HL Deb 13 November 2001 vol 628 cc542-58

Consideration of amendments on Report resumed on Clause 123.

[Amendment No. 71 not moved.]

Lord Goodhart moved Amendment No. 72: After Clause 123, insert the following new clause—

"ABOLITION OF MARRIAGE VALUES In Schedule 6 to the 1993 Act, omit—

  1. (a) paragraph 2(1)(b);
  2. (b) paragraph (4);
  3. (c) paragraph 5A(2)(b);
  4. (d) paragraph 5C;
  5. (e) paragraphs 9 and 9A;
  6. (f) paragraph 10(1 )(b);
  7. (g) paragraph 12;
  8. (h) paragraphs 15 and 16; and
  9. (i) paragraphs 19 and 20."

The noble Lord said: My Lords, in moving this amendment, I shall speak also to Amendments Nos. 74, 75, 83, 85 to 87, 92 and 93.

Those amendments form a group whose purpose is to remove the payment of marriage value from the calculation of the amount that someone has to pay when exercising a right of enfranchisement or to obtain an extended lease. Amendments Nos. 72, 74 and 75 deal with marriage value in the case of collective enfranchisement; Amendments Nos. 83, 85 and 86 deal with marriage value in the case of the grant of an extended lease of a flat; and Amendments Nos. 87, 92 and 93 deal with marriage value in the case of the enfranchisement of leasehold houses.

This is perhaps the most important issue that has been raised during our debates on the Bill. It is of great importance to the tens of thousands of leaseholders who may be considering enfranchisement or seeking extended leases and who are concerned about the price that they have to pay for them.

Marriage value in its simplest form arises when the leaseholder of a house buys the freehold and the value of the house as a freehold with vacant possession exceeds the separate market value of the leasehold and of the reversionary freehold sold as an investment. The excess is described as marriage value. The principles relating to the computation of marriage value in the cases of collective enfranchisement of blocks of flats and in the case of grant of extended leases are more complex and it would not serve any useful purpose at this time of the evening to try to explain how they work.

The increase in value—the creation of the marriage value—is due mainly to the fact that the leaseholder is a special purchaser at least in cases, as will frequently occur, when the leaseholder is in occupation. That means that the leaseholder is willing to pay more to buy the freehold than would an investor who was simply buying the freehold as an investment. The leaseholder avoids what would otherwise be the consequences of the expiring of the lease; namely, the fact that he, she or they will have to leave and find— perhaps buy—somewhere else to live. During the years leading up to that, they will go through a period of uncertainty. A leaseholder who exercises a right to enfranchise when the lease is coming towards its end—that is when the leaseholder is most likely to want to exercise the right and when the marriage value is at its greatest—is, as I have said, a special purchaser. In that situation there is no level playing field.

We say that it is right that the market price should be calculated as between a willing seller and a willing buyer, but in such a case the price is calculated on the basis of a willing seller and a buyer who is not only willing but eager to purchase. That means that the leaseholder has to pay because he is a special purchaser.

We believe that that is inappropriate; the leaseholder in such cases should be required only to pay the same as what the freeholder—or reversioner—would get if the reversion was sold as an investment and if the leaseholder was not a special purchaser but was willing to pay only what the purchaser of the lease would pay in order to purchase it as an investment again. We believe that it is appropriate to abolish marriage value in that regard and that the freeholder should be entitled to no more than what he would get for selling the freehold to an investor on the basis that the leaseholder was not a special purchaser. Otherwise, we believe that the freeholder would get the benefit of the potential detriment that would be suffered by a leaseholder who was faced with the threat of the loss of his home.

This matter has been debated at considerable length on earlier occasions and I do not propose to say anything more about it. I beg to move.

Lord Williams of Elvel

My Lords, I have a certain sympathy with the amendment of the noble Lord, Lord Goodhart, because I believe that the concept of marriage value is somewhat flawed. During Grand Committee stage of the former Bill, and in Committee on this Bill, I tabled a slightly modified amendment to the tapering of marriage values. I do not believe that 80 years has anything to do with the matter. If the marriage value is cancelled after 80 years I do not see why it should not reduce during the period from 80 years. It seems odd that someone who has a lease with 79 years to run has to pay full value whereas someone with a lease of 80 years pays no marriage value.

