HL Deb 20 May 1993 vol 545 cc1860-916
The Parliamentary Under-Secretary of State, Department of the Environment (Lord Strathclyde)

My Lords, I beg to move that the Bill be now further considered on Report.

Moved, That the Bill be further considered on Report.—(Lord Strathclyde.)

On Question, Motion agreed to.

Baroness Gardner of Parkes moved Amendment No. 160A:

After Clause 77, insert the following new clause:

("Appointment of managers

.—(1) Part II of the Landlord and Tenant Act 1987 (appointment of managers by the court) shall be amended as follows.

(2) In section 22 (Preliminary notice by tenant)—

  1. (a) in subsection (1) for the words after "a notice" there shall be substituted "or notices under this section must (subject to subsection (3)) be served by the tenant. In the case of an application under section 24(2) (a) or (c), a notice conforming to the requirements of subsection (2A) of this section must be served upon the landlord of the premises. In the case of an application for a consent order under section 24(2) (b), a notice conforming to the requirements of subsection (3) of this section must be served upon each tenant, whether of a flat or of part or parts of the premises occupied or intended to be occupied otherwise than for residential purposes";
  2. (b) in subsection (2), for "A notice" there shall be substituted "A notice served upon a landlord"; and
  3. (c) after subsection (2) insert

"(2A) A notice to be served upon a tenant under this section must—

  1. (a) specify the tenant's name, the address of his flat and an address in England and Wales (which may be the address of his flat) at which the landlord may serve notices, including notices in proceedings, on him in connection with this Part;
  2. (b) state that the tenant intends to make an application for an order under section 24 to be made by the court in respect of premises to which this Part applies as are specified in the notice, and state the terms of any draft order that it is proposed to place before the court.
  3. (c) contain such information (if any) as the Secretary of State may by regulations prescribe."

(3) In section 24(2) (appointment of manager by the court), after paragraph (a) insert

(aa) whether or not the landlord is in breach of any obligations mentioned in paragraph (a), where the court is satisfied that consent to the making of this order in such terms as it thinks fit has been obtained from

  1. (i) a majority of the tenants of flats in the premises, and
  2. (ii) the tenant or tenants of any part or parts of the premises occupied or intended to be occupied for otherwise than residential purposes." ").

The noble Baroness said: My Lords, two main causes of dissatisfaction with the long leasehold system exist. One is the fact that leases are wasting assets—we have already discussed that in great detail —and the other concerns the problems associated with management. It is that latter that I intend to address in this amendment this afternoon.

As the Bill stands, many people will be unable to enfranchise. Lease extensions, which we were so pleased to welcome when the Minister granted them the other day—we have not yet seen the actually wording and we wait to see that on Third Reading —will be of great help to people. However, the problem of bad management is common. Some two-thirds of flat owners complain of it. It affects the state of the national housing stock as well as the interests of individual flat owners. Surely we must tackle this problem by giving those who cannot enfranchise the right to manage, and it would be wrong if this legislation does not do so.

The difficulty of enfranchising has now been compounded by the new residence qualification, and the rule that those supporting enfranchisement must constitute 50 per cent. of occupiers in a block. Those are just two of the major concessions recently made to the landlord interest in the course of the passage of the Bill. We have now reached a position where eight separate hurdles have to be leapt before flat owners can even reach the starting point on the way to freehold ownership. Then there are the practical obstacles of raising the necessary finance and coping with the complex procedures. Many blocks will be ineligible, and in others which are eligible costs and other factors will prevent the qualifying leaseholders from getting the required majority support for enfranchisement.

The new residence test is particularly significant, more so than has been allowed. In many blocks the problem will not just be the presence of company owned flats and second homes. Flats which have been repossessed or whose owners have rented them out in order to avoid repossession before having lived there for three years will find themselves in real difficulty in meeting the 50 per cent. residence qualification. The qualification proposed by the noble Lord, Lord Boardman, of one year or three years in 10 is a severe one as in the late 1980s many people bought flats intending to continue to live in them then found they could not afford to do so. Indeed they were encouraged by the Government to let them out as a way of coping with their negative equity problems. Those people now find themselves in an even more difficult and disadvantaged situation.

For all those reasons the Leasehold Reform Co-ordinating Committee believes there will be many unenfranchised blocks and that in many of these bad management practices will continue unless there is some measure along the lines of this proposed amendment. Chapters V and VI of the Bill seek to improve the range of rights available to tenants in blocks under the control of landlords. However, in the view of the LRCC, that is to aim at the wrong target. The real need is to improve access to rights. Under the 1985 and 1987 Landlord and Tenant Acts flat owners' rights are already very impressive on paper. However, they fall down in practice. Government sponsored research has shown that in practice tenants are far too often unable to use their rights, mainly because of the high costs and the complexities of the court proceedings involved. That unfortunately will also be true of the new rights created by the Bill as drafted.

Tenants already have a right under the 1987 Act to take over the management of their own homes, but only where a landlord can be proved to be at fault. That may sound fair and reasonable but the court proceedings involved are so long and costly that in practice this is virtually a dead letter. One problem is that the procedure involved is cumbersome; another is that it must be proved that a landlord is currently in breach of a management obligation and is likely to continue to be so. If he persuades the court he is going to deal with the problem named by the tenants, their case falls to the ground and has to be started all over again if he fails to honour the commitments he has given. Above all, the fact that a landlord has a bad management record is not a ground on which the court can make an order.

Westminster City Council has in many instances had to intervene on behalf of tenants because landlords have collected money from tenants but failed entirely to carry out the repairs or upgrading they promised. It is only when they are threatened with a compulsory purchase order or court action that they appear willing to carry out the work. As soon as the threat has receded, they once again fail to carry out the work. In the end, Westminster City Council had to compulsorily purchase a number of blocks which it then passed on to housing associations for the latter to act as landlords as the council wished to see the tenants protected.

I am not really speaking here about good landlords. No tenant would wish to change a good landlord or a good managing agent. Nevertheless, I think there is great cause for concern that many people are dissatisfied and feel that the service charges they pay are not properly accounted for. I realise service charge accounts are meant to be submitted to tenants. However, last week I met a man who was a statutory tenant in a block. He told me that when he went to a rent review tribunal the accounts that were produced for the block he lives in were completely different from the figures that were produced for tenants who pay the service charges. There is a large discrepancy that no one ever accounts for.

At the very least the amendment would give access to the right to manage and would make that much more practicable. The LRCC believes that the best approach is to give a right to manage without the necessity and legal expense of proof of fault, dependent only on proof that the tenants in the building consent to such an order. The landlord also must consent. This is simply a matter of common sense. It will be an obvious anomaly for the law to give flat owners the ability to take over both ownership and control of properties without proof of fault, as is now proposed in the Bill, and yet to insist that where the lesser objective of control without ownership is sought, then fault must be proved. As I explained before, that is difficult to prove.

Under the regime created by the amendment, the required majority of residential tenants, together with any non-residential tenants, will approve the proposal to take control of the management. They will go to court to seek an order. Because the proceedings will be consent proceedings involving no legal contest between landlord and tenants, the problems associated with the use of courts under Part II of the 1972 Act as currently enacted will not arise.

The amendment does not propose that landlords be deprived of the power to manage, merely that that power may be taken away from them. Landlords would also have the right to apply to the court for protection or to seek revocation or amendment of any order made.

Good landlords have nothing to fear because tenants would want to leave them in control. I draw the attention of the noble Lord, Lord Monson, in particular to the fact that there is no question of tenants seeking windfall profits. I know that the noble Lord was concerned about that possibility in relation to ownership. No profits would be involved in taking over management or appointing new managing agents. It would simply be a case of improving the management.

It may also be argued that, in buying leases which give control of management to landlords, flat owners are only getting what they contracted for. That is true, if the landlords fulfil their obligations. Leases of flats involve management obligations rather than rights. Where those obligations are not met it is the landlords, not the tenants, who are flouting the rights of property and the sanctity of contract. Properly speaking, landlords do not have rights; they have obligations. However, it should be noted that under normal residential leases landlords are not allowed to make a profit out of management. They are meant to charge the tenants for the management functions which they carry out but that should not be on a profit-making basis. Nevertheless, many landlords abuse the system and make profits from service charges and other management fees.

The fact that the right to manage is consistent with the freedom of contract and the principles of property ownership is no doubt one reason why the chief executive of the Grosvenor Estates proposed in a recent letter to The Times that that right should be given to flat owners and why at an earlier stage my noble friend Lord Boardman brought forward Amendment No. 160 relating to the right to manage. My noble friend has since withdrawn that amendment. I considered re-tabling the amendment but thought that it would not be right to do so since he must have thought that it was defective or he would not have withdrawn it. My amendment is slightly different and, I believe, rather better.

Amendment No. 160A is limited in scope. Because of the late stage in the Bill's proceedings the amendment has been framed to achieve the objective with the minimum of new legislative provision. Conferring the right to manage exclusively by provisions within the current Bill would require numerous consequential amendments. This amendment seeks to achieve its objective through a relatively minor change in the 1987 Act, using the procedural mechanism created in that Act by simply adding a consent order procedure to the existing proof of fault procedure.

It would be for the court to make the necessary arrangements to protect the landlord from having any liability where he does not have control, just as it currently has that role where it takes over management on proof of fault. The amendment will not leave the court in day-to-day control of the management of a block of flats. That would be impractical and it was not the intention of the 1987 Act. The court puts a nominee and a manager in control of the management. In practice, the tenants would usually set up a management company. If that is satisfactory, that company would be appointed as manager by the court. That happened under the 1987 Act in the recent case of Howard v Midrome Limited. The management company would then take over full responsibility for the management, leaving the landlord without liability.

I believe that the amendment protects the rights of all involved. Under the right to manage created by the amendment, anyone, including the landlord, would enjoy the protection of being able to go to court to seek a revocation or amendment of the order on the ground that it was not working or that it was working in a way which was prejudicial to their interests. Again, I point out to the House that I am sure bad landlords will not seek revocation if that happens. Good landlords may do so because they may consider that the arrangement is not working.

Amendment No. 160A differs from Amendment No. 160B. I should like to mention the differences and say why I prefer my amendment and do not support Amendment No. 160B. Amendment No. 160A covers commercial tenants as well as residential tenants. I do not believe that Amendment No. 160B does so. Local authority tenants are covered under Amendment No. 160B. My own experience of the field of local authority housing leads me to consider that the provision is less appropriate for that sector. Under my amendment, commercial tenants are recognised and will be protected because the amendment demands that all commercial tenants agree to a consent order before it can be made. That provides very good protection. It is also appropriate because there may be a large commercial presence in some properties and the commercial tenants would have an interest in the matter.

I commend the amendment to your Lordships. The very fact that the Grosvenor Estates supports the concept is interesting, because I believe that it takes its obligations as a landlord seriously. That support must indicate that there is good in the amendment. I also believe that your Lordships will appreciate the common sense, sound value and simplicity of the amendment. I hope that your Lordships will support Amendment No. 160A. I do not support Amendment No. 160B, and I shall not speak to Amendment No. 237A, which is grouped with those amendments, because I have not had time to study its implications. I beg to move.

4 p.m.

Lord Williams of Elvel

My Lords, I too shall speak to Amendments Nos. 160A and 160B and I shall not speak to Amendment No. 237A, partly because I have not had time to study it and partly because the noble Earl, Lord Lytton, is perfectly capable of making out his own case.

I follow the arguments of the noble Baroness, Lady Gardner of Parkes, a long way. I do not intend to reiterate her arguments. In the course of its passage through your Lordships' House, the Bill has changed in certain respects, particularly in connection with the residency test and lease renewal. The consequence will be that enfranchisement will inevitably be less than it would have been had the Bill gone through as originally drafted. I believe that that is agreed on all sides by all rational men and women. On the other hand, there is a residual problem, which the noble Baroness quite rightly raised—namely, that there is therefore all the more reason for tenants to have greater influence on the management of the properties in which they live and of which they are leaseholders and in which they hold an interest. Indeed, at one stage of the passage of the Bill it was considered that there would be a package comprising a residency test, lease renewal and management of estates.

I follow the noble Baroness that far. However, where I differ from the noble Baroness is on the part of her amendment which alludes to the court. I believe that the existing arrangements, as she rightly said, are unsatisfactory. But I believe that the arrangements in her amendment would hardly be more satisfactory. I also do not follow her logic when she states that council tenants or local authority tenants should not enjoy the same rights and privileges as private sector tenants.

I do not wish to go over the arguments which the noble Lord, Lord Boardman, put to the Committee to justify the amendment which he moved, again very eloquently. Further, I wish to draw a distinction between what we propose in Amendment No. 160B and Amendment No. 213A, which specifically addresses the issue in Part II of the Bill.

In Amendment No. 160B I seek to establish the logic of the argument which we have been pursuing at all stages of the Bill. The logic is that if tenants can enfranchise, they will be in charge of the management of their properties. If for one reason or another they cannot enfranchise, they will have the right to renew their lease. If they have the right to renew their lease, subject to all the tests which they have to go through, then those who are still leaseholders of a freeholder should have the right to influence at least the management of the properties in which they live and which are their homes.

The logic goes further than just private leaseholders. It applies to leaseholders or tenants of any landlord, be he or she public or private. That is the logic of Amendment No. 160B. That is why I much prefer Amendment No. 160B to Amendment No. 160A.

I do not wish to detain your Lordships because I do not believe that at Report stage we should go over all the arguments that we have been through in Committee. I simply put forward Amendment No. 160B from these Benches as an amendment which we believe to be important, substantial and in the logic of the Bill as drafted. I would have much preferred the noble Baroness to have reserved her amendment for a later stage. At present I strongly prefer Amendment No. 160B and cannot support the noble Baroness on Amendment No. 160A. However, if the House decides against what I propose in Amendment No. 160B, the noble Baroness may reconsider the position at a later stage.

The noble Lord, Lord Boardman, will wish to speak on the matter. In Committee he spoke eloquently to an amendment approximately on the same lines excluding public sector tenants. It came as some surprise that he withdrew the amendment when it had already been tabled for Report.

In conclusion, I hope that your Lordships will accept Amendment No. 160B because it covers all the areas to which I have referred. It provides a way of public or private tenants being in some measure in charge of the management of their homes. The noble Lord may say that the amendment may be defective; I do not know. No doubt he will be able to clear up the defects at Third Reading if your Lordships accept the basic provision. I put forward an important principle: that people who are leaseholders who do not own the freehold, whether public or private, should have the right to say who manages their homes. That is the burden of Amendment No. 160B. That is what I wish to speak to.

4.15 p.m.

Lord Campbell of Alloway

My Lords, perhaps I may say a word in opposition to both Amendments Nos. 160A and 160B. In doing so, perhaps I may declare my interest as someone who, with others, has the right to buy, does not propose to exercise it and would wish to be able to participate in the management of the block, whether as part of a package or not.

My reasons—as part of the declaration of interest in not wishing to exercise the right to buy—are that under the common leases the provision of the services are at audited cost; the landlord is an honourable man; the managing agents appointed are of repute and charge a percentage of the management services, cost of repairs and so on; and that I am wholly content and would not wish to move from my home or take a quick turn at the expense of the landlord.

Listening to my noble friend Lady Gardner of Parkes, I would say with utmost respect to her that good landlords have a great deal to fear from enfranchisement and from the split administration which arises as a consequence of enfranchisement. As my noble friend spoke, she opened up for me, as a lawyer, a somewhat terrifying vista of endless and expensive legislation, the setting up of management companies, and so on and so forth, which more often than not rather than resolve differences between neighbours can even accentuate them.

I understand that Amendment No. 160 is a Leasehold Reform Co-ordinating Committee amendment. In this context again I say that I speak for no one but myself. My objection to the amendment is that it conflicts with the residence condition accepted on Amendment No. 14 at Committee stage, with consequent amendments on Report, and no doubt will also conflict with the government amendment to reflect in some degree Amendments Nos. 29 to 30A moved by my noble friend Lord Renton.

