§ (" .—(1) Any provision in a lease of a dwellinghouse to which this Act applies, whensoever created, requiring a tenant to insure with a nominated company and through the agency of a lessor (or both) or any other person, firm or company shall be void.
§ (2) Such provision shall continue to be effective so far as it relates to the insurance of a dwellinghouse against the usual household risks, for the full reinstatement value and index-linked, with ally reputable insurance company.").
§ The noble Baroness said: This amendment seeks to deal with the question of insurance companies and the necessity to insure with particular companies. Under the terms of most leases, there is a requirement for the lessee to insure the leased premises. More often than not, the requirement is that it should be with an insurance company named by the landlord or through the landlord's agency. Under such circumstances, 274GC leaseholders do not have the freedom of choice to obtain the best terms and conditions for their insurance. Flat holders can apply to the leasehold valuation tribunal on this matter, but house leaseholders do not have that protection.
§ Threats are often made by landlords to take forfeiture action in cases of non-compliance, which can sometimes result in tenants being intimidated into taking out double insurance, with the complications that that entails in the event of a claim.
§ The lessees on a long lease, on a full repairing basis, have the major interest in the premises and should be able to insure with any reputable insurance company of their choice. I beg to move.
§ Lord Goodhart
I rise to support the amendment. The practice is an abuse. The motive for including such provisions is, almost always, to enable the landlord to obtain commission. I have long taken the view that commission paid by insurance companies is a form of legalised bribery. Anything that reduces it seems to me to be a good thing. It will enable insurance policies to be cheaper than they are now, although that is clearly a long way beyond the scope of the Bill. I am happy to support the provision in the amendment.
§ Lord Hodgson of Astley Abbotts
I rise briefly to support the amendment of my noble friend Lady Hanham. I declare an interest in that I am director of a building society. The good practice in a building society now is to allow people to insure more widely. There was previously a practice whereby insurance could be obtained only from one company because that assured the position of the society. The amendment is in keeping with modern consumer choice and gives people a preference.
§ Lord Whitty
Again, we have some understanding of the concerns behind the amendment. We have received many reports that leaseholders have been required, usually under the terms of their lease, to insure their property with a nominated company, sometimes at inflated premiums. Under the present provisions, the leaseholder can go to art LVT to challenge the landlord's choice of nominated insurer. We recognise that under the present system the cost of launching such a challenge may turn out to be greater than the money saved. For that reason, among others, we plan to reduce the minimum fee for applying to the LVT in such cases.
The amendment takes a more sledgehammer approach and suggests that we should ban nominated insurer clauses outright. I have some sympathy with that. But we need to give considerable thought to how that works out in detail. Landlords have a legitimate interest in ensuring that their property is properly insured, and we need to make sure that any new arrangements are fair to the landlord and also give some flexibility to the leaseholder. Moreover, the clause as drafted would require overriding the insurance terms of existing leases. While that might be desirable in certain cases, we could not do that without having previously consulted widely on the implications. I hope, therefore, that the noble 275GC Baroness will not pursue the amendment. We undertake to look at this matter as a possible longer term measure outside the scope of the Bill.
§ Baroness Hanham
I thank the Minister for his reply. I make two points in response. First, as I suggested in my opening remarks, I believe I am right in saying that leaseholders of flats have the right to go to a leasehold valuation tribunal but leaseholders of houses do not. I am concerned about that discrepancy. I see noble Lords shaking their heads, but I believe that that is the situation. Secondly, I cannot believe that it is beyond the wit of all the wonderful lawyers—it may be beyond mine—to devise a system whereby the landlord can be satisfied that the required insurance is in place. I am sure that nowadays that is perfectly tenable. None the less, I am glad that I have raised the matter. I thank the Minister for his courteous reply. I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
Baroness Hanham moved Amendment No. 247B:
After Clause 142, insert the following new clause—