§ 1Clause 1, page 2, line 5, after ("or") insert ("save where the freeholder is a body of persons or Trust established for charitable purposes only").
§ The Commons disagreed to the above amendment but proposed the following amendments in lieu thereof:
§ 2Page 83, line 6, leave out ("shared ownership lease") and insert ("lease in pursuance of Part I of this Act").
§ 3Page 83, line 16, leave out ("shared ownership lease") and insert ("lease in pursuance of Part I of this Act").
§ 4Page 83, line 20, at end insert—
§ ("(4) Where, in the case of a tenancy to which this subparagraph applies, the tenant or the tenant under a sub-tenancy directly or indirectly derived out of the tenancy exercises his right to acquire the freehold under Part I of the said Act of 1967, the price payable for the dwelling-house shall be determined in accordance with section 9(1 A) of that Act notwithstanding that the rateable value of the dwelling-house does not exceed £1,000 in Greater London or £500 elsewhere.
§ (5) Sub-paragraph (4) above applies to—
- (a)a tenancy of a dwelling-house which is a house which is created by the grant of a lease in pursuance of Chapter I of Part I of the 1980 Act or Part I of this Act;
- (b)a tenancy which is granted in substitution for a tenancy falling within paragraph (a) above in pursuance of Part I of the said Act of 1967; and
- (c)where in any case that Part applies as if there had been a single tenancy granted for a term beginning at the same time as the term under a tenancy falling within paragraph (a) above and expiring at the same time as the term under a later tenancy, that later tenancy.").
§ The Earl of Selkirk rose to move:
§ 4A That this House do not insist on their Amendment No. 1 to which the Commons have disagreed and do agree to Amendments Nos. 2 to 4 proposed by the Commons in lieu thereof with the following Amendment to the Commons Amendment No. 4:
Line 1, at end insert—
("(3 A) The provisions of Part I of the said Act of 1967 shall not apply to a tenancy of a dwelling-house which is a house which is created by the grant of a lease in pursuance of Chapter I of Part 1 of the 1980 Act or Part I of this Act, nor to a sub-tenancy derived (whether directly or indirectly) from that tenancy, in any case where the landlord is a registered Housing Association and the freeholder is a body of persons or Trust established for charitable purposes only.").
§ The noble Earl said: My Lords, we discussed a similar amendment at the Committee stage and we carried it by a large majority. This amendment was, however, refused by the House of Commons and they put in what I regard as a minor point in that they raised the rate of compensation which might take place. This is a different amendment and a much narrower amendment indeed. First of all, it leaves out the problem of Dulwich altogether. That is to say, the householders in Dulwich can buy their houses under this Bill from the Southwark authority and can afterwards use the 1967 Act for enfranchisement from the freeholder. Dulwich, I understand, are perfectly happy to sell, and I can leave it at that.
§ When the other place discussed our amendment they said that the position of universities was indeed important and not very easy. What they did, as I said, was simply to raise the compensation of enfranchisement and nothing else; that is to say, it leaves the position substantially unchanged. This is not a problem of compensation; it is a problem of the development of our great universities. That is really the only point which we are considering at the present time.
§ The Government said that they already had a system which would answer this point. I want to deal with this fairly fully to show that to my mind the system is unsatisfactory. It is highly complicated, bureaucratic, highly centralised, and uncertain in its results, and I hope that I shall show that that is unsatisfactory to everybody concerned. May I explain the process which will be gone through under this Bill. First of all the tenant would exercise his right to buy from the landlord. That remains untouched in this amendment. Thereafter he would enfranchise his lease from the freeholder, which would be one of the universities.
§ What will inevitably happen, indeed is already happening now—and I believe in a number of cases—is that the freeholder will ask the Secretary of State to give him a covenant on the building, which in fact will be a real obligation; that is, if he sells the building the obligation will indeed continue.
§ But now we come to the crux of the situation which has never yet happened. How will the Secretary of State fulfil the terms of the covenant? He will take what will inevitably be a wholly arbitrary action. He has to decide whether he will grant the freeholder, or the former freeholder, the right compulsorily to acquire this house or whether he will refuse it. That immediately raises the situation of complete insecurity, both for the freeholder and for the tenant.
§ The whole purpose of the Bill is to give people security in houses which they own. Immediately under this process that is completely undermined. The freeholder does not know whether he will get his land back and the tenant does not know whether he will be turned out. This is an unsatisfactory situation; it is neither clear nor known. I believe one used to say that equity was as long as the Lord Chancellor's foot. Here the security is just as long as the Secretary of State's foot or any other part of his body. We do not know who the Secretary of State will be. This process will take place in 40 or 50 years' time (it could be more or less) and we have no idea who the Secretary of State will be. We have not the slightest idea what decision he 1019 will make. It will be a very difficult decision for him to make, I appreciate that, but it leaves all the people concerned—a comparatively small number— uncertain as to how they stand.
§ I should like to explain what this amendment does, what its purpose is and how it will be carried out. I hope I shall be able to explain that it meets the central point, first, of giving security to the tenant and certainty to the freeholder. Secondly, it will enable the Secretary of State to avoid having to use the power of compulsory purchase of a private house. In any circumstances that is a most disagreeable thing to have to do.
