COMMONS AMENDMENT

HL Deb 15 April 2002 vol 633 cc692-725

12 After Clause 60, insert the following new clause—

"Advice

(1) The Lord Chancellor may give financial assistance to a person in relation to the provision by that person of general advice about an aspect of the law of commonhold land, so far as relating to residential matters.

(2) Financial assistance under this section may be given in such form and on such terms as the Lord Chancellor thinks appropriate.

(3) The terms may, in particular, require repayment in specified circumstances."

13 Clause 62, page 29, line 15, leave out from beginning to "by" in line 17

Baroness Scotland of Asthal

My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 12 and 13.

Amendment No. 12 introduces a new clause to allow the Lord Chancellor to fund the provision of advice on commonhold. Amendment No. 75 removes paragraph 9 of Schedule 5. There are also consequential amendments. Amendment No. 13 replaces a joint regulation-making power in Clause 62 relating to compulsory purchase powers with a power for the Lord Chancellor to act alone. Amendment No. 23 adds an entry for residential commonhold units to Clause 68. If those amendments are uncontentious, I shall say no more.

Moved, That the House do agree with the Commons in their Amendments Nos. 12 and 13.—(Baroness Scotland of Asthal.)

The Earl of Caithness

My Lords, how much money has the Lord Chancellor set aside to help these people? Is the intention to help individuals or to help, for example, the RICS to pass on advice to its members?

Baroness Scotland of Asthal

My Lords, I am not able to say precisely how much money is set aside. I shall write to the noble Earl on the two matters that he has raised, because I am not able to give him precise details at the moment, although I am sure that I would be able to give him an answer if I stayed on my feet long enough.

On Question, Motion agreed to.

COMMONS AMENDMENTS 14 Clause 63, page 29, line 32, leave out from "as" to end of line 34 and insert "land registration rules within the meaning of the Land Registration Act 2002, 15 Page 29, line 36, leave out "rules under section 144" and insert "land registration rules 16 Page 29, line 37, leave out "rules under section 144" and insert "land registration rules 17 Page 30, line 2, leave out paragraph (b) 18 Page 30, line 24, leave out "145 of the Land Registration Act 1925 (c. 21)" and insert "102 of the Land Registration Act 2002 19 Page 30, line 30, leave out "1925" and insert "2002 20 Clause 65, page 30, line 45, leave out "1925" and insert "2002 21 Page 31, line 12. leave out subsection (6) 22 Clause 67, page 31, line 30, leave out from "(c. 20)," to "defining" in line 31 and insert "the Companies Act 1985 or the Land Registration Act 2002 23 Clause 68, page 32, line 23, at end insert— Residential commonhold unit Section 17

Baroness Scotland of Asthal

My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 14 to 23.

Moved, That the House do agree with the Commons in their Amendments Nos. 14 to 23.—(Baroness Scotland of Asthal.)

On Question, Motion agreed to.

COMMONS AMENDMENTS 24 Clause 78, page 38, line 41, leave out "one month" and insert "three months 25 Clause 88, page 44, line 22, leave out "one month" and insert "1hree months 26 Page 44, line 25, leave out "one month" and insert "three months 27 Clause 91, page 47, line 9, leave out from first "date" to end of line 10 28 Clause 92, page 47, line 34, leave out from beginning to "must" in line 37 and insert "The duty imposed by this section 29 Clause 96, page 49, line 8, at end insert "; but nothing in this section or section 97 applies in relation to an approval concerning only a part of the premises consisting of a flat or other unit not held under a lease by a qualifying tenant. 30 Page 49, line 37, at end insert "; and an approval required to be obtained by virtue of a restriction entered on the register of title kept by the Chief Land Registrar is, so far as relating to a long lease of the whole or any part of any premises, to be treated for the purposes of this Chapter as an approval under the lease. 31 Clause 100, page 51, line 18, after "leases" insert "(including enactments contained in this Act or any Act passed after this Act) 32 Clause 109, page 55, line 6, at end insert "or 33 Page 55, line 10, leave out from "rent)" to end of line 12

The Minister of State, Department for Transport, Local Government and the Regions (Lord Falconer of Thoroton)

My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 24 to 33.

