhold association. That is a majority vote. According to the application of the arrangements put forward by the Government there is an assumption that not everything will have to be decided unanimously but by majority vote. The running of the properties and their repairs and maintenance will be decided by majority vote. However, when it comes to whether the Bill will work. the Government say, "Oh no, we will not allow people to decide by majority vote but will insist on unanimity." That is, I am afraid, a form of totalitarianism. By imposing a completely unnecessary rule, the Government are insisting that nobody will have the freedom to exercise the rights that they have introduced, with our support and that of the Liberal Democrats, to increase the opportunities for holding property in a better way.

Mr. Mark Field

What does my hon. Friend consider to be the right level of approval? We have talked about majority approval. Presumably he does not accept that a vote of 51 per cent. of people should drive through a decision for the remaining 49 per cent. In the spirit of improving the legislation, does my hon. Friend have some thoughts on the matter?

Mr. Cash

Yes, indeed. I refer my hon. Friend to amendment No. 86, which is identical to one that we moved in Committee. It would ensure that where certain conditions set out in the Leasehold Reform, Housing and Urban Development Act 1993 were satisfied in respect of certain provisions, regulations made under clause 3(2) could, under certain circumstances, dispense with the consent of the person in question. It is not an arbitrary arrangement; it would all be dealt with by regulations, which would have to be debated. The bottom line is that we believe that the many millions of people who will be affected by the Bill deserve better and more informed argument and arrangements than are provided.

Clause 3(1) refers to the registered proprietor of the freehold estate and the registered proprietor of a leasehold estate in the whole or part of the land granted for a term of more than 21 years". We suggest that where no more than 20 per cent. of the qualifying tenants within the meaning of the 1993 Act refuse to consent, their consent could be dispensed with. In answer, then, to my hon. Friend the Member for Cities of London and Westminster (Mr. Field), we have in mind a refusal figure of 20 per cent. The Liberal Democrats, in amendment No. 4, propose not fewer than 75 per cent. of registered proprietors registering their consent, so we are all talking in similar terms. There is a margin between us, but no difference of principle. I do not mean to encourage too much support from the Liberal Democrats, but my family were Liberals once upon a time and founded, among other things, the Abbey National building society and the Rochdale co-operative society. I come from a background of seeking to be reasonable and co-operative, but I want the maximum number of people to be able to exercise their rights because I believe in democracy.

5.15 pm

What I do not believe is that everyone should be automatically able to enforce his or her rights against other people. The unanimity rule is draconian. We need flexibility, and I appeal to the Minister to think about that. I am truly surprised that the Government do not understand that some people will be awkward and that others will try to engineer situations that will prevent the Bill from working. I cannot believe that the Government do not know that that will happen.

I shall be fascinated to hear what the Minister has to say. He has heard the arguments in the other place and in Committee, and I know that he periodically rewrites his speech to accommodate them. The Government have taken a tough line throughout the Bill's progress, but it is not sensible to be tough in suppressing the rights of millions of people to have their way and to own a better form of property.

I know that when the Minister was at Cambridge, he wrote the whole or part of his thesis on the Primrose League. I am much associated with that myself, and I know that it had much to do with the working man, democracy and the manner in which we guarantee that the maximum number of people obtain the maximum benefit. In the past 150 years or so, an enormous amount has happened. Democracy has been established, and it is a property-owning democracy. I do not want to be too effusive about a Government Bill, but their commonhold proposals are an enormous step in the right direction. Yet they are kicking the house down on the point before us, and I find that strange.

I shall be glad to hear what the Minister has to say. The Government have repeated, here and in the other place, that they are determined to stand by what they have already said. Consequently, commonhold will be limited in practice to new developments and only in the smallest block of flats will there be any prospect of obtaining all the consents necessary to effect conversion to commonhold.

Why are the Government insisting so steadfastly on unanimity? They have advanced two arguments, although there may be more to come. One thing I know about the Minister is that when he is in stubborn mood, he relies on not just two arguments, but has others lined up which he will produce both this afternoon and on Wednesday.

I have no doubt that there are more arguments to come, but so far the Government have made two. In Committee, they said that if one allowed conversion to commonhold with the agreement of fewer than 100 per cent. of the

tenants, commonhold blocks would have a mixture of commonhold units and long leases. Tenants who wanted to convert would receive commonhold units, whereas tenants who did not want to convert would be left with long leases. The hon. Member for Clwyd, West made that very point with reference to the Minister's speech on Second Reading.

The Government say that such a result would complicate the administration of the block as two sets of accounts would need to be kept—as the hon. Gentleman pointed out. Furthermore, a mixture of commonhold units and long leases would destroy the perfect beauty—the utopia—of a block owned by lots of happy commonholders working in harmony in a commonhold association. There would be an ongoing relationship between the landlord—who would have become the commonhold association—and some tenants who would maintain their previous arrangements.

Does the Government's argument stand up? It is true that any departure from unanimity would make commonhold less neat and tidy—there would still be tenants with long leases. I am happy to concede that. A block consisting only of commonhold unit-holders would undoubtedly be more elegant. However, it is not merely a matter of elegance but of the interests of all the people in the country. The provisions would affect a huge number of people.

We are not in this place merely to devise an aesthetically pleasing legal construction. Over and over again, my hon. Friends the Members for Cities of London and Westminster, for Leominster (Mr. Wiggin) and for South-West Bedfordshire (Andrew Selous) have been making practical points but we want practicality and philosophy to run together. That is one of my main concerns. We are interested in ensuring that there is a property-owning democracy. We want more people to have more rights in their property.