§ I am suggesting in the amendment that the tenant should use the right to buy as laid down in the Bill. That remains unchanged. He would then have what might be termed the landlord's position of a leasehold where probably the rent will be less and he will have assured tenure for a longer period. That is greatly to the advantage of the tenant. The university retains the freehold and everyone then knows exactly where he stands. If there is any rule which is important in land tenure it is to know exactly where one stands, what the liabilities are and how long one is likely to be there.
§ At present the arrangement made by universities is extremely good: The colleges in certain cases—I cannot speak for every one—went to the local authority to explain that they had land that they would not need for a long period and asked "What socially, and otherwise, is the most desirable use for that land? How should we use it?" An agreement was reached between the local authority, the university and the housing association and it was decided that to build houses was the most useful thing to do. I think most noble Lords would agree with that. It would be the proper thing to do and the land was given for a long tenure which the university could take back and on the grounds that the university could put in one-third of the tenants, the town council one-third and the housing association one-third. This is the arrange-ment, which I am given to understand is working extremely well, and is the system which I am suggesting in this amendment. I believe that in these circumstances that would be very much more satisfactory for all concerned in this arrangement.
§ I want to add one other word. Any cavalier treatment of charity is extremely dangerous. Charities play an enormous part in this country in the back-up of education, of health services, of what you will. I remember the late Lord Beveridge, perhaps 30 years ago, speaking and writing on this—the value of voluntary service, most of which is charitable work. This is an essential back-up to the whole of the welfare state. I will not go into detail, but we should perhaps consider the situation if some of the great charities today were not playing their part in helping us in the modern society which we have built up.
§ It is dangerous to disregard or in any way to trample on charities as they stand. We are not considering a large number of houses, but we are talking about houses in an essential and, in many cases, central area of our great university towns. They are therefore of great importance. I am not a Cambridge man, but Cambridge, among others, has been doing its job for 1020 some 700 years. Do they not know better than the Ministry of the Environment how the place should be developed? Is it not better for Cambridge to make the decisions which matter?
§ I end by saying that this gives greater security to the householder and the freeholder. It avoids having compulsory acquisition laid on them by the Secretary of State at any time. I beg to move.
§ Moved, That this House doth not insist on their Amendment No. 1 to which the Commons have disagreed and do agree to Amendments Nos. 2 to 4 proposed by the Commons in lieu thereof with Amendment No. 4A to the Commons Amendment No. 4.—(The Earl of Selkirk.)
§ The Deputy Speaker (Lord Aberdare)
My Lords, if this Motion is agreed to I cannot call Amendment No. 4B.
§ Baroness Nicol
My Lords, I should like to concentrate particularly on the charitable aspect of the amendment of the noble Earl, Lord Selkirk. There will always be 20 to 25 per cent. of people in this country who will require rented accommodation. This is not my view; it is the view of one of our leading building societies, which deals with private property and house sales all the time. This is the level of rented accommo-dation which it feels will always be required.
As the stock of local authority housing is being run down, or certainly reduced, which is perhaps a better word, we shall rely more and more on housing associations and on charitable institutions to provide rented accommodation. Certainly charitable land will become more and more important. The noble Earl, Lord Selkirk, has concentrated particularly on Cambridge. It is true that the charitable land in Cambridge is particularly important for the provision of accommodation in that town, but there are other towns and other charities where the provision of land, and the feeling of the charity that that land is secure in the long term, are extremely important for the supply of accommodation both rented and for sale in the way in which the noble Earl, Lord Selkirk, has outlined.
There has always been widespread support for the protection of charities in this House and not only in this House. When the Leasehold Reform Act 1967 was under discussion I understand that a large number of Conservatives voted in favour of an amendment to exclude charities at that time. Included among their number was a certain Mrs. Thatcher and a certain Mr. Heseltine. I do not think that many Conservatives will have gone back from that situation.
I should have liked to see the suggestion of the noble Earl go a little further. I should have liked to see an amendment that produced retrospective elements in some of the legislation before us but I appreciate that this is not possible or acceptable. This amendment is a good compromise and from our side of the House we will support it.
§ Lord Coleraine
My Lords, I think that it will be for the convenience of the House for me to speak now to Amendment No. 4B which stands in my name and which cannot be called if the amendment now before the House is passed.
§ Amendment No. 4B: That this House do not insist on their Amendment No. 1 to which the Commons have disagreed, that they disagree to Amendments Nos. 2 to 4 proposed by the Commons in lieu thereof but propose the following amendment in lieu of the Commons Amendments:
Page 82, line 46, leave out paragraph 1 and insert—
("1.—(1) The provisions of Part I of the Leasehold Reform Act 1967 (enfranchisement and extension of long leaseholds) shall not apply to a tenancy to which this sub-paragraph applies.
(2) Sub-paragraph (1) above applies to—
- (a)a tenancy of a dwelling-house which is a house which is created by the grant of a lease in pursuance of Chapter I of Part I of the 1980 Act or Part I of this Act;
- (b)a sub-tenancy directly or indirectly derived out of a tenancy falling within sub-paragraph (a) above; and
- (c)where in any case Part I of the said Act of 1967 applies as if there had been a single tenancy granted for a term beginning at the same time as the term under a tenancy falling within paragraph (a) or paragraph (b) above and expiring at the same time as the term under a later tenancy, that later tenancy.").