The amendments deal with various aspects of the right to manage. Amendments Nos. 24 to 28 increase from one month to three months the period that elapses between a determination that the right-to-manage company is entitled to exercise the right to manage and the acquisition of that right. Noble Lords will no doubt recall the discussion about that in this Chamber. I gave an undertaking on Report that we would consult. The procedures as originally drafted would have allowed leaseholders to take over the management of their block without necessarily having all the supporting information and access to funds. Concerns have been expressed about that. After consulting interested parties and listening to their concerns, we have brought forward these amendments, the critical aspect of which is the extension from one month to three months.

The aim of Amendment No. 29 is to clarify the existing provisions relating to approvals once the right to manage has been exercised. Concerns have been expressed that under the current drafting it could he argued that the RTM company would have functicns relating to approvals in relation to commercial tenancies under Clauses 96 and 97. That has never been our intention. This technical amendment is intended to ensure that the right-to-manage company only has functions relating to approvals for premises held under a long residential lease by a qualifying tenant.

Amendment No. 30 is another technical amendment that will prevent an anomaly highlighted by the Land Registry in the approvals regime. Amendment No. 31 is a technical amendment that makes it clear that the power in Clause 100(2) applies to subsequent Acts of Parliament and to the provisions in the Bill. Amendments Nos. 32 and 33 are technical amendments that will remove an inconsistency in Clause 109, which, as noble Lords will all know, deals with notices in relation to the right to manage.

I have gone through the amendments after Amendment No. 28 quite cursorily, but I shall be happy to answer any questions.

Moved, That the House do agree with the Commons in their Amendments Nos. 24 to 33.—(Lord Falconer of Thoroton.)

The Earl of Caithness

My Lords, I thank the Government for carrying out a consultation exercise, which has led to a slight change of heart. The noble and learned Lord will be aware that this part of the Bill is not as welcomed as the noble Baroness, Lady Scotland, thinks the first part of the Bill is welcomed throughout the country. I am rather surprised that the noble and learned Lord has brought it forward. On 27th February, in a debate initiated by the noble Lord, Lord Best, the noble and learned Lord said: The lower the political risk in relation to the private rented sector, the more a landscape will be created for investment by both smaller landlords and institutional investors. The private rented sector is sensitive to changes in regulation". He went on: the Government have no intention of changing the regulatory framework covering the private rented sector".—[Official Report, 27/2/02; cols. 1473–74.] However, the Bill does that. The noble and learned Lord knows that most people in the rented sector are unhappy with the Bill. I received briefings yesterday from two sources, both of which said that there would be a need for further legislation. The Bill is rather contrary to what people outside think is going to happen.

Lord Falconer of Thoroton

My Lords, the noble Earl has effectively again raised the issue of various aspects of the Bill about which there has been debate. I do not complain about that, but it is not quite germane to the specific detailed proposals which I am proposing in this group of Commons amendments. I do not believe that there is any inconsistency between what I said in that debate on the private rented sector and this Bill—which is effectively and primarily all about long leasehold arrangements. I believe it was clear to everyone in that debate that the Commonhold and Leasehold Reform Bill was being considered by Parliament and that we were talking about what people would understand as the shorter-term rental sector. That is what that debate was about.

On Question, Motion agreed to.

COMMONS AMENDMENT 34 Clause 114, page 58, line 17, at end insert— (2)In section 69(1)(b) of the 1993 Act (estate management schemes), for "by virtue of the amendments of that Chapter made by paragraph 3 of Schedule 9 to the Housing Act 1996 (c. 52)" substitute "in circumstances in which, but for section 114(1) of the Commonhold and Leasehold Reform Act 2002 and the repeal by that Act of paragraph 3 of Schedule 9 to the Housing Act 1996 (c. 52), they would have been entitled to acquire it by virtue of the amendments of that Chapter made by that paragraph".

Lord Falconer of Thoroton

My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 34. With your Lordships' leave, I shall also speak to Amendment No. 60.

Noble Lords will no doubt recall that during previous debates on this Bill, primarily in response to issues raised by the noble Baroness, Lady Gardner of Parkes, I gave an undertaking that the Government would bring forward an amendment on estate management schemes if possible. That is what we have done in this group of amendments.

