§ 3.15 p. m.
§ Baroness Hooper
My Lords, I beg to move that this Bill be now read a second time. The Bill before your Lordships implements the main findings of the committee chaired by Mr. Edward Nugee, QC, which examined the problems of management in privately 637 owned blocks of flats. The prime purpose of the Bill is to strengthen the rights of people living in privately owned flats, and it applies whether the flat is in a mansion block, in a more recent purpose-built development or in a conversion of a house or other premises. In some respects we have gone further than the committee recommended, but the core of the Bill is based firmly on the findings of the Nugee Report.
The Government set up the committee in 1984 because of our growing concern about the management problems which were emerging in private blocks of flats. The report, which was produced in November 1985, showed that there are indeed severe problems affecting the management of many blocks, although there are also many landlords and agents who undoubtedly achieve high standards of management and consumer satisfaction.
The proposals of the Nugee Committee reflected a wide spectrum of opinion. The committee consisted of members drawn from various professional bodies and representing the viewpoints of landlords and tenants. It is a remarkable achievement to have reached unanimous recommendations on so much, and I should like to pay tribute to the committee.
Turning briefly to the content of the Bill, Part I gives qualifying tenants a right of first refusal where the landlord wishes to dispose of his interest in a block of flats. The Nugee Report suggested a procedure based on offer and counter-offer which would give tenants the first refusal at a price to be negotiated between the parties within a set timetable. We have implemented those recommendations.
Part II enables any tenant of a flat, whether a long leaseholder or rack-renting tenant, to apply to the court for the appointment of a manager to take over the management of the premises where the landlord has failed to discharge his obligations under the terms of the lease.
Part III enables a majority of leaseholders of flats in a block let wholly or mainly on long leases to apply to the court for an order to acquire compulsorily the landlord's interest where the landlord has failed to discharge his obligations and the appointment of a manager would not be an adequate remedy or where a manager has been appointed for three years.
Part IV deals with the circumstances on which a court may vary the terms of a long lease of a flat. It also safeguards long leaseholders of houses against unsatisfactory provisions on insurance in their lease.
Part V deals with management of leasehold property. It strengthens the provisions in the Landlord and Tenant Act 1985 dealing with variable service charges and extends them to houses and other dwellings. It provides that contributions to service charges, including sinking funds, shall be held on trust for the benefit of the tenants; it adds important rights for tenants on the insurance of their property; and it gives a recognised residents' association the right to be consulted about the appointment of managing agents. Part VI extends a residential tenant's right to information about his landlord's name and address.
The Bill as a whole provides a framework for the orderly management of flats in private ownership. All residents, whether they are long leaseholders or renting 638 tenants, have a right to expect that their homes will be properly managed. The Bill strikes a balance between improving the position of tenants and safeguarding the proper interests of landlords. As my honourable friend the Minister for Housing has repeatedly made clear, good landlords have nothing to fear from the Bill. Its provisions should bring the general level of management of flats closer to the standards already achieved by the better landlords and managing agents.
The Bill has been widely welcomed and was given all party support in another place. I believe that there is a general wish that it should be implemented as soon as possible. I commend the Bill to your Lordships. I beg to move.
§ Moved, That the Bill be now read a second time.—(Baroness Hoope.)
§ 3.20 p.m.
§ Lord Coleraine
My Lords, I am grateful to my noble friend for her brisk but clear gallop through the terms of this Bill. I am very pleased to welcome this Bill to its Second Reading. It follows, as my noble friend said, the report of the Department of the Environment's committee of inquiry established in February 1984 under the chairmanship of Mr. Nugee, to look into the problems arising from the management of privately owned blocks of flats.
These had for many years been a concern of many of us, particularly also of my honourable friend Sir Brandon Rhys Williams, whose frequent attempts to legislate in another place should not pass without respectful comment; of Mr. John Wheeler, who also served as a member of the Nugee Committee; and of Mr. John Fraser in another place, who strongly and effectively supported the Bill on behalf of an Opposition party during its speedy passage through all its stages in another place. It was my honourable friend Mr. Gow who commissioned the report and it fell to my honourable friend Mr. Patten to implement it, and he has steered it through another place with dash and some brio.
The decision to legislate most of Nugee's recommendations was made known to us 13 months ago in answer to a Question for Written Answer addressed to my right honourable friend the Secretary of State, and it is clear that the Bill before us has been prepared with care by parliamentary counsel. What we have to consider is a substantial and considered measure of overdue law reform in the field of domestic landlord and tenant law, a corner of our law which your Lordships may not find immediately glamorous, though I know that many of your Lordships are long lessees of flats and well aware of the deficencies in the existing law.