§ My noble friend's amendment seeks to exclude the provisions of the Leasehold Reform Act from long leases where the landlord is a residents' housing association and the ultimate freeholder is a charity. My amendment would seek to exclude the provisions of the Leasehold Reform Act 1967 from any right-to-buy lease created under this Bill or the 1980 Act. Your Lordships' amendment to Clause 1 of the Bill had one direct object and one indirect effect. The direct object of the amendment was to decline to extend to tenants of public landlords whose ultimate freeholders are charities any right to buy long leases of their homes. The indirect, knock-on, effect with which both amendments are chiefly concerned this afternoon was to preclude the expropriation under the Leasehold Reform Act 1967, on any terms, of the ultimate freeholders provided that the freeholders are charities.
§ I would agree that the direct object of the original amendment was ill-advised because it deprived some public-sector tenants of the right to buy long leases of their homes from their landlords on the altogether irrelevant grounds that their ultimate freeholders were charities. To have insisted on this amendment would have perpetuated and compounded the anomaly between the treatment of one public-sector tenant whose landlord is a freeholder and the treatment of another tenant whose landlord is itself a leasehold tenant by creating the sub-distinction between the case where the freeholder is a charity and the case where it is not. Such anomalies can only cause feelings of unfairness in the tenants affected by them, and in the absence of grounds of principle for retaining them I see every reason in this clause of the Bill to be rid of these anomalies altogether.
§ This is recognised both in my noble friend's amendment and in my amendment. Neither amendment would deprive a public-sector tenant whose landlord is itself a lessee, of the right to buy a long lease under the Bill. So we both accept the force of the reasoning which led the other place to reject the direct object of the original amendment. It is only when we come to the indirect effect of that amendment and the manner in which the other place propose that it should be dealt with that difficulties arise between me and the Amendment-in-lieu, No. 4, proposed to us by the other place, to which I now turn.1022
§ Concern was expressed here, at various stages of the Bill's passage, at the consequential effect of Clause 1 of the Bill. When a lease of a house is created under the right-to-buy provisions of the original Bill, the tenant, after three years' continued residence in the house, will have the right—not under the Bill but under the Leasehold Reform Act—to acquire the freehold or an extended lease of the house. If the tenant chose to acquire the freehold or the extended lease, the price or the rent would be calculated according to a formula which could only be justified as a pragmatic measure introduced to alleviate hardship. This was the 1967 Act and the late 1960s were days of pragmatic measures. The noble Baroness, Lady Nicol, during the debate on my noble friend's original amendment, reminded us of the miners or miners' widows who were then, in 1967, having to leave their homes because their century-old leases were up. That was the situation of hardship then seen to exist. I venture to doubt that the noble Baroness would hold much of a brief now for the adoption in this Bill of the terms of compensation which freeholders were given in 1967; or that she would see much hardship suffered by right-to-buy tenants. But those are the terms of compensation which would have fallen to the lot of a freeholder under the original provisions of the Bill.
The editors of Woodfall, a respected treatise on the law of landlord and tenant, have this to say about the original 1967 terms of compensation:
The editors of this and the last previous edition of this book have found it quite impossible to relate"—
what amounts to the 1967 terms of compensation—
to any principle of valuation or of fair dealing between landlord and tenant known to them, and therefore present this as an arbitrary rule laid down by Parliament for some reason extraneous to the matters considered in this work".
§ The concern expressed in this House at the unfair terms of compensation was taken up and accepted in the other place; and Amendment No. 4 seeks to provide a fairer price for a freeholder.
§ However, I have to tell your Lordships that I do not think that the amendment has got it right. The amendment adopts for this Bill a valuation formula which was carried into the 1967 Act by a Conservative Opposition amendment in another place to the Housing Act 1974; and in my view the 1974 amendment did not have it right even then. The 1974 formula would indeed provide fairer terms for compensation for a tenant if he acquired a freehold under the 1967 Act. Unfortunately, the formula can generally be evaded by a well-advised tenant. It happens in this way. The 1967 Act provides two routes by which a long-leaseholder wishing to profit from the Act may benefit and the formula applies to only one of them. That way is when the tenant acquires a freehold. The formula does not apply to the case where the tenant acquires a 50-year extension of his lease at an up-to-date ground rent.
§ If this Bill goes through, as amended by the other place, any right-to-buy lessee can add 50 years to his lease; the rent for the 50 years would be a rent for the ground alone and nothing for the house built on it. This is because of the old 1967 Act assumption that the lessee owns the house and the landlord owns only the land. This is the valuation basis to which the editors of Woodfall take exception, and so do I. A 1023 freeholder—be it a Cambridge college, or anyone else—if asked for an extended lease would suffer a substantial and unwarranted diminution in the value of his property; and the amendment from the other place does nothing about this at all. I have given my noble friend the Minister notice of my concern on this point, and if he thinks that I have got it hopelessly wrong he will, I feel sure, tell the House so. But if I am right, a coach and horses can be driven around the 1974 formula and Amendment No. 4 is really of not great value. The other place ought to be given another look at this clause. This means that your Lordships ought today to accept one or other of the two amendments now before you.
