Commonhold Legislation (Hansard, 16 March 1993)

§ The Lord Chancellor (Lord Mackay of Clashfern)
My Lords, legislation to implement the commonhold proposals will be introduced when parliamentary time allows.

§ Baroness Jeger
My Lords, I am sure that the noble and learned Lord the Lord Chancellor has read the pretty booklet which his office has distributed to the public. I quote from it: commonhold should not be confused with the Government's leasehold enfranchisement scheme, the subject of other legislation at present before Parliament". How can the noble and learned Lord help regarding the confusion which exists? Many people who are following the Bill which is at present before the House are confused and wonder whether they would be better served by waiting for the commonhold Bill. Can the noble and learned Lord say something more exact about the commonhold Bill? What advice does he give to people who take action under the present Bill but 1333 who decide in the future that they would have done better under commonhold? Will he please give some free legal advice on this matter?

§ The Lord Chancellor
My Lords, as your Lordships know, I am very happy to give any advice that I can without any additional charge. Leasehold enfranchisement, which is the subject of the Bill presently before your Lordships, is a scheme to enable long leasehold flat owners to acquire collectively the freehold interest in their blocks of flats. That is the leasehold system and the enfranchisement of it which is presently in question. Commonhold is different. That is a scheme to provide for the separate freehold ownership of units within developments and, at the same time, to provide for the communal management of the development as a whole. To create a commonhold it will be necessary to have control of the freehold of the land concerned; for example, a commonhold can be created in respect of a new block of flats being put up and developed.
In the case of flats where the long-leasehold owners have the right to enfranchise, enfranchisement—if they use it —would give control of the freehold which will then enable them to go on and set up a commonhold, if they so desire. The leasehold enfranchisement is a way of getting ownership of the freehold. The commonhold system is a way of distributing the ownership of that effectively between the flat owners and providing a scheme for the management in the interests of the whole. So there is no question of somebody doing better under commonhold than under enfranchisement. Those two are distinct. In order to get from a leasehold property at present to commonhold, one would need enfranchisement. I believe that the option which the noble Baroness has in mind is not one which requires to be considered. The two are, as it were, in succession, the one to the other.

§ Lord Williams of Elvel
My Lords, will the noble and learned Lord say whether, after consultation, he still takes the view that there should not be a low-rent test for long leaseholders?

§ The Lord Chancellor
My Lords, I believe that the noble Lord will understand that there are distinctions of responsibility for the decision of particular questions. I am seeking to explain the relationship between enfranchisement and the commonhold scheme which is the subject matter of this Question. The precise terms on which enfranchisement should be allowed are determined by your Lordships, along with the other place, in the light of the developing debate on the present Bill.

§ Lord Williams of Elvel
My Lords, is the noble and learned Lord aware of the debates which your Lordships had yesterday on precisely the subject of the low-rent test, and of the unsatisfactory answer which we had from the Minister in the Department of the Environment on that particular question? Given that commonhold can be achieved, as the noble and 1334 learned Lord said, through leasehold enfranchisement, would it not be right to make sure that leasehold enfranchisement and commonhold for long leaseholders is on the same basis?

§ The Lord Chancellor
My Lords, the commonhold will come along as a possibility where, as a result of enfranchisement, the leaseholders have control of the freehold. As I have explained, it will come along with a lot of other possibilities as well; for example, in relation to commercial property and new developments. It is not linked only to leasehold enfranchisement. I am aware of course of the debate that took place yesterday. I would not agree in full with the description of it which the noble Lord has given.

§ Lord Ezra
My Lords, will the noble and learned Lord enlighten us a little further? He will be aware of the debate on the subject of leasehold enfranchisement, and does he agree that there will be a number of long leaseholders who will not qualify? If there were to be a commonhold law, would those same leaseholders be able to qualify for commonhold?

§ The Lord Chancellor
My Lords, no. I fear that I have failed to explain the difference between the two. Commonhold will apply only where the people in question, seeking to make the commonhold association, have control over the freehold. Therefore, if one has only a leasehold at the moment, unless one is in a position to convert that, with others, into ownership of the freehold, there is no question of the commonhold being of any assistance. Therefore, the only way of getting from leasehold to commonhold is through the mechanisms of enfranchisement unless one can get consent from all the other people interested in the unit concerned.

§ Lord Renton
My Lords, is my noble and learned friend aware that yesterday my noble friend Lord Strathclyde made it clear that in dealing with the current legislation on leasehold enfranchisement it would be wrong for us to anticipate any legislation on commonhold?

§ The Lord Chancellor
My Lords, I am sure that that was wise advice because one does not know exactly when the commonhold legislation will come and one does not know exactly what your Lordships might do to it when it does come, so it would be very unwise to anticipate fully the terms of it. However, I hope that it is possible to anticipate that commonhold legislation will in fact come along. I am certainly seeking to do my bit to ensure that that will happen.

§ Baroness Jeger
My Lords, would it not be helpful to this House and to the public in general if at least the Bill could be published so that we know what it is all about? If there is not the parliamentary time to enforce it, perhaps Parliament's programme could be rearranged to make that possible.

§ The Lord Chancellor
My Lords, the noble Baroness expresses a wish with which I have considerable sympathy. As far as publishing the Bill is concerned, we published fairly full proposals on 1335 commonhold some time ago. There is a limit to the number of times that I can publish such rather tedious detail. It is quite a complicated provision. In the meantime, however, I have sought to supplement that by the booklet to which the noble Baroness referred in, I think, appreciative terms.

§ Lord Tordoff
My Lords, reverting to what the noble Lord, Lord Williams of Elvel, was asking and to the noble and learned Lord's reply to another question, is it not the situation that, as a result of yesterday's decision, certain people will be excluded from moving from the happy position in which they are in at the moment to commonhold?

§ The Lord Chancellor
My Lords, for a person who has only a leasehold, the route to commonhold is through the conditions of enfranchisement —and those conditions will have to be met whatever they are. No doubt the decision made yesterday will form part of them as the proposals stand at the moment.

§ Lord Irvine of Lairg
My Lords, since commonhold legislation is the responsibility of the noble and learned Lord's department, could not his department have co-operated with the Department of the Environment so that the undoubtedly related issues of leasehold enfranchisement and commonhold could have been dealt with in a single piece of legislation? Why have the Government moved so slowly on a measure—commonhold—to which they are committed by their manifesto of last year, which has the support of all parties (and almost certainly of the Cross-Benches) and which will require relatively little parliamentary time?

§ The Lord Chancellor
My Lords, the last part of the noble Lord's question was very welcome as far as I am concerned. I was delighted to hear it. On the first part, it was not for lack of co-operation, but the amount of parliamentary time available for dealing with the present Bill is such that, having regard to the technicalities associated with the commonhold proposals, it was thought right to distinguish between them. Therefore, your Lordships have the pleasure of considering the present proposals without the necessity of applying your minds in the meantime to the detailed technicalities of commonhold.