Here I shall myself declare an interest, in that I am the tenant of a long-lease flat; and it may be called a lease at the sharp end because it has only 13 or 14 years remaining unexpired. It is also, I have to say, what would be called a defective lease. I may also say that in my practice as a solicitor I frequently have to advise clients on defective leases which they may own or which they may be contemplating buying. Advice in such circumstances is not given or received easily, because people who have seen a flat that they like do not like to be told by their solicitors that they should 639 not buy it because of some technicality which their solicitor sees.
I shall come back to the question of defective leases, but perhaps I may tell your Lordships now that the drafting of and advising on residential leases is boring and repetitive, and has perhaps never received the care and attention that all the possible pitfalls call for. On the basis that you only get what you pay for, and with the pressure for conveyancing costs to be reduced and reduced, we must surely expect many more defective leases being drafted today to return to vex us tomorrow. The use of word processors also does not help.
I was delighted to read the Nugee Report, delighted to learn that legislation would follow and delighted when this Bill passed through all its stages in another place. The provisions of the Nugee Report were generally welcomed, as my noble friend has pointed out, and it is worth noting, as she did, that the committee comprised, among other well-informed persons, members reflecting the interests of both landlords and tenants as well as members of the relevant professional bodies.
Having said all that, I have to say that a Bill of this nature needs the closest scrutiny, clause by clause, in this House. I am surprised that we are being asked today, with all-party agreement, to take the Bill through all its stages on the nod this afternoon. I expected, as I know a number of your Lordships did, that this Bill would fall with the Parliament. It has been pressed for and worked for for so long that it would he a shame if it were lost, but that does not make its provisions urgent—quite the reverse.
It passed quickly through another place—only three sittings in Standing Committee—but that is not an indication that we should deal with it so quickly; merely a reflection of the agreed general nature of the measure, and a clear invitation to us to scrutinise the Bill carefully if we can. Not to give the Bill the close consideration that it needs may well be seen as an abjuration of our role as a revising Chamber, which we may well come to regret at a later date if this Bill does itself prove to be defective.
My surprise that we were dealing with this Bill in one day is shared by others outside your Lordships' House. I had a telephone call this morning from a well-known firm of City solicitors, Linklaters and Paines. They saw what they thought were problems in the Bill and they have written to me at length about them. I shall not go into details about the problems that they saw, except that they run through the Bill and they deal with the question of the landlord's and tenant's right to pre-emption; they deal with the tenant's right to compulsory purchase of the landlord's interest in certain circumstances, and they deal with the provisions of the Bill relating to managing agents.
When I took up the Bill yesterday afternoon on learning what we were going to do today, I turned to the provisions of Part IV—that is, Clauses 35 to 40—dealing with the variation by the courts of defective leases. This had always seemed to me to be the area of the report which needed the closest probing. After a little while, I had eight amendments drafted in pectore, but looking at them now I see that 640 they are for the most part Committee amendments and I do not propose to worry your Lordships or my noble friend with them this afternoon. Nevertheless, I should like to address the question whether Part IV should, in an ideal world, pass into law now or whether its contents should be left to another occasion for proper consideration.
I have no difficulty in agreeing that the problem of defective leases is a serious one. Defective leases fall into three principal categories. This is at least the best analysis that I can produce at short notice. The simplest category to consider is the sort of case where the landlord or his solicitors have imposed on a tenant a covenant to pay a proportionate part of the expense of repairing the structure of the block, without themselves convenanting to carry out any repairs. Your Lordships will be aware that it is a well-known fact that landlords call the tune and effectively impose their leases on tenants, and if a tenant does not like what the landlord's solicitor suggests all the tenant can do is find another flat.
The second type of case is where, as a result of incompetent drafting by the landlord's solicitors, there are errors and inconsistencies and ambiguities in the lease. With the growing use of word processors, and for the other reasons that I have mentioned, I see this category of defective lease as likely to be on the increase in the future.
The final category I have in mind is a more harmless one, though very difficult to resolve. That is where what are largely social conditions have changed over the years and left old leases stranded like dinosaurs on a beach. Such leases were relevant to the days of the daily delivery of groceries by errand boys on bicycles into the hands of porters on duty in shifts for perhaps 18 hours a day; of coal stored in flat owners' cellars; of porters, again, who let in the guests through the front door of the block. Now we may want to install entry phones but the lease does not provide for that.