§ I come now to my own amendment, about the substance of which I have little to say now. The arguments are well known. But I will say this. You may dress up the contrary argument in any fashion you wish. The fact will remain that, unless the other place are given a chance to reconsider this matter, this will prove to be, as far as I can ascertain, the first occasion on which a Conservative Administration has passed legislation providing for the expropriation of private property by a private lessee of his private landlord. In case any noble Lord feels that I am too concerned with the interests of freeholders, I would say this. The right-to-buy tenant who will lose his right to acquire his freehold if my amendment is passed will not be much worse off financially. The reason for this is that the value of the right-to buy lease to be granted to a public-sector tenant will reflect the fact that the tenant will have no rights under the 1967 Act and the price to be paid for the lease will be that much less. I have great sympathy with my noble friend's amendment. For myself, I see no reason why the patrimony of Oxford and Cambridge colleges should be taken away from them under the Leashold Reform Act. Nevertheless, I am not sure that I can support him. It is not just that I feel that the best is the enemy of the good; but his amendment is, I am afraid, unduly restrictive in its operation even as regards charitable freeholders. I think it will be seen as opaque in the manner in which it sets about achieving its end, and likely to create unfair and anomalous conditions when it comes to finding out exactly who are the freeholders of charities; and who are the tenants whose landlords are not registered housing associations but whose ultimate freeholders are charities. My amendment is wider in its operation than that of my noble friend, but is covers his and it protects colleges in the same way as his does. I hope, therefore, that when my noble friend has listened to the debate and heard all the arguments he will find it possible to withdraw his amendment and allow your Lordships to come to their conclusion on the basis of mine.
§ To my noble friend the Minister I would say one thing. If he agrees that the other place have not got it right and should have the opportunity to have another look at this one, would he not also agree that if my noble friend does not press his amendment he (the Minister) should not stand in the way of mine?
§ Lord Templeman
My Lords, I rise to support the infant amendment put forward by the noble Earl, Lord Selkirk. I do so on two grounds, in the hope that 1024 either the Government or this House will adopt the infant, which is a very small and well-deserving one. It is a very small one because it protects only the freehold interests of a charity which has entered into a lease with a housing association: it is deserving because in those cases there will not have been the necessary hard bargaining which would have taken place between two commercial entities.
To give the House an example which I put to the noble Minister and which I hope he will deal with in due course, one of the Cambridge colleges in which I am not uninterested—not in a pecuniary fashion, but only in a sentimental and loyal fashion—entered into negotiations with a housing association and with the City of Cambridge for their joint benefit to develop a site which the college owned. In all those negotiations and valuations regard was had to the fact that the development was intended to help newly-married couples and elderly persons; it was intended to help the college to get nominations for the accommodation they required; and it was intended to help the City of Cambridge, whose housing problems were of course rendered worse by pressure from the university for more and more accommodation. In those negotiations, not only did the college in its valuations not seek to obtain the highest possible price, but, in addition, after negotiations had ended the college supplied money to provide communal facilities in the development which was proposed.
If the Commons amendments are accepted it will undoubtedly mean not only that the college's interests will be bought at a price which does not adequately reflect the value to them of the property or of their interest in it, but it will also destroy the effect of the tripartite arrangements between the college, the city and the housing association. The Minister has very kindly replied to the example I gave him, and he says that the college will now get more compensation as a result of the amendments made by the Commons. That compensation is still inadequate, but, more importantly, this is not merely a question of finance but a question of policy. The college does not wish to see destroyed these beneficial arrangements that it has with the housing association and the City of Cambridge.
The Minister also makes the point that under various provisions of the Leasehold Reform Act 1967 the college could obtain a stop on any compulsory purchase if it had plans to develop within 10 years. But, of course, the whole object of this transaction is not limited to 10 years. Charities are bodies which can think in terms of a hundred years ahead. The redevelopment has taken place already, and it is the existing position which the charities wish to safeguard.
I come back to where I began; namely, that this is a very minor amendment and affects only those few cases where a charity has entered into an arrangement with a housing association. There cannot be many such cases; but in every case there was a good reason for the arrangement being made, and in every case there cannot have been the same commercial approach as there would have been between an ordinary freeholder and a commercial leaseholder. On those grounds, I commend the amendment moved by the noble Earl.
My Lords, I shall be very brief. I have no wish to follow the noble Baroness, Lady Nicol, or the noble Lord, Lord Coleraine, in going back to who said what to whom regarding the Leasehold Reform Bill in 1967 in another place, although in fact I took part in those debates. I speak in your Lordships' House as a member of a party which has not had a recent opportunity of reneging on any manifesto commitments, and to that extent I am perhaps privileged, as against noble Lords opposite and noble Lords who speak for the official Opposition. I rise merely to indicate that my noble friends on these Benches will support the noble Earl's amendment, although we think it right to say that we would have preferred the amendment which was passed so overwhelmingly in your Lordships' House, which went to another place and which has now been bounced back in a somewhat different form. Since we cannot have that, we are grateful to the noble Earl for his amendment, and we will indeed support it.
§ Lord Bellwin
My Lords, may I first explain why the Government recommended the Commons to disagree with the original amendment? The purpose of Clause 1 of the Bill is to extend the right to buy to tenants who would have the right under the 1980 Act but for the fact that their landlord has a leasehold rather than a freehold interest in the land on which the house or flat is built. Time and the technicalities associated with leasehold tenure prevented provisions of this kind being included in the 1980 Act. We therefore included in our manifesto for the 1983 election a firm pledge to extend the right to buy to tenants in cases where the landlord does not own the freehold.