Since estate management schemes were first permitted under the Leasehold Reform Act 1967, Parliament has legislated to provide protection for tenants in respect of service charge payments. As noble Lords are aware, leaseholders who pay service charges have rights and safeguards to protect them against unreasonable charges. This Bill will improve and extend those rights and introduce similar rights in respect of administration charges made under a lease. Currently there are no such rights in respect of charges made under estate management schemes. At present, anyone who enfranchises and is subject to a scheme will lose the protection against unreasonable charges that they had under their lease. That seemed to us to be an anomaly.

We have brought forward Amendment No. 60 in order to remedy that anomaly. It will provide that charges under estate management schemes should be payable only to the extent that they are reasonable and that the LVT has the power to determine the extent to which such charges are reasonable. They will also be able to determine whether a person subject to an estate management scheme is liable for such a charge.

Amendment No. 34 is intended to ensure that it continues to be possible to request consent for the making of an application for the approval of an estate management scheme in connection with acquisitions under Chapter 1 of Part 1 of the 1993 Act. It has come to our attention that once Clause 114 of the Bill comes into force, we would be removing an existing right to make an application for an estate management scheme under section 69 of the Leasehold Reform, Housing and Urban Development Act 1993. That is not our intention, and the amendment will preserve that existing right. I am grateful to the noble Baroness, Lady Gardner of Parkes.

Moved, That the House do agree with the Commons in their Amendment No. 34.—(Lord Falconer of Thoroton.)

Baroness Gardner of Parkes

My Lords, I thank the Minister for the amendment, which I think is a very good one to include in the Bill. It has been a very contentious issue, but he has been very supportive in helping to resolve it.

Rather than hopping up as we reach each group of amendments, I should like to ask the Minister a couple of questions on later amendments now. We have discussed whether the Government have accidentally created a situation whereby head lessees are able to benefit greatly from the Bill to the disadvantage of leaseholders. There was great discussion on the issue when it was raised by, I think, the noble Earl, Lord Caithness. I am not sure whether any of the amendments address that issue.

I also thank the Minister for Amendment No. 40, which is in the next group. It seems to be the amendment—if I have read it correctly—that will ensure that those who are in an estate management scheme are so informed prior to purchasing their freehold. However, I may have misunderstood him on that point and the issue may be addressed in another amendment. Nevertheless, I am most grateful that the estate management issues have been fully considered.

Lord Falconer of Thoroton

My Lords, I believe that the head lessee point is dealt with in Commons Amendment No. 44, to which I shall return. However, the summary which I have of Commons Amendment No. 40 states that it is, a consequential amendment which changes the time at which the right-to-enfranchise company must notify the landlord of any side deal with persons other than participating members". So Amendment No. 40 does not seem to address that specific issue.

On Question, Motion agreed to.

3.45 p.m.

COMMONS AMENDMENTS 35 Clause 119, page 60, line 21, after "notice" insert "to the company 36 Page 60, line 28, leave out from "if" to end of line 30 and insert "he has given a participation notice to the company within the period beginning with the date of the assignment and ending 28 days later (or, if earlier, on the execution of a relevant conveyance to the company). 37 Page 60, line 32, leave out from "if" to end of line 33 and insert "they have given a participation notice to the company at any time (before the execution of a relevant conveyance to the company). 38 Page 60, line 34, leave out second "a" and insert "the 39 Page 60, line 36, at end insert— (7A) For the purposes of this section a participation notice given to the company during the period—

1. (a) beginning with the date when the company gives a notice under section 13, and
2. (b) ending immediately before a binding contract is entered into in pursuance of the notice under section 13, is of no effect unless a copy of the participation notice has been given during that period to the person who (in accordance with section 9) is the reversioner in respect of the premises."

40 Clause 123, page 63, line 4, at end insert— (2)In section 18(1) of the 1993 Act (duty to disclose existence of agreements affecting premises etc.), for "valuation date for the purposes of Schedule C, substitute "time when a binding contract is entered into in pursuance of the initial notice". 41 Clause 125, page 63, line 14, leave out from first "of" to end of line 16 and insert "the lease held by any of those participating members exceeds eighty years, any increase in the value of the freehold or any intermediate leasehold interest in the specified premises which is attributable to his potential ability to have a new lease granted to him as mentioned in sub-paragraph (2)(a) is to be ignored. 42 Clause 128, page 63, line 31, leave out "1" and insert "2 43 Clause 129, page 64, line 14, leave out "one year" and insert "two years

Lord Falconer of Thoroton

My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 35 to 43. With the leave of the House, I shall also speak to Amendments Nos. 49 and 76.