Then under this category there is the pressing problem of central heating, which I put in the same category. What about the old boiler in the cellar? It supplies the whole building through furred-up pipes, with boiling water to the radiators in some flats and cold water to others, eating up oil at prices which could never have been envisaged by the draftsman who drew up the lease.
If you have a communal system you may turn off your radiators to save fuel on a March morning, but you will probably find that you get very little financial saving yourself from doing that. Indeed, you may notice that your walls are warm because your neighbour has gone off to the West Indies and left his radiators running at his fellow tenants' expense. Nowadays, all the arguments are in favour of individual central heating. However, under the old leases, if tenants install an independent system in their flats they will also have to pay their share of the running and maintenance costs of the old guzzler in the basement.
All those are problems and we need new machinery to resolve them. The question is: is the right machinery to be found in Part IV of the Bill? I confess to the gravest reservations on that point. I also have grave reservations about the propriety of legislating on the 641 nod for the massive variation of contractual rights by the courts.
The Nugee Report states in paragraph 7.6.8:The evidence we have received of the unsatisfactory nature of some leases leads us to conclude that it should be possible in certain circumstances (which need to be carefully defined) to modify the existing terms of the lease in the interests of the well being of the block and its owners and occupants even in cases where no majority agreement can be reached. The procedure would entail application to the Court for the lease to be varied. Such intervention is by no means unprecedented in statute; for example under Section 84 of the Law of Property Act 1925. Moreover, the recent history of legislation relating to variable service charges from the Housing Finance Act 1972 onwards (and in particular Schedule 19 to the Housing Act 1980) provides examples of obligations to supply information and consult and of rights to challenge charges all of which may go beyond the terms of the actual leases.Section 84 of the Law of Property Act 1925 allows the Lands Tribunal, not the courts, to discharge or modify restrictive covenants affecting land in clearly defined circumstances. Broadly, those are: where the restriction is deemed obsolete or impedes reasonable use of the land and does not benefit anybody, or is contrary to the public interest. That is a very limited interference with contracts.
The other reference in the Nugee Report—the reference to service charges—is to my way of thinking quite off the point. The provisions in recent legislation do not alter individual contractual rights. They alter the general law.
For all their expertise in their respective fields, I wonder whether the committee really paid proper attention to the legal problems involved in the interference with vested rights. We are dealing with the Nugee Report on major defects here, and I should point out that the James Working Party Report, which preceded it and which is set out as Annex 1 to the Nugee Report had considerable reservations as to the desirability of permitting leases to be varied as a general rule.
One type of case I have considered is where the landlord's and/or the tenant's interests in the property may have changed hands many times since a defect in the lease became apparent. It will have done so at prices which will have been augmented or reduced on account of the defect.
Clearly in those circumstances there is a case for compensation to be paid on a variation of the lease and the Bill contains provisions enabling compensation to be awarded by the courts. Nevertheless, I do not find them clear and unambiguous, as they should be where a Bill of this nature potentially affects literally thousands of laymen. I should have thought that such provisions should be scrutinised further.
I want to raise another point and here I shall refer to the Bill. Clause 35 provides grounds where an application may be made for a variation of a lease. That is where the lease fails to make adequate provision for one or more of various matters. I quote as one such matter Clause 35(2)(e) where it is stated that the lease makes inadequate provision for:the recovery by one party to the lease from another party to it of expenditure incurred or to be incurred by him, or on his behalf, for the benefit of that other party or of a number of persons who include that other party".642 Why should a landlord who has covenanted to provide services for his tenant, and has not asked his tenant to pay for them, he presented with that invitation to apply for the lease to be varied? Of course, a right to apply does not mean that the court will grant the landlord the variation sought. However, the Nugee Report in effect says that in such circumstances the landlord should get his variation. I refer to paragraph 7.6.9(iii) of the report which states that,
the lease should be varied in various circumstances such as:where the service charges payable in respect of the fiats in the block are determined as a percentage of the landlord's expenditure and the aggregate of the percentages is either more or less than 100 per cent. of such expenditure".I wish to look for a moment at the significance of the words "more or less". Where we are talking about "more" we are clearly talking about tenants in the building who are obliged under their leases to pay, shall we say, 110 per cent. in aggregate of the landlord's costs of repairing the building and providing the services. When those tenants entered into their leases, they were asked to pay some small percentage in respect of each flat. They will not have received any information as to what the total percentage recovered by the landlord would amount. The Nugee Report states, and correctly in my view, that in those circumstances it is wrong for a landlord to recover the final 5 or 10 per cent. of the aggregate amount of the service charges. However, if we look at a case where less than 100 per cent. is recovered, we see that the landlord—for reasons of his own which are unknown to the tenants—has told the tenants individually that their percentage will be such and such a figure and those percentages do not add up to 100 per cent.