Let me explain in some depth, because I think it is necessary so to do, why I believe that the arguments advanced against Clause 1 are essentially unjustified, as well as indicating why we have brought forward a compromise proposal. Tenants of houses who obtain the right to buy under Clause 1 will, if they qualify in other respects, be able to buy their freeholds under the Leasehold Reform Act 1967. My noble friend Lord Selkirk, in moving his amendment at Committee stage, relied heavily on the fact that this consequential right to buy the freehold would adversely affect Cambridge colleges which had leased land for building by non-charitable housing associations, and of course the same point is being brought out again today by my noble friend and by the noble and learned Lord, Lord Templeman, and others.
Two arguments have been advanced in the representations by the Cambridge housing associations. The first concerns the future development of the colleges. As my noble friend put it, the colleges would, as a result of some individuals being able to buy the freehold—and I quote from column 1163 of Hansard of the 28th February 1984—find themselves with land dotted about with freehold property, and their purpose of building a students' hostel or new laboratories, or of developing the college in some way or another will be entirely frustrated".The second argument advanced in subsequent discussions with my noble friend Lord Selkirk and with my noble friends Lord Coleraine and Lord Molson was that the terms of enfranchisement under the 1967 Act were not favourable to the freeholder.
1026 On the first of these arguments I referred in Committee to the safeguards for university bodies already in the Act of 1967, but I think it is very important (because this is the kernel of the whole issue) that I should spell them out in more detail. It is clear that exactly the same argument against the Leasehold Reform Act was put forward in 1967 on behalf of university bodies and very substantial provisions were incorporated in response. No doubt noble Lords opposite will agree that these safeguards in their Act are effective and are not lightly to be dismissed.
Section 28 of the Leasehold Reform Act provides that, where a leaseholder applies to purchase the freehold or extend the lease, a university or college may apply to the Secretary of State for Education and Science for a certificate that the property will be required within 10 years—and I shall shall come to the point that the noble and learned Lord made on that a moment ago—for development relevant to the university's educational purposes. The grant of a certificate means that the application for enfranchisement cannot proceed. This applies at any time throughout the currency of the lease.
Alternatively, Section 29 of the Act provides protection of development rights, even if no immediate development is in prospect. University bodies may, with the consent of the Secretary of State for Education, in most cases impose restrictive covenants on enfranchising tenants reserving their rights for possible future development. About 20 to 30 applications to impose such covenants are received each year, almost all from Oxford and Cambridge colleges, and when my noble friend refers to the cavalier treatment of charity, may I tell him—in case he does not know, though I feel he must—that the Secretary of State has never so far refused a consent. That is hardly cavalier treatment and hardly what my noble friend referred to as uncertainty as to the results of applications or the Secretary of State taking arbitrary action.
Having imposed the covenants, university bodies can ask the Secretary of State to act as their agent to reacquire an enfranchised freehold compulsorily, if at any time they want it for development purposes; that is to cover the sort of hostels or laboratories to which my noble friend referred. This is a unique compulsory purchase power available to a private body, and meets, I suggest with great respect, any fears that your Lordships may have about the leasing of land by academic bodies.
I hope your Lordships will agree that these provisions, which already exist and which are being actively pursued by Oxford and Cambridge colleges, entirely dispose of the concern that the prospect of enfranchisement might deter colleges from leasing land to housing associations because it could hinder future development. Indeed, the safeguards are so strong that the individual who buys his freehold with the prospect that it could be reacquired might feel that he has something less than a freehold.
The second argument, as I said, concerns the basis of valuation when a freehold is enfranchised. As your Lordships know—and this is the major point of my noble friend Lord Coleraine—the 1967 Act contains two bases of valuation. The second was incorporated 1027 in 1974 by Section 118 of the Housing Act of that year and applies to the houses of higher rateable value brought into the scope of leasehold reform in 1974. It is generally accepted that this basis produces a higher price, all other things being equal, than the original basis. It was put to us in discussions that if we wished to retain the present scope of Clause 1 of the Bill it would be fairer to freeholders generally, whether charitable or not, to apply the 1974 basis to all cases where enfranchisement came about as a result of the right to buy. We agree that it would be reasonable to provide for this, not least because freeholders would not have been expecting the effect of Clause 1. Hence the new concession which is the effect of Commons Amendments Nos. 2, 3 and 4, proposed in lieu of Amendment No. 1.
I could refer to the views of the British Property Federation, which were referred to during the debate on Clause 1. They are not a charity and they do not represent charities, but we have been having discussions with them about Clause 1 ever since the original Bill was introduced. I saw them after our debates in Committee and I should like to refer to a short passage from a letter which they subsequently sent to me. It reads:You were good enough to suggest that it might be more equitable to the freeholder if the provisions of Section 118 of the Housing Act 1974 applied instead of those of the Leasehold Reform Act 1967 as amended by the Housing Act 1969, to any enfranchisements resulting from the granting of tenancies under the Housing and Building Control Bill. We have looked at the provisions of the acts very carefully and I write to confirm that we agree that the provisions of the Housing Act 1974 are more equitable, particularly in view of the case of Norfolk v. Trinity College, Cambridge in 1976. We therefore hope that the Government will agree in introducing amended legislation to cover this provision".I should, in fairness, say that the BPF are still concerned about the situation where the right to buy flats will arise, but that is a somewhat different matter. I hope it will be agreed that the Government have responded to the concern advanced on behalf of freeholders subject to enfranchisement as a result of Clause 1 and that we have done so in a fair and balanced way.