Amendment No. 160B seems to have arisen as a phoenix from the ashes of Amendment No. 160. I would indeed have supported in principle Amendment No. 160, as I believe I said at the time of speaking to Amendment No. 14 at Committee stage. With regard to Amendment No. 160B, my objections are essentially twofold, while accepting that some requisite means of participation must be provided for tenants who decline to exercise the right to buy. The two reasons are these.

First, I do not understand why groups of houses in public sector estates, as defined in subsection (5), should be included in subsections (2) (b) and (3) (b), or why it is appropriate to do so. Secondly, it is not understood or considered that management is sufficiently defined to include all aspects of the administration of the block. But, as to the requisite means of participation which lie behind the debate on Amendments Nos. 160A and 160B, Amendment No. 160 had it been moved or any other similar amendment, certain questions arise on which, if the Minister is able to give some measure of assurance, I should indeed be most grateful.

First, would the management, as proposed by the Government, include the right to disturb services rendered at cost under common leases, to alter the cost of provision, or even to discontinue the provision of such services as regards the tenants who decline to enfranchise? On 18th May, at col. 1718 of Hansard, my noble friend the Minister said, in the context of service charges: One of the objectives of [the scheme] is to release tenants from that regime". That regime should not be perpetuated in an estate management scheme. To what extent can the management committee, set up by those who exercise the right to buy, enforce amendment of the provisions of the common form lease upon those who do not wish to exercise that right? I know that I am a lawyer and I should know the answer, but I do not.

What is the position as regards the repairing company, or the exercise, for example, of an option to purchase a caretaker's flat, or an agreed reduction in service charges under the common leases when a statutory tenant in the block falls ill? What is the position as regards the mutual covenants scheduled to the lease?

Those who wish to participate in an estate management scheme, not having enfranchised, seek clarification as to whether and, if so, to what extent the management committee may, contrary, for example, to my wishes, disturb the contractual relationship under the common form lease which exists between myself and my landlord? I seek clarification and a measure of reassurance respectfully. I wish I knew the answer. For the reasons I have given, despite what lies behind the amendments, I am unable to agree with either of them. Nevertheless, I should have supported Amendment No. 160.

Lord Monson

My Lords, superficially there is some attraction in both amendments. In response to the noble Baroness, Lady Gardner, I accept entirely that there would be no question of windfall profits accruing to anyone if either of the amendments were to be accepted.

The problem is that in so far as the amendments would deal with bad landlords, they are to be welcomed. However, in certain circumstances, they could also unfairly make life difficult for highly respected, good landlords such as Smith's Charity and other landlords of high repute.

The chief circumstances that come to mind are these. There are periods of high inflation such as we saw to a large degree in the early 1970s, to a lesser degree in the late 1970s and for a small period in the early 1980s. At such times, especially for those who exist on a fixed income, it is a normal human reaction to resent all price increases of any kind, including increases in management charges, even if the increases do no more than keep pace with the rapidly rising cost of living. That could lead to resentful tenants voting to kick out perfectly good landlords from their management function in the mistaken belief that the management fee increases were unjustified. That could arise even though the increases happened to be no more than level-pegging with or below the retail prices index.

For that reason, while the broad thrust of the amendments is probably to be welcomed, the threshold at which the landlord could be removed from his existing management functions under Amendment No. 160B would appear to be 50.001 per cent. That is to say, anything over half of the tenants. However, that is too low. The figure ought to be somewhere between 60 per cent. and 70 per cent. If the amendment were to be brought back on Third Reading with that change incorporated, I should support it. However, as it stands, I do not believe that I can.

Lord Boardman

My Lords, both my noble friend Lady Gardner and the noble Lord, Lord Williams, referred to the amendment which I moved earlier in Committee. As I made clear at the time, Amendment No. 5 was part of a group of amendments which hung together. The management's right to protect the lease and there being no right for non-residents to enfranchise were all part of a package. Both my noble friend and the noble Lord strenuously opposed my Amendment No. 5, knowing that with it hung Amendment No. 160 which, as a consequence, I withdrew. I do not accept my noble friend's criticism for withdrawing an amendment which I made clear at the outset was part of Amendment No. 5 which she forcefully opposed.

Perhaps I may return to my noble friend's speech in moving the amendment. She made three points on which I wish to join issue with her. First, she said that purchasers must be occupiers of 50 per cent. of the block. She will find that recorded in Hansard. With great respect, she has not followed the Bill nor the effect of Amendment No. 14 which I moved and which was accepted; indeed, it was accepted by the noble Lord, Lord Williams. She was quite impressed with that. Therefore, the whole of her argument is, I believe, based on a fallacy.

My noble friend then said something and I hope that she will forgive me quoting it. If she wishes to correct me I shall happily give way. I believe that it was an unfortunate remark. She said that we should not be concerned with management rights but with management obligations. Managements, she said, do not have rights; they have obligations". I do not know whether my noble friend really meant that. If she did, I shall certainly give way to her.

Baroness Gardner of Parkes

My Lords, by leave of the House, yes. We were talking about contracts and leases. If one studies the lease of any flat, one sees that it places obligations upon the landlord. He has obligations to maintain the block and to see that it is maintained. That is what I meant about the obligations. It is not a pleasure in the sense that, "I have the right to look after the block", or "not to look after the block". It is an obligation on the landlord which the good landlord always carries out adequately and which the bad landlord fails to carry out. But it is a contractual obligation under a lease.

Lord Boardman

My Lords, I am obliged to my noble friend. In my book, each side to a contract has rights and obligations. It is not a one-sided bargain, as perhaps my noble friend has suggested on this and a number of other amendments. I find her amendment defective. It is based on the wrong premise and perhaps does not follow the complexities of what has been approved in my Amendment No. 14. Perhaps it is through having a different approach to obligations and rights. I oppose her amendment.

As regards Amendment No. 160B, proposed by the noble Lord, Lord Williams of Elvel, perhaps I can claim part copyright because large sections of it come from my Amendment No. 160. Unfortunately that amendment was withdrawn, not simply because Amendment No. 5 was lost, but also because I had received advice that it was entirely defective and would be unacceptable. In so far as he has taken from me the copyright of the preface to my amendment, I have to say to him with regret that I am advised that the amendment is defective. No doubt my noble friend will be able to say whether nor not that is so. Certainly it was not drafted with the object of extending, as the noble Lord has, into the public sector. I understand his argument. But I would find that the amendment, in so far as it copied my Amendment No. 160, was probably wrong. As it extends into the public sector, I think it inappropriate. However, my noble friend may have more to say on the matter.

I have not studied the other amendment, tabled by the noble Earl, Lord Lytton, which is grouped with this one. As it has not been amended, I shall make no comment on it. I certainly oppose Amendments Nos. 160A and 160B.

4.30 p.m.

Lord Carnock

My Lords, I support the general thrust of these amendments. In coming to that decision I am very much influenced by the fact that in nearly every case the financial interest of the tenants in a block of flats is very much greater than that of the landlords. Indeed, the reverse only occurs when leases have only a few years to run before expiry.

Both of the amendments appear to me to suffer from some defect. I shall illustrate the point that worries me by asking noble Lords to consider a block containing 100 flats and 20 offices or shops. Under Amendment No. 160A at least 51 residential flat owners would have to agree before a management order could be obtained—and also, all 20 of the non-residential owners. That would be so even if one were to disagree. Therefore, a situation could arise whereby 18 or 19 of the commercial owners would want a manager appointed, but there would be one dissentient so the management application would be blocked.

In the case of Amendment No. 160B, commercial owners are omitted entirely. In that eventuality, to take the block which I have suggested for consideration, one would find that a majority—not even a majority, only 50 per cent. —of the flat owners in the block would be able to secure a management order, and the wishes of the commercial owners would be entirely neglected.

Baroness Hamwee

My Lords, the House is indebted to the noble Baroness, Lady Gardner, for making so clear the issue to be addressed. It is indeed, as she puts it, management obligations. I take issue with the noble Lord, Lord Boardman, in saying that this is a position where the rights of the management or manager, however one wishes to describe him, need to be balanced with his obligations. In any agreement both sides have rights and obligations, and those are to be recognised. As the noble Baroness described, a lease has a benefit for the landlord in the rent that he is paid, and he has obligations to maintain the property. It is a simple quid pro quo; one which often expresses itself in about 65 pages of lease. The noble Baroness is quite right in drawing our attention to the fact that this is at the heart of her amendment; and, indeed, at the heart of Amendment No. 160B. It is the objective of both those amendments to ensure that if there is a failure to comply with the obligations—after all, in the real world when things are going well no tenant will want to create the complex situation of applying the provisions of either of these clauses but would simply prefer to get on with a quiet life and let the landlord undertake the management—and things go wrong, then it is entirely right that the tenants, both those described in Amendment No. 160A and the more extensive group of tenants in Amendment No. 160B, should have the right to take action to protect their own positions.

Lord Strathclyde

My Lords, these amendments seek, in different ways, to give tenants a right to manage their homes. We have heard a number of speeches explaining how many of the problems in the running of blocks might be overcome if the tenants had the right to take control of the management, and certainly it is a seductive idea. I believe the noble Lord, Lord Monson, said it was superficially attractive. After all, the tenants meet the cost of the management through their service charges so, the argument goes, it is only right that they should control how that money is spent. I believe, however, that there are some fundamental difficulties which noble Lords may not have sufficiently addressed in looking at these amendments. I fear that the Government cannot go along with what is proposed. and I shall explain why.

First, I believe that giving tenants the right to take management responsibility from private landlords is unfair to landlords. Many of them manage their blocks themselves and there is no reason to suggest that, by and large, their standards of management are lower than those of, say, a reputable managing agent. It is their livelihood, yet these proposals would take away their business. Now, of course, enfranchisement is equally likely to result in a change of management in these circumstances. But in that case the landlord does receive back the value of his investment. Allowing the tenants to take away management responsibilities without also taking on ownership of the block is equivalent to taking away a business but keeping the former owner's capital invested in it. That is hardly fair. Equally, I am not sure that the proposals would actually provide an effective basis for the management of residential accommodation.

I take first the proposal from my noble friend Lady Gardner. That is based on the existing regime in the Landlord and Tenant Act 1987, which allows the court to appoint a manager if it is satisfied that the landlord is in breach of his obligations under the lease and that the breach is likely to continue. The amendment would give tenants the right to apply to the court for the appointment of a manager, whether or not the landlord is in breach of his obligations. So it considerably widens the scope of the 1987 Act.

But that approach does not provide a sensible and sustainable way to manage blocks. It is one thing to allow a court to step in and appoint a manager where the landlord is in default, but it is quite another to do so when the management arrangements are working in a perfectly satisfactory way.

Taking management responsibilities from the landlord and giving them to the appointed manager is not always a very happy recipe. It is hardly a flexible way of dealing with day to day management if, every time there is some disagreement between the landlord and the manager about what action the manager should take, there has to be an application to the court for direction.

The fundamental difficulty is that while the manager may be appointed by the court he is nevertheless answerable to the landlord. The amendment does not give the tenants a right to manage, only a means of ensuring that a manager appointed by the court is in place. Where the landlord has not defaulted or failed in his obligations it would be fundamentally unsatisfactory for the courts to appoint a manager who will then be responsible to the landlord, even where there is a majority of the tenants in favour. It may be tolerable in the case where the alternative is a landlord who defaults on his obligations through apathy, but it is not an acceptable alternative in other cases. Therefore, I have very great difficulties with my noble friend's amendment.

I turn now to the amendment of the noble Lord, Lord Williams. The amendment adopts a different approach. under which tenants acting collectively can appoint a management, presumably to act for them. Again, I think there is a fundamental difficulty here. The noble Lord sought to establish a logic. I fear he failed to do so. I ask him some simple questions. To whom is the manager answerable? Does he take his orders from the landlord, of from the tenants? If it is from the tenants, what rights and responsibilities does the landlord have? Is he effectively dispossessed of his property? If the manager takes his orders from the tenants, who gives them? Is it each tenant individually? Is it different groups of tenants? It is not at all satisfactory to say that the leasehold valuation tribunal will sort out the details in each case—they cannot re-write every lease in the country. That is not a drafting point, it is a fundamental flaw.

Lord Williams of Elvel

My Lords, I shall have to interrupt the noble Lord. No doubt he realises that we are at Report stage. We have grouped together a series of amendments. I have spoken to that group. Therefore, I am unable to respond to his questions. However silly they may be, I am unable to respond to them.

Lord Strathclyde

Of course, my Lords. But the noble Lord may wish to counter those points when he decides whether or not to move his amendment. The noble Lord's amendment deals not only with blocks of flats but goes on to give any tenant of a public sector estate "a right to manage". Those proposals are unnecessary.

The Bill already provides in Clause 120 new arrangements under which properly constituted tenant management organisations shall have the right to take over from their local authority landlord management responsibilities. That clause sets out proper arrangements under which the Secretary of State may make regulations dealing, among other matters, with the administrative support and training of the tenant management organisation, feasibility studies, balloting, and for settling all the matters to be considered.

Before I explain the very real problems that I have with the amendment, perhaps I may turn to my noble friend Lord Campbell of Alloway who made a somewhat complicated speech, which I do not pretend to have followed in its entirety. Perhaps I may write to him with the detailed answers. However, the point is that the tenants will have to pay the cost of maintaining their own blocks through charges imposed by the nominee purchaser. Non-participants would have exactly the same rights and obligations under their leases as they had before enfranchisement. The lease itself remains unchanged.

I believe that both the amendments are wrong in principle. Moreover, both leave a great many issues unanswered and would therefore be extremely difficult to put into practice. Any tenants who were to venture down the new avenues offered by these amendments would soon find themselves surrounded in a fog of ill-defined responsibilities with no firm structures in place to guide them.

These amendments offer only illusory rights. The detailed and well-defined procedures that we have offered for enfranchisement and for tenant management organisations offer a far better approach. I hope therefore that my noble friend Lady Gardner is satisfied with my explanation. I hope that she is able to withdraw her amendment arid that the noble Lord, Lord Williams, will not move his amendment.

Baroness Gardner of Parkes

My Lords, I am most grateful to various Members of the House who have spoken on this matter. I must reply to a few of the points raised. The noble Lord, Lord Campbell, examined many points going beyond those directly concerned with the lease. I am glad that the Minister will reply to him.

I draw the attention of the noble Lord, Lord Monson, to the Australian shorthold situation which works very well. There is always a management company which owns the block and each person has a share in it. It is decided by a majority of those people themselves, some of whom are actively interested and some of whom do not attend a single meeting, whether or not they want to spend money on a luxurious entrance. The arrangement is not a haphazard matter. I take note of the noble Lord's comments about the 60-plus per cent. of tenants. That is very interesting. I might be able to pursue it at a later stage with my noble friend the Minister.

The noble Lord, Lord Boardman, and I are, I believe, at cross purposes. We both understand leases perfectly well and the fact that on each side there are rights and obligations. The tenant's main obligation is to pay rent and to abide by the landlord's covenants, which usually include interior decorating, not disturbing other people in the block, and so on. But the tenant's right is to enjoy the flat and the occupancy thereof without disturbance and to rely on the landlord to do what he has covenanted to do, which usually includes maintaining the building, cleaning, insuring, and, of course, the tenant has to pay a proportion for that. The noble Lord said that I had said 50 per cent. of the purchases. If I said that, that is not what I meant. I meant 50 per cent. of the residents. That is the phrase that I should have used in my amendment.

But that is neither here nor there. I intend to take up the other points made by the Minister. He made a very interesting case. I accept what he said: that the landlord has the right to manage the block and it is his business. Provided that he is doing it well, I have no fault to find. Having listened to the Minister's reply, I feel that probably the real problem with the 1987 Act, to which my amendment relates, concerns the two passages about "currently in breach" and "likely to continue the breach" of the obligation to manage the property adequately. That is why tenants are so dissatisfied at the moment. They fail in any attempt to get rid of a bad landlord and have the court appoint managing agents to take over because of those two difficulties: the "currently" and "continuing" to do so. The really bad and completely evasive landlord has means of avoiding the word "currently" by hurriedly doing whatever is complained about; and at present the law does not take into account any past history of how many years of failure to do what needs doing has gone on.