Amendments Nos. 35 to 40 and Amendment No. 76 are all consequential to the change to the valuation date for flats, as provided for in Clause 123 of the Bill. As noble Lords may recall from previous debates, under existing law, the valuation date for flats is the date on which the terms of acquisition are agreed or determined. The Bill would provide that, instead, the valuation date should be the date on which the right-to-enfranchise company serves its initial notice on the landlord. We have subsequently realised that this could have some unintended consequences, and these amendments are designed to rectify them.

First, under the proposals currently in the Bill, it could be argued that where the price to be paid for the freehold includes marriage value, it should be calculated by reference to the number of participants at the time when the initial notice was served. That is plainly not what we had intended. Amendment No. 76 makes it clear that, although the property should be valued as at the date of the initial notice, the price to be paid will be based on the number of participants at the point when the landlord and the RTE company actually exchange contracts.

We of course also have to ensure that the landlord knows how many participants there are at that stage. When the initial notice is served, the landlord will be told how many leaseholders are participating at that point. Amendment No. 39 will ensure that the landlord is sent a copy of any participation notices given to the RTE company after that point. Amendments Nos. 35 to 38 are consequential. Amendments Nos. 36 and 37 specify the time by which assignees and personal representatives have to give notice to participate.

Secondly, existing law provides that the landlord must be notified of any agreements between the nominee purchaser and non-participating leaseholders which provide for the disposal of a relevant interest in relation to the enfranchisement. Amendment No. 40 would require the RTE company to notify the landlord of any such agreements entered into at any time before the exchange of contracts. I believe that that has nothing to do with estate management contracts.

On Amendment No. 41, as noble Lords will be aware, the Bill generally provides for rnarriage value to be disregarded in cases where the unexpired term of a lease exceeds 80 years. Our policy aim is to prevent potentially expensive debate over sums which would be, in any event, de minimis. However, in the case of collective enfranchisement, the Bill provides that marriage value should be disregarded only if the unexpired terms of all the leases of flats held by participating members of the RTE company exceed 80 years.

On reflection, we do not consider that this approach meets our policy objectives. We have derided, therefore, to provide that marriage value should be disregarded on any individual lease with more than 80 years left until its expiry. That is consistent with the approach taken for the individual rights of lease renewal and house enfranchisement, and would be a better way to meet our policy objective.

Amendment No. 42 corrects a purely technical error in the Bill, correcting an incorrect reference to Chapter 1 of the 1993 Act, which should instead refer to Chapter 2. Amendments Nos. 43 and 49 extend the period in which personal representatives could exercise their rights.

Moved, That the House do agree with the Commons in their Amendments Nos. 35 to 43.—(Lord Falconer of Thoroton.)

On Question, Motion agreed to.

COMMONS AMENDMENT 44 Clause 135, page 65, line 20, at end insert— (IZB) Where a flat forming part of a house is let to a person who is a qualifying tenant of the flat for the purposes of Chapter 1 or 2 of Part 1 of the Leasehold Reform, Housing and Urban Development Act 1993 (c. 28), a tenant of the house does not have any right under this Part of this Act unless, at the relevant time, he has been occupying the house, or any part of it, as his only or main residence (whether or not he has been using it for other purposes)—

1. (a) for the last two years; or
2. (b) for periods amounting to two years in the last ten years."

45 Clause 137, page 66, line 19, leave out "(IZA)" and insert "(IZB) 46 Page 66, line 21, leave out "(IZB)" and insert "(IZC) 47 Page 66, line 44, leave out "(IZC)" and insert "(IZD) 48 Page 66, line 47, leave out "(IZB)" and insert "(IZC)

Lord Falconer of Thoroton

My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 44 to 48.

Amendment No. 44 is intended to address concerns about the enfranchisement of head leases which were raised in this House when we previously discussed this issue. Noble Lords will no doubt recall that the noble Earl, Lord Caithness, tabled an amendment on Third Reading to try to address the issue of enfranchisement of head leases. At that time, my noble friend Lord McIntosh undertook to consider the matter further and to introduce an amendment if appropriate. I am pleased to say that this amendment will, we hope, deal with the noble Earl's concerns.