As my noble friend Lord Selkirk has explained, his amendment would exclude from the enfranchisement provisions of the Leasehold Reform Act, 1967 any lease granted in pursuance of the exercise of the right to buy, where the landlord is a registered housing association and the freeholder is a charitable body. This is a fundamental change from Amendment No. 1 which my noble friend moved in Committee and I gladly accept that. I am pleased that we both agree. We usually both agree on most things, and I am pleased that we both agree that the House should not insist on that amendment.
Clause 1 of the Bill would allow secure tenants to buy a long lease of their homes. In the case of houses, the tenants could proceed to acquire the freehold under the Leasehold Reform Act 1967. I have already explained that the effect of Amendment Nos. 2 to 4 would be to allow the freeholder to benefit from the higher 1974 basis of compensation in such cases, and I am glad my noble friend agrees with me that the House should agree that those amendments should replace Amendment No. 1.
1028 However, I am afraid that our area of agreement today does not extend to the amendment which he has tabled. That amendment would single out a small group of long leaseholders of houses and deny them the right to acquire the freehold of their homes; those are tenants of registered housing associations where the freeholder is a charitable body. My noble friend is prepared to agree that tenants of local authorities with a charitable freeholder should be able to acquire the freehold. I must say that I see no logic in distinguishing between one right-to-buy landlord and another in the way proposed in the amendment. Exactly the same considerations apply from the freeholder's point of view.
I must remind your Lordships that we are not talking here about charitable housing associations; the right to buy does not arise where the landlord is a charitable association. We are talking about ordinary tenants of non-charitable housing associations, who just happen to have been allocated a house where the freeholder is a charitable body. They may have been nominated by a local authority, and, if the local authority had allocated them a house leased from the same charitable body, then they could go on to acquire the freehold. There is no logic in that distinction.
As regards the point of concern about the Cambridge colleges—almost the major point and, certainly, the one which brought the noble and learned Lord, Lord Templeman, in to raise this matter—I have explained that here there is a unique and extremely strong protection which exists for their development needs, even if no immediate development is in prospect. They may—and they do, in most cases—impose restrictive covenants on enfranchising tenants. I do not want to go on longer on this point.
May I say this to my noble friend Lord Selkirk? He knows the enormous respect and regard which I have for him, but I really feel that this amendment discriminates against a small group of tenants of non-charitable housing associations for no sustainable reason. I should like to give a simple last example. If a charitable institution had leased one of a pair of semi-detached houses to a housing association and the other to a local authority, the tenant of the association would have the right only to a sub-lease, while the council tenant in the adjoining one could acquire the freehold. That is just not logical, it is not equitable and it is not fair.
May I say to the noble Baroness, Lady Nicol—who said the Conservative vote to exclude charities in the 1967 Act did not seem to have very much effect—that I am slightly amused, if not cynical, at the now great concern which she and her friends expressed for those same chairities which in 1967 they were not prepared to support in that way. My noble friend Lord Coleraine has also—
§ Lord Simon of Glaisdale
My Lords, before the noble Lord leaves the noble Earl's amendment, he mentioned amending legislation. When is that contemplated?
§ Lord Bellwin
My Lords, may I come to that when I have answered the noble Lord, Lord Coleraine. My 1029 noble friend Lord Coleraine has also agreed that the House should not insist on Amendment No. 1. I am somewhat disappointed, however, that he cannot support the compromise proposed by the Government on Amendments Nos. 2 to 4 offering a higher basis of compensation for the freeholder in the event of an enfranchisement of a right-to-buy lease. In my earlier remarks I quoted from a letter that I had received from the British Property Federation, who, to use their words, have looked at the provisions of the Act very carefully. Then I went on to say that they had agreed, et cetera. It is the responsiblity of the independent leasehold valuation tribunals and the Lands Tribunal to decide individual cases of dispute between landlords and tenants about the application of this basis to their situation, and the Government should not be seen to be steering them in any particular direction.
Second, as your Lordships will know, there is a case about the principles of the Leasehold Reform Act before the European Commission in Strasbourg involving Her Majesty's Government and the Trustees of the Duke of Westminster. The Government have no wish to influence those proceedings indirectly by making separate pronouncements here on matters which may be in dispute. Nevertheless, the view taken by the British Property Federation cannot be ignored.
My noble friend Lord Coleraine has suggested that there is a flaw in the 1974 valuation basis which, if exploited by a tenant in a position to enfranchise, would produce a lower price than would otherwise be the case. I am somewhat surprised that my noble friend (who urged us to consider the 1974 basis both in the House and in the course of discussions subsequently) should now have turned against it. The Government are not aware that this point has been tested in the Lands Tribunal or in court. If it has not, then there is certainly an arguable case on both sides, and it may well be that there is no flaw at all. If there is a flaw, then its effect on value may only be quite modest. However, I can say that if any serious problem emerges, subject to any wider considerations we will be prepared at a suitable legislative opportunity to clarify the point at issue by confirming that the valuation assumptions are not undermined if the tenant first opts for a long lease before exercising his right to enfranchise. I am sorry to go into a complex matter, but I think in view of my noble friend having raised this point in this way that it is very necessary to put the position on the record.
