§ 4.28 p.m.
§ Lord Elton rose to move, That the draft order laid before the House on 12th November be approved.
§ The noble Lord said: My Lords, the need for this order arises from a judicial decision of this House in December 1978 in Wentworth Securities Ltd. v. Jones. That showed the existence of a major loophole in the 354 legislation relating to leasehold enfranchisement. In order to plug this loophole, the Leasehold Reform Act 1979 was enacted for Great Britain. This order proposes to do the same for Northern Ireland so as to ensure that long leaseholders are not effectively deprived of the rights granted to them by the Leasehold (Enlargement and Extension) Act (Northern Ireland) 1971. This Act provides that a long leaseholder of a house who pays ground rent is entitled to purchase the freehold compulsorily on favourable terms, provided certain conditions are satisfied, and it corresponds to the Leasehold Reform Act 1967 which applies to England and Wales.
§ In Wentworth Securities Ltd v. Jones this House in its judicial capacity held that the landlords had created a conveyancing device which was highly successful in increasing the price to be paid for the freehold. It increased the price from £300 to £4,000, an increase of some thirteen-fold. The device was ingenious and its use had not been anticipated when the Leasehold Reform Act 1967 nor the Leasehold (Enlargement and Extension) Act (Northern Ireland) 1971 were drafted, thus leaving a gap in the legislation open to exploitation by landlords and their legal advisers.
§ The aim of the order therefore is to close that gap and to ensure that the price payable under the Leasehold (Enlargement and Extension) Act (Northern Ireland) 1971 by a leaseholder claiming the freehold cannot be artificially increased by transactions involving the creation, transfer, or alteration of the terms of an intermediate lease which have taken place after 15th February 1979. That is the operative date for the corresponding legislation which applies in England and Wales; that is to say, it is the date on which the Leasehold Reform Bill was introduced in another place. On that date, the then Government signified their intention to remedy the defect exposed in the legislation by the Wentworth case, and I consider it proper that there should be no hiatus between the enactment of the Leasehold Reform Act 1979 and the present order during which a swift and clever lawyer in Northern Ireland—and there are many such—could have produced a scheme similar to that which the order seeks to frustrate.
§ This order will close the loophole in the law and ensure that the leaseholders in Northern Ireland will be free from potential exploitation from which their fellow occupants in Great Britain are protected. I beg to move.
§ Moved, That the draft order laid before the House on 12th November be approved.—(Lord Elton.)
§ Lord Blease
My Lords, from this side of the House we formally welcome the order as a very useful piece of legislation and support its approval.
On Question, Motion agreed to.