Furthermore, we are dealing with new Labour and the middle way—as well as the patriotism for which the Minister is primarily responsible. Surely the Minister and the new Labour cohorts want more people to have enhanced property rights. They did not get to power by arguing against such rights—far from it. They would not have cadged all those votes from us without, in effect, making a spurious claim that is undermined by the Bill's proposals. If people heard the arguments in this debate, they would say, "Oh, is that the real attitude? Every person in our block of flats will have to go down that route if we are to have that enhanced property value". Many people, including good honest Labour voters—especially new Labour voters—would realise that they were not getting what new Labour offered them. Of course, now it is a matter for the press. There is no more that we can do once we have discharged our functions at the Dispatch Box.

I hope that people will understand that, in practice, they are not getting what new Labour offered them. These provisions are a good example. I suspect that that is why the hon. Member for Brent, North made such a strong case on Second Reading, when I think that the hon. Member for Rother Valley (Mr. Barron) made some similar points.

The whole point of the change in our approach to property over the past 50 years has been the practical advantage that people gain by owning property rather than living in state-subsidised or council housing. We are not here to devise an aesthetically pleasing legal construction. Indeed, we are surprised to find that new Labour Ministers have any interest in aesthetics. For many of us, the idea of an aesthetically pleasing legal construction is an oxymoron, like a welcome Labour stealth tax—but let us not rough it up too much this afternoon.

We are trying with commonhold to produce something practical and popular. The Government's only practical argument against having both commonhold units and long leases in the same block concerns the difficulties with accounts.

Andrew Selous

Does my hon. Friend agree that we should not consider our country's accounting and legal skills to be in any way inferior to those of a jurisdiction such as Honolulu, which seems perfectly able to cope with mixed tenures within blocks?

Mr. Cash

I was most attracted by the Honolulu argument, which took me back to that wonderful film, "South Pacific". My hon. Friend is right, and there are many other places where the unanimity rule does not apply—for example, there are the strata arrangements in America, Australia and elsewhere in the western world.

It is certainly true, as the Government say, that a commonhold association would have to make arrangements so that service charges could be collected from commonhold unit-holders in accordance with the commonhold community statement, and from long leaseholders in accordance with the terms of their leases, but it is absurd, with respect, to suggest that this presents any practical difficulties.

Mr. Mark Field

Does my hon. Friend agree that there is an analogy with the situation in a council block in which some of the flats have been sold to long-standing tenants? In that case, two sets of accounts have to be dealt with in a way that the Bill seems to suggest is impossible.

Mr. Cash

I could not agree more. The same situation arises in many different contexts. Having to have two sets of accounts is no reason to give up on the many advantages that people will gain in respect of the important principle that lies at the heart of the Bill.

There are frequently different leases for different flats in the same block, with different service charge and rent provisions. That is an absolute fact that the Minister must acknowledge. No managing agent has the slightest difficulty in keeping accounts that distinguish between the liabilities of different flats. Why should managing agents be worried about different accounts for commonhold arrangements? I challenge the Minister to tell me now.

Mr. Wills

In due course.

Mr. Cash

Very well.

The situation would be exactly the same in a block with commonholders and leaseholders: the managing agent would calculate the service charge for each flat, based on the relevant legal principles.

The Government's second argument is even more far-fetched. They say that, okay, one could allow a commonhold without a unanimity requirement but that, with all the recent reforms to leasehold, leasehold is now such an attractive option that there is no need for existing leaseholders to convert to commonhold.

What is one to make of that argument? Commonhold is about choice, and about expanding choice. That is the gravamen of the argument that I urged on Second Reading and in Committee and that I repeat today. People with leases should have the right to choose whether to carry on with leasehold or to convert. That is the key consideration, and it affects millions of people. It is not for the Government to dictate whether people should convert or not. The Government stand condemned for wrecking their Bill and removing that choice from those people. It is incredibly obtuse of them and I do not understand their decision.

5.30 pm

It is true that leasehold has been improved as a result of various reforms, most notably those contained in the Housing Act 1996, which was introduced by the last Conservative Administration, although the Government do not admit to that. As a consequence of those reforms, leasehold is a much more satisfactory form of tenure. However, there remains a widespread dissatisfaction with it. It is wrong to prevent tenants in blocks from converting to commonhold when there is a widespread desire to do so just because one tenant or mortgagee does not agree. The veto should go. The amendment would achieve that purpose. The most important consideration is that we enlarge the property opportunities for the people of this country. Millions will be affected by the proposals and the Government are obtuse, wrong and arrogant in their refusal to accept that unanimity must go.

Mr. Wills

I am glad finally to be given the chance to address the points raised. We have covered this ground over and over again. The indignation of the rhetoric used by the hon. Members for Stone (Mr. Cash) and for South-West Bedfordshire (Andrew Selous) outstripped their attentiveness to the arguments. The words "appalled", "obtuse", "it beggars belief' and "astounding" were used frequently. They might disagree with us, but had they listened carefully they would understand that there is a clear logic to our decision.

The Opposition once again made the same old arguments and they gave only a partial view of the problem. The hon. Member for Stone, in a lengthy disquisition on all sorts of things including the amendments, airily brushed away the problems with the alternative approaches and the opportunities that the alternative choices present for leaseholders. It is not adequate to make a case by dismissing the problems in such a way.