I believe that there is a different way in which we could bring an amendment forward. It would cover the situation in the same way by applying to the court and proving the fault but the fault would not have to be proved on such a restricted basis as at present. At the moment it is almost impossible for tenants to succeed, no matter how bad the landlord may be. I have cited cases in which a council has tried to protect tenants and found it extremely frustrating in that nothing works with a really slippery landlord. With the good landlord, I do not believe that anyone will attempt to change the situation. People will be perfectly happy.

I have been persuaded by my noble friend not to press my amendment at this stage. But I shall have discussions with him before Third Reading. I believe that there is a point which could be brought forward which would be acceptable to both tenants and landlords and we should try to find it. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Williams of Elvel moved Amendment No. 160B:

After Clause 77, insert the following new clause:

("Tenants' right to manage

.—(1) This section shall confer upon tenants to whom subsection (2) below applies the right to appoint a manager to carry out such functions in connection with the management of those premises as the leasehold valuation tribunal shall order.

(2) This section applies—

  1. (a) to the tenant of any flat within premises if—
    1. (i) they consist of a self-contained building or part of a building and the freehold of the whole building or of that part of the building is owned by the same person;
    2. (ii) they contain two or more flats;
    3. (iii) not less than two-thirds of the flats contained in the premises are held by tenants under a long lease, and
  2. (b) to any tenant of a public sector estate.

(3) The right to appoint a manager under this section shall only be exercisable where written notice of appointment is given—

  1. (a) in the case of premises with tenants falling within subsection (2) (a) above, to the landlord responsible for managing the premises and to the freeholder if not the same person by not less than half of the tenants of flats in those premises and not less than half of the tenants giving such notice satisfy the residence condition set out in subsections (2), (3) and (4) of section (Qualifying tenants satisfying residence condition); and
  2. (b) in the case of a public sector estate, to the public sector landlord by not less than half of the tenants of houses on that estate, each of whom is either a secure tenant or a qualifying tenant as defined in section 5.

(4) Upon application by a manager appointed in accordance with subsection (3) the leasehold valuation tribunal shall make an order providing for—

  1. (a) the manager to assume responsibility for the performance of such of the obligations of the landlord as may be determined by the leasehold valuation tribunal;
  2. (b) for the manager to indemnify the landlord against any claim for non-performance of those obligations; and
  3. (c) such other matters relating to the exercise by the manager of his functions and such matters as are incidental or ancillary thereto as the leasehold valuation tribunal thinks fit.

(5) In this section—

(6) In making a determination of under this section, a leasehold valuation tribunal may have regard to such matters as it thinks fit.

(7) The right conferred by this section shall have effect notwithstanding any order made under section 2(3) of the Local Government Act 1988 providing for the exercise of any management functions to be defined activity for the purposes of Part I of that Act (compulsory competitive tendering.").

The noble Lord said: My Lords, I have already spoken to this amendment. It offers a different approach from that of the noble Baroness. I recognise that. The fact that the amendments were grouped together was perhaps slightly misleading. However, this raises a very important point of principle and I wish to test the opinion of the House on the matter. I beg to move.

4.47 p.m.

On Question, Whether the said amendment (No. 160B) shall be agreed to?

Their Lordships divided: Contents, 86; Not-Contents, 144.

Division No. 1
Addington, L. John-Mackie, L.
Airedale, L. Kagan, L.
Archer of Sandwell, L. Kilbracken, L.
Ardwick, L. Listowel, E.
Attlee, E. Llewelyn-Davies of Hastoe, B.
Aylestone, L. Longford, E.
Beaumont of Whitley, L. Lovell-Davis, L.
Blackstone, B. McIntosh of Haringey, L.
Blease, L. Mackie of Benshie, L.
Broadbridge, L. McNair, L.
Bruce of Donington, L. Mallalieu, B.
Callaghan of Cardiff, L. Mayhew, L.
Carmichael of Kelvingrove, L. Merlyn-Rees, L.
Castle of Blackburn, B. Milner of Leeds, L.
Cledwyn of Penrhos, L. Molloy, L.
Clinton-Davis, L. Monkswell. L.
Cocks of Hartcliffe, L. Mulley, L.
David, B. Murray of Epping Forest, L.
Dean of Beswick, L. [Teller.] Nicol, B.
Dormand of Easington. L. Ogmore, L.
Ennals, L. Peston, L.
Falkender, B. Pitt of Hampstead, L.
Falkland, V. Ponsonby of Shulbrede, L.
Gallacher, L. Prys-Davies, L.
Gladwyn, L. Rea, L.
Greene of Harrow Weald, L. Redesdale, L.
Grey, E. Richard, L.
Grimond, L. Robson of Kiddington, B.
Hamwee, B. Rochester, L.
Hanworth, V. Russell, E.
Harris of Greenwich, L. Seear, B.
Healey, L. Serota, B.
Hilton of Eggardon, B. [Teller.] Shackleton, L.
Hirshfield, L. Shaughnessy, L.
Hollis of Heigham, B. Stoddart of Swindon, L.
Holme of Cheltenham, L. Strabolgi, L.
Hooson, L. Thomson of Monifieth, L.
Houghton of Sowerby, L. White, B.
Hughes, L. Wigoder, L.
Jay, L. Williams of Crosby, B.
Jay of Paddington, B. Williams of Elvel, L.
Jeger, B. Williams of Mostyn, L.
Jenkins of Putney, L. Wilson of Rievaulx, L.
Aldington, L. Kintore, E.
Alexander of Tunis, E. Kitchener, E.
Allenby of Megiddo, V. Lauderdale, E.
Amwell, L. Layton, L.
Annaly, L. Leigh, L.
Archer of Weston-super-Mare, L. Liverpool, E.
Long, V.
Arran, E. Lucas, L.
Astor, V. LyeII, L.
Astor of Hever, L. Lytton, E.
Banbury of Southam, L. Mackay of Clashfern, L.
Barber, L. [Lord Chancellor.]
Beloff, L. Mancroft, L.
Bessborough, E. Merrivale, L.
Blatch, B. Mersey, V.
Blyth, L. Monk Bretton, L.
Boardman, L. Morris, L.
Boyd-Carpenter, L. Mottistone, L.
Brabazon.of Tara, L. Mountevans, L.
Braine of Wheatley, L. Mountgarret, V.
Bridgeman, V. Moyne, L.
Brightman, L. Munster, E.
Brougham and Vaux, L. Murton of Lindisfarne, L.
Bruntisfield, L. Norrie, L.
Butterworth, L. Onslow, E.
Cadman, L. Oppenheim-Barnes, B.
Caithness, E. Orkney, E.
Campbell of Alloway, L. Orr-Ewing, L.
Carnegy of Lour, B. Oxfuird, V.
Carnock, L. Park of Monmouth, B.
Carr of Hadley, L. Pender, L.
Chalker of Wallasey, B. Platt of Writtle, B.
Charteris of Amisfield, L. Plummer of St. Marylebone, L.
Chelmsford, V. Porritt, L.
Clanwilliam, E. Pym, L.
Clark of Kempston, L Rankeillour, L.
Colnbrook, L. Rathcreedan, L.
Constantine of Stanmore, L Reay, L.
Craigavon, V.. Rees-Mogg, L.
Cranborne, V. Rennell, L.
Crawshaw, L. Renton, L.
Cullen of Ashbourne, L. Renwick, L.
Cumberlege, B. Rodger of Earlsferry, L.
Davidson, V. Romney, E.
Denham, L. St. Davids, V.
Denton of Wakefield, B. Seccombe, B.
Downshire, M. Selborne, E.
Eccles of Moulton, B. Shannon, E.
Eden of Winton, L. Shrewsbury, E.
Ellenborough, L. Shuttleworth, L.
Elles, B. Skelmersdale, L.
Elliot of Harwood, B. Soulsby of Swaffham Prior, L.
Elliott of Morpeth, L. Stedman, B.
Faithfull, B. Strafford, E.
Ferrers, E. Strathcarron, L.
Finsberg, L. Strathclyde, L.
Flather, B. Strathmore and Kinghorne, E.
Fraser of Carmyllie, L. [Teller.]
Fraser of Kilmorack, L. Swinfen, L.
Gainford, L. Swinton, E.
Gardner of Parkes, B. Tenby, V.
Goschen, V. Terrington, L.
Halsbury, E. Thomas of Gwydir, L.
Harvington, L. Torrington, V.
Henley, L. Trefgarne, L.
Hesketh, L. [Teller.] Trumpington, B.
HolmPatrick, L. Ullswater, V.
Hood; V. Vaux of Harrowden, L.
Hooper, B. Vivian, L.
Howe, E. Wilberforce, L.
Hylton-Foster, B. Wise, L.
Jenkin of Roding, L. Wolfson, L.
Kimball, L. Young, B.
Kindersley, L.

Resolved in the negative, and amendment disagreed to accordingly.

4.55 p.m.

Lord Campbell of Alloway moved Amendment No. 160C:

After Clause 77, insert the following new clause:

("Preservation of external condition

.—(1) The Secretary of State shall, subject to subsection (2), after consultation with such conservation societies as may be deemed by him to be appropriate, by order direct those persons who have exercised the right to enfranchise their flats, or any person or body set up to manage a block of flats, to preserve and conserve the external decorative treatment and structural condition of such block of flats in conformity with that of other properties in the terrace, crescent, street, square or circus in which such block is situated in compliance with the provisions of such direction.

(2) No direction may be given under subsection (1) above unless an opportunity has been afforded to all interested parties to make representations to the Secretary of State and due account has been taken of such representations.)".

The noble Lord said: My Lords, Amendment No. 160C is concerned with the preservation of the external condition of houses in which there has been total or partial enfranchisement of the flats held on long leases. At present, and indeed as has been the case for some time—one is tempted to say all but centuries —this important matter of preservation lies within the remit of those landlords who discharge their functions in that regard with diligence and conspicuous success.

The amendment is also concerned with the question of enforcement; that is, the means to the end of such preservation under the new regime proposed by the Bill. The whole object of tabling the amendment was to afford an opportunity for further discussion on a matter of some importance and of common concern. Again, I declare an interest as a long leaseholder who lives in a flat in a square to which the amendment would apply.

In a way this subject claimed the attention of your Lordships' House last Tuesday. In this context, at cols. 1714-5 my noble friend the Minister said that he would give consideration as to whether the leasehold valuation tribunals should have power to transfer rights and powers to English Heritage and local planning authorities in conservation areas, who would be obliged to consult with all persons interested. My noble friend then dealt with certain reservations, and no doubt at Third Reading some amendment will be brought forward.

Frankly, the Bill as it stands is defective in any event. There are no measures of safeguard in this respect provided in the Bill. If there be an end upon which we can all agree, so be it. The means of enforcement then must be truly effective to preserve and conserve the external decorative treatment and the structural condition of the houses in which the flats have been let on long leases so that conformity with other properties in the immediate vicinity of a conservation area may be preserved. This is not only in London. It is all over the country; notably Bath, for one example, and Cheltenham, for another example. One could go on. This is not a London affair. It is a national affair.

These are external facades of, to my way of thinking, great beauty and at all events of great architectural interest. They are for the enjoyment of all. They are a tribute to our heritage. Effective enforcement will now be wholly requisite as we will have no landlord to take the appropriate action to preserve them. We must envisage, must we not, a split administration between those who have exercised the right to buy and those who for some reason have declined to exercise that right? I say with respect to my noble friend the Minister—I always address him with respect—that I entertain some real reservations as to whether a transfer of power by the Leasehold Valuation Tribunal to English Heritage and the local planning authority would in practice truly afford effective means of enforcement once the landlords have gone. It is a very cumbersome approach.

I take the view that, after all, it is the Minister who has introduced this new regime and it does not seem unreasonable to suggest that the Minister should bear the responsibility for ensuring that the implementation of his new regime should not have most unwelcome consequences in this context. Though it may be irksome for a Department of State to assume such responsibility, none the less your Lordships may think that it is requisite that it should. It is not the intention to seek to pre-empt such government amendment as may be introduced, but I have not seen a draft of it and I do not know whether a draft already exists. Your Lordships may take the view that the buck on enforcement, as a matter of principle, stops with the Minister and that therefore the principle of the amendment is appropriate. I shall of course attend to your Lordships' contributions to this debate with deference and care in the hope that this amendment may commend itself in principle. No doubt it is technically defective because I drafted it myself. I beg to move.

5 p.m.

Lord Renton

My Lords, I wish to support the new clause moved by my noble friend Lord Campbell of Alloway. As he has pointed out, some of our residential squares in various towns and cities are indeed a credit to this country. One of the most powerful arguments against the leasehold enfranchisement of the buildings in those squares is that it will cause trouble, disappointment and environmental damage. This is a very difficult problem to deal with. I am not saying that my noble friend's new clause will enable that problem to be solved entirely but it will make a valuable contribution towards doing so. I really do think that if Parliament is legislating in this far-reaching manner with regard to leasehold enfranchisement we really ought not in the times in which we live to ignore the environmental effects. My noble friend Lord Campbell of Alloway is to be congratulated on having put forward a constructive proposition which will help to deal with the problem —not entirely but to some extent.

Lord Strabolgi

My Lords, I should like to support the noble Lord's amendment. The only thing I am surprised at is that he has not included houses in single occupation. It is my experience that this is where most of the problems lie. Perhaps he will explain that when he comes to reply.

I have the good fortune to live in a conservation area on the Grosvenor Estate. It is a matter of great concern that the standards which the estate itself has managed to preserve over a great many years should be allowed to slip. It is a natural characteristic of individualism that people like to paint their houses and flats different colours. I know one house which is in a row of houses designed by Cubitt which have to be painted in cream, with preferably black railings and the same colour doors. It had mock beams put on to it and mullioned windows to give it a sort of Tudor look, which of course is quite unsuitable. I know other houses where the railings have been painted bright cobalt blue. I am not in any way trying to criticise the colour of the party opposite but, architecturally, it is quite unsuitable in that type of setting. I hope that the Bill, which I have always supported and which I commend the Government for introducing, will curtail the excessive individualism of householders who may think that they want to have a house that is more suitable for Capri or the South of France than London in a district which has architecture following the Palladian tradition. Therefore, I commend the amendment and I hope that the Government will accept it.

Lord Coleraine

My Lords, I sympathise with the amendment moved by my noble friend Lord Campbell and spoken to by the noble Lord, Lord Strabolgi. However, having read the amendment, I am not sure that in my lifetime I have seen any impediment to the way people enjoy their property of as dirigiste a nature as this one.

Lord Rix

My Lords, much to my surprise I found myself speaking for Amendment No. 174A. However, I should like to support the amendment moved by the noble Lord, Lord Campbell of Alloway. I happen to have lived off private roads for the past 18 years. I was chairman of the road committee for 10 years. I found it extremely difficult to get individuals to agree to a consensus when it came to the upkeep of the roads and the sidewalks of the roads. I can see that this would well apply to the frontage of flats and squares of this nature. Therefore, I should like to support the amendment.

Lord Strathclyde

My Lords, I always welcome it when a noble Lord seeks to give the Executive very extensive new powers. But in this case I fear that my noble friend Lord Campbell has proposed powers which are far too extensive and which are totally unnecessary given the very extensive provisions already included in the Bill which we discussed at some length on Tuesday afternoon. I am sorry that my noble friend and other noble Lords who have spoken this afternoon could not join us then.

As the House knows, Chapter IV of the Bill already provides for estate management schemes which can be used to maintain adequate standards of appearance and the amenity of an area. These provide the necessary mechanism for protecting the appearance of leasehold estates after enfranchisement. We have also given additional powers to English Heritage and local planning authorities to promote such schemes in conservation areas where the landlord fails to do so. I have promised to come forward with amendments at Third Reading which will further improve these arrangements.

My noble friend Lord Campbell of Alloway suggested that it should be the responsibility of the department. Even if that were to be the case, ultimately the department would be advised by English Heritage. Although I therefore share entirely the concerns of my noble friend and others who have supported him, I believe that we have already provided a mechanism for dealing with them and I hope that, on that basis, he will withdraw his amendment.

