§ (". Schedule (Compensation for postponement in connection with ineffective claims) (which makes, in relation to claims to enfranchisement or an extended lease under Part I of the Leasehold Reform Act 1967 and claims to collective enfranchisement or a new lease under Chapter I or II of Part I of the Leasehold Reform, Housing and Urban Development Act 1993, provision for compensation of the landlord where the claim has prolonged an existing tenancy, but is ineffective) shall have effect.").
§ The noble Lord said: My Lords, in moving this amendment, I shall, with the leave of the House, speak also to Amendment No. 163. Amendment No. 163 is of inordinate length. I think that the two amendments together occupy about 10 pages, or will occupy about 10 pages in the Bill, if they are accepted. They deal with what is essentially a fairly simple problem.
§ Noble Lords will observe that Amendment No. 163, long and complex though it is, consists of three parallel sets of provisions: for cases under the Leasehold Reform 389 Act 1967; for collective enfranchisement under the Leasehold Reform Housing and Urban Development Act 1993; and for lease renewal under the same Act.
§ The problem which these amendments seek to resolve concerns the situation where a claim for enfranchisement or a new lease is made shortly before expiry of the existing long lease, usually in the final few months. If the term date of the lease is reached before the claim is settled, the legislation provides for the lease to be continued during the currency of the claim and for three months afterwards.
§ Where there is no claim for enfranchisement and a long lease expires, most tenants can hold over at or near a market rent. This arrangement is overridden when an enfranchisement claim is in progress, and so the landlord would only receive the ground rent in this period. This is seen to be unfair when the claim is unsuccessful because the landlord is denied the market rent from the original term date which he would have received had there been no claim. This could be a significant sum for high quality properties in desirable locations. We are aware of some persistent abuse along these lines and we do not see the people indulging in that abuse as a particularly deserving or needy class. The present arrangement can be an incentive for tenants to spin out procedures, even if they decide that they cannot go through with the claim, as they will prolong the period during which they pay only ground rent. In addition, the landlord will not have the benefit of a capital sum at the end of the process.
§ These amendments will apply only when the claim is made within two years of the expiry of the long lease term. Once such a claim has been determined as unsuccessful, the tenant would become liable to pay the landlord the difference between what the tenant would have paid in market rent and what he has actually paid in ground rent over the following period (called the appropriate period in Amendment No. 163). Broadly speaking, this period begins with the earliest date when the long lease could have terminated (this will usually be the date of expiry of the long lease term) and ends with the date when the claim for enfranchisement etcetera ceases to have effect. These amendments would remove any incentive for tenants to prolong the procedures. Provision is also made to cope with cases where there has been a change in the leaseholder's immediate landlord.
§ The provision will apply to claims made on or after 15th January 1999. This is the changeover date for the statutory regimes for holding over after a long lease expires (that is, Schedule 10 to the Local Government and Housing Act 1989, will replace Part I of the Landlord and Tenant Act 1954). Tenants will therefore have adequate time to prepare and submit a claim before these provisions come into force. I beg to move.
§ Lord StrabolgiMy Lords, as the noble Lord, Lord Lucas, said, this is of course a whopping amendment, about 12 pages long. I congratulate him on the brief and succinct way in which he has boiled it down to quite a small number of words. Having said that, I must say I am not really happy about it. This 390 amendment seems to have been tabled virtually entirely for the benefit of the large estates, mainly in London. I hasten to say that I live on one of them, the Grosvenor Estate. I declare an interest as a committee member of the Belgravia Residents Association. I do not include the estate in any criticism because the Grosvenor Estate is an extremely good landlord and on the whole has a happy relationship with the people who live on the estate. It looks after the estate in a most magnificent way so that it remains one of the most beautiful—probably the most beautiful—parts of London. I hope it will never be broken up in the way that Pimlico was broken up when the previous duke but one died. I must say I would rather live under a duke any time than one of these new fangled property companies or overseas banks.