Government amendment No. 10 will render amendment No. 6 unnecessary, and we are not prepared to accept the other amendments in the group. I hope that the hon. Member for Torbay (Mr. Sanders) will forgive me if I pass quickly over amendments Nos. 2, 3, 5, 6 and 7. They are drafting devices aimed at getting to the meat of the group, contained in amendment No. 4. That amendment makes another attempt to introduce a consent level that is less than the 100 per cent. on which the Government still insist for conversion from leasehold to commonhold. Despite the hon. Gentleman's heroic efforts, we looked in vain for recognition of the extremely complex tasks posed by conversion and the subsequent management arising from such a change.

Amendment No. 4, like all the others that have aimed at reducing the hurdle, fails to take into account the practical problems that the poor souls who try to take advantage of conversion will face. We repeatedly said on Second Reading, in another place and in Committee that had we been able to find a way both to lower the hurdle and to provide for a sensible, practical and, above all, simple way of accommodating the resulting procedures, we would have done so, but it has proved impossible. We went through the arguments in considerable detail at every stage of the Bill in both Houses and, of course, in the three stages that were completed in another place before the last election. It is a matter not of being stubborn or obtuse, as the hon. Member for Stone alleges, but of considering the problem practically, in a cold-eyed way, and making a judgment on the best evidence available. There is not much to add to those discussions, but none the less

Dr. Julian Lewis (New Forest, East)


Mr. Wills

I shall give way to the hon. Gentleman in a moment. I am glad to see that he has joined us for the latter part of these proceedings. I was about to say that, as there is such concern among Opposition Members, I shall explain the arguments again in the hope that they may finally penetrate.

Dr. Lewis

I thank the Minister for giving way. In case he has not noticed, I was present for the earlier part of the proceedings; there was merely a slight intermission. Does he accept that the import of his remarks is an admission that the Government are accepting the fundamental point made by my hon. Friend the Member for Stone (Mr. Cash) because they cannot get round the problem? Are they not admitting that the benefits of the Bill will apply only to people in new properties and not to those in existing leasehold properties, with hardly any exceptions?

Mr. Wills

No, I do not accept that. The truth is that nobody in the House has any idea of exactly what will happen in future. As we have always said, the market will decide the issue. As the hon. Gentleman will no doubt be aware, the market, by its very nature, cannot be predicted with any degree of certainty. None the less, I shall go on to reassure him about some other matters that have not fully percolated into Opposition Members' consciousness.

Dr. Lewis

May I remind the Minister of the point that I made in Committee when another Minister was dealing with the Bill? If a freeholder does not want leases on his property to be converted to commonhold, is it not a racing certainty that he will take either personally or by proxy a single lease on one small part of the property so that he can block conversion? Is not that an absolute certainty that does not depend on the vagaries and unpredictability of the market?

Mr. Wills

A similar point was made by the hon. Member for Bath (Mr. Foster) some considerable time ago, and I shall deal with it in due course.

As the hon. Member for Stone eventually got around to acknowledging, there are two good reasons for our persistence with the 100 per cent. threshold. If I may, I shall deal with the matter relatively briefly. Let us consider once again the nature of the problems that will arise if long leaseholders continue to live under the terms of their lease in a commonhold development. There will be two classes of occupant, so self-evidently there will be two management streams under two different statutory regimes. There will also be two sets of moneys to collect and two sets of accounts to produce, because the calculation of service charges for the remaining leaseholders will continue to be set by the terms of their lease, which is a legal contract.

Existing landlord and tenant legislation provides for appeals against the determination of service charges. There would be no such appeal for a commonhold, because commonhold assessments will be set by members of the association at a general meeting. That is why the two streams of accounts and two different sets of moneys would persist. There could be an almost infinite variety of tailor-made schemes to design and operate, and they would bring with them all the potential for the drafting problems that have helped to bring leases into such disrepute and which the Bill sets out to address.

This is a matter not of aesthetics—curiously, that is what the hon. Member for Stone appears to believe—but of practicality. As my hon. Friend the Member for Clwyd, West (Gareth Thomas) so cogently pointed out, complexity, burdensome bureaucracy and all the consequent costs should worry deeply anybody who is concerned about the future of commonhold. If anything will strangle commonhold at birth—another bit of the Opposition rhetoric that I recall from Second Reading—it is the complexity, bureaucracy and cost that would flow from accepting a hurdle of less than 100 per cent. for conversion.

Of course, there are issues in terms of minority holdings, which were mentioned by the hon. Member for Torbay and also the hon. Member for Bath, who referred to landlord blocking. However, all that discussion merely brushes aside the option now available under part 2: the right to enfranchise, which can be triggered by two thirds of leaseholders. Under the right-to-enfranchise provisions in part 2, the landlord's interest can be bought out regardless of whether those who must consent have done so. If the landlord is bought out under those provisions, in due course the right-to-enfranchise company can transform into commonhold, which would in itself stop the blocking potential of a landlord.

Of course important issues are involved, but we must consider what is most likely, in practical terms, to ensure that the new form of tenure takes hold. As we have said many times, in the end the market will decide. I do not want to rehearse those arguments at great length. I merely remind the House that if commonhold has the virtues that we believe it has, it will take root not only in new developments and redevelopments of existing properties without leaseholders, but in the conversion of existing leaseholds.

I hope that the existence of the remedy in part 2 and all the changes that it makes possible, coupled with the fact that profound problems are associated with making the consent level less than 100 per cent., will enable the hon. Member for Torbay to withdraw the amendment.

Mr. Cash

I remain puzzled by the Minister's remarks. He told us that he would go through all the arguments and give us a full explanation, but he has done nothing of the kind. Furthermore, he says that a market will operate, but how can that happen if one puts an enormous roadblock in its way by saying that the unanimity rule will prevail? There will be no flexibility and no marketplace in such circumstances. On the one hand he suggests that he wants more freedom of action and opportunity, but on the other hand he takes it away.