Lord Renton

My Lords, I am looking at Chapter IV and am trying to find to what extent those who will have responsibility under the few clauses of that chapter will be required to preserve the environmental quality of the buildings concerned. Perhaps that will be done under the amendment that my noble friend will move on Third Reading, but perhaps he will explain the point because this is the crux of the matter.

Lord Williams of Elvel

My Lords, perhaps I may intervene in support of the Minister. We have had an extensive discussion. If the noble Lord, Lord Renton, would like to read Tuesday's debate, he will find extensive provisions for ensuring what he wants and extensive assurances from the Minister that in conservation areas local authorities and planning authorities will be the subject of amendments to be brought forward by the Government to our satisfaction on Third Reading. With the greatest respect to the noble Lord, we should get on with the Bill.

Lord Campbell of Alloway

My Lords, I do not much relish being told by the noble Lord, Lord Williams, even with a smile on his face, to get on with the Bill, but none the less I have to take that kind of thing in my stride.

I am grateful to all noble Lords who have spoken in the debate. I too have problems with Chapter IV. I too have read the extensive debate to which the noble Lord, Lord Williams, referred, and I read it before I tabled the amendment. I was not satisfied that the debate was comprehensive and grappled with the essence of the problem as to whether, under Chapter IV, there would be effective means of implementation to secure our heritage. I may be wrong, but the amendment was tabled in good faith and was not designed to waste the time of your Lordships' House.

In view of the fact that my noble friend the Minister is considering this matter, albeit along lines that are somewhat different from those proposed by my amendment but will nonetheless lead, one hopes, to the same end, perhaps I may have the opportunity of discussing the matter further with my noble friend the Minister between now and Third Reading. On the assumption, which I take for granted because he is always accessible to discussion, that he would be willing to discuss the matter, I should like to withdraw the amendment. I ask for leave to do so and, in doing so, thank all noble Lords for their contribution.

In answer to the noble Lord, Lord Strabolgi, I am concerned with houses, but I am not concerned with houses in single occupation because, with respect, houses in single occupation do not fall within the ambit of the Bill. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 78 [Amendment of Part III of Landlord and Tenant Act 1987]:

[Amendment No. 161 not moved.]

5.15 p.m.

The Earl of Lytton moved Amendment No. 162:

After Clause 78, insert the following new clause:

("Variation of leases under Part IV of Landlord and Tenant Act 1987

In section 35(4) of the Landlord and Tenant Act 1987 (variation of lease on grounds that it fails to make satisfactory provision with respect to the computation of a service charge), in paragraph (c), for "exceed" there shall be substituted "either exceed or be less than".").

The noble Earl said: My Lords, I shall be as brief as I can on a purely technical amendment. In moving this amendment I wish to speak also to Amendment No. 238.

Your Lordships may recall that in Committee I drew attention to the question of the consequential effects of enfranchisement of part of a development on the terms, particularly relating to service charges, of the balance of leases where there had been no enfranchisement. The Minister did not accept my protestations about deficiencies. It was put to me that there was already a remedy in the form of the relevant sections of the Landlord and Tenant Act 1987 and that, if a landlord's right to recover service charges was interfered with, that was dealt with under the injurious affection provisions.

I believe that that is a little unsatisfactory. To deal with the latter point first, the injurious affection provisions meant that the obligation of the enfranchising tenants to pay was needlessly enlarged by the provision. Following the Committee stage, there was some dialogue between myself and the Minister and his officials. In the fullness of time I was given to understand that perhaps after all there was a point with which we could come to terms. Amendment No. 162 is a result of those deliberations.

I am grateful to the Minister for acceding to this point. It may not go as far as I should have liked. I still have reservations about whether the 1987 Landlord and Tenant Act can take into account deficiencies in service charge provisions arising as a consequence of this legislation as opposed to inherent deficiencies of an external kind. However, I must rely on the fact that he and his department have scrutinised the matter with some care. I therefore hope that this technical amendment will remedy that aspect by making a minor amendment to the Landlord and Tenant Act 1987.

Amendment No. 238 is consequential upon Amendment No. 162 in that it introduces into the Long Title of the Bill an amendment to include reference to Part IV of the Landlord and Tenant Act 1987. Amendment No. 162 seeks to alter that provision and without Amendment No. 238 there would be no cross-reference in the Long Title. I beg to move.

Lord Coleraine

My Lords, I intervene to seek some clarification about the amendment. I believe it is a sensible amendment, but I understand that it provides that, where the service charge percentages in the building do not add up to 100 per cent., the landlord may apply to increase them in some way so that they do add up to 100 per cent. It.is in the interests of both the landlord and the tenant that the service charge percentages recoverable under leases should total 100 per cent. of the cost.

I understand that, under Section 38(10) of the 1987 Act, the court may make an order providing for payment of compensation in respect of loss sustained by the variation. In the case of an order being made increasing the percentages which may affect one or more of the tenants, I presume—perhaps my noble friend will confirm this point —that the tenant whose percentage is increased would normally expect an award of compensation to compensate for the economic loss suffered by having to pay however much more it may be than his lease provided, bearing in mind that when he bought the lease he would have received a percentage in it but would have no idea whether the other percentages in the building added up to 100 per cent.

The 1987 Act states that the percentages can be reduced by a variation of covenants if they add up to more than 100 per cent. Again, I should like to ask my noble friend the Minister whether there have been cases in which percentages have been varied downwards in this way and whether in such cases the landlords have been entitled to recover compensation for the loss that they will have sustained. I ask this because the circumstances seem to be different here in that the landlords knew that they were entitled to recover more than 100 per cent. If they did so, they were in my view unjustly enriching themselves and I should have thought that it would be unreasonable for them to be able to recover compensation for that loss.

Baroness Gardner of Parkes

My Lords, I am slightly concerned about the provisions if they mean that people will find that the percentage set in their lease varies. That should give us great cause for worry. I support the point made by my noble friend Lord Coleraine that when buying a lease people see what the percentage will be—and I have seen some recently ranging from 1.3 per cent. to 10 per cent.—but if that is suddenly to be changed, those concerned will have no way of knowing how it relates to others. It is important that, whatever the computation, tenants should be able to understand it precisely and to see that what they are paying is a fair amount.

Lord Strathclyde

My Lords, I do not think that there is anything mysterious here. The Government did not feel that there was anything wrong with the original wording. Although successful applications for variation may be made under the 1987 Act, I accept that there may be some ambiguity and I am therefore happy to accept the amendments which have been moved by the noble Earl.

Turning to the points made by my noble friends, I do not think that there is a problem because the provisions mean that one would be paying a larger share of a smaller amount, for example, when half the estate enfranchises. Therefore, the result is that nobody will end up paying any more than they would otherwise.

On Question, amendment agreed to.

Lord Coleraine moved Amendment No. 162A:

After Clause 78, insert the following new clause:

("Amendment of Landlord and Tenant Act 1987

.—(1) Part I of the Landlord and Tenant Act 1987 (Tenants' right of first refusal) shall be amended as follows.

(2) In section 4 (relevant disposals) the following subsection shall be added after subsection (1A)—

"(1B) (a) subject to paragraph (c), in this Part a relevant disposal shall be deemed to include, where the landlord is a body corporate, the disposal of a controlling interest in the landlord (other than to an associated company of the landlord);

(b) for the purposes of this Part, a person has a controlling interest in a company if, had he been a company, the other company would have been its subsidiary;

(c) this subsection shall not apply if the value of the landlord's interest in any premises to which this Part applies, free from all charges, is less than 50 per cent. of the total asset value of the landlord immediately before the disposal of such controlling interest."

(3) The following section shall be added after section 11—

Further provisions where disposal made in contravention of Part I

11A.—(1) Where—

  1. (a) there has been a disposal of a controlling interest in the landlord to which this Part would have applied had section 4(1B) been in force at the time of the disposal, and
  2. (b) that disposal was made within three years before the coming into force of this section, and
  3. (c) the premises affected by such disposal are still premises to which this Part applies,
the requisite majority of qualifying tenants of the constituent flats may, before the end of the period specified in subsection (2), serve a notice on the landlord requiring him to furnish a person (whose name and address is specified for the purpose in the notice) with the particulars specified by section 5 and the date on which such disposal was made; and in the following provisions of this Part any reference to "the new landlord" shall include a reference to the landlord.

(2) The period referred to in subsection (1) above is the period of three months beginning with the date on which this section comes into force.

(3) Any person served with a notice in accordance with subsection (1) above shall comply with the notice within the period of one month beginning with the date on which the notice is served on him."").

The noble Lord said: My Lords, it is now almost exactly six years to the day since the Landlord and Tenant Act 1987 was enacted. Noble Lords may remember that it was enacted immediately before the 1987 general election. Part I of that Act provides a procedure whereby in certain circumstances the tenants in a block of flats are offered the right of first refusal in the event of the freeholder wishing to sell the freehold. In a nutshell, where a freeholder wishes to sell he must state his price, and if the tenants wish to buy they should be able to buy at that price. If they do not wish to buy, then the freeholder is able to sell elsewhere, but for a period he may not do so except at the same or a greater price.

This Bill gives the tenants active and not passive rights of purchase. Therefore, everything else being equal, it would seem likely as a general rule that this Bill will to some extent render Part I of the 1987 Act superfluous. I am choosing my words with some care because I am generalising. What I believe I can say is, first, that in blocks of flats with less than two-thirds qualifying tenants, as defined in this Bill, enfranchisement can only come passively under the 1987 Act, if at all; and, secondly, this Bill offers nothing to short lease tenants and long lessees who do not qualify under the low-rent test, but those tenants may have rights under Part I of the 1987 Act. So, even after the passing of this Act, the 1987 Act will remain the only legislative avenue by which the tenants of some blocks of flats will have at least some hope of enjoying the control of their own homes which this Bill offers to many long leaseholders at low rents.

Part I of the 1987 Act gave to many tenants the right of first refusal where the freeholder wished to assign his reversion. One of the exceptions to this right, under Section 4(2), was the case of a disposal by a company to an associated company. When that happened, it meant that a property owning company could assign its reversion to a newly created associated company and immediately sell the shares in that company to a third-party purchaser—and could do so without giving the tenants any right of first refusal. From the outset this has been considered a loophole, a defect, in the Act. I suspect, however, that the draftsman was well aware of the possibilities given to corporate landlords to side-step their tenants' right of first refusal. It may have been thought that there was no particular reason why a corporate or any landlord should wish to do this.

Landlords would know that their tenants, as special purchasers, would be likely to outbid any third party if they were interested in buying. If they were not interested in buying, it would not matter whether or not they had that opportunity. Indeed, it is difficult to see why any landlord should not want to give his tenants the first chance to buy in those circumstances.

In fact, this has not altogether been how things have worked out. The published findings of the study into the working and public perceptions of the 1987 Act, carried out for the department in 1991, make this clear. The main way, as I understand it, in which things go wrong is that many landlords sell without first making any offer of first refusal to their tenants. The tenants generally have a measure of protection when that happens because, where they had a right of first refusal under the Act but that right has not been honoured, they are given the right under Section 16 to compel a sale by the purchaser at the price he paid.

This right, of course, does not exist where the reversion has been sold by an associated company share sale. In one case which has recently been brought to my notice, the tenants were ready, willing and able to buy the reversion. The associated company device was used to thwart the tenants, and ownership passed. The tenants remain ready, willing and able to do a deal with the new purchaser at the price it paid for the shares, but they have no rights under the Act. They have no right of first refusal and no right of buy-out.

The amendments which I am moving to the 1987 Act have been carefully drafted to close this way by which the right of first refusal may legitimately, but in breach of the social intentions of the Act, be circumvented. Section 4 would be amended to give to tenants a right of first refusal in the case of the sale of a controlling interest in a company which owns the freehold reversion to a block of flats where the net value of the reversion is worth at least half the gross asset value of the company. It will be seen that the drafting bends over backwards not to touch genuine commercial transactions to the extent that it may not be 100 per cent. effective for tenants. That may be said of the original legislation and should not be a bar to a modest extension of the provisions of that legislation now.

The second and consequential amendment would, in cases where no right of first refusal had been offered, extend to such share sales the right to buy out the ultimate purchaser, and I should point out that there will be a retroactive element here, as there is in the enfranchisement provisions of this Bill. For three months after the section comes into force, the right of buy-out will be exercisable in respect of disposals made within the previous three years.

I am conscious that, even with the careful drafting of these amendments, all points will not have been covered; some points may need further attention, and there may be anomalies. This is, however, an important loophole in the Landlord and Tenant Act 1987, as I hope and believe my noble friend will recognise, and it should be closed. I would, therefore, ask my noble friend, if these amendments are not perfect as they stand, to recommend their acceptance on the basis that the Government will take this problem in hand and move further and better amendments when the Bill is once again in another place. I beg to move.

Baroness Gardner of Parkes

My Lords, I should like to support this amendment because the case of Harley House has caused grave concern to Westminster City Council. The chairman of Westminster's housing committee has written to the Secretary of State for the Environment on this matter because he considers that, in being so involved with the matter of enfranchisement in relation to this Bill, we have tended to overlook the right of first refusal.

Most of the residents and tenants of Harley House are on rack rents or are statutory tenants and had arranged their finance—we are talking about £16 million, so they were prepared to pay quite a substantial sum—but they found that the original freeholder took advantage of a loophole in the drafting and, according to the letter from the chairman of the housing committee, created a wholly owned subsidiary company, transferred ownership of Harley House to that company then subsequently sold the company to a third party"— to a plc. That means that it does not qualify as a "relevant disposal". I shall not quote further from that letter, but it makes it clear that Westminster City Council is disturbed by this case because it has the highest proportion of long leaseholders in the country. It has supported the Bill, which it believes to be an important piece of legislation.

What amazes me is that under employment law if one passes employees from one company to a related company the company's obligations pass with them, but obviously under the Bill that does not apply. If one transfers the property to a related company, one's responsibilities are shed. The property does not have to be offered to the residents and tenants. That is unfortunate, and I hope that the amendment will be accepted.

5.30 p.m.

Lord Strathclyde

My Lords, I hope that the brevity of my reply will not demonstrate to my noble friends that I am not interested in the subject. I understand it wholly. I have every sympathy with what my noble friend Lord Coleraine said. I am well aware of the case cited by my noble friend Lady Gardner of Parkes.

My noble friend has made a, valiant attempt to find a solution to the problem. It is a solution which has eluded us for the past five years. Knowing how difficult it has proved so far—the problem has been examined on a number of occasions since 1987—it is unlikely that we shall find a solution in time for an amendment to be made at this late stage of the Bill. But I can assure the House that we shall continue to examine this issue until a solution is found. Unfortunately, we do not think it would be right to jump in and agree to an inappropriate solution. Having said that, and with that assurance, I hope that my noble friend can withdraw the amendment.

Lord Coleraine

My Lords, I listened to what my noble friend said. I accept that this may not be the time to insert the amendment into the Bill. I took great comfort from the way that my noble friend approached the problem. He was saying that the department has found no way round the problem during the past five years, but I do not for a moment believe that he was suggesting that it would be anything like that length of time before a solution was found. It should not be left that length of time. I rely on the assurances of his department that the matter will be dealt with in the future, so I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 82 [Jurisdiction of leasehold valuation tribunals]:

Viscount Goschen moved Amendments Nos. 163 to 169:

Page 85, line 13, after ("section") insert ("68 or").

Page 85, line 27, at end insert: ("( ) the amount of any payment falling to be made by virtue of section 16(2);").

Page 85, line 29, after ("II") insert ("and, in the case of costs to which section 30(1) or 57(1) applies, the liability of any person or persons by virtue of any such provision to pay any such costs").

Page 86, line 9, after ("under") insert ("or by virtue of").

Page 86, line 17, leave out ("Any") and insert ("No").

Page 86, line 17, after ("under") insert ("or by virtue of").

Page 86, line 19, leave out ("borne by that party") and insert ("recoverable by order of any court (whether in consequence of a transfer under subsection (4) or otherwise)").