Having said that, I do not think that all the other estates are equally good in the way that they treat their tenants. Some landlords have for some years pursued a policy of not renewing or extending leases as they reduce in years but instead deliberately let them run out, with enormous resultant hardship, loss and misery to the many long-term tenants living on the estate.
In coming to an assessment of the price to be paid for the freehold or new lease, however, these tenants are profoundly disadvantaged by the fact that they were not granted an extension of lease at an earlier stage and are now coming, through absolutely no fault of their own, to enfranchise or buy a new lease with little equity on their side. The price will be high because they have to start from scratch. For many it will be a difficult business to complete the process. The whole undertaking is, therefore, fraught with anxiety and uncertainty for some tenants on some of the estates of London.
If this leasehold enfranchisement gets under way—and, I believe, collective commonhold is also on the far horizon—I hope that the Government will be able to fulfil what they promise when an election comes. I suppose that next spring they will promise it all over again. In the meantime, I hope that they will try to get the issue resolved so that we do not have to live with these large estates for much longer.
I do not believe that because someone owned a few fields 300 years ago they should be able to continue to let property on leasehold for 100 or 200 years, gaining it back after that period. I do not believe that that situation should continue until the end of time. I hope that one day this Government or a Labour Government will bring that situation to an end.
§ 9.30 p.m.
§ Lord DubsMy Lords, I have listened with interest and I largely agree with my noble friend Lord Strabolgi. I also listened to what the Minister said. Given the length of the amendment and the fact that it is marked with a star—although it was put down a few days ago, it was changed yesterday and we have this version today—it is difficult to engage with the details of the amendment and to make a proper assessment. The Government may have had good reason for bringing forward such a large amendment so late. It runs to some 391 10 pages or so and is very complicated. The only information that I have received makes me concerned about its possible effects: that it will not be helpful to some people living on some larger estates.
Having said that, I wish to protest that we have been given such a complicated amendment without the benefit of the Government's view until a few moments ago. I appreciate that the Minister was succinct and clear in what he said. I sought to relate that to the amendment. It is rather difficult. I am not sure that we are in the best position to consider such a complicated amendment at Report stage when we cannot engage in any further discussion beyond one intervention in the debate.
I express a reservation about how the provision has been handled. It makes the position very difficult for us.
§ Baroness HamweeMy Lords, I, too, have a reservation about this. It seems to me that if one has a cut-off period, whatever the period is, one plays the game by the rules set. If one happens to come close to the edge, costs and so on will fall where they fall.
Lord LucasMy Lords, I appreciate what the noble Lord, Lord Strabolgi, said both in his praise for the quality of some of the London estates and the fact that they give us some of the most pleasant environments of any European city; and what he said about the future and the importance of people being able to own their own homes and do as they wish with them. The two are to some extent mutually exclusive. As the noble Lord recognises, we have moved some way from one towards the other over the past few years. At some stage perhaps some government will move further.
I agree with the noble Lord, Lord Dubs, that the amendments are tabled much later than I should like to have seen. I assure the noble Lord that the recent changes have been minor. We have not made major changes to the amendment. Nevertheless, it is a long amendment which contains many references to other legislation. It needs much examination and consideration. I apologise for the difficulty under which it will place the noble Lord in seriously criticising it. If he has any problems with the wording, I can assure him that my time and that of my officials is at his disposal to go through it. That is the best I can do in the time that remains for us.
That said, it is a desirable change, given the length of time that we leave before the provision comes into effect. There will be plenty of time for those nearing the end of their leases to make the necessary arrangements to begin the enfranchisement procedure without making themselves liable for paying what in some cases may be quite hefty rent for the year or two it takes the enfranchisement procedure to go through if they fail at the end to raise the necessary capital to buy the freehold.
I understand the picture painted by the noble Lord, Lord Strabolgi, but, given that we are leaving it until 1999 for the legislation to become effective, there will be plenty of time for people to take the necessary action. It is worthwhile making the change to prevent what shows signs of becoming a tiresome abuse.
§ On Question, amendment agreed to.
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Lord Lucas moved Amendment No. 163:
After Schedule 10, insert the following new schedule—