Before tabling the amendment, I considered the amendment of the noble Lord, Lord Goodhart. If that were accepted by the Government my amendment would fall. However, if the noble Lord's amendment is not accepted by the Government in this House, I would wish to revert to the tapering question at Third Reading.

Baroness Gardner of Parkes

My Lords, I, too, support the tapering principle. A hard line is always drawn when a person is just on the 80 years. A leasehold association today asked me to speak in favour of the 80-year point. Although it went into great depth as to whether the figure should be 70 or 80, even that association did not seem 100 per cent sure. It opted for 80 years as the better choice.

The point raised by the noble Lord, Lord Williams, would answer that issue. If it were a tapering process, it would be fairer.

8.45 p.m.

Lord Falconer of Thoroton

My Lords, as the noble Lord, Lord Goodhart, said, marriage value has been debated at great length at every stage of the Bill and I should not endear myself to the House if I went into all the arguments for and against at this late stage. We know what they are.

Our position remains as set out in the Bill. It remains our view that the Bill strikes the correct balance between the competing interests of landlords and leaseholders. We cannot support an alternative valuation method which would result in a compulsory and substantial transfer of resources from one private individual to another. As the noble Lord, Lord Goodhart, will know, there plainly is marriage value in selling from the freeholder to the leaseholder. The essence of the transaction is that for 50 per cent of what it would cost, the lessee gets the value of granting himself a long lease. So he and the freeholder end up in a perfectly sensible position.

The issue of tapering was raised by the noble Lord, Lord Williams, and supported by the noble Baroness, Lady Gardner. The answer is this. Above 80 years we have taken the view that there is no marriage value worth arguing about. At 80 years it starts to have value and it goes up as one gets closer to the end. The nature of the asset, as it goes down from 80 years, brings with it its own tapering. It will go up in value from 80 down to nil. It will start at a low value at 80 because the principle underlying our approach is that above 80 the value is so small that it is not worth arguing about. That is why we argued for no marriage value above 80. The fact that the marriage value goes up from 80 downwards brings its own tapering.

We reject the approach taken by the noble Lord, Lord Goodhart. We have considered carefully the question of tapering. However, for the reasons I have given, that does not appeal to us. I invite the noble Lord to withdraw the amendment. I invite my noble friend Lord Williams of Elvel to think again about whether he should bring forward an amendment at Third Reading because of the explanation I have given as to why tapering would not be appropriate; and make a similar invitation to the noble Baroness, Lady Gardner.

Lord Goodhart

My Lords, I am not surprised by the outcome of this short debate. Before I turn to marriage value, perhaps I may deal briefly with the tapering point.

I would not reject the proposal for a taper but we consider that if there is to be tapering it is at the wrong end. What is needed is a taper which increases as leases get towards their end. It is at that stage that the impact of the special purchaser position is at its greatest. We believe that a taper from, say, years 80 to 50 when the reversionary value is small is relatively unhelpful. If there were a taper it would be more helpful if it reduced the proportion of the marriage value taken by the freeholder in the last few years of the lease.

However, on the abolition of marriage value we have made our points. It is a matter on which we feel strongly. It would not be appropriate to divide the House at this time of the evening but we shall return to the matter at Third Reading. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 73 to 77 not moved.]

Lord Bassam of Brighton moved Amendment No. 78: Page 63, line 2, after "only" insert "or

The noble Lord said: My Lords, in moving the amendment, I speak also to Amendments Nos. 80, 90 and 91. Amendment No. 78 corrects a minor drafting defect which was identified by the noble Lord, Lord Goodhart, and his good friends in the Law Society. Again, we are grateful to them for drawing this to our attention.

Amendment No. 80 extends the period during which personal representatives have the right to claim a new lease of a flat from six months to one year. This was also proposed by the noble Lord, Lord Goodhart, and the Law Society and we agree that this is a fair and sensible change. Amendment No. 91 makes a similar change in relation to the enfranchisement of leasehold houses.