For the life of me I fail to understand why in those circumstances it should be thought right for the landlord then to be able to go to court and ask for the percentages to be raised—which is what the subsection to which I have referred provides.
I shall now turn to a brief consideration of the court as a forum for applications for variations of lease. My noble and learned friend the Lord Chancellor will be well satisfied that the courts—I take it that we are primarily talking about the county courts—can deal with those various applications.
I must confess that I am not convinced either that the Bill gives satisfactory guidance on variations of leases to the judges who will be asked to operate it, or that, with present adversarial procedures, the county court judges should be given the jurisdiction or can exercise it satisfactorily.
This matter will be green fields for some years, and I fear that for some considerable time to come there will be a flood of expensive litigation, with appeals. It will for the most part be brought by landlords, because they are generally better able to afford the cost and they will, by the nature of their relationship with their numerous tenants, have more at stake.
Landlords will also seek to recover the costs of the litigation from their tenants and that litigation will, for the most part—except where leases have simply fallen out of date as a result of changed social circumstances—have resulted from defective leases for 643 which the landlord or a landlord was originally responsible.
While I welcome the Bill and wish it a safe Second Reading, I do not feel able to make any further comments on what happens to it after that.
§ 3.39 p.m.
§ Lord Monson
My Lords, I had not originally intended to take part in the Second Reading debate on the Bill. I read the various summaries of the Nugee Report upon which the Bill is partially—I stress the word "partially"—based and, although I have had the pleasure of meeting the distinguished Mr. Nugee, I have no particular expertise on mansion blocks, apart from knowing a number of people who have at one time or another lived in such blocks.
However, when I heard only yesterday afternoon (because of the inefficiencies of the postal system) that this highly technical, complex and detailed Bill—which is 67 pages long and contains 62 clauses and five schedules and on which we would normally spend at least five and more likely six or even seven days—was, without good cause, being rushed through in its entirety in a single afternoon, I knew that I must come and vote against it on principle, not at Second Reading (for that is not our custom) but at a later stage. I say that despite the fact that I know a number of people personally who will benefit directly from the Bill when it is enacted and I know no one personally who will be disadvantaged by it directly. However, if the prediction made in a considered letter from the chairman of the Sussex Private Landlords' Association, published in the Daily Telegraph of 5th May, is correct and the Bill leads to a drying up of the supply of private rented accommodation, then a large number of people will suffer indirectly.
I say that also despite the fact that the intentions which underlie the greater part of the Bill are entirely admirable. Part VI of the Bill seems to be wholly uncontentious, while Part V of the Bill is almost wholly contentious. I should guess that the same goes for Parts II and III, in so far as I have studied them in the extremely short time available. However, Part IV, to which the noble Lord, Lord Coleraine, has drawn our attention, and particularly Part I, which goes way beyond the Nugee recommendations, are a very different matter.
The noble Baroness, in introducing the Bill, spoke for a mere four or five minutes. Perhaps she can take time in her summing up to explain exactly why small detached or semi-detached houses with only two tenants in them are to be included in Clause 1. Mansion blocks owned by large impersonal institutions are one thing, but small houses owned by individuals or families are a different matter. Does she not think that the precedent thereby set will give the green light to a future Left-wing government to expropriate all private rented accommodation or to nationalise it for a relatively derisory sum?
Moreover, on previous form even the least contentious clauses are bound to be capable of further improvement in your Lordships' House. The Bill may be 90 per cent. right; it may possibly be 95 per cent. right. But it is highly unlikely to be 100 per cent. right.
644 It is not as if we face a really serious and unexpected crisis, such as the Argentinian invasion of the Falklands Islands, which would justify rushing through emergency legislation.
It is true that there is a much less grave Middle Eastern invasion of London which is said to be responsible for some of the abuses which Part VI of the Bill is designed to rectify. But the abuses could easily be dealt with by confining ourselves today to passing the uncontentious Part VI in the certain knowledge that the all-party support for the principles of the Bill will ensure that the balance of the Bill will receive top priority in a new Parliament, whichever party happens to be in power. People who have waited many years and indeed decades could hardly object to waiting another two to three months in order that the legislation could be got absolutely right.
