LEASEHOLDERS' RIGHTS (Hansard, 1 March 1966)

§ THE JOINT PARLIAMENTARY SECRETARY, MINISTRY OF LAND AND NATURAL RESOURCES (LORD MITCHISON)

My Lords, it is much more than a form of words to say that I am very grateful indeed, as are the Government, to my noble friend for raising this matter. I have never said here, or in any other place, that all freeholders were wicked and all leaseholders virtuous. Indeed, I have said the contrary: that there is a difference in their position. A freeholder is inevitably concerned with the investment possibilities of his freehold, and the leaseholder has to live in the house. The object, or one of the main objects, of the White Paper which was issued the other day, was to foreshadow legislation which will prevent people who have 674 lived in houses for a long time—not only in London but in other parts of the country—and come to regard them as their home, from being turned out at the end of a long lease, which was made several generations ago and may itself have represented at the time a rather harsh pressure, as events have proved, on those who had to find somewhere to live in that part of the world.

But, be all that as it may, let us for one moment look at this letter, of which my noble friend has, in my view, quite rightly complained. It is dated February 17. The White Paper on Leasehold Reform came out on February 18, one day later. It was, as my noble friend rightly reminded us, discussed and approved without a Division in another place last night as a basis for future legislation. I cannot disconnect these events.

§ LORD MITCHISON

I think it is pretty obvious that there was some connection between the proposed legislation and the letter. What I find fault with about the letter is this. If you read it through it is rather hard to put your finger on a sentence and say: "That particular sentence is untrue". But when you take the letter as a whole, there is not the least doubt what it is intended to convey to the minds of the recipients. What it is intended to convey is that there is certainly going to be development; that it is certain that satisfactory arrangements will have to be made by, and with, the leaseholders, and that it is reasonably certain that, one way or another, they have to find somewhere else to live. The very last sentence which my noble friend happened to omit is: I am sure you will find that the representatives of Messrs. Ernest Owers & Williams will do all they can to assist you in finding suitable alternative accommodation. First of all, let us consider what the actual position under the White Paper is. It is perfectly clear that there is a right to enfranchise the leasehold, and the 675 broad terms of that enfranchisement are set out in the White Paper. Consequently, the leaseholder is entitled at any time during the lease to get the freehold by enfranchisement. Therefore he is fully entitled to reply to these people: "I am still entitled to enfranchise, and instead of your buying me up I am entitled to buy you up, and you have no right whatever to intimate to me in any way that you can, for the purposes of development, get me out." The only circumstance in which the freeholder can get the leaseholder out against the leaseholder's agreement is this: Where a leaseholder has not enfranchised"— that is to say after the end of the lease— and the lease has been extended for fifty years, which is an alternative right given under this Bill, the landlord will have the right at any time during the extension of fifty years to obtain possession. if he shows that he genuinely intends to redevelop the property, but he will have to pay compensation to the leaseholder equal to the value of the leasehold interest as it then exists. That is paragraph 19 of the White Paper, and it lays down in pretty clear English the circumstances in which the freeholder can get hold of the property in order to redevelop it.

I call the noble Lord's attention to the fact that it is up to the freeholder to prove that he genuinely intends to develop. If he went to a court and said that, and then this letter were produced—and it might be that he had not even asked for planning permission at the time—so far from helping his case, I think it would be a considerable hindrance to it. But the essential point about this is that until the leaseholder has decided that he does not want to enfranchise and there has been an extension of the lease for 50 years, which is the alternative open to the leaseholder, the freeholder has no power whatever to turn him out. The leaseholder must be given his opportunity to enfranchise.

I agree that anyone may say, "Well, this is a new measure; it is new law". So it is; and it was discussed as such, I repeat, last night in another place, and was accepted without a Division and with a good deal of approval from the Con- 676 servative side, as well as from the Labour side for what it was trying to do. What it is trying to do is to effect a considerable change in the rights of long leaseholders, provided that they qualify under the Bill we propose. The qualification depends on the length of the lease, on the length of occupation and on a rateable value limit, which in London is—400 and elsewhere in the country—200. The rateable value must be below those figures.