Amendment No. 90 has been put forward in response to concerns raised by the noble Earl, Lord Caithness, during Second Reading that other changes in the Bill, in particular the abolition of the low rent test, would enable certain business tenants who occupy premises which could be regarded as houses to enfranchise under the 1967 Act. It was never our intention to grant enfranchisement rights in relation to properties such as hotels or public houses. My noble and learned friend Lord Falconer has already undertaken to do this in his letter to the noble Earl, Lord Caithness, of 23rd July. Business tenants will not be able to enfranchise if their lease, when originally granted, was for a term of 35 years or less Most genuine business tenancies will generally be for terms of less than 35 years.

There may be a very small number of business tenants who are currently able to enfranchise under the 1967 Act who would lose their right as a result of this proposal. These would be tenants who had a lease of 35 years or less at a low rent. I must stress that such leases would be very unusual indeed. However, we intend to allow any such tenants a window of opportunity to exercise their right before it is withdrawn. As a consequence, commencement of this provision will be delayed for a period of 12 months following Royal Assent to give those affected the opportunity to serve an initial notice. Publicity relating to the Bill will draw attention to this. In order to avoid creating a window of opportunity for other business tenants to enfranchise, the commencement of the provisions which abolish the low rent test will be similarly delayed. I beg to move.

Lord Goodhart

My Lords, I rise to say that once again I am grateful to the Government for accepting the proposals, which emanate from the Law Society.

On Question, amendment agreed to.

[Amendment No. 79 not moved.]

Clause 129 [Personal representatives]:

Lord Bassam of Brighton moved Amendment No. 80: Page 63, line 19, leave out "six months" and insert "one year

On Question, amendment agreed to.

Clause 131 [Valuation date]:

[Amendments Nos. 81 and 82 not moved.]

[Amendments Nos. 83 and 84 not moved.]

Clause 132 [Landlord's share of marriage value]:

[Amendment No. 85 not moved.]

Clause 133 [Disregard of marriage value in case of very long leases]:

[Amendment No. 86 not moved.]

Clause 134 [Amendments of 1967 Act]:

[Amendment No. 87 not moved.]

Clause 135 [Abolition of residence test]:

[Amendment No. 88 not moved.]

Clause 136 [Reduction of qualifying period as tenant etc]:

[Amendment No. 89 not moved.]

Lord Bassam of Brighton moved Amendment No. 90: After Clause 136, insert the following new clause—

"EXCLUSION OF CERTAIN BUSINESS TENANCIES After subsection (1ZA) of section 1 of the 1967 Act (inserted by section 135(2)) insert—

On Question, amendment agreed to.

Clause 138 [Personal representatives]:

Lord Bassam of Brighton moved Amendment No. 91: Page 66, line 13, leave out "six months" and insert "one year

On Question, amendment agreed to.

Clause 141 [Tenant's share of marriage value]:

[Amendment No. 92 not moved.]

Clause 142 [Disregard of marriage value in case of very long leases]:

[Amendment No. 93 not moved.]

Lord Goodhart moved Amendment No. 94: Before Clause 146, insert the following new clause—

"MINIMUM TERM FOR LEASES AT A PREMIUM (1) No lease of a flat or house may be granted at a premium unless the term of this lease is not less than 300 years. (2) In this section "flat" has the same meaning as in Chapter 1 of this Part and "home" has the same meaning as in Part I of the Leasehold Reform Act 1967 (c. 88).

The noble Lord said: My Lords, we did not move this amendment in Committee this time round, but we moved a similar amendment during debate on the previous Bill, which fell because of the general election.

The purpose of the amendment is to require that all future residential leases of property at a premium should be for a period of not less than 300 years. The amendment has been proposed because my noble friend Lord Jacobs feels strongly about the matter and persuaded us that it was right to debate it. Unfortunately, although he was present earlier, he is unable to be present now because it is his 70th birthday and he has a long-standing commitment—a surprise party, but not as much of a surprise party as it might have been. So he has a good excuse for not being here.