After all, the Government cannot have thought that this Bill was particularly urgent. They did not give it a very high priority in their legislative programme this Session and a June general election has been an odds-on probability for several months now. Why then the new-found sense of extreme urgency? I suspect that the answer lies in the fact that the beneficiaries of the Bill are, to a large extent, articulate middle-class or upper middle-class people who live in marginal constituencies and who are sophisticated enough to know how to vote tactically. If those with similarly valid grievances had been inarticulate working-class people living in constituencies with rock-solid Labour majorities, I doubt very much whether a complicated, 62-clause Bill would have been rushed through in a single afternoon.
On 30th March Mr. John Patten, the Minister in charge of the Bill in another place, said, at col. 774 of the Official Report:such will be the excellence of the scrutiny that the Bill will receive in Committee, I am sure that it will pass rapidly through to law".Doubtless the Minister was being flippant. The main constituential function of your Lordships' House is that of a revising Chamber. But we are being effectively denied the right to revise or even scrutinise. In other words, we are not being permitted to do our constitutional duty. For that reason alone, and not because I oppose the general principle of the Bill, I regret that I shall have to oppose its passage.
§ 3.45 p.m.
§ Lord Wilberforce
My Lords, I feel that I must add a few words in support of what has been said, even though what I wanted to say has been said much better from the Benches behind me. I yield to no one in my admiration for the work which has been done in this area by Sir Brandon Rhys Williams, who, as well as being my relative, is also my Member of Parliament. I have also had many years of admiration for the work of Mr. Nugee, who is in the chambers that I was in at Lincoln's Inn. I have followed the work of his committee with great care and enthusiasm.
No doubt the work of the committee is very good and is largely acceptable. Nevertheless, we are presented here with a major piece of legislation—almost a code of legislation—in an area so far untouched by the law. Your Lordships should not be deceived by the great clarity and simplicity with 645 which the Bill was explained by the noble Baroness. It is a very complicated measure, as has been said, of over 60 clauses with long subsections and schedules. Each of the parts requires careful study.
Your Lordships will be in no doubt, having heard the speech of the noble Lord, Lord Coleraine, that there are areas of considerable potentiality for discussion, particularly in the areas of compensation, of compulsory acquisition and of variation of contractural terms. One can only repeat that this is essentially the sort of measure which ought to receive careful consideration by this House.
One feels that the noble Baroness, who occupies a somewhat isolated position on the Front Bench at the moment, is in a very difficult situation as regards agreeing to vary what is no doubt the agreement of a powerful coalition behind the scenes to the Bill coming forward. However, I feel that many Members of your Lordships' House on all sides, and even on the Benches behind the noble Baroness, in the light of what was said yesterday by the noble Lords, Lord Wigoder and Lord Mishcon, would feel very much relieved if this measure could be deferred and considered at greater leisure.
It is not a matter which requires urgent legislation. We want to look at it; we can make constructive amendments to it. The noble Lord, Lord Coleraine, made that perfectly clear. If there were some means by which the noble Baroness could agree to the postponement of Part IV, at any rate, I feel that many constitutionalists in the House, as well as those who care for getting the relation between landlord and tenant right (which is a very sensitive area and one which, once got wrong, is very difficult to correct), will be much relieved. I associate myself entirely with what has been said behind me and what has been said by the noble Lord, Lord Coleraine.
§ 3.48 p.m.
§ Lord Denning
My Lords, it seems to me very wrong to rush this complicated and legal piece of legislation through without its having progressed through the proper stages in this House. I have read the Bill. It is exceedingly complicated, exceedingly legal and exceedingly obscure. It is the sort of Bill on which this House repeatedly does a first-rate job in revising legislation. It is altogether wrong that it should be rushed through in one day when there is no urgency about it. It ought to be properly considered by the House in its proper stages before it is passed into law.
§ 3.49 p.m.
§ The Earl of Kinnoull
My Lords, I rise to intervene and to apologise for my lack of courtesy in not putting my name down to speak. Although we have heard some stringent comments about the lack of time in which to examine the Bill, I should like to add that this is a good Bill. It is a Bill which will help many tenants. It is perhaps long overdue and it has, as I understand it, received all-party consent through the usual channels to go forward. It has not been a government steamrolling measure.
I intervene because I wish to make what are really Committee points. I should like to thank the noble 646 Baroness for giving me time with her officials before this Second Reading to examine the points which have been raised outside the House. I should also like to thank those officials. Perhaps I may put four points to her briefly so that she can answer them for the benefit of those who are interested in the legislation.