Mr. Wills

I shall try again to illuminate the matter for the hon. Gentleman. With respect, he must focus on the purpose of the Bill—that is, for commonhold to take root. It is all very well for him to say, "Let's have a threshold of less than 100 per cent. Let's not worry about all the problems that will result or the burdensome bureaucracy, complexity and cost. Let's just assume that this will not have any deleterious effect on commonhold taking root"—

Mr. Tony McWalter (Hemel Hempstead)

Will my hon. Friend give way?

Mr. Wills

In a moment; I want first to deal with this point. We have gone over it again and again, and I want to have one last shot at convincing the hon. Member for Stone, after which I shall abandon all hope.

The hon. Gentleman must consider these matters in the round; one should never focus on just one aspect. I hope that he will finally be prepared to change his mind; that he will not be stubborn and obtuse about the matter; and that he will focus on the problems that would result from the amendment. In doing so, he should bear in mind the fact that the right-to-manage and right-to-enfranchise provisions in part 2 give leaseholders—whose concerns are in the forefront of all our minds—an effective remedy against the problems that Opposition Members have described at some length in relation to the amendment—i and many times previously. Those are important advances' that will benefit leaseholders everywhere, and I ask the hon. Gentleman to bear that in mind.

Mr. McWalter

Many Labour Members are worried about the matter, and I am grateful for my hon. Friend's arguments. Fears have been expressed that ultimately the Bill may be a dead letter because it is extremely difficult for people to get these associations off the ground. Will my hon. Friend undertake on behalf of the Government to reconsider the matter with a view to making such modifications as are necessary in the light of experience?

Mr. Wills

Of course I understand the concerns of my hon. Friend and of other hon. Friends who are not here, as well as those of Opposition Members, because this matter is important to their constituents. We are a flexible and responsive Government who want to deliver for the people of this country. If changes need to be made, of course we shall consider making them.

Having given my hon. Friend that reassurance and, I hope, finally broken through the barriers to understanding on the part of Opposition Members, I hope that the hon. Member for Torbay will feel able to withdraw the amendment.

5.45 pm
Mr. Sanders

We have spent an extraordinarily long time on this subject in Committee and on the Floor of the House, and a great deal of time was devoted to it in the other place. As the Minister said, the purpose and principle of the Bill is to let commonhold take root. The amendment would do precisely that by removing the barriers that might prevent it from happening. We have heard some effective arguments from Opposition Members; in fact, the only unanimity has been on this side of the House.

The hon. Member for Clwyd, West (Gareth Thomas) made a good argument about the practicalities of the amendment being in place—that is, that leaseholders who voted in favour of commonhold would have to buy out the leases of those who did not. Given that the amendment calls for a 75 per cent. majority, the maximum number of leases that would need to be bought out would be to the value of 25 per cent. It is possible that those would not need to be bought out because the existing freeholder would only sell the 75 per cent. to those who wished to become commonholders. The leaseholders would not have to buy out in every event. On the other hand, if they did, the value of their commonhold association would be significant, and they would have little problem in raising the money. Of course, if they wished not to go ahead in the light of the figures, they would be at liberty not to do so. There is not, therefore, the blockage suggested by the hon. Member for Clwyd, West.

The British Property Federation believes that achieving the 100 per cent. requirement will be impossible in practice. One would not have expected that organisation to be a great ally of a Bill allowing people to enfranchise themselves with greater ease. If, as I suspect, the federation has decided, "This isn't going to work; it will be impossible for people to become commonholders", that is a good reason for Labour Members who believe in leasehold reform to support the amendment. I duly wish to press it to a vote.

Question put, That the amendment be made:—

The House divided: Ayes 148, Noes 276.