The reason for the amendment is that the leasehold system has proved itself thoroughly unsatisfactory as a vehicle for holding residential property and should be phased out. It would be replaced by a mixture of commonhold, ordinary freehold and rentals. The problem is that until the difficulties with positive covenants, which we discussed earlier, have been resolved, in practice it is impossible to have freehold flats. Where commonhold is not practicable, leases should be of a length more or less equivalent to a freehold—300 years is probably enough; we doubt whether a 300-year lease will give rise to problems in 2301.

Of course, we cannot abolish existing leasehold property for a shorter term than that, and there would be difficulties if we provided that all renewals of existing leases should be for terms of 300 years. That might involve leaseholders who wanted to extend their lease for a shorter period having to pay more than necessary. Nevertheless, the amendment should receive serious consideration. I beg to move.

Baroness Gardner of Parkes

My Lords, I rise to support the amendment, because it contains an attractive principle. If the Government were to accept it, it would show that they had a real desire for commonhold—which I still doubt. For that reason I strongly support the amendment.

Lord McIntosh of Haringey

My Lords, I appreciate the concern expressed by the noble Lord, Lord Goodhart, on behalf of the noble Lord, Lord Jacobs. Perhaps I may, on behalf of Members on these Benches, ask the noble Lord to convey our congratulations to the noble Lord, Lord Jacobs, on reaching his alloted span.

As I understand it, the point raised by the noble Lord, Lord Goodhart, is that in order to promote the use of commonhold we should remove the attractiveness of the leasehold system to landlords and developers. Unlike the noble Baroness, Lady Gardner of Parkes, we are confident that commonhold will be attractive to developers and will be widely adopted. Many current developments already offer 999-year leases and a share in a leaseholders' management company.

However, until commonhold has been tried and tested, we consider it premature to restrict the use of leasehold in the way that the amendment provides. Any restriction on the granting of leases would limit the choice of the purchaser. If a person wishes to save on rent or fix his housing costs over a period by paying a capital sum for a short lease, he should be allowed to do so. As drafted, the amendment would prevent the granting of a six-month tenancy for a single payment.

A developer or landlord may have only a leasehold interest and be unable to grant leases beyond the term of his own interest. A long minimum term would mean that the landlord could rent units out only on periodic tenancies and could prevent development taking place. Some local authorities have properties on land which they hold on a leasehold basis. If such a lease runs for 150 years, should we be saying that because they cannot offer a lease of 300 years, they should be prevented from selling leases to tenants under the right to buy? That would not be popular.

Of course, we will monitor the development of commonhold after the Bill is enacted. We expect it to become the preferred form of tenure and that leasehold will gradually wither on the vine. We would be prepared to consider restrictions on its use in the longer term if there was a clear need to do so and the benefits to be gained outweighed the disadvantages. But at present, we cannot accept the amendment.

Lord Goodhart

My Lords, I am grateful to the Minister for at least raising the possibility of some move in that direction in the longer term, if not in the Bill. I have promised my noble friend Lord Jacobs that we will table the amendment at Third Reading to give him the opportunity to make the speech that he has been unable to deliver today. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

9 p.m.

Schedule 12 [Leasehold valuation tribunals: procedure]:

Baroness Gardner of Parkes moved Amendment No. 95: Page 123, line 12, at end insert—

"PUBLIC INFORMATION 2A (1) Procedure regulations under paragraph 1 shall include provision about the public information to be provided by leasehold valuation tribunals. (2) Such information referred to in sub-paragraph (1) above shall include—

  1. (a) details about the jurisdiction of leasehold valuation tribunals,
  2. (b) guidance on the ways of applying to leasehold valuation tribunals, and
  3. (c) descriptions of recent decisions of leasehold valuation tribunals."

The noble Baroness said: My Lords, I have been looking for some way of bringing up the situation of people who purchase their freehold and I must pay tribute to the Public Bill Office for the great help it gave me in working out where I could place this issue so that it would come into this Bill.