This has a broad social purpose. When I read the penultimate paragraph of this epistle: You will know that the construction of new residential accommodation is being encouraged at the present time, and this has prompted my company to plan the re-use of the land so that a much larger number of people can he accommodated in modern flats, and your co-operation is anticipated and prompts this personal letter", I am prompted to say that this is hypocritical hunk. But since we know, on the highest authority, that limited companies "have no body to be kicked and no soul to be damned" I suppose we cannot charge them as a company with hypocrisy. But it is too much that this sort of letter should be sent round when the writer of it knows perfectly well that legislation either has been outlined, or will very soon be outlined, which will certainly affect the position of leaseholders and make a great deal of this letter as untrue as in fact it is. It is not untrue by reason of any misstatement, but in the far more dangerous kind of untruth which consists in the suppression of the truth. That is the danger of this letter. In fact if the true position had been stated, the letter would have read very differently. This is not merely a matter of the way of putting things. It goes beyond that.

My Lords, I earnestly hope that the very proper action of the noble Lord in raising this matter here to-day, coupled with what I have said, will lead leaseholders to look carefully at the letters they get from freeholders. I am not saying that all freeholders are wicked, but I am saying that anybody dealing in land, quite apart from this particular question we are considering to-day, is usually well advised to get some advice. I am not trying to promote the interests of the legal profession but merely seeking to ensure that people who know a good 677 deal about the situation do not take an unfair advantage over those who may not know nearly so much. I hope that leaseholders will not hesitate to seek advice when there is any doubt about the position.

Speaking with—I do not know whether or not it is arrogance, but at any rate with a real sense of responsibility, I would suggest to ground landlords, whether they are in London or Wales, or wherever else they may be, that they really have a moral and social responsibility about this kind of thing. There is legislation, of which the 1954 Act is an instance, which puts on them a duty to call the attention of the leaseholders with whom they are dealing to the state of the law. I do not know whether or not that will be in the Bill when it is drafted, but I do say that it represents the standard of common decency and fairness which ought to be there, and to which one ought not to have to call attention. It really is up to the freeholder, in cases like this, not to count on an equality of knowledge in the leaseholder. It is up to him not to regard this as a matter where the leaseholder must know just as much as he knows himself.

In the particular instance we are discussing it is a property company, whose business it is to know what it is doing; and in fairness to the leaseholder it is right that he should be given a fair statement of the case. I do not say it need be an enormous and comprehensive statement, but it is right that this should be done, and it is right for the company to act decently and not to take advantage of its superior position in the matter, as it sometimes has, and of superior knowledge, as it frequently has.

I do not think we need help my noble friend. He knows what he is talking about; he knows where he is. I do not know what his rateable value may be; he may be all right on that count; but this letter was being sent round to a number of people. Some of them will not know 678 their position, and it is just as well that they should take heed of what I am saying (and noble Lords will be relieved to hear that I am about to sit down): "For goodness sake!, if you get a letter from the freeholder, whether that freeholder be the Church Commissioners or John Jones Ltd., look at it, read it by all means, but do not go and do what the freeholder suggests until you either know the law and the general position about it or have taken steps to ascertain it ". I am not urging leaseholders to go and consult a lawyer in every case, although I must say in this matter I am refraining from doing so with a little difficulty; but I do say to them: This is something which will matter to you now, and possibly for the rest of your life. It is an important business. Do not go into it or answer letters or comply with anything until you know where you are ".

I will end with the shortest of short stories. It is the tale of Mr. Smith, who received a notice to quit and was in fact protected by the Rent Acts. He replied: "Dear Sir, I remain, Yours faithfully, William Smith". That was quite enough. And those who do remain may bear in mind that my right honourable friend the Minister of Housing and Local Government made a promise about people who hang on at the end of a lease and are still in possession. The promise was to the effect that those who so remained should be brought within the scheme, and it was made on behalf of the Government on December 8, 1964. So there is value, as I hope the mythical Mr. William Smith found, simply in remaining. There is even more value in finding out how you stand before you answer any letters from landlords.

One last piece of advice. If you are in any doubt about it, go and ask your Member of Parliament, to whichever Party he belongs; because I believe this is a matter on which we all have a conscience and a real sense of our own responsibilities, such as my noble friend has shown to-night.