HL Deb 22 March 2001 vol 623 cc263-6GC

(" .—(1) Section 30B of the 1985 Act is amended as follows. (2) After subsection (3)(b) insert "; and

(3) After subsection (4)(a)(ii) insert "; and

The noble Lord said: The amendment would amend the 1985 Act. It is a modest amendment based on specific experience. I have talked to a number of people in the field and there is a growing recognition of the phrase "amateur managers". There is going to be a major question in many areas of leaseholding about the competencies—in both senses of the word—of the managing agent and of the residents' association, which is the typical generic title. In today's environment, they are generally not called "tenants' associations"; they are generally called "residents' associations", but that is by the by. We are talking about the same animal.

Apropos the point that has just been made by the noble Earl, Lord Caithness, the realities are that a residents' association would have some responsibilities. It can often be a company and, as I understand it, it can often take responsibilities for members as well as non-members, provided that the members constitute more than 50 per cent of the total number of leaseholders. We are talking about quite an important part of the jigsaw puzzle here, and yet nowhere is there a very clear statement about the standing and competence of the residents' association. Neither is there very much about the role of the managing agents. This seems to be an under-explored part of the whole equation that we have been debating for weeks in this Bill.

I have a very interesting document here; it is the management code of the Royal Institution of Chartered Surveyors. Many Members of the Committee will be aware of this document, and some Members of the House of Lords have probably written it. It is an interesting attempt to codify the existing law. It also tries to go a little beyond that and maybe mention what one might call good practice.

One of the difficulties is that on the one hand one does not want to make the law too prescriptive and rigid. On the other hand, a typical code of practice on relations and practice procedure between residents' associations and managing agents, and indeed landlords—in other words, freeholders—tends to rely on the statutory requirement as being the basis of its own code. In other words, I do not know that there is very much in this code of the Royal Institution of Chartered Surveyors which is any different from an intelligent person's guide to the law. That is understandable, but I suspect that there is more to it than good practice, which goes beyond the law.

Unless we want the law to be very detailed and prescriptive in this area, we ought to be looking for a bigger role for good practice documents, both on the part of the Property Owners' Federation—I do not know whether it has a code, but it probably does—and the Royal Institution of Chartered Surveyors. That is my first general point before I mention the actual terms of the amendment.

At the moment, the law requires consultation on the appointment of a managing agent and in respect of many other matters. It follows the basic doctrine that the managing agent is responsible solely to the freeholder, and there is no way round that legally. In practice, however, the managing agent has a week-by-week relationship not only with the landlord—in other words, the freeholder—but with the residents' association. It is bad news for that relationship if the landlord can at will sack the managing agent and appoint another one, which is the position at the moment. The amendment seeks to improve that procedural relationship.

The issue arises in cases in which there will be the right to manage. It arises in a different way in the right to enfranchisement, but the Bill will change the context in which many blocks operate even if they are precluded from availing themselves of RTE or RTM. My own personal intuitive guess is that out of the 1 million people quoted, about half will still be in the position of the relationship being with the managing agent through the residents' association.

It is necessary to have some proper recognition of the residents' association, and this is a probing amendment to see whether we can throw some light on that relationship and give some recognition to its importance. Will the Minister say something about the status and role of codes of practice in this area? Would it not be useful to encourage a code of practice about relationships when the Bill has been enacted, which we hope will be soon? Otherwise there will be a large gap between the fine words written in the Bill and many residents' associations and managing agents struggling in difficult, circumstances as regards who they represent, who is legally liable for the decisions which they reach and so on. To use the vernacular, it could become a dog's breakfast. That is why I seek some wider discussion on this whole area. I beg to move.

5.45 p.m.

Lord McIntosh of Haringey

The amendment before us is very limited and specific but the noble Lord, Lord Lea, has quite legitimately used it as a peg on which to hang more general criticisms of the position in leaseholds that do not qualify for the right to manage or the right of enfranchisement. I shall respond first to the more general points before turning to the amendment.

It is true that there are still major problems in ensuring good standards of leasehold management. I know that the noble Lord, Lord Lea, has discussed the matter with Ministers and has been told that we want to do something about the issues but must consult more widely. It does not seem possible that we can do so within the time-scale of the Bill. I accept that his points deserve consideration. In particular, the noble Lord makes an interesting point about codes of practice. The answer as to their status is that they can be used as evidence in proceedings; for example, on the question of the appointment of a manager under Part II of the 1987 Act, which is very close to the specific amendment that is before the Committee. It is not possible to do anything within the framework of the Bill. but it is certainly necessary that standards of management of leasehold properties should be improved.

As regards the specific amendment that is before us, the Bill provides that there must be consultation before the appointment of a manager. We agree that it would be wrong for a landlord to sack a managing agent for trying to be fair to all parties. However, a requirement to consult before sacking him would simply result in delay and would not change the decision. There could be all kinds of other reasons for sacking a manager— and much more likely reasons than that he is being too fair and equitable in his treatment of the leaseholders. Although we are sympathetic to the thinking behind the proposal, we cannot accept the amendment that is before us.

Lord Lea of Crondall

I indicated that this was a probing amendment, but the recognition of, and regular meetings with, residents' associations will become a big issue when the Bill is implemented. If circumstances arise under which the Bill does not reach the statute book soon, there may be scope for further consideration of how this matter can be addressed more satisfactorily. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 239A and 239B not moved.]

Clause 140 agreed to.

[Amendment No. 240 not moved.]

Clause 141 agreed to.

Lord Richard had given notice of his intention to move Amendment No. 240A: After Clause 141, insert the following new clause—