On Question, amendments agreed to.

Lord Strathclyde moved Amendment No. 170:

Page 86, line 28, after ("but") insert: ("(a)").

The noble Lord said: My Lords, I shall speak also to Amendment No. 171. I have had a number of meetings with various noble Lords to discuss the measures we are bringing forward on estate management schemes.

One of the areas of concern is whether there is a right of appeal to the Lands Tribunal over the decisions of leasehold valuation tribunals in considering applications for estate management schemes. The answer is that the Bill will give the applicant for an estate management scheme the right of appeal to the Lands Tribunal.

That right of appeal does not extend to any other person who might be affected by the application or by the decision of the leasehold valuation tribunal. We are concerned that where persons have made representations and appeared before the leasehold valuation tribunal they too should have the opportunity of making an appeal against the decision of the tribunal where there are grounds for them to do so. I therefore propose to widen the right of appeal to the Lands Tribunal to include such persons. I hope that that proposal is welcomed by the House. I beg to move.

Baroness Hollis of Heigham

My Lords, does "person" in this case include also a body corporate such as a local authority?

Lord Strathclyde

My Lords, yes, it does.

On Question, amendment agreed to.

Lord Strathclyde moved Amendment No. 171:

Page 86, line 31, at end insert—


(b) in relation to any proceedings on an application for a scheme to be approved by a tribunal under section 65, paragraph 2(a) of that Schedule shall apply as if any person appearing before the tribunal in accordance with subsection (5) of that section were a party to the proceedings.").

On Question, amendment agreed to.

Clause 84 [Agreements excluding or modifying rights of tenant under Chapter I or II]:

Viscount Goschen moved Amendments Nos. 172 and 173:

Page 87, line 44, leave out ("immediate or a superior").

Page 88, line 35, leave out from ("and") to end of line 36 and insert ("subsections (5) to (7) of section 53 shall apply in relation to the lease as they apply in relation to a lease granted under that section.").

The noble Viscount said: These amendments have already been spoken to. I beg to move.

On Question, amendments agreed to.

Lord Monson moved Amendment No. 174:

After Clause 84, insert the following new clause:

("Domicile conditions

.Where a tenant of a flat or house who does not occupy it as his principal residence acquires the freehold of the premises in question under the provisions of Chapter I or Chapter III and subsequently sells the freehold within three years at a profit, the Secretary of State may deem him to be domiciled in the United Kingdom for tax purposes irrespective of his actual place of domicile.").

The noble Lord said: My Lords, on Tuesday last week and again two days ago, I revealed the enormous profits that would be made on enfranchisement of high value properties in areas such as Belgravia where leases have 30 years or thereabouts to run. A typical example would be where a property was purchased and then enfranchised at a total cost of just over £1.2 million and then sold shortly afterwards for £1.5 million. That would produce a profit of £276,000, or a little over 22.5 per cent. Where the lease has 40 years to run, the profit would be almost as great, at just over £250,000, and where it has 20 years to run it would be slightly below £250,000. All this is on the assumption that the share of the marriage value granted to the landlord under the terms of the Bill remains unaltered.

Now that the Government, with the vigorous support of the Opposition, have successfully resisted amendments to increase the share of the marriage value attributable to the ground landlord, those theoretical high profits will become a reality. But even if the landlords lose, at least the Treasury will gain to a limited extent—provided that the enfranchising tenant is domiciled in the UK. In the example I have given, the Treasury would receive between £108,000 and £110,000 by way of capital gains tax, less expenses, depending upon whether any other gains had been received by the enfranchiser in the course of the year. It would receive slightly more if the tenant made a habit of enfranchising and therefore became liable to income tax plus higher rate tax. Just 200 such cases a year would raise £22 million for the Treasury. That would be extremely welcome in these days when the Treasury is so strapped for cash that there is talk of making almost everyone pay prescription charges.

However, there is one large fly in the ointment. Rather more than half the people who buy high value property in the most affluent parts of London are domiciled outside the UK. The amendment is in no way designed to discriminate against them. On the contrary, it is designed to treat everyone equally: to create a level playing field, as it were—and I am sure that we are all in favour of level playing fields these days. The Californian multimillionaire cited frequently to your Lordships by the noble Earl, Lord Onslow, would have to pay his fair whack. What could be fairer than that, since any Englishman who made a similar profit in the United States, or in most other countries, would have to pay tax, irrespective of his place of domicile.

Acceptance of the amendment would not merely ensure equal treatment for everyone in the United Kingdom who happens to be resident in the United Kingdom; it would bring us into line with normal international practice. The amendment does not of course infringe Commons privilege in any way: I have taken the trouble to ascertain that fact. It should be noted also that the power is permissive and not mandatory. So the Secretary of State could establish such exemptions for borderline cases as he thought appropriate, or could decide not to implement the rule at all if public opinion permitted him so not to do. The wording has been checked by drafting experts and lawyers and found to be without blemish. Accordingly, I beg to move.

Lord Clark of Kempston

My Lords, I hope that my noble friend will look at the amendment sympathetically. The noble Lord, Lord Monson, has made out a perfect case. He quoted the United States of America. The tax authorities in the USA are endeavouring, under unitary tax proposals, to tax British companies on their total world profits. My right honourable friend the Chancellor of the Exchequer is well aware of that fact and is fighting the tax authorities in the USA.

My noble friend stated that under the Bill one investor must give to another investor half the marriage value. He knows that I never agreed with that and never shall. As was said by the noble Lord, Lord Monson, if the lessee does not happen to be domiciled in this country he will escape paying capital gains tax. That must be wrong. In any event, my right honourable friend the Chancellor of the Exchequer is looking for ways of obtaining more money in order to reduce the deficit. It is wrong to make a gratuitous gift to people who do not live in this country; it is bad enough to make a gratuitous gift at the expense of the landlord to people who do live here.

I believe that my noble friend should accept the amendment. I hope that he will not say that it will upset the double taxation agreements with the various companies. As was said by the noble Lord, Lord Monson, the amendment contains a discretionary power. If there were to be a violation of any double taxation agreement that could be overcome. I hope that my noble friend will look sympathetically at the amendment, which has great merit. The wording can be changed at a later stage if it is incorrect but I think that the Government should accept the spirit of the amendment.

Lord Boardman

My Lords, I am in full sympathy with the noble Lord, Lord Monson. It is offensive that non-resident leaseholders should be able to buy a property and even more offensive that they should be able to do so at a large discount. It is more offensive still that they should be able to take away the profits tax free. I am sure that my noble friend Lord Strathclyde will point out all kinds of objections to the amendment. I am in full sympathy with the intention of the amendment, which is to take into our taxation system some part of the profits. To that extent I support it.

Lord Strathclyde

My Lords, I understand the motives of the noble Lord, Lord Monson, in moving the amendment and of my noble friends in supporting it. It was kind of the noble Lord, Lord Monson, to consider the fact that the Treasury needs every available source of funding that it can get its fingers on. But I cannot possibly accept the new clause and the reasons are many. First, a tenant of a house has to be resident anyway in order to be able to enfranchise. Therefore, the reference to Chapter III has no meaning. Secondly, the clause will have no effect at all on people who may not have resided in their flat but live elsewhere in England or Wales. Such people are already liable to taxation on gains from the disposal of property. In the case of overseas residents, the new clause may well be considered discriminatory against Community nationals under European law; and a company freeholder cannot have a domicile anyway.

Thirdly, its effect will be rather swingeing because where it does bite it will apply the deemed domicile for all tax purposes. That would not be fair. Equally, if the tenant is to be liable for capital gains tax it is not clear whether he may offset losses on any other property against the profit on the house or premises. Fourthly, the new clause does not suggest how the Secretary of State might become aware that the ex-tenant in question has disposed of the property in the first place, let alone made a profit.

I shall not discuss at great length the issue of the marriage value. We have had many discussions and my noble friends and I disagree. I hope that having explained the serious faults in the amendment the noble Lord, Lord Monson, is persuaded to withdraw it.

Lord Monson

My Lords, I am grateful to the noble Lords, Lord Clark and Lord Boardman, for their support. The amendment has arisen later than I had expected and many noble Lords who might have supported it have had to leave. As was said by the noble Lord, Lord Boardman, it is offensive that people can buy property at a discount, sell, and pay no tax on it.

The Government's objections do not stand up. How can the provision discriminate against nationals of other EC countries if they are treated exactly the same as the rest of us? At present the discrimination is all the other way. If they can escape taxation while those resident and domiciled in this country suffer taxation it is we who are discriminated against.

Amendment No. 14, which was agreed to, covers residents of every kind and definition, and merely provides that one must have lived in the property for three years out of the previous 10 years to qualify. That is not residential as the term is normally understood. There are many borderline cases, and I am afraid that the Minister is wrong.

It is true that in current circumstances the Treasury needs every penny, and although that is not the main reason for tabling the amendment, I agree that every little helps. Public opinion supports the amendment, to the extent that it is aware. The amendment does not discriminate. It brings us into line with other countries, in particular the United States of America and other industrialised countries. It is permissive; if it is faulty the Secretary of State need not apply the provision, or can improve upon it. I believe that the other place should at least be given a chance to look at the amendment, which is supported by the Country Landowners' Association and similar organisations. In those circumstances, I must test the opinion of the House.

On Question, amendment negatived.

5.45 p.m.

Lord Rix moved Amendment No. 174A:

After Clause 84, insert the following new clause:

("Protection of occupants who are mentally handicapped or mentally ill

.Any provision in any lease or sublease of any residential flat which prohibits the lessee or sub-lessee from providing accommodation therein for a person who is mentally handicapped or mentally ill, shall be unenforceable, unless the behaviour of that person infringes the right of occupants of other flats in the same building to quiet enjoyment thereof.").

The noble Lord said: My Lords, in the absence of the noble Lord, Lord Renton, who was to move the amendment, it has fallen to my lot. The noble Lord was present in the Chamber until a moment ago but rather like the bad fairy in the pantomime he has disappeared. He has left me as an inadequate understudy for I am unaware of the arguments which he had intended to put forward.

However, on reading Hansard I was encouraged, as no doubt were others, by the reference of the noble Lord, Lord Strathclyde, in Committee to his preference for a general anti-discrimination Bill. I assumed that as Government spokesman he was speaking for the Government; but in an earlier letter to me dated 18th March the noble Lord was not as generous. He referred to a general Bill dealing with such discriminatory covenants. I hope that I may rely on his later, more helpful and more logical reference made on 22nd March in your Lordships' House to a general Bill aimed at non-discrimination.

I see that the noble Lord, Lord Renton, has returned to his seat but I am afraid that he is a little late because I am already moving the amendment. I too share the preference for general antidiscrimination legislation. However, the fact is that we do not have such legislation; nor does what I know of the parliamentary programme and the Government's expressed intentions lead me to believe that a rights Bill is just around the corner. But we have the Housing and Urban Development Bill in front of us today.

We have evidence that discriminatory clauses are written into leases. The somewhat notorious case, now happily remedied, suggests that if anyone had the time to search leases they would find many more examples. Given the opportunity to prevent what we all agree to be wrong I find the technical argument against doing something about it unconvincing. Parliament has the job of asserting people's rights. As this small assertion of rights seems to be within the scope of the Bill and can hardly be said to offend the rights of other parties I warmly supported my noble friend when he first moved the amendment in Committee. I use the word "friend" in a non-political sense. It is said of the man who waited for the perfect day to plant his bulbs while letting slip the opportunity of quite suitable days that his garden the following spring was somewhat bare. I beg to move the amendment.

Lord Renton

My Lords, I am covered in shame for not being in the Chamber when the amendment was called and I apologise to your Lordships. What I say first and foremost is: thank heaven for the noble Lord, Lord Rix.

I drafted this new clause. I hope that your Lordships will find that it is not only short, clear in its meaning and certain in its effect but also that it has a worthy purpose. I say that for the reasons which the noble Lord, Lord Rix, has already put before the House. I wish to stress that the new clause ensures that people who are mentally handicapped or mentally ill will be allowed to live in residential flats unless their behaviour disturbs other people in other flats in the same building.

Why should not mentally handicapped and mentally ill people be allowed to live in their parent's flats? To have leases or sub-leases which prevent them from doing so is, in my opinion, cruelly discriminating. I first discovered that that was happening when my late wife and I lived in one of the nearest and largest blocks of flats here in Westminster. We were deeply shocked when we found that a clause in our lease, which was a long lease, prevented our youngest daughter, who is mentally handicapped, from being there with us. We decided to ignore the clause by having her to stay with us in our flat from time to time.

I doubt whether the landlord's agent discovered that we were in breach of covenant and no proceedings were taken against us. That was some years ago and inquiries which I made at the time revealed to me that discriminatory clauses were common in many of the leases of flats in the London area and elsewhere. I became chairman of MENCAP soon after that happened and I made inquiries there. I found that it was a fairly common practice. I have no reason to believe that the practice has since been dropped.

My noble friend Lord Strathclyde kindly wrote to me in March as follows: I sympathise strongly with your desire that no one should be prevented from leasing a flat simply because he or she is mentally handicapped or mentally ill. Such discrimination is clearly wrong. I should be interested to know whether in practice it is common for leases to discriminate in this way". As to whether the practice is still common, I have not the facilities, the opportunities or the authority to carry out a national survey. I am not sure whether my noble friend has, but he would be in a better position than I to do so. However, I ask my noble friend to accept the evidence which, from personal experience, I have already given.

In his letter my noble friend went on to say that he does not believe that this Bill is the right place for the inclusion of provisions to prohibit discriminatory covenants. He points out what Part I does. He then says: The right place would be a general Bill dealing with such discriminatory covenants". I am puzzled that my noble friend says that this Bill is not the right place in view of what is stated in the Long Title. It is the longest and most detailed Long Title that I have seen for some years. This is a miscellaneous provisions Bill. I admit that it deals with long leases, leasehold enfranchisement and other specific matters, but it also deals with a wide range of matters concerning housing and urban development. If the new clause were to be inserted and if my noble friend considers that the Long Title needs some small further amendment, that could be done either by manuscript late this evening or on Third Reading. It is a small technical point which can be overcome quite easily.

Surely, the point is that if we do not deal with this problem now in this Bill, we shall miss a great opportunity to remove a serious injustice. If we wait for general anti-discriminatory legislation which we all hope—I know that the noble Lord, Lord Rix, agrees with me—will come, we may have to wait for some years. A Bill is passing through the other place. It does not deal with this point but does deal with certain other matters of discrimination. However, the Government have made it clear that it will not reach the statute book this Session. We do not know whether there will be a government Bill next Session or what fate a Private Member's Bill would suffer in the next Session.

I beseech your Lordships to realise that this matter needs to be dealt with. We should be ashamed of such practices and try to put them right. That can be done in this Bill and I hope that my noble friend will agree to advise your Lordships to do so. beg to move.

Lord Crickhowell

My Lords, when I came into the House I had no intention of speaking in the debate. However, I am so profoundly shocked by what I have just heard that I rise to support my noble friend. I was sufficiently long in government to be fully aware of the kind of answers which are put before Ministers who must respond to amendments of this kind. Therefore I am apprehensive as regards the reply which we are likely to receive. I am sure that all kinds of reasons, as indicated by my noble friend, will be produced as to why this is not the right opportunity to accept the amendment.

I recall the vigorous measures that I as a Minister, along with my colleagues, took in government to make arrangements for mentally handicapped people to live in the community. It was a central plank of government policy to do so. If this kind of discriminatory clause in leases is commonplace, that is entirely in conflict with government policy as it has existed for a considerable time. Therefore, there is a clear obligation on the Government to take this opportunity to do something about it or, if not, to indicate that they will take a very early alternative opportunity to do something about it. I warmly support my noble friend.

Baroness Elliot of Harwood

My Lords, I also support my noble friend. I have experience of mentally handicapped members of the family. Their condition was not severe but they needed sometimes to go into hospital. It is very important to be able to help them in every way. It is possible to help them in a far better way within the community where they are able to be with other people and learn a straightforward and honest way of life such as we all try to lead. I hope that the Government will accept the amendment. It affects a great many people and is very important. As already mentioned, this Bill provides an excellent opportunity to prevent such discrimination.