My first point was raised under the many provisions of notices that come under the Bill in Clause 5, where the landlord proposes to dispose of his interest in premises and serves notice on the qualifying tenants. Although it may seem only a small point, it is a very serious matter and I believe there should be a statutory form of notice giving details of the regulations on the counter-notices. The Bill provides a new right for tenants which will not be easily understood. I believe there is a very strong case for publishing the statutory form of notice which is not provided for in the Bill at the moment. I hope that my noble friend will he able to make some helpful comment on that matter and will consider whether such a form of notice should be published.
My second point, again involving notices, concerns Clause 22. The clause provides that one tenant may serve a preliminary notice on the landlord for the appointment of a manager of the block of flats. Obviously such a matter affects every tenant and not merely the one who serves the preliminary notice. Under the present format of the Bill none of the other tenants needs to be served notice. I believe that they have a right to be served. They have just as much an interest in the management of the block of flats as the tenant who served the notice. Again, I hope that my noble friend will say something encouraging on that point. The Nugee Report emphasises that there should be full disclosure among the tenants, as well as to the landlord.
My third point concerns Clause 47, which refers to the information available for the tenants as a matter of right; namely, the landlord's name and address. I accept that that is a very important right. It is also important for tenants to be notified of other tenants names and addresses. Nowadays, particularly in London, there are many company lettings and foreign tenants. It would be very helpful for tenants to know who are the other tenants in the block. I hope my noble friend will consider this point and make the information available.
My final point concerns the valuation formula. Under Clause 31 the valuation formula, where the tenant is buying the landlord's interest, is based on the open market price, not taking into account the tenant's interest. This is a formula similar to that which, according to my recollection, came under the original Leasehold Reform Act 1967 and which was found to be basically unfair and to give rise to difficult and unhappy results, and it was subsequently amended. There, that principle of valuation stands.
I find it very strange that we do not have the same established principle under the present Bill. Although I know that we cannot do anything today to alter the principles of the Bill, I hope that my noble friend will take on board the fact that there are many people outside who feel that the principle contained in the Bill is basically unfair.
§ 3.53 p.m.
§ Lord Dean of Beswick
My Lords, I speak on the basis that my party supports the Bill and agrees with the provisions contained in it. Moreover, my party's policy goes somewhat further than the Government's proposals. However, I have a great deal of sympathy for noble Lords who spoke earlier and complained about the shortness of time. I remind your Lordships, without trying to score political points, that the shortness of time is not the fault of the Opposition. I do not know how we are supposed to organise your Lordships' House or whether the Government consider what they do to us.
This time last year we were swamped with legislation, when complex, detailed, long and intricate Bills were given insufficient time. Major amendments were down for complex Bills such as the Financial Services Bill and the Banking Bill. Noble Lords were complaining about the hurry that was forced upon them, which resulted in the fact that adequate time was not available to deal with important matters.
In order to deal with that legislation we were brought back earlier than ever before. Although I stand to be corrected, I believe it was the heaviest batch of legislation that your Lordships' House has carried in a Session. My noble friend on the Front Bench who has just come in was involved in having to drop and restrict debates on very important matters that your Lordships should have dealt with in detail.
For some reason known only to the Government, when we reassembled in November we had the lightest legislative programme that has been seen for a long time. It is now obvious why. Again, that was not the fault of the Opposition. I believe that as the Government have gone further than the recommendations contained in the Nugee Report, the Bill could have been before your Lordships earlier and therefore had a fuller debate. However, that is not to be.
I say, I think without contradiction, that had the election been called when most people thought it was to be called, namely, October, there would have been no complaints today as there would have been ample time to amend and scrutinise the Bill. As I do not have a legal background I am not too familiar with parts of the Bill, which is very complex. However, I like to hear the implications of such legislation when it is explained and examined in detail by noble and learned Lords. As has been said by the noble Earl, Lord Kinnoull, the Bill has a great deal of good in it, tipping the balance slightly in favour of the tenant. However, my party would have gone further.
I was glad to hear noble Lords pay tribute to Sir Brandon Rhys Williams in another place, as I know how he has battled over the years. However, your Lordships will understand if I mention John Fraser, Member for Norwood, who, in conjunction with Sir Brandon Rhys Williams, represented a London borough with all its problems. He has done an outstanding job not only on behalf of my party but on behalf of tenants in general. He has made his expertise available both in a political and non-political sense, which has been of tremendous value. I do not know Mr. Nugee. However, I concur with the expressions of appreciation to him and his committee.
648 Having made those points, I should like to say that the Opposition in general were faced with a situation not of their making and would have been letting down a number of tenants if they had said, "Take the Bill away and bring it back later". There is so much good in the Bill—for example, the advances towards tenants' rights—that my party agreed to support it in its present form.