§ Lord Coleraine
My Lords, before my noble friend passes from that, the point which I was making did not concern the acquisition of a freeholding by a lessee who had acquired a long lease. I simply pointed out that an extended lease could be acquired; and I do not think there is any dispute between any of us that that long lease would be on very favourable terms indeed to the tenant when compared with the price which he would have to pay to buy a freehold under the direct acquisition of the freehold terms. I was not concerned with the possibility that the tenant might extend his lease and then try to buy the freehold. I agree that there is room for doubt there.
§ Lord Bellwin
I thank my noble friend for that. As I said, this is a difficult and complicated matter. 1030 Concerning what the noble and learned Lord, Lord Simon, said, may I say that I think there might be a slight misunderstanding here. When I spoke of amending legislation I was referring to my noble friend Lord Selkirk's amendment, which is perhaps a somewhat different matter. I do not think that there is much more that I can add. I understand exactly why my noble friend Lord Selkirk brings forward his amendment. We have had many conversations throughout the passage of this Bill at its various stages concerning the problem which he raises.
For the reasons that I have given I feel that there is no problem. It is not happening in that way in practice. There has not been a single instance so far where the colleges have been in any way thwarted or held back at all. Therefore. I do not think we ought to assume that this will be so. Certainly, there is no evidence to suggest that, and I hope that my noble friend will feel, in the light of what I have said, that he would not wish to press his amendment.
The Earl of Selkirk
The noble Lord described very well the procedure under Sections 28 or 29 of the 1967 Act, but what he utterly failed to do was to tell the House quite frankly that it has never been carried out at any time. What has happened is that the Secretary of State has granted the covenant; but that covenant has never been fulfilled, and all these tenants-cum-freeholders can, according to the noble Lord, at any time be turned out by compulsory purchase. The noble Lord asked why universities should be privileged. He said it is anomalous. They already stand in the 1967 Act, Sections 28 and 29. They are treated quite differently. Therefore, the argument which the noble Lord makes is vacuous and has no weight whatever.
§ Lord Bellwin
My Lords, I am grateful to my noble friend for giving way. I did not ask why the universities were privileged: I simply stated the fact that in the Act they have what is a unique right to them. I am not questioning whether that right should or should not have been given in 1967.I am saying that it exists, that it has been practised and that it has worked entirely to their advantage. I am not suggesting that that is wrong in any way at all.
The Earl of Selkirk
My Lords, I did not suggest that my noble friend was wrong in that way. Where he was wrong was in saying that this procedure had ever been carried out. It has never been carried out, and no one has any evidence of what course the Secretary of State would take. That is the essential part, and it was not mentioned by my noble friend. I really think there is no alternative but to ask your Lordships to divide. My noble friend has not met the points we have made. They are serious. They are not large; but they are extremely important for them to carry out.
§ The Deputy Speaker (Lord Jacques)
The question is that the House do not insist on their Amendment No. 1 to which the Commons have disagreed and do agree to Amendments Nos. 2 to 4 proposed by the Commons in lieu thereof, and the amendment to the Commons Amendment No. 4 set out on the Order Paper. The Question is that this amendment be agreed 1031 to; that is, Amendment No. 4B. I am sorry, my Lords; it is Amendment No. 4A.
§ Lord Molson
Could the noble Lord make it quite plain? I am sorry, but I have not quite understood exactly what the issue is that is being put to the House.
The Deputy Speaker
My Lords, the issue that is being put to the House is the amendment moved by the noble Earl, Lord Selkirk—Amendment No. 4A.
§ Lord Molson
My Lords, is it my noble friend's amendment which is being put? If so, and if we wish to support it, do we say, "Content"?
The Deputy Speaker
My Lords, the issue which is being put to the House is the amendment being moved by the noble Earl, Lord Selkirk, Amendment No. 4A.
§ 4.30 p.m.
§ On Question, Whether the said amendment (No. 4A) shall be agreed to?
§ Their Lordships divided: Contents, 128; Not-Contents, 99.