I have been in correspondence with the noble and learned Lord, Lord Falconer, on this matter and that correspondence revealed that the jurisdiction for dealing with estate management schemes passed, under the 1993 Act, from the High Court, where it was vested under the 1967 Act, to the Leasehold Valuation Tribunal. I passed that information on to a gentleman who was anxious to know how he could do something to help himself, having enfranchised his own house and not realising, until he received the documents, that he would be handed a 30-page estate management scheme by which he would be bound and which would be more onerous and expensive than the previous lease.

It is a strange situation and I raised the point earlier today in your Lordships' House. I felt it was important that people should be obliged to disclose documents. The noble Lord, Lord McIntosh, said that he would write to me on this point. Omissions are as bad as wrong facts being put into information.

Returning to the case in point, I passed the information on to the gentleman in question, who rang the Leasehold Valuation Tribunal and said that he understood that that office could deal with it. Its answer was, "No, we have no jurisdiction. You must go to the High Court". I relayed that information back to the office of the noble and learned Lord, Lord Falconer, and by a process of time we located someone higher up in the Leasehold Valuation Tribunal who, whether due to the information they had been given by the office of the noble and learned Lord or from digging into the recesses of history, suddenly discovered that it does have jurisdiction to deal with estate management cases in terms of having powers to vary. When I raised this issue earlier the noble and learned Lord, Lord Falconer, said that every estate management scheme must have the powers of variation in it or a process by which it could be varied.

The gentleman in question was feeling rather aggrieved about being pushed backwards and forwards and obtaining different answers. I have since spoken to the vice-president or president of the Leasehold Valuation Tribunal and was told that there is no question but that it does have jurisdiction. I make that point now so that it will be recorded in Hansard, and any applicant wishing to take a case to the Leasehold Valuation Tribunal should be able to produce that copy of Hansard and say, "I do have the right to bring this case to you and you do have the jurisdiction".

It is extraordinary that the tribunal did not know it had jurisdiction; and that it then said that it had dealt with only two cases a long time ago which involved council estates and which were not a parallel That gives the applicant the feeling that the tribunal is so unfamiliar with the process that he will not get a fair hearing even if he does take his case there. He feels that the members may all be prejudiced because he stirred the matter up.

I do not believe that. I believe the tribunal will conduct the case fairly. But it is important for people to know their rights and where they can obtain them. It is also necessary for the tribunal to issue either leaflets or instructions in some way to make clear what our rights are and a simple way of applying for them. The whole purpose of the leasehold valuation tribunal is for people to be able to deal with their own cases and not be involved in lengthy and expensive procedures. I beg to move.

Lord Falconer of Thoroton

My Lords, I am sympathetic to the points raised by the noble Baroness, Lady Gardner of Parkes. Amendment No. 95 is aimed at ensuring that the public can obtain certain information from the LVT. We agree that the public should have access to the sort of information described in order to assist in and avoid precisely the situation that the noble Baroness related. It is not necessary to deal with such matters through regulation. I suspect the amendment, quite rightly, was simply a means of raising this issue.

The Government already produce a free booklet entitled, Applying to a Leasehold Valuation Tribunal, which is available from numerous sources, including the LVT itself. That booklet includes guidance on the jurisdiction of the LVT and is regularly updated to reflect new developments.

Of course, neither we nor the LVT can give legal advice. That is the role of the Leasehold Advisory Service—more commonly known as LEASE—an independent body funded by the Government. LEASE also produces a booklet called Leasehold Valuation Tribunals—a User's Guide, and two booklets on applying to the LVT, one for enfranchisement and lease renewals and one for disputes relating to the management of the property. Again, they are free publications which include advice on matters of jurisdiction.

The Leasehold Advisory Service also has a website on which it lists LVT decisions, summarises the key facts of each case and provides a link to a copy of the actual decision. Paper copies of LVT decisions are available from the LVT on request. We would be more than happy to consider any other suggestions the noble Baroness has as to how one could improve the information that is available.

Perhaps I can turn to the specific question of estate management schemes, and again I am grateful to the noble Baroness for raising this matter. We have corresponded on this matter and the noble Baroness first raised it with me in Committee. However, she rightly continues to press it as an important issue and perhaps I can respond in a little detail.