Division No. 188] [5.48 pm
Ainsworth, Peter (E Surrey) Browning, Mrs Angela
Arness, David Burns, Simon
Arbuthnot, Rt Hon James Burstow, Paul
Atkinson, Peter (Hexham) Burt. Alistair
Bacon, Richard Cable, Dr Vincent
Baker, Norman Calton, Mrs Patsy
Barker, Gregory Carmichael, Alistair
Baron, John Cash, William
Beith, Rt Hon A J Chapman, Sir Sydney (Chipping Barnet)
Bercow, John
Beresford, Sir Paul Chope, Christopher
Boswell, Tim Clappison, James
Bottomley, Peter (Worthing W) Clarke, Rt Hon Kenneth(Rushcliffe)
Bottomley, Rt Hon Virginia
Brady, Graham Clifton—Brown, Geoffrey
Brazier, Julian Collins, Tim
Brooke, Mrs Annette L Cran, James
Davies, Quentin (Grantham) Mawhinney, Rt Hon Sir Brian
Davis, Rt Hon David (Haltemphce) May, Mrs Theresa
Djanogly, Jonathan Mitchell, Andrew (Sutton Coldfield)
Dodds, Nigel Moore, Michael
Doughty, Sue Moss, Malcolm
Duncan, Alan (Rutland & Melton) Murrison, Dr Andrew
Fabricant, Michael Norman, Archie
Fallon, Michael Oaten, Mark
Field, Mark (Cities of London) O'Brien, Stephen (Eddisbury)
Flight Howard Opik, Lembit
Flook, Adrian Osborne, George (Tatton)
Forth, Rt Hon Eric Ottaway, Richard
Foster, Don (Bath) Page, Richard
Francois, Mark Paterson, Owen
Gale, Roger Pickles, Eric
Gibb, Nick Prisk, Mark
Goodman, Paul Pugh, Dr John
Gray, James Randall, John
Green, Damian (Ashford) Redwood, Rt Hon John
Grieve, Dominic Rendel, David
Hammond, Philip Robertson, Hugh (Faversham)
Harvey, Nick Robertson, Laurence (Tewk'b'ry)
Hawkins, Nick Rosindell, Andrew
Hayes, John Ruffley, David
Heath, David Russell, Bob (Colchester)
Heathcoat-Amory, Rt Hon David Sanders, Adrian
Hendry, Charles Sayeed, Jonathan
Hermon, Lady Selous, Andrew
Hoban, Mark Shepherd, Richard
Hogg, Rt Hon Douglas Simmonds, Mark
Holmes, Paul Spelman, Mrs Caroline
Horam, John Spicer, Sir Michael
Hughes, Simon (Southwark N) Spink, Bob
Jackson, Robert (Wantage) Spring, Richard
Jenkin, Bernard Stanley, Rt Hon Sir John
Johnson, Boris (Henley) Kennedy, Rt Hon Chartes Steen, Anthony Streeter, Gary Stunell, Andrew
(Ross Skye & Inverness W) Swire, Hugo
Key, Robert Syms, Robert
Kirkbride, Miss Julie Tapsell, Sir Peter
Kirkwood, Archy Taylor, Ian (Esher& Walton)
Laing, Mrs Eleanor Taylor, Matthew (Truro)
Lansley, Andrew Taylor, Sir Teddy
Laws, David Tonge, Dr Jenny
Leigh, Edward Trend, Michael
Letwin, Oliver Turner, Andrew (Isle of Wight)
Lewis, Dr Julian (New Forest E) Tyrie, Andrew
Liddell-Grainger, Ian Waterson, Nigel
Lidington, David Watkinson, Angela
Lilley, Rt Hon Peter Webb, Steve
Llwyd, Elfyn Whittingdale, John
Loughton, Tim Wiggin, Bill
McIntosh, Miss Anne Wilkinson, John
MacKay, Rt Hon Andrew Williams, Roger (Brecon)
Maclean, Rt Hon David Wilshire, David
McLoughlin, Patrick Young, Rt Hon Sir George
Malins, Humfrey
Maples, John Tellers for the Ayes:
Marsden, Paul (Shrewsbury) Tom Brake and
Maude, Rt Hon Francis Mr. Desmond Swayne.
Abbott, Ms Diane Blackman, Liz
Ainger, Nick Blears, Ms Hazel
Ainsworth, Bob (CoviryNE) Blizzard, Bob
Allen, Graham Blunkett, Rt Hon David
Armstrong, Rt Hon Ms Hilary Bradley, Rt Hon Keith (Withington)
Atherton, Ms Candy Bradley, Peter (The Wrekin)
Atkins, Charlotte Bradshaw, Ben
Banks, Tony Brennan, Kevin
Beard, Nigel Brown, Rt Hon Nicholas
Begg, Miss Anne (Newcastle E & Wallsend)
Bell, Stuart Brown, Russell (Dumfries)
Benton, Joe Browne, Desmond
Berry, Roger Bryant, Chris
Buck, Ms Karen Havard, Dai
Burden, Richard Healey, John
Burgon, Colin Henderson, Doug (Newcastle N)
Burnham, Andy Henderson, Ivan (Harwich)
Byers, Rt Hon Stephen Hendrick, Mark
Caborn, Rt Hon Richard Hepburn, Stephen
Cairns, David Heppell, John
Campbell, Mrs Anne (C'bridge) Heyes, David
Campbell, Ronnie (Blyth V) Hill, Keith
Casale, Roger Hinchliffe, David
Caton, Martin Hoey, Kate
Cawsey, Ian Hood, Jimmy
Challen, Colin Hope, Phil
Chapman, Ben (WinalS) Hopkins, Kelvin
Chaytor, David Howarth, Rt Hon Alan (Newport E)
Clapham, Michael Howarth, George (Knowsley N)
Clark, Mrs Helen (Peterborough) Howells, Dr Kim
Clark, Paul (Gillingham) Hoyle, Lindsay
Clarke, Rt Hon Charles Hughes, Bevertey (Stretlord)
(Norwich S) Hughes, Kevin (Doncaster N)