I took note of the fact that the Minister spoke only for four minutes and I shall try not to exceed that, because the Bill, as was mentioned by the noble Lord, Lord Monson, has had three sittings in Committee. However, there were extensive debates on some parts of the Bill during those sittings. I have read them. I believe in the later stages there was an attempt by Mr. Fraser to introduce a long, rather convoluted and legally binding clause which would have pushed the provisions further along the road towards the tenant.
I shall not detain your Lordships any longer on Second Reading because it has been made quite clear that what is before us now will go through in its present form. Further comment at this point is not the best way of dealing with the matter. On that basis, on behalf of my party I end by saying that we support the contents of the Bill and wish it well.
§ 3.59 p.m.
§ Lord Donaldson of Kingsbridge
My Lords, before the noble Baroness replies, may I ask her to make perfectly clear to those of us who are not part of the usual channels why there should be any objection to postponing the Bill until later, as other noble Lords have suggested. In the recent past I have had to complain about lawyers in the House. But, this afternoon, they have been first class. As most of us, it is fair to say, are not part of the usual channels, we need an explanation of why this serious warning from lawyers who have to deal with the matter and who are experts in it should be ignored. I hope that the noble Baroness will be able to give that explanation.
§ 4 p.m.
§ Baroness Hooper
My Lords, I regret that my noble friend Lord Coleraine was the first of a number of your Lordships who feel that the timing of the passage of the Bill leaves something to be desired. The noble Lord, Lord Dean of Beswick, suggested that the Bill should have been brought forward earlier. As the noble and learned Lord, Lord Wilberforce, the noble and learned Lord, Lord Denning, and the noble Lord, Lord Donaldson, have said, it is a long and complex Bill. We recognise that.
It has been a major task for the Department of the Environment and parliamentary counsel to draft the Bill. There was a long gestation period. As I explained in opening, the committee sat for a lengthy period and made wide consultations. Because the Bill was to embody the recommendations of the committee, it was felt that time should be given to its drafting. Had we been able to introduce the measure earlier, we should indeed have done so. I am afraid that that was not possible because of the care taken in drafting and because of the parliamentary programme.
The noble Lord, Lord Monson, added his comment on the suggestion that the Bill was being rushed 649 through. I must repeat that the committee, in carrying out wide consultations, found extensive evidence of problems in the management of blocks of flats. The Bill puts into effect the committee's recommendations.
The noble Lord was incorrect in suggesting that Part I departs from Nugee's recommendations. It does not. My honourable friend the Minister for Housing and other Ministers receive large numbers of letters from residents of blocks of flats who have serious problems. Indeed, we are well aware that Members of another place have made a point of drawing attention there to the size of their mail bags. As a result, I cannot accept that there is no urgency in the matter. Many tenants need the help that the Bill can provide. That is why it has received all-party support in another place. I am therefore grateful to the noble Lord, Lord Dean of Beswick, for his expression of support in this respect.
I should like to reiterate remarks that I made earlier. The Bill as a whole provides a framework for the orderly management of flats in private ownership. This is greatly to be desired and has been given a general welcome not only in another place but in the wider world outside. Therefore, we feel that it is important to pursue the Bill through its remaining stages now.
I turn to the references to Part IV made by my noble friend Lord Coleraine. Part IV deals with the provisions for variation of leases. A key element of the Bill, it implements one of the central recommendations of the Nugee Report.
The committee found dissatisfaction with leases a recurrent theme in many responses to its questionnaires both among residents and among landlords and managing agents. The report distinguished between complaints that stemmed from the realisation that the lease contained disadvantageous provisions which residents simply did not like and those that reflected a serious deficiency in the arrangemens for the satisfactory management or maintenance of the block.
Where a lease is badly drafted—this was referred to specifically by my noble friend Lord Coleraine—so that it does not make clear who is responsible for what or how any services or works should be paid for, we agree with the Nugee Committee's conclusion that there must be machinery to enable such matters to be put right. Again, where the lease fails to make satisfactory provision for the insurance of the property or where the proportions of the service charges add up to more than the total of the sums required, a mechanism is needed to deal with this. I do not think that there is any serious disagreement on the need for provisions on all of this, and Part IV was welcomed on both sides of the House in another place.
Clause 35 was specifically referred to. Clause 35(2) spells out circumstances in which an application can be made for a variation of a defective lease. The clause is a as precise as we could make it, although it is not of course possible in legislation such as this to deal with every conceivable variation or set of circumstances. However, I note the point made by my noble friend with reference to Clause 35(2)(e) in particular.