As the noble Baroness will know, estate management schemes are designed to ensure that common facilities and common standards can continue to be upheld on an estate where one of the properties on that estate is enfranchised. We understand why enfranchised leaseholders dislike being subject to such schemes. But we are also satisfied that, as a general principle, estate management schemes are both desirable and necessary.

That said, there are two key questions which need to be looked at within the present arrangements. First, we are aware anecdotally that there may be some schemes which have not been set up properly. That seems to include some instances of schemes which contain unnecessary and possibly inappropriate terms—the noble Baroness referred to a large document.

As the noble Baroness is aware, there are already mechanisms to address that point. All schemes are required to include provisions which allow for the variation of their terms. In most cases—I cannot promise in all—that will involve an application to the Leasehold Valuation Tribunal either because the scheme specifically says so or because jurisdiction was transferred from the High Court by Section 75 of the Leasehold Reform, Housing and Urban Development Act 1993. Anyone who is concerned about the terms of the scheme to which they are subject should seek to address that under those provisions—I underline in effect the point made by the noble Baroness in her speech.

The second issue is that of payment under schemes. As noble Lords will know, leaseholders who pay service charges have rights and protections to protect themselves against unreasonable charges. This Bill will improve and extend those rights and introduce comparable ones for administrative charges under a lease. However, there are not any similar provisions in respect of charges made under estate management schemes. At present, therefore, anyone who enfranchises and is subject to a scheme will move from having protection against unreasonable charges under their lease to having no protection against unreasonable charges under the scheme. That seems to us to be an anomaly.

The noble Lord, Lord Richard, raised the issue in Committee in the previous Parliament. We have been considering it since then. The noble Baroness will know, because I corresponded with her, that I cannot promise that I will be able to find space in the Bill to change this provision. However, it is right that I make those comments on estate management schemes. There are concerns about them, on which the noble Baroness has touched, both in her remarks tonight and in correspondence. In the light of my comments, I invite the noble Baroness to withdraw her amendment.

Baroness Gardner of Parkes

My Lords, I thank the Minister for those comments, which are extremely valuable. However, the point he made about unreasonable payments is the very point that has been made to me; that is, that people had more rights even before the Bill. If I understand him correctly, the Minister is saying that the Bill will improve people's rights against unreasonable charges. The statement that has been made to me is that people are being asked to pay much more now as so-called freeholders than they ever were when they were leaseholders. That seems to be unjust.

The noble and learned Lord also mentioned that where one house in a street is enfranchised, the rest of the street has to be protected. I accept that. However, in the example to which I referred, I understand that seven out of nine properties are enfranchised. That means that the vast majority are so-called freeholders, and it is the vast majority who are suffering.

I hope that the noble and learned Lord will be able to find a way to include in the Bill some form of protection for people from unreasonable charges, wherever the matter is taken to, whether that be to the leasehold valuation tribunal or elsewhere. It is wrong for people to be exploited in terms of charges under an estate management scheme. I thank the noble and learned Lord for the point he raised and beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 165 [Appeals]:

Baroness Gardner of Parkes moved Amendment No. 96: Page 84. line 36, at end insert— ( ) In any proceedings in the Lands Tribunal on appeal from a leasehold valuation tribunal, the fees payable and costs awarded shall not exceed such fees and costs as may be specified for a leasehold valuation tribunal under paragraphs 9 and 10 of Schedule 12 to this Act.

The noble Baroness said: My Lords, I covered this subject fairly fully in Committee, and your Lordships will be pleased to hear that I do not need to do so again tonight. At present people are frightened into not pursuing their cases to the Lands Tribunal because they are told that the costs could cripple them or break them. Therefore, that is being used as a big stick to prevent people taking appeals to that tribunal. I believe that it would be fair for such charges to be in line with those of the leasehold valuation tribunal, whatever those charges happen to be. I beg to move.