|DIVISION NO. 1|
|Airedale, L.||Hanworth, V.|
|Alport, L.||Hatch of Lusby, L.|
|Ampthill, L.||Hayter, L.|
|Ardwick, L.||Henderson of Brompton, L.|
|Attlee, E.||Henniker, L.|
|Aylestone, L.||Houghton of Sowerby, L.|
|Banks, L.||Howie of Troon, L.|
|Beswick, L.||Hylton, L.|
|Birk, B.||Hylton-Foster, B.|
|Boothby, L.||Irving of Dartford, L.|
|Boston of Faversham, L.||Jacobson, L.|
|Bottomley, L.||Jacques, L,|
|Brockway, L.||Jeger, B.|
|Bruce of Donington, L.||Jenkins of Putney, L.|
|Burton of Coventry, B.||John-Mackie, L.|
|Carmichael of Kelvingrove, L.||Kagan, L.|
|Chichester, Bp.||Kaldor, L.|
|Cledwyn of Penrhos, L.||Kearton, L.|
|Collison, L.||Kilmarnock, L.|
|Cooper of Stockton Heath, L.||Kintore, E.|
|Croft, L.||Leatherland, L.|
|Darling of Hillsborough, L.||Listowel, E.|
|David, B.||Lloyd of Kilgerran, L.|
|Davies of Leek, L.||Lockwood, B.|
|Dean of Beswick, L.||Longford, E.|
|Delacourt-Smith of Alteryn, B.||Lovell-Davis, L.|
|Denington, B.||MacLeod of Fuinary, L.|
|Diamond, L.||Mais, L.|
|Donaldson of Kingsbridge, L.||Mar, C.|
|Elliot of Harwood, B.||Merrivale, L.|
|Elwyn-Jones, L.||Milverton, L.|
|Ennals, L.||Minto, E.|
|Ezra, L.||Mishcon, L.|
|Faithfull, B.||Molloy, L.|
|Feversham, L.||Molson, L. [Teller.]|
|Fisher of Rednal, B.||Monson, L.|
|Gaitskell, B.||Mulley, L.|
|Gallacher, L.||Munster, E.|
|Gladwyn, L.||Nicol, B.|
|Graham of Edmonton. L.||O'Brien of Lothbury, L.|
|Gregson, L.||Oram, L.|
|Grimond, L.||Peterborough, Bp.|
|Hale, L.||Phillips, B.|
|Hampton, L.||Ponsonby of Shulbrede, L.|
|Porritt, L.||Stamp, L.|
|Prys-Davies, L.||Stedman, B.|
|Rathcreedan, L.||Stewart of Alvechurch, B.|
|Rhodes, L.||Stewart of Fulham, L.|
|Ross of Marnock, L.||Stoddart of Swindon, L.|
|Runciman of Doxford, V.||Strabolgi, L.|
|Sainsbury, L.||Strauss, L.|
|Saltoun, Ly.||Taylor of Blackburn, L.|
|Scanlon, L.||Templeman, L.|
|Seebohm, L.||Terrington, L.|
|Sefton of Garston, L.||Tordoff, L.|
|Selkirk, E. [Teller.]||Underhill, L.|
|Serota, B.||Vickers, B.|
|Shackleton, L.||Wells-Pestell, L.|
|Shaughnessy, L.||White, B.|
|Shepherd, L.||Wilberforce, L.|
|Simon of Glaisdale, L.||Wilson of Langside, L.|
|Somers, L.||Winstanley, L.|
|Spens, L.||Wootton of Abinger, B.|
|Airey of Abingdon, B.||Lane-Fox, B.|
|Avon, E.||Loch, L.|
|Bauer. L.||Lucas of Chilworth, L.|
|Belhaven and Stenton. L.||Luke. L.|
|Bellwin, L.||Lyell, L.|
|Beloff, L.||McAlpine of West Green, L.|
|Belstead, L.||McFadzean, L.|
|Berkeley, B.||Mackay of Clashfern, L.|
|Bessborough, E.||Macleod of Borve, B.|
|Broxbourne, L.||Mancroft, L.|
|Cairns, E.||Marley, L.|
|Caithness, E.||Massereene and Ferrard, V.|
|Campbell of Croy, L.||Maude of Stratford-upon-|
|Carnegy of Lour. B.||Avon. L.|
|Chelmer, L.||Middleton, L.|
|Chelwood, L.||Mills, V.|
|Cockfield, L.||Mottistone L.|
|Cork and Orrery, E.||Mowbray and Stourton, L.|
|Cottesloe, L.||Northchurch, B.|
|Cox, B.||Nugent of Guildford, L.|
|Crawshaw, L.||Onslow, E.|
|Cullen of Ashbourne, L.||Orr-Ewing, L.|
|Daventry, V.||Pender, L.|
|Davidson, V.||Penrhyn, L.|
|De La Warr, E.||Platt of Writtle. B.|
|Denham, L. [Teller.]||Plummer of St. Marylebone, L.|
|Dilhorne, V.||Portland, D.|
|Drumalbyn, L.||Rankeillour, L.|
|Eccles, V.||Renton, L.|
|Elphinstone, L.||Rodney. L.|
|Elton, L.||Romney, E.|
|Erne, E.||St. Davids, V.|
|Forester, L.||Sandys. L.|
|Fortescue, E.||Sempill, Ly.|
|Fraser of Kilmorack, L.||Skelmersdale, L.|
|Gainford, L.||Soames, L.|
|Gardner of Parkes, B.||Strathclyde, L.|
|Gisborough, L.||Strathcona and Mount Royal, L.|
|Gowrie, E.||Strathspey, L.|
|Gray of Contin, L.||Swansea, L.|
|Gridley, L.||Swinton, E. [Teller.]|
|Hailsham of Saint||Teynham, L.|
|Marylebone, L.||Thorneycroft, L.|
|Henley, L.||Tranmire, L.|
|Hives, L.||Trefgarne, L.|
|Holderness, L.||Trumpington, B.|
|Hood, V.||Ward of Witley, V.|
|Hornsby-Smith, B.||Westbury, L.|
|Kaberry of Adel, L.||Whitelaw, V.|
|Kitchener, E.||wise, L.|
§ Resolved in the affirmative, and amendment agreed to accordingly.
§ 4.40 p.m.
The Deputy Speaker
My Lords, as Amendment No. 4A has been agreed to, I cannot call Amendment No. 4B.