Clarke, Rt Hon Tom (Coatbridge) Humble, Mrs Joan
Clelland, David Hutton, Rt Hon John
Clwyd, Ann Iddon, Dr Brian
Coaker, Vernon Irranca-Davies, Huw
Coffey, Ms Ann Jackson, Helen (Hillsborough)
Coleman, Iain Jamieson, David
Connarty, Michael Jenkins, Brian
Cook, Rt Hon Robin (Livingston) Johnson, Alan (Hull W& Hessle)
Corston, Jean Jones, Helen (Warrington N)
Cousins, Jim Jones, Kevan (N Duiham)
Crausby, David Jones, Lynne (Selly Oak)
Cruddas, Jon Jones, Martyn (Clwyd S)
Cryer, Mrs Ann (Keighley) Joyce, Eric
Cryer, John (Hornchurch) Keeble, Ms Sally
Cummings, John Keen, Ann (Brentford & Isleworth)
Cunningham, Jim (Cov'try S) Kelly, Ruth
Cunningham, Tony (Workington) Kemp, Fraser
Dalyell, Tam Khabra, Piara S
Davey, Valerie (Bristol W) Kidney, David
Davies, Rt Hon Denzil (Uanelli) King, Andy (Rugby & Kenilworth)
Davies, Geraint (Croydon C) King, Ms Oona (Bethnal Green)
Dawson, Hilton Knight, Jim (S Dorset)
Dean, Mrs Janet Ladyman, Dr Stephen
Dhanda, Parmjit Lammy, David
Dobbin, Jim Lawrence, Mrs Jackie
Doran, Frank Lepper, David
Dowd, Jim Leslie, Christopher
Drown, Ms Julia Levitt, Tom
Eagle, Angela (Wallasey) Lewis, Ivan (Bury S)
Eagle, Maria (L'pool Garston) Lewis, Terry (Worsley)
Edwards, Huw Linton, Martin
Efford, Clive Uoyd, Tony
Ellman, Mrs Louise Love, Andrew
Ennis, Jeff Lucas, Ian
Etherington, Bill Luke, Iain
Farrelly, Paul McAvoy, Thomas
Fisher, Mark McCafferty, Chris
Fitzpatrick, Jim McDonagh, Siobhain
Fitzsimons, Mrs Lorna MacDougall, John
Flint, Caroline McFall, John
Flynn, Paul McGuire, Mrs Anne
Foster, Michael Jabez (Hastings) McIsaac, Shona
Galloway, George McKechin, Ann
Gapes, Mike Mackinlay, Andrew
Gardiner, Barry McNamara, Kevin
Gerrard, Neil McNulty, Tony
Gibson, Dr Ian McWalter, Tony
Gilroy, Linda Mahmood, Khalid
Godsiff, Roger Mahon, Mrs Alice
Goggins, Paul Mandelson, Rt Hon Peter
Griffiths, Jane (Reading E) Mann, John
Grogan, John Marris, Rob
Hall, Mike (Weaver Vale) Marsden, Gordon (Blackpool S)
Hamilton, David (Midlothian) Marshall-Andrews, Robert
Hanson, David Meacher, Rt Hon Michael
Harris, Tom (Glasgow Cathcart) Meale, Alan
Merron, Gillian Shipley, Ms Debra
Miliband, David Simon, Sion
Miiller, Andrew Singh, Marsha
Moffatt, Laura Skinner, Dennis
Mole, Chris Smith, Angela (Basildon)
Moonie, Dr Lewis Smith, Rt Hon Chris (Islington S)
Moran, Margaret Smith, Geraldine (Morecambe)
Mudie, George Smith, Jacqui (Redditch)
Mullin, Chris Smith, John (Glamorgan)
Munn, Ms Meg Smith, Llew (Blaenau Gwent)
Murphy, Denis (Wansbeck) Soley, Clive
Murphy, Jim (Eastwood) Southworth, Heleni
Naysmith, Dr Doug Starkey, Dr Phyllis
Norris, Dan Steinberg, Gerry
O'Brien, Mike (N Warks) Stewart, David (Inverness E)
O'Hara, Edward Stewart, Ian (Eccles) 1
O'Neill, Martin Stoate, Dr Howard
Owen, Albert Strang, Rt Hon Dr Gavin
Palmer, Dr Nick Stuart, Ms Gisela
Pearson, Ian Sutcliffe, Gerry
Perham, Linda 1 aylor, Rt Hon Ann (Dewsbury)
Picking, Anne Taylor, Ms Dan (Stockton S)
Pickthall, Colin Taylor, David (NWLeics)
Plaskitt, James Thomas, Gareth (Clwyd W)
Pollard, Kerry Thomas, Gareth R (Harrow W)
Pond, Chris Timms, Stephen
Pope, Greg Trickett, Jon
Prentice, Ms Bridget (Lewisham E) Turner, Dr Desmond (Kemptown)
Prentice, Gordon (Pendle) Turner, Neil (Wigan)
Prescott, Rt Hon John Twigg, Derek (Halton)
Primaroto, Dawn Twigg, Stephen (Enfield)
Prosser, Gwyn Vis, Dr Rudi
Purchase, Ken Walley, Ms Joan
Purnell, James Wareing, Robert N
Quinn, Lawrie Watson, Tom
Rapson, Syd Watts, David
Raynsford, Rt Hon Nick White, Brian
Robertson, John Whitehead, DrAlan
(Glasgow Anniesland) Williams, Rt Hon Alan
Robinson, Geoffrey (Cov'try NW) (Swansea W)
Roche, Mrs Barbara Williams, Mrs Betty (Conwy)
Rooney, Terry Wills, Michael
Ross, Emie Winnick, David
Ruane, Chris Winterton, Ms Rosie (Doncaster C)
Ruddock, Joan Woolas, Phil
Russell, Ms Christine (Chester) Wray, James
Salter, Martin Wright, Anthony D (Gt Yarmouth)
Sarwar, Mohammad Wright, David (Telford)
Savidge, Malcolm Wright, Tony (Cannock)
Sedgemore, Brian
Shaw, Jonathan Tellers for the Noes:
Sheerman, Barry Mr. Ivor Caplin and
Sheridan, Jim Mr. Graham Stringer.