6 p.m.

Lord Auckland

My Lords, I, too, hope that my noble friend the Minister will give sympathetic consideration to the amendment. I live in a part of Surrey where we have six hospitals dealing with mentally-handicapped patients. I happen to be president of the friends' association of one of them. Many mentally-handicapped people contribute enormously to the community. If they are to be barred from living with their relatives under the terms of the Bill, it will deprive not only the community but also their families of a great deal of pleasure. I very much hope that my noble friend will think carefully about the proposal.

Lord Williams of Elvel

My Lords, when we were in Committee I am sure that the House will remember that the amendment was one of the last with which we dealt very late one night. In the absence of the noble Lords, Lord Renton and Lord Rix, I moved the amendment on their behalf from this Dispatch Box. It is, therefore, with great pleasure that I support the movers who are present in the Chamber today. I very much hope that the Minister will take on board the arguments and that he will give us a rather less dusty response than that which he gave me—admittedly rather late at night—in Committee.

Baroness Hamwee

My Lords, from these Benches I should like to put on record our support for the amendment. I was shocked to discover that the problem, so ably explained by the noble Lords, Lord Rix and Lord Renton, existed. In my innocence I had assumed that any such provision would have been against public policy and unenforceable on that ground. I am worried about the amendment's reference to "quiet enjoyment". Other noble Lords have much greater expertise in conveyancing terminology than myself, but I wonder whether the wording is appropriate. However, whether "quiet enjoyment" in the literal sense is quite the right way of expressing it matters not a jot. But we must put on record the importance—

Lord Renton

My Lords, I can assure the noble Baroness that that is the term of art in this branch of the law which is appropriate in these circumstances.

Baroness Hamwee

My Lords, I raised the issue because I wondered whether it would be possible for the behaviour of the people to whom the amendment refers actually to interfere with "quiet enjoyment". That sort of interference normally comes from a landlord. I did not want noble Lords to be confused about the literal meaning of "quiet enjoyment"; in other words, residing in one's flat without hearing noisy behaviour and the sort of thing that has perhaps led to some of the problems that underly the proposal are not what is referred to. However, I fear that I am in danger of attempting to draft out loud, which is the very last thing that one should do. I simply wish to express my support for the noble Lord.

Lord Strathclyde

My Lords, the amendment has had an interesting time, both in Committee when it was moved by the noble Lord, Lord Williams, and today when it was moved by the noble Lord, Lord Rix. I am glad that my noble friend managed to arrive here in time. The story that he recounted was one that he had told me in private. I believe that it was right for the whole House to hear it.

I did not feel able to accept the amendment in Committee because I did not think that this Bill was an appropriate place for the inclusion of provisions to prohibit discriminatory covenants. At that time I suggested that a general Bill aimed at nondiscrimination might be the appropriate place. However, I have, as I said I would, considered the matter further. I am not aware of any current plans for a general non-discrimination Bill. Therefore, in the light of the support that my noble friend and the noble Lord, Lord Rix, received today and the common sense way in which the amendment was moved, I am content to accept an amendment of the type proposed for the Bill if it is your Lordships' wish. But, unfortunately, the drafting of the amendment is not quite right. Perhaps it would be appropriate for the Government to return on Third Reading with our own amendment which would then be acceptable to noble Lords.

Lord Renton

My Lords, before my noble friend sits down, and before the noble Lord, Lord Rix, replies to the debate—which he should do because he kindly moved my amendment—perhaps I may make a comment. We are well accustomed to parliamentary counsel thinking that they can do better than us, but what they really want to do is to do it differently. If that is the case, I am happy. However, I do not think that there is much wrong with the legal effect of the amendment.

Lord Strathclyde

My Lords, with the leave of the House, I shall bear that point in mind and certainly mention it to parliamentary counsel.

Lord Rix

My Lords, I am extremely grateful for the response that I have received from the Minister and, indeed, from all Members of your Lordships' House. I am also most grateful for the wonderful support that I have received on this occasion. I am pleased that the amendment has been accepted, albeit with some slight change of wording about which I am sure the Government and the noble Lord, Lord Renton, can come to a quiet arrangement. We are absolutely delighted. I am personally extremely delighted because I shall receive the credit for it, as opposed to the noble Lord, Lord Renton.

Baroness Hamwee

My Lords, with the leave of the House and before the noble Lord sits down, I wonder whether the noble Lord would like to withdraw his accusation that the noble Lord, Lord Renton, was the bad fairy and perhaps designate him as a good one.

Lord Rix

My Lords, I shall be delighted to subscribe to the fact that the noble Lord is a good fairy. I only hope that he is able to wave a magic wand in another place in regard to an anti-discrimination Bill in due course. I beg leave to withdraw the amendment.

Amendment, by leave withdrawn.

Lord Monson moved Amendment No. 175:

After Clause 87, insert the following new clause:

("Property owned by cathedral church

. There shall be no right under Chapter 1 or II to acquire any interest in or lease of any property which is vested in the capitular body of a cathedral church, within the meaning of the Cathedrals Measure 1963.").

The noble Lord said: My Lords, in the absence of the noble Earl, Lord Kinnoull, and of the noble Lords, Lord Peyton of Yeovil and Lord Strathcona, it falls to me to move the amendment. Unlike Amendment No. 174, thankfully, the amendment needs little explanation. It is designed to exclude cathedral property—notably that in cathedral closes—from the provisions of the Bill, broadly in line with exemptions already granted to the National Trust and with those covered by the amendment of the noble Lord, Lord Cavendish, (if it is accepted by another place) regarding other historic properties.

The overall number of properties involved is small. No one would ever accuse deans and chapters of being wicked or rapacious landlords—the sort of people at whom this part of the Bill is generally aimed. There is little need to describe the unique beauty and tranquillity of our cathedral closes. They have retained their individual character because of integrated long-term planning made possible by the enlightened management policies of their governing bodies. Closes are usually an oasis of peace and tranquillity in the urban environment. Moreover, they are accessible to everyone, not just those resident in them. Agreement to the amendment would be a small concession for the Government to make, but it would be a positive way to demonstrate their real concern for charities. I beg to move.

Lord Williams of Elvel

My Lords, I am bound to say that I have a certain sympathy for the amendment, but not as drafted. I have in mind the words, property which is vested in the capitular body of the cathedral church". I say that because chapters own a great deal of property outside a cathedral close. But where there is a cathedral close in a conservation area, I think that there is merit in the amendment. However, in my view, it goes far too far. I know, as I am sure the right reverend Prelate the Bishop of Guildford knows, of chapters which own property that is right outside conservation areas and which, indeed, should be subject to the Bill as drafted. Nevertheless, as the noble Lord, Lord Monson, said, there is some merit in looking at the matter. I shall be interested to hear the Minister's response.

The Lord Bishop of Guildford

My Lords, I should like to support the amendment moved by the noble Lord, Lord Monson. I am most grateful to him for bringing it forward. I fully accept the qualifications suggested by the noble Lord, Lord Williams. But my concern certainly would be for those medieval cathedrals which were of course in origin monastic foundations and to that extent religious and community buildings. That religious and community focus still remains, though they are now run by deans and chapters. They draw the crowds, whether tourists or others, because they are a focus of the community. For that purpose, they need communities and people to run them.

However, I have to say that there is something in the make-up of the clergy that sometimes makes it extremely difficult for them to get on on with one another. But putting that on one side—fortunately none of my colleagues is present—I think there is a risk that under the provisions of this Bill properties in our mediaeval cathedral closes could be alienated. There is some risk that if in future a further development is needed because of changing circumstances in order to enhance the community aspect of a building, that may be that much more difficult because the property is no longer available to the Dean and Chapter of the cathedral. I do not wish to engage in special pleading on behalf of the Church but I feel there is some substance in what is being proposed here, albeit in an amended form. I am glad to support the noble Lord, Lord Monson.

Lord Renton

My Lords, subject to what my noble friend Lord Strathclyde may have to say, I too am impressed by the arguments in favour of this amendment. On the point made by the noble Lord, Lord Williams of Elvel, I should have thought—this is a question of fact which is very difficult to ascertain —that most of the properties which would be covered by the amendment would be in or near cathedral closes. The noble Lord shakes his head. He may know better than I.

Lord Williams of Elvel

My Lords, I am sorry to interrupt the noble Lord, Lord Renton. Perhaps he should consult the Dean and Chapter of Durham Cathedral to discover exactly which properties they hold.

Lord Renton

My Lords, I am sure that there are Church properties outside cathedral closes. There is no doubt about that. But I was not aware they owned large blocks of flats away from the cathedral. In principle I support this amendment. I am not aware of the technicalities that are involved but in principle I would think it unacceptable certainly for cathedral closes to have their character changed and for the domination by the Dean and Chapter of the cathedral to be disturbed by the leasehold enfranchisement of properties within the closes. I think this is a matter which deserves the serious attention of the Government.

Lord Strathclyde

My Lords, I am grateful to the noble Lord, Lord Monson, for having proposed this amendment in the absence of all the noble Lords who have added their name to it, including my noble friends. I am grateful for the comments of the right reverend Prelate who feels there is cause for concern here.

The amendment seeks to disapply both the enfranchisement and lease renewal provisions in Chapters I and II of this Bill to property which is vested in the capitular body of a cathedral church. The noble Lord, Lord Monson, thinks that this is a safeguard which is necessary to preserve the appearance of the property around our great cathedrals.

My noble friend Lord Kinnoull recently met my honourable friend the Minister for Housing in the hope the Government would accept this amendment. He knows that we cannot accept it—perhaps he passed that on to the noble Lord, Lord Monson—because, quite simply, it is unnecessary. The capitular body of a cathedral church may own property near to a cathedral for various reasons and, of course, that property may or may not be of historic or architectural importance. I am sure that the noble Lord accepts that there is no issue in respect of property which has no heritage value.

Properties near to, but separate from, the cathedral are, I understand, usually run in a commercial manner, as any landlord would run a property. As far as the rights of tenants are concerned, it makes little difference who their landlords may be. There is no reason at all why the enfranchisement provisions in this Bill should not apply to any such property let on long leases.

In the case of Canterbury Cathedral, to take one of the best-known examples, I understand that it is unlikely that many tenants will enfranchise. Most of their property is either let on short leases, or consists of two or three storey buildings above shops which are excluded by the 10 per cent. commercial threshold exemption. The noble Lord is concerned that enfranchisement rights might be extended by some future government to short leases, or that the 10 per cent. commercial threshold might be reduced. However, we cannot speculate on what future governments might do.

I appreciate that some residential properties, such as those in the Cathedral close at Salisbury for example, are more closely related to the Cathedral. They indubitably form an integral part of the architectural ambience of an attractive and historic area. Your Lordships may be surprised that the cathedral authority has chosen to let much of this residential property on long leases. Where this has been the case, again, I can see no reason why the residential leaseholders should not be able to enfranchise. Indeed—this is the point of the amendment—many of them may have already done so, under the provisions of the 1967 Act. Capitular bodies were not exempted landlords for the purposes of that Act.

We have debated estate management schemes at length. Several amendments have been incorporated to improve and strengthen the concept. I have undertaken, as I said, to move yet more amendments at Third Reading. The House has welcomed the changes made already and those still to come, and has acknowledged the power of the estate management scheme as a weapon in the heritage armoury. It is for this reason that I am convinced that the amendment, though laudable in aim, is totally unnecessary. There is no cause for concern about cathedral closes. There are adequate safeguards in the Bill to ensure that the undeniable quality, beauty and architectural heritage of some of the buildings in them is maintained for future generations. I hope that, with that explanation, the noble Lord, Lord Monson, will feel he can withdraw his amendment.

Lord Monson

My Lords, before the noble Lord sits down, can he indicate whether there is any possibility that the Government would look favourably upon a compromise amendment at Third Reading which would allow such tenants to extend their leases while preventing enfranchisement?

6.15 p.m.

Lord Strathclyde

My Lords, with the leave of the House, I should say that the noble Lord, Lord Monson, has to prove that enfranchisement would be detrimental to cathedral closes. As he has not been able to do so, I cannot offer him any comfort for Third Reading.

Lord Monson

My Lords, I must say I am disappointed in that reply. There obviously seems to be no room for compromise here at all. I am grateful to all those who have spoken in favour of the amendment. The noble Lord, Lord Williams of Elvel, thinks it goes too far. Perhaps it does and it would be nice to think we could come back on Third Reading with a compromise amendment. I thought this was supposed to be a Conservative Government and that the Conservatives were in favour of conserving all that is good in our country and had a respect for tradition. I do not see much sign of that at the moment. My inclination, as I cannot be here late on Tuesday, would be to press this amendment to a Division. However, that might be unfair upon the noble Earl, Lord Kinnoull, and the other noble Lords who added their names to this amendment, as they may wish to return with a compromise amendment just to see whether they can get it accepted on Third Reading. I do not wish to take it upon myself to press the amendment now, lose it and then not have an opportunity for the noble Lords to return with a compromise amendment. That being the case, I shall withdraw the amendment on the understanding that a compromise amendment may well be introduced at the next stage of the Bill. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 88 [Power to prescribe procedure under Chapters I and II]:

Viscount Goschen moved Amendments Nos. 176 to 178:

Page 91, line 44, leave out ("provide") and insert (", in particular, make provision—


Page 91, line 46, at end insert:

("(b) for the payment of a deposit—

  1. (i) by a nominee purchaser (within the meaning of Chapter I) on exchange of contracts, or
  2. (ii) by a tenant who has given a notice under section 39; and

(c) with respect to the following matters, namely—

  1. (i) the person with whom any such deposit is to be lodged and the capacity in which any such person is to hold it, and
  2. (ii) the circumstances in which the whole or part of any such deposit is to be returned or forfeited.").

Page 92, line 1, leave out subsection (3).

The noble Viscount said: My Lords, these amendments have already been spoken to. I beg to move.

On Question, amendments agreed to.

Clause 89 [Notices]:

Viscount Goschen moved Amendments Nos. 179 to 181:

Page 92, line 10, after ("address") insert ("in England and Wales").

Page 92, line 17, after first ("address") insert ("in England and Wales").

Page 92, line 28, after ("address") insert ("in England and Wales").

The noble Viscount said: My Lords, these amendments have already been spoken to. I beg to move.

On Question, amendments agreed to.

Clause 90 [Orders and regulations]:

Viscount Goschen moved Amendment No. 182:

Page 93, line 16, leave out ("Act") and insert ("Part").

The noble Viscount said: My Lords, this amendment has already been spoken to. I beg to move.

On Question, amendment agreed to.

Clause 91 [General interpretation of Part I]:

Viscount Goschen moved Amendment No. 183:

Page 94, line 20, after ("is") insert ("(unless the context otherwise requires)").

The noble Viscount said: My Lords, this amendment has already been spoken to. I beg to move.

On Question, amendment agreed to.

Lord Monk Bretton moved Amendment No. 183A:

After Clause 95, insert the following new clause:

Exceptions to the right to buy

(".—(1) In paragraph 10(1) (groups of dwelling-houses for persons of pensionable age) of Schedule 5 to the 1985 Act (exceptions to the right to buy)—

  1. (a) for the words "persons of pensionable age", in the first place where they occur, there shall be substituted the words "elderly persons"; and
  2. (b) for those words, in the second place where they occur, there shall be substituted the words "persons aged 60 or more".

(2) For paragraph 11 (individual dwelling-houses for persons of pensionable age) of that Schedule there shall be substituted the following paragraph—

"11.—(1) The right to buy does not arise if the dwelling-house—

  1. (a) is particularly suitable, having regard to its location, size, design, heating system and other features, for occupation by elderly persons, and
  2. (b) was let to the tenant or a predecessor in title of his for occupation by a person who was aged 60 or more (whether the tenant or predecessor or another person).

(2) In determining whether a dwelling is particularly suitable, no regard shall be had to the presence of any feature provided by the tenant or a predecessor in title of his.

(3) Notwithstanding anything in section 181 (jurisdiction of county court), any question arising under this paragraph shall be determined as follows.