Clause 37 allows a majority of the parties to the leases of flats in a block to apply to the court for a variation of all the leases in the block. The court may 650 grant an order so long as the variation is not opposed by more than a prescribed minority. The purpose of the provision, again based on the Nugee Committee's recommendation, is to allow desirable changes such as the setting up of a sinking fund to be made.
We have thought it right, where the effect of a variation would be that one of the parties suffers financial loss, that the court should be able to order that compensation should be paid by the party getting the benefit of the variation. Where, however, the effect of a variation is to disadvantage a party to the lease and the award of financial compensation would not be an adequate way of recompensing him, then the Bill provides that a variation order should not be made. I hope that your Lordships will agree therefore that in this respect, as in others, the Bill is even-handed as between landlords and leaseholders.
Although the Bill is primarily concerned with the management of blocks of flats, we have thought it right to deal also in Part IV with the question of insurance provision in leases of other types of dwelling, because of the concern which has been expressed in some parts of the country, especially in South Wales and in the North-West of England about this issue. As I have said, the Bill is in response to problems raised directly with the department.
My noble friend was concerned about the impact of these provisions on the workload of the county court. I agree that if the new rights in this Bill are used by landlords and leaseholders, as we hope they will be, there will be some increase in the courts' workload, but we do not expect this to be large in relation to the total work of the county court—certainly not a flood of litigation, as my noble friend suggested. After all, we are talking about not more than 500,000 dwellings to which the Bill will apply. We believe that the existence of a statutory right to apply for the variation of a lease will, in many cases, encourage the parties to reach a satisfactory settlement out of court.
As I made clear, I hope, we regard Part IV as an important and, indeed, essential factor of the Bill. It will not, of course, be possible to bring it into operation for several months after Royal Assent because of the need to draft rules of court to deal with the handling of applications. Perhaps that will meet some of the concerns expressed by several noble Lords this afternoon.
I have already said to my noble friend, I think, that if he wishes to discuss in greater detail any of the points which concern him in this respect, certainly both I and my noble friend Lord Skelmersdale are very willing to do so. I refer briefly to the point that he made about service charges not adding up to 100 per cent. Where total service charges add up to more than 100 per cent. of the landlord's costs, he accepted the tenant's right to be able to apply to the court to vary the lease. In fact, Part IV of the Bill will facilitate that. We believe that the landlord should also be able to apply to the court to vary the lease where the service charges do not add up to 100 per cent. because we want to encourage well-maintained blocks of flats. That is in the interests of landlords and tenants, but if the landlord is to maintain the block, clearly, he must have the resources to do so.
651 Having dealt generally with one or two points made by the noble Lord, Lord Monson, I refer specifically to his comment about small and semi-detached houses. The sort of problems this Bill is aimed at—bad management, neglect and lack of repair—can arise as often in houses which have been converted to new flats held on long leases as in purpose-built blocks of flats. We see no reason why the tenants of such converted buildings should not have the remedies provided by the Bill. We certainly do not agree that the Bill will harm the interests of good landlords or discourage investment in this sector.
My noble friend Lord Kinnoull was very helpful in raising various points. I was most interested in them. As he explained, we have already had some discussion about several aspects of the Bill. I hope that I was able to show that the Bill, as amended substantially in another place, already provides adequately for many of the points which were troubling him. In several cases I undertook to consider whether we could meet his concerns. In drafting the subordinate legislation and rules of court which will be needed, we will, of course, take into account the points raised by my noble friends and by all noble Lords who have spoken today.
I realise that I am speaking in somewhat unusual circumstances at this point in the parliamentary programme. I welcome the contributions and suggestions that have been made on all sides of the House and the general support both for the aims of the Bill and recommendations of the Nugee Committee. I hope your Lordships will agree that we should press ahead and give the important advantages which the Bill will provide to the people concerned.
On Question, Bill read a second time; Committee negatived.
Then, Standing Order No. 44 having been dispensed with (pursuant to Resolution of 12th May), Bill read a third time.
§ Moved. That the Bill do now pass.—(Baroness Hooper.)
§ Lord Monson
My Lords, as I said at an earlier stage, I fear that for reasons of party political advantage, your Lordships' House has been deprived of its main constitutional function and, indeed, has been deprived of its right to fulfil its constitutional obligations. Effectively, the House has been asked to rubber stamp what has been decided behind the scenes, just like some puppet assembly behind the Iron Curtain. For that sole reason, I regret that I shall have to vote against the passing of the Bill.
On Question, Bill passed.