Question accordingly negatived.

Mr. Wills

I beg to move amendment No. 10, in page 2, line 29, leave out paragraph (d).

Madam Deputy Speaker (Sylvia Heal)

With this it will be convenient to discuss Government amendments Nos. 11 to 22.

Mr. Wills

As many hon. Members are aware, the Land Registration Act 2002 has achieved Royal Assent and will he implemented ahead of the Commonhold and Leasehold Reform Bill, assuming that the Bill completes its last stages successfully. For this reason, we found it necessary to take another look at those parts of the Bill which rely on the 1925 Act or will be affected by the provisions in the 2002 Act.

The amendments in this group are rather technical and are required so that the provisions in our Bill work in tandem with the scheme created by the Land Registration

Act 2002. To avoid repeating myself ad nauseam when speaking to this group of amendments, let me explain that references to the 1925 Act are to the Land RegistrationAct 1925, and references to the 2002 Act are to the Land Registration Act 2002.

Subsection (I)(d) of clause 3 provides that one of the consents required before land can be registered as commonhold land is that of a person who is registered as a cautioner of the whole or part of the land. I announced on the first day of the Committee stage of the Bill that we would table an amendment to remove cautioners from the list of persons who must consent to registration of land as commonhold. Amendment 10 would do that by removing subsection (1)(d) from clause 3.

There are two reasons for doing that. First, it will honour a commitment that I made in Committee to simplify the consent requirement in the Bill, as a class of interests would be removed from the blanket protection of the consent requirement and, so far as may be necessary, would be dealt with under clause 3(1)(e). Secondly, it would give room to manoeuvre to take the provisions of the new scheme in the 2002 Act into consideration. The 2002 Act makes changes to the scheme of protection of interests on the register which makes the reference to "a cautioner" in clause 3(1)(d) no longer effective or appropriate. Under the 2002 Act it is still possible to enter cautions against first registration, and transitional arrangements mean that existing entries on the register are retained. However, it will no longer be possible to enter cautions against dealings on the register.

Instead, under the 2002 Act, cautions against dealings are, for the most part, replaced by unilateral notices. Some types of interest that are at present protected by a caution will in future be protected by a restriction. Some interests may be able to be protected by both a notice and a restriction under the new regime—the notice to protect the priority of the interest, and the restriction to ensure that certain procedural requirements of the interest are complied with.

The policy behind the inclusion of cautioners, as opposed to any other interest holder, in subsection (1)(d) was based not on a need for additional protection for cautioners, but rather on the fact that a caution is regarded as a hostile entry on the register, and is subject to the warning-off procedure. Including a requirement for the consent of cautioners in clause 3 effectively brought forward to the pre-application process any dispute under the warning-off procedure that might otherwise delay the registration of the land. Bringing potential disputes to the fore at an early stage was felt to contribute to streamlining, which we considered sufficiently necessary to include it in the Bill.

We want to continue with this policy of early discovery of potential disputes. We will also need to consider whether provision for consent by holders of interests which were protected by entering a caution is necessary. Further consideration will need to be given to whether, and if so what, consent provisions are required for beneficiaries of notices and restrictions as defined in the 2002 Act who would not previously have been cautioners under the 1925 Act.

As we want to be certain that we have given sufficient thought to the consent requirement and those interests, taking into careful consideration the implementation of the 2002 Act, it would he difficult and foolhardy to prescribe in the Bill the holders of which interests should be required to give consent under clause 3. We are certain that further work will need to be done on the matter in conjunction with the implementation of the 2002 Act.

Mr. Geoffrey Robinson (Coventry, North-West)

On consents, I am not sure whether this part of the Bill relates to the issue of Millendreath in Cornwall, a village with many holiday homes, which was part of the National Union of Mineworkers, and which has a long-standing link to the former Coventry colliery, very near my constituency. Will holiday homes be covered by the provision; and what special consents, if any, might be required?

Mr. Wills

I am grateful to my hon. Friend. Other hon. Members have raised in various forums the question of whether commonhold can apply to holiday homes. I am happy to tell him that commonhold can apply to any development where there are at least two interdependent units and common parts. A development consisting entirely of holiday homes is possible, or a few holiday homes in an otherwise owner-occupied development. Commonhold as a form of tenure is flexible enough to allow for any such developments. I hope that that satisfies my hon. Friend's interests.

We are certain that further work will be necessary on the matter to which I referred, in conjunction with the implementation of the 2002 Act. In order to deal with these interests, therefore, the Government would rely on the power as it stands in subsection (1)(e) of clause 3 to prescribe other classes of persons whose consent should be required.

Clause 6(2) refers to section 82(1) of the 1925 Act, which deals with rectification. It excludes the register being rectified under section 82(1) in the specific circumstance of errors in the process leading up to the registrar registering land as commonhold land, and creates a specific procedure in respect of commonhold land for matters that are specific to commonhold.

The 2002 Act provides for a more limited scheme of rectification in clause 65 and schedule 4 than was provided under section 82(2) of the 1925 Act. However, for the purposes of clause 6, because subsection (2) of the clause paves the way for provision on rectification in error of commonholds, the more limited nature of the new scheme is not relevant. The minor change in amendment No. 11 is necessary simply to correct the reference in subsection (2), so that it refers instead to the rectification provisions of section 65 of, and schedule 4 to, the 2002 Act.

On amendment No. 12, in listing various courses of action that a court may take when making an order under clause 6, the Bill provides that the court may order the rectification of the register. This amendment would substitute the word "alteration" for "rectification".

"Rectification" under the 2002 Act has a narrower meaning than was provided under the 1925 Act. We do not want unnecessarily to restrict the power of the court under clause 6(6)(b) to ordering rectification in the new, narrower sense of the word. If there is a defect in the process leading up to registration as a commonhold rather than a mistake on the register preceded by correct registration process, we want to give the court a wide power to make an order that it feels appropriate. In those circumstances, which may have very little to do with the register, it is proper that the registrar should not be asked to consider issues not strictly involving the correctness of the register itself. It should be left to the court to consider the appropriate course of action. The amendment, by replacing the word "rectification" with "alteration", would ensure that defects in the process of application not calling for rectification in the new stricter sense of schedule 4 to the 2002 Act do not fall within the registrar's competence.