Lord Goodhart

My Lords, I strongly support the noble Baroness, Lady Gardner of Parkes, and would add one comment. Such costs are a deterrent to people taking cases on appeal to the Lands Tribunal after losing a decision in the leasehold valuation tribunal. As a barrister, I am well aware that one of the most awful fates that can sometimes befall a litigant is to win at first instance, to find oneself taken to appeal—something which one cannot prevent—and then to be saddled with the costs both at first instance and in the Court of Appeal. Therefore, the deterrent is not only to people taking cases to the Lands Tribunal by way of appeal but to making the original application to the leasehold valuation tribunal. Therefore, I am more than happy to support the amendment.

Lord Kingsland

My Lords, the noble and learned Lord will have noted that I have not tabled any of my Committee stage amendments regarding the leasehold valuation tribunal. However, I hope that he will forgive me if I support the amendment of my noble friend Lady Gardner.

Lord Falconer of Thoroton

My Lords, I had noted that point. The noble Baroness made her points in Committee. The noble Lord, Lord Goodhart, has indicated the point; namely, to limit the fees payable to the Lands Tribunal to reflect to some extent the limit at the land valuation tribunal. That would avoid any intimidatory effect to a leaseholder who is worried about the cost effect of going to the Lands Tribunal.

When those issues were raised before I undertook to study them carefully with my colleagues at the Lord Chancellor's Department. I have now done so. As noble Lords will know, Sir Andrew Leggatt recently concluded a wide-ranging review of the tribunal system as a whole. The Government are still consulting on the outcome of that review. That will provide an opportunity to consider all aspects of Lands Tribunal procedures, including its costs regimes. I hope that the noble Baroness, Lady Gardner of Parkes, will agree that this issue would be better dealt with in that context when her arguments, which have considerable force and support around the House, can be put. In those circumstances I invite the noble Baroness to withdraw her amendment.

9.15 p.m.

Baroness Gardner of Parkes

My Lords, I do not know whether I am prepared to wait that long, but I am prepared to withdraw the amendment tonight so I can discuss it with the noble and learned Lord between now and the next stage of the Bill. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Williams of Elvel moved Amendment No. 97: Before Clause 167, insert the following new clause—

"REGULATION OF MANAGING AGENTS (1) After such consultation as he considers appropriate, the Secretary of State may by regulations provide for the establishment of a professional regulatory body for managers of property under this Part. (2) The rules of the professional regulatory body shall be approved by him. (3) The rules referred to in subsection (2) shall include provision for—

  1. (a) a scheme of membership,
  2. (b) standards for accreditation of members,
  3. (c) procedures for complaints and disciplinary measures, and
  4. (d) procedures for extending eligibility for membership to other managers of property.
(4) A statutory instrument containing regulations under subsection (1) shall not be made unless a draft of it has been laid before and approved by a resolution of each House of Parliament.

The noble Lord said: My Lords, this amendment deals with the regulation of managing agents. In the original consultation document on the reform of residential leasehold law in November 1998, it was regarded as essential, and one of the key elements of successful reform, that there should be regulation of managing agents. The Government have not as yet brought forward any proposals to implement those conclusions.

The need for greater regulation of managing agents is recognised by all those involved in the leasehold sector, including the Association of Residential Managing Agents and, I am very happy to say to my noble and learned friend, the British Property Federation. It also includes the Royal Institution of Chartered Surveyors and others. Everybody says that this is the only effective way of implementing the right to manage proposals in the Bill. Many landlords are concerned that they may lose control of their investments by right to manage, not through any fault of theirs as owners, but through the inadequacies or the incompetence of the managing agents who then take over.

It seems to me that the Government's position is somewhat uncertain. I believe that they would like to see management of managing agents, but they are publicly committed to go out to consultation. The Government approve in principle, but have no clear view on how to proceed.

I say to my noble and learned friend that there is only one chance of primary legislation. There will not be another Bill of this nature by any normal parliamentary standards, in the next two or three years. So if we are going to deal with managing agents something has to be put into this Bill.

My amendment is essentially enabling. It states: After such consultation as he considers appropriate it is up to the Secretary of State— the Secretary of State may by regulations provide for the establishment of a professional regulatory body for managers of property under this Part". The amendment relates specifically to that Part. But the rules of such a body can be such as to extend the membership to people who are involved in the management of other properties. That gets round the problem that we cannot put something in this Bill which does not relate to the Bill itself.