(4) If an application for the purpose is made by the tenant to the Secretary of State before the end of the period of 56 days beginning with the service of the landlord's notice under section 124, the question shall be determined by the Secretary of State.

(5) If no such application is so made, the question shall be deemed to have been determined in favour of the landlord.

(6) This paragraph does not apply unless the dwelling-house concerned was first let before 1st January 1990."

(3) Subsections (1) and (2) do not apply in any case where the tenant's notice claiming to exercise the right to buy was served before the day on which this section comes into force.

(4) For the purposes of subsection (3), no account shall be taken of any steps taken under section 177 of the 1985 Act (amendment or withdrawal and re-service of notice to correct mistakes).")

The noble Lord said: My Lords, this new clause and the consequential amendments to Schedule 21, Amendments Nos. 236A and 236B, return us to the subject of right to buy and housing for the elderly. At present unless a property is part of a sheltered group landlords have to apply to the Secretary of State in every case for a statutory determination. Since this arrangement started in 1989 there have been some 4,000 applications. That is a very bureaucratic exercise. Determinations have also taken an inconveniently long time.

The Association of District Councils has long felt that a more automatic and less restrictive arrangement would be preferable. Therefore, in Committee on 29th March I moved an amendment to change paragraph 10 of Schedule 5 of the Housing Act 1985, the provision which deals with sheltered housing. That amendment recognised modern developments in call systems by removing the need for either a resident warden or a common room provided an appropriate call system is installed. My noble friend the Minister felt that that amendment went too wide. However, he proposed further discussion of the matter. In view of that offer the Committee permitted me to withdraw the original amendment. I am glad to say that the subsequent discussions produced a way forward, which we managed to identify after some discussion and much help, hence the new clause.

This time the proposed new clause relates primarily to paragraph 11 of Schedule 5 of the 1985 Act. That is the provision under which landlords ask the Secretary of State to make determinations excluding pre-1990 housing from the right to buy. The Secretary of State must make such determination if he is satisfied that a property is particularly suitable for people of pensionable age and was let for occupation by such persons.

Your Lordships may also recall that paragraph 11 was inserted by an amendment agreed by this House by a large majority in 1989, against an extremely tight parliamentary timetable. Therefore, it is perhaps lacking in some refinement of detail which might otherwise have been possible.

The purpose of the new clause is very simple. It is designed to remove the need for a reference to the Secretary of State if the tenant is content to accept the landlord's view that his or her home is elderly persons' housing. As the law stands at present, there is no provision for finding out whether the tenant agrees with the landlord that that is so. If the tenant makes an application under the right to buy the landlord must apply to the Secretary of State within the somewhat short period of four weeks. The landlord is not given time to discuss with the tenant whether he wants to pursue a right-to-buy claim. In fact, the landlord could probably be criticised for attempting any such discussion. I bear in mind that the Minister said in Committee that the majority of decisions made by the Secretary of State were in the landlord's favour in any case.

The present arrangements require landlords to put a detailed case to the department, even if the tenant is ready to accept that the property is particularly suitable for elderly people and even though that is the view the Secretary of State takes in many instances. That is not merely a nuisance for landlords, it is also a nuisance for tenants at times because the tenant in his turn has to be invited to comment on the landlord's submission. That can be a particular burden on an elderly tenant. I gather that as a result tenants not infrequently withdraw their right-to-buy claim even before a decision is arrived at.

The proposed new clause would allow the landlord to respond to a tenant's right-to-buy claim by deciding to deny the right to buy. However, the tenant on his side would have the right to ask the Secretary of State whether the landlord was correct. In other words, the local authority makes a decision within set guidelines but the tenant has a right of appeal to the Minister. If the tenant asks the Secretary of State to step in, the department will doubtless ask the landlord for all his reasons, as now, and go through the same detailed procedures that we have at present. However, under the proposed new clause the process would be necessary only if the tenant was not satisfied with the local authority's decision. I believe that that is a useful contribution.

The new clause also makes another change which I believe to be worth while. Paragraphs 10 and 11 currently provide for housing to be excluded from the right to buy only if particularly suitable for persons of pensionable age and let to such persons. That precise linkage with the qualifying age for state pension seems to me to be inappropriate. Under the new clause the question would be whether the housing was particularly suitable for elderly people and had been let for occupation by a person aged 60 or more.

I know that many local authorities have allocated elderly persons' housing to tenants from age 60 even if they were fit and active in order to avoid the need for a further move in a few years' time. I do not believe that local authorities should have to run the risk of losing the ability to retain their elderly persons' housing as a result of such perfectly sensible actions which they have taken from time to time.

The two amendments to Schedule 21 are consequential and repeal provisions which are rendered otiose as a result of the new clause.

Finally, the new clause would make only modest changes, but, I believe, with advantage to tenants, to local authorities as landlords and to the Government by reducing the unnecessary number of referrals to the Secretary of State. I beg to move.

Lord Shuttleworth

My Lords, having put my name to Amendment No. 183A I am delighted to support it as proposed by my noble friend Lord Monk Bretton.

As chairman of the Rural Development Commission, which has been concerned with this matter since at least 1989, I am obviously anxious that wherever possible elderly people in rural areas are able to continue to live in their communities close to relatives and friends. That presupposes the availability of property suitable for their needs. Properties built for the elderly in rural areas may not always be to the same specification applicable in urban areas but such properties, once sold, are no more easily replaced.

The amendment allows a more flexible view to be taken of what constitutes an elderly person's dwelling. It will safeguard the availability of such housing in rural areas and it will remove the bureaucracy and uncertainty in the present system. For those reasons I have pleasure in supporting the amendment.

Baroness Hollis of Heigham

My Lords, we on this side of the House would also like to support the amendment. We believe that it proposes a sensible way forward which places the presumption of a decision at local level where all the circumstances can be taken into account if there is a clear need for such housing to remain available for renting and long leases. Therefore, we very much support the amendment.

Lord Renton

My Lords, I happen to live in a rural area when I am not in London. In my old constituency of Huntingdonshire I was familiar with the problem which arises when working people come to the end of their working lives and for one reason or another cannot continue to live in their present home. It may be close to a factory or a cottage tied to the former employment, which may not necessarily be farm work. Farm workers are often treated with great care by their employers in such circumstances. For various reasons retired people then start looking for somewhere to live. The problem does not arise only in rural areas. To the extent that the amendment would help them when they have found somewhere, it is worthy of support.

6.30 p.m.

Baroness Hamwee

My Lords, I, too, support the amendment, as I did at the previous stage. A moment ago we discussed discriminatory provisions. By substituting for "pensionable age" the terminology, "persons aged 60 or more", I am glad that any discrimination between men and women who reach pensionable age at different times can be avoided. That is perhaps a side issue.

While I strongly support the amendment, I have one small anxiety. At paragraph 11(2) (b) of Schedule 5 to the 1985 Act which is to be substituted, there is a reference to property let to a physically disabled person. I have difficulty in understanding the purpose of that reference at that point because the provision is largely directed to housing designed for elderly people, although there is no clear cut division between the two. What worries me is that under the existing legislation there is the possibility—albeit it relies on the Secretary of State—to except from the right-to buy provision property suitable for occupation by a physically disabled person. That has gone from the amendment. I do not know whether the Minister can help me on that.

I was aware that the amendment was promoted by the Association of District Councils. About an hour and a half ago I received a telephone call from that body. I returned the call expecting it to be an answer to that question only to discover that it wished me to chair a session at its conference. My diary is therefore fuller but my knowledge no greater. If the noble Lord can help I should be grateful.

Lord Strathclyde

My Lords, I welcome the new clause moved by my noble friend Lord Monk Bretton. We have debated the right to buy in housing for elderly people on many occasions in the past. The legislative history on the subject has borne an uncomfortable resemblance to a tug of war between the interests of tenants wishing to buy their homes and landlords wishing to retain them for reletting. I share the hope of my noble friend Lord Monk Bretton that modest changes in the legislation will prove to be of benefit.

The noble Baroness, Lady Hamwee, asked an interesting question about physically disabled people.

I understand that the reference in paragraph 11 of Schedule 5 to the Housing Act 1985 as enacted was repealed in 1988 as a result of an amendment moved by my noble friend Lord Swinfen. It was thought at that time to be discriminating against people with disabilities. It was therefore a perfectly appropriate question to ask. I hope that that is the correct answer. If it is not, I shall write to the noble Baroness.

I thank my noble friend for bringing forward a beautifully drafted and crafted amendment which the Government can accept. I am sure that it is welcomed by the whole House.

Lord Monk Bretton

My Lords, with the leave of the House, perhaps I may say a word of thanks to my noble friend and to all the people who have supported me.

On Question, amendment agreed to.

Baroness Hollis of Heigham moved Amendment No. 183B:

After Clause 96, insert the following new clause:

("Right to require former landlord repurchase

.—(1) In the circumstances and subject to the conditions stated in this section, a former secure tenant has the right to require repurchase by the former landlord.

(2) The right to require repurchase shall cease to exist where the former secure tenant disposes of the interest acquired under the right to buy or right to acquire on rent to mortgage terms, or where he ceases to occupy as his residence the dwelling house in which the interest is held.

(3) Where a dwelling house is repurchased under the provisions of this section, the price payable by the former landlord shall be—

  1. (a) where the dwelling house was purchased under the right to buy, the price for which it was purchased; or
  2. (b) where the dwelling house was acquired on rent to mortgage terms, the sum of the initial payment and any subsequent payment made in pursuance of such an acquisition, or, such other amount as is agreed between the former landlord and the former secure tenant.

(4) Where a local authority makes any payment to a former secure tenant in relation to a repurchase under the provisions of this section, the Secretary of State shall issue to that authority a supplementary credit approval, within the meaning of section 54 of the Local Government and Housing Act 1989 (supplementary credit approvals) in an amount equal to the price payable for, and for the purpose of, repurchasing the dwelling house.

(5) The sum of payments made under this section in any year shall not exceed an amount to be prescribed annually by the Secretary of State, after consulting persons who appear to him to be representative of local authorities.

(6) In this section—

The noble Baroness said: My Lords, I am returning with an amendment discussed in broad outline at Committee stage. It is the right to repurchase by local authorities. We seek still to avoid homelessness among marginal owner occupiers when their financial situation deteriorates. I bring it back because I hope that an additional section in the clause will meet the Minister's objections which he raised at Committee stage in terms of the overall impact on financial resources.

The amendment requires former landlords to repurchase a house or a flat lost under the rent-to-mortgage scheme and to do so at the original price, with supplementary credit approval so that their power to borrow or to spend for other purposes would not be handicapped by the activity. To reflect the Government's response at Committee stage, subsection (5) provides that the sum total of payments available for that purpose should be prescribed annually by the Secretary of State in consultation with local authority organisations. As I recall, that was the main objection raised by the Minister at Committee stage. I hope that we have now met it.

Underlying the amendment are two propositions. We believe that few people will avail themselves of the scheme because it is not financially attractive compared with the right to buy—the existing scheme. However, we believe that it is such a misconceived scheme, pressing marginal purchasers into a financially unfavourable deal, that a disproportionately high percentage of them may wish to revert back to being tenants rather than risk losing their homes. I want for them a safe passage back.

All the evidence indicates a growing, continuing, lingering housing crisis arising from failure to invest in our housing stock and because local government until this year was not allowed to recycle fully all its capital receipts from sold-off stock and was not allowed resources to modernise the stock which it held. On the other hand, it is a crisis of ownership. An increasing number of families, who could not afford to do so, bought homes in the 1980s, sometimes because they were denied by this Government the opportunity to rent from the local authority. They now find that they cannot maintain their mortgage payments. Either their housing debts exceed their housing assets, or their financial ability to pay has gone. It is the problem of both negative equity and lack of a mortgage benefit scheme.

Some 300,000 families are more than six months in arrears. The important point for the purpose of the amendment is that most mortgage default is on cheaper housing. In other words, default is a problem of low or suddenly falling incomes rather than high housing costs. We fear that, if unamended, the Bill will force more people into that situation.

It is from shortage in the housing market of property to rent that most other problems flow. Unable to rent, most young people are forced to buy. Those who cannot afford even to do that have joined the queue for bed and breakfast accommodation. The problem relates to families who are not able to rent and cannot afford to buy. It is silly and deeply anti-social to press low income tenants to move from the security of renting a council house into the swampy land of buying it and subsequently risking default and repossession. Under the Bill those people have that right. We do not now seek to stop them although we may judge the exercise of that right unwise. But if they come unstuck —we suspect that a high proportion of them will do so—we do not wish to punish them further by seeing them homeless. Why will those people come unstuck? If they could afford to buy a council house under the RTB, they would already have gone for that on outright purchase which produces a more financially advantageous deal. With its structured discounts that would be more attractive and cheaper.

By definition the people about whom we speak cannot afford the right to buy and are being encouraged therefore into the financially more disadvantageous scheme of rents to mortgage. They are precisely the tenants who by definition have the lower income and are therefore more at risk. If they go into such a scheme and are partly employed, they will lose the right to any help with housing costs through a housing benefit scheme even though their hqusing costs will rise because they have to take on board insurance costs, repairs and so on.

All the evidence suggests that foreclosures and repossessions are associated with reduced or reducing employment. Therefore, those most marginal purchasers—and they are marginal because it is financially more attractive to go for outright RTB—will be extremely exposed to the vagaries of their employment situation. The amendment offers them a route back into keeping the home in which they live and from which their children go to local schools, saving considerable family distress and at no cost to the public purse. The Minister may say that local authorities already have the power to do that. We all agree, there is no difference between us in terms of the principles involved. What the amendment provides is what we do not have and that is the resources to make the principle a reality. We need supplementary credit approvals to make it possible, which means that in order to avoid the greater costs of homelessness we are willing to accept the point that the Minister made at Committee stage that the ability to grant supplementary credit approval should be within a finite annual total. Thus it could be staged throughout the course of the year to meet a need which we might otherwise avoid.

In the light of that, we have come back with an amendment specifically designed to address the Minister's criticism in regard to a finite resource in the course of the year. We do not disagree about the principle. Therefore we hope that we may together make available the resources to protect marginal purchasers at risk of losing their homes from actually becoming homeless. I beg to move.

Lord Strathclyde

My Lords, this amendment would give former secure tenants who had purchased under the right-to-buy legislation, the right to require their landlord to buy back their homes at the price they had originally paid. Although I have a great deal of sympathy with right-to-buy purchasers who are having problems with resale, this proposal is not one that I can support.

I am fully aware that former tenants in certain kinds of ex-council flats have been experiencing difficulties over resale. In the present state of the market, lenders are indeed acting very cautiously. But once the market picks up, right-to-buy purchasers, along with other home owners, will benefit. Meanwhile, we are continuing to work with the building societies to do what we can. This seems to me to be the way forward, rather than imposing a duty on the landlord to repurchase.

In some respects, I am somewhat surprised to see this attempt to limit the independence and discretion of local authorities in the way they manage their stock, particularly in the light of the debates we have had over the course of the past few months. The landlord can, as the noble Baroness recognised, already buy back a property from a right-to-buy purchaser if it so wishes and if it seems a reasonable and justifiable use of its resources. In deciding whether to buy back, the landlord must consider the financial implications. This must be right.

By contrast, the new clause would place a duty on landlords to repurchase, giving them no discretion. It provides for central government resources to be made available to enable the landlord to meet the expenditure incurred, but this would be a further call on limited public sector resources. Under our current practices, which are drawn up in consultation with local authority associations, all resources that are available for housing are allocated to individual local authorities or earmarked for programmes such as Estate Action well in advance of the beginning of the financial year. If this amendment were to become law, we would have to hold back an amount each year to meet repurchase costs.

The new clause, as the noble Baroness explained, seeks to place an annual limit on the sum of payments to be made. This is a modification of what the noble Baroness introduced. The previous amendment would have left the public purse with an open-ended commitment in respect of the properties landlords had been required to repurchase. But the new clause does not make clear how these limited resources are to be allocated. Would there be some sort of rationing and, if so, how would it work? Would it be easier for former tenants to exercise their right in some parts of the country than in others, or would certain types of cases be given priority? Who would decide? The new clause would require someone, whether the Secretary of State or landlords, to take on the invidious job of deciding which applicants for repurchase should be favoured.