Government amendment No. 13 is the fourth of the Government amendments to take into consideration the provisions of the 2002 Act. Clause 6(6)(g) refers to sections 83 and 84 of the 1925 Act, which are provisions in respect of indemnity. That indemnity scheme has been replaced by a scheme contained in section 103 of, and schedule 8 to, the 2002 Act. As with amendment No. 11, because clause 6(6)(g) confers a power to apply, disapply or modify for the specific commonhold context a provision of the indemnity scheme, the differences between the scheme in the 1925 Act and that in the 2002 Act are not relevant for the purposes of the Bill. This amendment would correct the reference in clause 6(6)(g) so that it refers instead to schedule 8 to the 2002 Act.

Amendments Nos. 14 to 19 amend clause 65 of the Bill, which empowers the Lord Chancellor to make rules about registration specifically in relation to commonhold land. In making provision about how these rules are to be made, what they may cover and how they are to have effect, clause 65(2) relies on references to section 144 of the 1925 Act. Clearly, those references cannot survive the repeal of the 1925 Act by the 2002 Act. Therefore, amendments Nos. 14 to 16 would remove reference to section 144 in clause 65(2) and refer instead to the "land registration rules" within the meaning of the 2002 Act. Section 132(1) of the 2002 Act defines land registration rules as any rules to be made under the 2002 Act. That is a useful definition for our purposes, as it catches all the land registration rules in the 2002 Act. As those rules, which are equivalent to those in section 144 of the 1925 Act, are separated out over a number of sections in the 2002 Act, it would be impractical to list them clause by clause.

Amendment No. 17 would remove clause 65(3)(b), which provides that commonhold registration rules may make provision disapplying section 64 of the 1925 Act in certain circumstances. Section 64 dealt with the production of certificates. It is not directly replaced in the 2002 Act, but paragraph 4 of schedule 10 of that Act provides a power to make provision about the production of certificates. The disapplication of general rules for certain circumstances can be done under that power without the need for specific provision to that effect in the Bill, as section 128(1) of the 2002 Act allows "different provision for different cases" to be made by land registration rules. In tabling this amendment, therefore, we seek simply to disapply clause 65(3)(b).

Clause 65(5) requires a commonhold registration document to be accompanied by such fee as specified by order under section 145 of the 1925 Act. Section 145 is replaced by section 102 of the 2002 Act for all relevant purposes. Amendment No. 18 would replace the reference to section 145 of the 1925 Act with a reference to section 102 of the 2002 Act.

6.15 p.m

Clause 65(6) of the Bill defines "commonhold registration document" and "general registration document", and does so for the latter by referring to a document sent to the registrar under a provision of the 1925 Act. Amendment No. 19 would correct that to a reference to a document sent to the registrar under the 2002 Act.

On Government amendments Nos. 20 and 21, clause 67(1) defines "the register" as that kept under section 1 of the 1925 Act. That section is repealed by section 1 of the 2002 Act. Amendment 20 would correct the reference in clause 67(1) so that it refers instead to section 1 of the 2002 Act.

Amendment No. 21 would amend clause 67(6) to remove reference to an insertion in the 1925 Act after section 126(4), which made provision for the expenses of the registrar—principally salaries of staff—to be provided out of money given by Parliament. Clause 67(6), as it stands, extends the scope of that provision so that expenses relating to commonhold registration functions can be similarly provided. Provision of the registrar's expenses out of money given by Parliament is no longer appropriate, given the Land Registry's trading fund status and the 2002 Act does not reproduce section 126 or make provision in the same way. Land Registry expenses will be met in different ways. The provision to be inserted b) subsection (6) is therefore no longer required.

Government amendment No. 22 affects clause 69(3), which provides for any provision of the 1925 Act defining an expression to apply to the use of that expression in part 1 of the Bill unless the contrary intention appears. The reference to the 1925 Act in clause 69(3) should now be to the 2002 Act, and amendment No. 22 would do that.

Mr. Cash

The Minister rattled through these complicated but not very interesting amendments, although there are some important exceptions. I am put in mind of the famous occasion when it was said—I believe that it is true—that a town clerk added a clause to a private Act by burying in the verbiage a provision tha "the town clerk shall hereby be divorced". When I heard the reference to the Land Registry and the state trading unit—or whatever it was described as—my ears pricker up. However, I am sure that, given the Minister' integrity, we have not landed ourselves with an enormous problem that we will live to regret; far from it. We an thoroughly gratified by the speed with which he dealt with the amendments.

In my comments on unanimity, I rightly included—because the amendment had not been tabled—a reference to cautioners as those whose consent would be required under clause 3(1)(d). Now I see that—of course, I observed this before—cautioners will be taken out of the Bill by an amendment that was about to be tabled. We are grateful that, as a result of our powerful arguments in Committee, the references in clause 3(1)(d) have beer excluded from the Bill. As the House will know, my view is that the amendments do not go anything like far enough. The unanimity problem will prevail for all the other circumstances described in clause 3.

We have had an extensive debate on that issue, so I have no further comments to make on the amendments. We will certainly not divide the House on them.

Mr. Don Foster

The Liberal Democrats congratulate the Minister on a 14-minute tour de force covering a wide

range of important issues. I merely invite him to tell us which bit of his speech he considers the most important, and would tell the editors of either "Today in Parliament" or "Yesterday in Parliament" to concentrate on.

Mr. Wills

They would disregard anything that I have said at their peril.

Amendment agreed to.

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