I go on to say that the whole business must be approved by the Secretary of State and that the rules, membership and disciplinary procedures should be equivalent to those of the Bar Council and the Law Society. The rules should be approved by statutory instrument which should be on an affirmative resolution.

I simply cannot believe that the Government will not accept this way of getting through the procedure. I very much hope that my noble and learned friend will have listened very carefully to what I have said and give himself and the Government the opportunity to move forward with something which they already want. I beg to move.

Lord Goodhart

My Lords, it seems to me that there is a great deal of sense in the proposals contained in the amendment of the noble Lord, Lord Williams, and I am happy to support it.

Baroness Gardner of Parkes

My Lords, I too support the amendment. I have spoken before in your Lordships' House about my September in Australia. I discovered that all managing agents have to be fully regulated and approved. It works very well. They also take much greater responsibility, which is desirable. I support the amendment.

Lord Kingsland

My Lords, I endorse all that noble Lords have said, so far.

Lord Falconer of Thoroton

My Lords, that was put very seductively by everyone. The noble Lord, Lord Williams of Elvel, said that there would not be another legislative chance for two or three years. Our experience in every legislative Session for the past two years has been to produce a Commonhold and Leasehold Bill which has taken for ever.

My noble friend Lord Williams wishes to ensure that managing agents of leasehold property meet certain standards. We all agree with that. We also agree that standards in the profession are at present very variable and that some who describe themselves as managing agents do not deserve that name. We certainly wish that it were otherwise; that landlords and leaseholders could turn to any organisation which advertised itself as a managing agent, happy in the knowledge that they would receive a competent, honest and efficient service.

Sadly, however, I am not sure that there is a single profession in the kingdom, regardless of how long-established it may be or of what measures may be in place to safeguard its standards, of which that can safely be said. That indicates the difficulty of the task which my noble friend has set himself.

For our part, we do not believe that it would be wise to embark on any particular course for setting the residential property management business to rights without the fullest possible public discussion and consultation.

In principle, the objective which we share with my noble friend could be tackled in any one of a number of different ways. One approach would be to encourage the business itself to set up a body to regulate its own members. Indeed, in the interests of healthy competition, there would be benefit in having more than one such organisation, though that might be to hope for too much. Once such an organisation had been established and had achieved credibility, its agents would doubtless be chosen in preference to others. As it happens, I understand that the Association of Residential Managing Agents and the Association of Residential Letting Agents are in the preliminary stages of seeking to establish just such an institution.

At the other extreme, we could adopt some more formal regulatory scheme under which agents would need a licence to be allowed to practise, or could be banned from practising if they committed specific misdemeanours. The coverage of any of these arrangements would also need consideration: should they be confined to agents because the problems may instead be caused by the landlord or another person responsible for management?

The issues are complex and we have promised a consultation paper on them. That should be ready for publication early next year. Until the consultation process is complete, it would be premature for us to conclude that any particular approach is the right one. In the light of that explanation, I hope that my noble friend will agree to withdraw his amendment.

Lord Williams of Elvel

My Lords, I doubt whether my noble and learned friend has read the amendment. It states: After such consultation as he considers appropriate". It is then up to the Secretary of State to consult and I put no timetable on it. We are all agreed that something similar to a special regulatory body would be the right way forward. My noble and learned friend appears to believe that there might be a different approach; for instance, statutory licensing. I would not choose statutory licensing and I am surprised that my noble and learned friend suggested that as a possibility.

I find the attitude of not accepting a simple, enabling new clause strange. It does not impose a duty on the Secretary of State; it allows him to take certain actions. My noble and learned friend said that we have commonhold and leasehold legislation every two or three years. As an experienced Member of this House, I must tell him that we do not and it is unlikely that we shall.

Nevertheless, if that is the Government's position, they are missing an important and interesting trick. We may talk about the matter later, but in the meantime I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

House adjourned at twenty-five minutes past nine o'clock.