Tenants who consider exercising their right to buy have an important decision to make. Home ownership confers a number of practical advantages, and many people in addition derive a satisfaction from the knowledge that the roofs over their heads are their own. But transferring from renting to owning also means coming out of a relatively sheltered system. Home owners who want to move must either sell their home on the open market or let it. Anyone who has sold a home will know that it is not a simple mechanical process: a bargain has to be struck. It has been particularly difficult in recent times because demand has been slack.

The new clause seeks to insulate former public sector tenants from the uncomfortable discipline of the market place by allowing them to sell back to their former landlord. I do not think that would be right. It would be imprudent for tenants to buy their homes in reliance on the landlord bailing them out in the future, because when the time came there might be no money available for this purpose.

I do not suppose that I have given a satisfactory reply to the noble Baroness, but I hope that she will feel able to withdraw her amendment.

6.45 p.m.

Baroness Hollis of Heigham

My Lords, I suppose that I thank the Minister for that reply, but I found some of the language and phraseology quite extraordinary. First, he makes the point which he made at Committee stage that the Government rely on negotiations with the building societies to prevent such families becoming homeless and therefore having to go into temporary accommodation or bed and breakfast accommodation. That includes all the social strain which results for families and children.

All the evidence may be that the building societies are more willing to roll up mortgage debt. All that does is to add to the problem of negative equity and merely postpones the problem to a later date; that is, unless the Government are hoping that price inflation will again hit the country so that their problems will be resolved in a great inflationary spiral.

Secondly, the Minister makes the point that he does not see how the allocations would be made; whether it would be by the Secretary of State. He produced a list of rhetorical questions. It will be done in exactly the same way as with all other matters of detail. Housing allocations are made in consultation with the local authority associations. I see no problem. That is only one aspect of the whole round of budgetary and financial considerations which are regularly under negotiation, as surely the Minister knows. So there is no departure there.

Thirdly, the Minister says that he does not see why former council tenants should be protected—I do not know who drafted the phrase—"from the uncomfortable discipline of the market place". In devising schemes which push the most marginal people into owner-occupation and then, for many, deny the lifeboat of housing benefit schemes which they would have received if their situation had worsened when they were tenants, the Government must take responsibility for the results. Today we see around us what has happened as a result of pressing people into owner-occupation during the 1980s, with the subsequent housing crisis and domestic stresses and strains that have resulted. The Minister should not walk lightly away and attribute to the: "uncomfortable discipline of the market place" the results, which were predictable and were predicted by us, of his own Government's policies.

Here we are trying to put in safety nets for a small number of people who will come unstuck. We say now that they will come unstuck because the Minister is unwilling to allow us to help them and give them a way back in which they could keep their homes or revert back to being tenants. There is no difference between us in principle. The Minister accepts that. It is simply a matter of resources and at nil cost to the public purse we seek the resources to enable that help to be given.

I have to say shame on the Minister for exposing potentially vulnerable families, in his phrase which will come back to haunt him, to "the uncomfortable discipline of the market place". Now we know from the Minister's own words what exposure to owner-occupation is intended to mean to former council tenants—the discipline of the market place. Given that there is such a gap between us, I have no option but to withdraw the amendment.

Amendment, by leave, withdrawn.

Schedule 15: [Schedule inserted after Schedule 6 to the Housing Act 1985]:

Viscount Goschen moved Amendment No. 184:

Page 230, line 29, at end insert:

("(6) References in this Schedule to the secure tenant's successors in title do not include references to any person entitled to a legal charge having priority to the mortgage required by section 151 B (mortgage for securing redemption of landlord's share) or any person whose title derives from such a charge.").

The noble Viscount said: My Lords, the purpose of this technical amendment is to protect the position of mortgage lenders who finance the purchase under the rents-to-mortgages scheme. I beg to move.

On Question, amendment agreed to.

Baroness Hollis of Heigham moved Amendment No. 184A:

After Clause 109, insert the following new clause:

("Tenants of housing associations

.Sections 143 to 155 of the 1985 Act shall not apply where the secure tenant is a tenant of a registered housing association.").

The noble Baroness said: My Lords, this amendment stands in my name and that of my noble friend Lord Williams. It seeks to exclude tenants of registered housing associations from the rents-to-mortgages scheme. Charitable housing associations are so exempt, but some of the largest housing associations are not registered as charitable, such as the North Housing Association and the North British Housing Association, each of which has about 20,000 properties. Because they are not charitable does not mean that they are therefore commercial. All registered housing associations are prevented from making a profit; all have their fair rents set by the rent officer. But unlike charitable housing, to some extent the associations have seen their stock eaten away by the right to buy. Therefore, like local authorities, they have experienced growing waiting lists for dwindling stock.

Increasingly, as the Housing Corporation has experienced cut-backs which it has passed on to housing associations, the housing associations have to turn to the private financial market to make up the shortfall in funds. However, their capacity to do so is obviously determined by their asset base and the right to buy and now these proposals under the Bill would diminish the asset base on which they can raise new finance.

Thus, this amendment, which seeks to include registered housing associations which are not registered as charities but are nevertheless not commercial organisations, comes with the support of the National Federation of Housing Associations. It also has the active support of the Council of Mortgage Lenders, which believes that it is inappropriate that the social housing provided by registered housing associations should be lost to the rented stock. I beg to move.

Baroness Hamwee

My Lords, we have dealt with this subject before. I support the noble Baroness. My name is on the amendment.

Lord Strathclyde

My Lords, since the new clause is concerned with a particular group of housing association tenants, it may be helpful to recall that before January 1989 the majority of tenants of registered housing associations were secure tenants. They had the right to buy provided that they were not tenants of charitable housing associations, trusts or housing associations which had never received public funding. There are now less than 150,000 secure housing association tenancies with the right to buy. Since January 1989 new lettings by housing associations have normally been on assured tenancies. Such tenancies do not have the right to buy.

Secure tenants of publicly funded non-charitable housing associations have the same rights under the right to buy as secure tenants of local authorities, including the right to buy on shared ownership terms if they cannot afford to buy outright. Rents-to-mortgages is an extension of the right to buy which will supersede the right to shared ownership which the Bill repeals. Secure tenants of housing associations who have the right to buy will naturally expect to have the right to acquire on rent-to-mortgage terms. I do not see how we can defend treating them differently from secure tenants of local authorities. It would be seen as unfair.

It has been suggested that sales under rents-to-mortgages will be financially disadvantageous for housing associations. The immediate capital receipt will indeed be lower than for a sale under the right to buy. But in the long run the total receipt is likely to be greater. That is because the former landlord is entitled to a further payment on disposal or death. Such payments will attract a discount, but only of 20 per cent., which is less than the right-to-buy rate.

It has also been suggested that sales under rents-to-mortgages will replace those under the right to buy and so reduce receipts in the short term. The evidence indicates the reverse; namely, that they will be additional to the right to buy. In the pilot schemes in Basildon and Milton Keynes a number of tenants who made inquiries about rents-to-mortgages went on to make applications under the right to buy. But there was no evidence of right-to-buy applicants transferring to rents-to-mortgages. I hope that in the light of that explanation the noble Baroness can withdraw her amendment.

Baroness Hollis of Heigham

My Lords, I entirely take the point of the Minister that the pass was sold very unwisely by government when they allowed non-charitable but registered housing associations to be exposed to the right to buy and all the subsequent problems. Certainly some of the arguments that we have heard tonight about the problems of rural housing have confirmed the folly of that original decision by Ministers. I was trying here to protect our housing associations from an infliction of still more folly by the Minister which will go on to reduce still further the amount of social housing available for rent. But I expect and appreciate that there are not the numbers here to give support to the amendment that might otherwise be the case. Therefore, with the leave of the House, I beg to withdraw it.

Amendment, by leave, withdrawn.

Clause 130 [The rent to loan scheme]:

Lord Fraser of Carmyllie moved Amendment No. 185: Page 135, line 8, leave out ("73D(1)") and insert ("73D").

The noble and learned Lord said: My Lords, with this amendment I shall speak also to Amendments Nos. 190 to 194, and Amendment No. 198. This group of amendments seeks to clarify the circumstances in which the deferred financial commitment in a rent to loan sale has had to be repaid to the landlord who originally sold the house. There will be cases where to require repayment of the deferred financial commitment on the death of the purchaser could put surviving spouses, other relatives or joint purchasers in the position of having to sell the house in order to repay the DFC. The new Section 73D therefore protects people in that potentially very vulnerable position by providing that the DFC need not be repaid on the death of the purchaser if someone has been living there for 12 months succeeds to the house or if a joint purchaser leaves his share to other joint purchasers who have been living there. In those circumstances the DFC need not be repaid until the survivor sells it, or himself dies.

Amendments Nos. 190 and 191 are designed to deal with, say, the case of where two people succeed to the house but only one of them is resident. Similarly, Amendment No. 192 deals with a case where a joint purchaser dies and does not leave his share of the house to his fellow joint purchasers.

Amendments Nos. 194 and 198 are consequential, making changes to the definition of "rent to loan purchaser". I beg to move.

On Question, amendment agreed to.

Lord Fraser of Carmyllie moved Amendment No. 186: Page 135, line 31, after ("but") insert ("immediately").

The noble Lord said: My Lords, in speaking to Amendment No. 186, I shall speak also to Amendments Nos. 187 to 189. This group of amendments clarifies the ranking of the deferred financial commitment element of the purchase price and certain advances made by recognised lending institutions for the purchase or improvement of the house. The amendments are technical in nature and do not represent any change in policy. I beg to move.

On Question, amendment agreed to.

Lord Fraser of Carmyllie moved Amendments Nos. 187 to 189:

Page 135, line 36, leave out second ("or").

Page 135, line 37, at end add ("; or (iii) for any combination of those purposes,").

Page 135, line 45, at end insert (";

references to interest payable under a standard security are references both to present and future interest payable thereunder including interest which has accrued or may accrue; and

references to expenses and outlays include interest thereon.").

On Question, amendments agreed to.

Lord Fraser of Carmyllie moved Amendments Nos. 190 to 194:

Page 137, line 3, after ("whom") insert ("or persons for whom or for one or more of whom").

Page 137, line 5, after ("his") insert ("or their").

Page 137, leave out lines 9 to 15 and insert (",at the time of the death, the house was the only or principal home of the survivor or the survivors or one or more of them").

Page 137, leave out lines 21 to 23 and insert ("the person or persons acquiring it, succeeding to it or surviving in the circumstances whereby subsection (1) applies or on the death of such person or of the last of them for whom the house was, both at the time of such acquisition, succession or survival and at the time of his death, his only or principal home; and").

Page 137, leave out lines 26 to 31.

The noble and learned Lord said: My Lords, in speaking to Amendment No. 185, I spoke to Amendments Nos. 190 to 194. I beg to move en bloc.

On Question, amendments agreed to.

Clause 131 [Rent to loan scheme: related amendments]:

Lord Fraser of Carmyllie moved Amendment No. 195:

Page 138, line 26, leave out ("paragraph") and insert (" "; and").

The noble and learned Lord said: My Lords, in speaking to Amendment No. 195 I speak also to Amendments Nos. 196, 197, 199 and 200. This group of amendments is intended to clarify the circumstances in which the purchase price abatement provisions in Clause 132 apply to the rent to loan scheme. As currently drafted, the Bill does not make as clear as it might that the purchase price abatement provisions would apply if the landlord failed to serve an amended offer under Section 63(3). The Bill does not specify the timescale within which an amended offer is to be served, and that could be interpreted as being within the original two-month period. That could clearly be unfair to landlords in circumstances where, for example, the tenant informs the landlord on the last day of that two-month period that he wishes to pay more than the minimum initial capital payment. This group of amendments therefore makes it clear what is to happen in those circumstances.

Amendments Nos. 199 and 200 make the necessary changes to Clause 132 to ensure that the purchase price abatement provisions apply. I beg to move.

On Question, amendment agreed to.

Lord Fraser of Carmyllie moved Amendments Nos. 196 and 197:

Page 139, line 5, after ("shall") insert (", before the end of the period specified in subsection (2) or, if later, the expiry of one month from the date when the landlord was so informed of the tenant's intention,").

Page 139, line 12, leave out subsection (4) and insert:

("(4) In section 71—

  1. (a) in subsection (1)—
    1. (i) in paragraph (a), after "offer", in both places where it occurs, there shall be inserted "or amended offer";
    2. (ii) in paragraph (d), after "offer" there shall be inserted "or amended offer" and there shall be added at the end "and, in the case of an amended offer, they do not conform with the requirements of section 63(3)"; and
  2. (b) in subsection (2)—
    1. (i) in paragraph (b), after "offer" there shall be inserted "or amended offer"; and
    2. (ii) after "63(2)" there shall be inserted "(and, in the case of an amended offer, under section 63(3))" ").

The noble and learned Lord said: My Lords, I have already spoken to these amendments. I beg to move.

On Question, amendments agreed to.

Lord Fraser of Carmyllie moved Amendment No. 198:

Page 139, line 20, leave out from ("or") to ("that") in line 22 and insert ("where section 73D(l) applies, the person whose selling or otherwise disposing of the house or whose death is, by virtue of subsection (2) of that section, the occasion for payment of the deferred financial commitment").

The noble and learned Lord said: My Lords, I have already spoken to this amendment. I beg to move. On Question, amendment agreed to.

Clause 132 [Abatement of purchase price]:

Lord Fraser of Carmyllie moved Amendments Nos. 199 and 200:

Page 139, line 46, at end insert ("or, where an amended offer to sell falls to be served on the tenant under subsection (3) of section 63, has failed to do so within the time limit specified in that subsection ").

Page 140, line 13, after ("offer") insert ("or amended offer").

The noble and learned Lord said: My Lords, I have already spoken to Amendments Nos. 199 and 200 in speaking to Amendments Nos. 185 and 195. I beg to move.

On Question, amendments agreed to.

Lord Fraser of Carmyllie moved Amendments Nos. 201 to 204:

Page 140, line 46, leave out ("within") and insert ("either during or after").

Page 141, line 9, leave out ("earliest") and insert ("earlier"). Page 141, line 12, at end insert ("or").

Page 141, line 15, leave out from ("sale") to end of line 18.

The noble and learned Lord said: My Lords, with Amendment No. 201 I shall speak also to the lengthy Amendments Nos. 202, 203 and 204. This group of amendments involves purely technical changes to the purchase price abatement provisions of the Bill which provide for the purchase price to be offset by rent paid when a right-to-buy sale is unreasonably delayed by the landlord. I beg to move Amendments Nos. 201 to 204 en bloc.

On Question, amendments agreed to.

Clause 134 [Right to have repairs carried out]:

Lord Fraser of Carmyllie moved Amendment No. 205:

Page 143, line 8, at end insert:

("(f) the landlord may set off against any compensation payable under the regulations any sums owed to it by the tenant.").

The noble and learned Lord said: My Lords, this amendment enables the Secretary of State, in making regulations under the right to repair scheme, to allow the landlord to set off any payments of compensation against any outstanding sums owed to it by the tenant.

The enabling power for the right to repair scheme provides for regulations to require landlords to make compensation payments to tenants when their usual contractor fails to complete a repair within a prescribed maximum time. Where the tenant is in arrears with his rent there are strong arguments in favour of not making cash payments to tenants and using any credit to help to meet their debts to the landlord.

Additionally, since the payments of compensation will generally be small and may in some cases exceed the cost of making the payment itself, it will be more cost-effective for the authority to credit the tenant's rent account.

This is a small but sensible amendment. I understand that it is one which is already in place for England and Wales. I beg to move.

On Question, amendment agreed to.

Viscount Goschen

My Lords, I beg to move that further consideration on Report be now adjourned. In moving this Motion, perhaps I may suggest that the Report stage begin again not earlier than 7.30 p.m.

Moved accordingly, and, on Question, Motion agreed to.