Where there is a head lease of a building which can be regarded as a house, and parts of the building have been sublet on long leases, changes to the Bill would enable a non-resident head lessee, with possibly only a nominal interest in the building, to enfranchise the whole building under the 1967 Act. Such a head lessee would stand to make a windfall profit at the expense of the landlord if under-lessees subsequently collectively enfranchised or acquired new leases under the 1993 Act.

The amendment provides that when part of a house is sublet to a person who is a qualifying tenant for the purposes of the 1993 Act, the house cannot be enfranchised under the 1967 Act unless the head lessee has occupied the house, or any part of it, for the past two years or for periods totalling two years in the past 10. That will prevent any opportunity for non-resident head lessees to enfranchise and make windfall gains from subsequent enfranchisement or lease renewal under the 1993 Act. It will retain the existing right for resident head lessees to enfranchise in these circumstances. Amendments Nos. 45 to 48 make consequential changes.

Moved, That the House do agree with the Commons in their Amendments Nos. 44 to 48.—(Lord Falconer of Thoroton.)

The Earl of Caithness

My Lords, I am grateful to the noble and learned Lord for the amendment. It is certainly an improvement. Probably the best way of dealing with the matter was to go back to the residency test. I can assure the Minister that a number of overseas companies were rubbing their hands with glee at the thought of getting hold of some useful profit, but they are no longer doing so.

Baroness Gardner of Parkes

My Lords, I wonder whether I was confused because of the use of the word "house". I had thought when the noble Earl, Lord Caithness, raised the matter previously that we were concerned not only with individual houses, but with properties in general. I am concerned that the provision might apply to the head lessee of a major block of flats. Will the Minister assure me that that could not happen and that the head lessee of a block of flats would not have an automatic right to a long lease, an extension or the right to enfranchise? Is there no risk whatever of that and is that why the clause is restricted to a house only?

Lord Falconer of Thoroton

My Lords, my recollection is that the problem was raised by the noble Earl, Lord Caithness, in the context of a house. I shall write to the noble Baroness about that, or perhaps I shall be able to answer her question during the debate. I cannot answer it immediately in the categorical terms that the noble Baroness seeks.

Baroness Gardner of Parkes

My Lords, I thank the Minister. If I am right and there is a risk of a similar situation arising in a block of flats, what will happen after we have debated the Bill today? Is it too late to do anything about that?

Lord Falconer of Thoroton

My Lords, in this Bill the answer is almost certainly yes, but I should prefer to answer the question posed by the noble Baroness before we get into that difficulty.On Question, Motion agreed to.

COMMONS AMENDMENT 49 Clause 139, page 67, line 33, leave out "one year" and insert "two years

Lord Falconer of Thoroton

My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 49.

Moved, That the House do agree with the Commons in their Amendment No. 49.—(Lord Falconer of Thoroton.)

On Question, Motion agreed to.

COMMONS AMENDMENT 50 After Clause 141, insert the following new clause—

"PREMISES INCLUDING RAILWAY TRACK In section 4 of the 1993 Act (premises in the case of which right does not apply) insert at the end— (5) This Chapter does not apply to premises falling within section 3(1) if the freehold of the premises includes track of an operational railway; and for the purposes of this subsection—

1. (a) "track" includes any land or other property comprising the permanent way of a railway (whether or not it is also used for other purposes) and includes any bridge, tunnel, culvert, retaining wall or other structure used for the support of, or otherwise in connection with, track,
701
2. (b) "operational" means not disused, and
3. (c) "railway" has the same meaning as in any provision of Part 1 of the Railways Act 1993 (c. 43) for the purposes of which that term is stated to have its wider meaning.""

Lord Falconer of Thoroton

My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 50.

Before discussing the amendment, I have news for the noble Baroness, Lady Gardner of Parkes, and it is probably better if I deal with it now. The note that I have states that a head lessee cannot enfranchise under the 1993 Act, so the problem does not arise in respect of flats. It only refers to houses. I hope that that gives the noble Baroness the assurance that she seeks.

Turning to Amendment No. 50, we should like to make a minor amendment to it, which appears on the revised Marshalled List as Amendment No. 50B. The noble Lord, Lord Goodhart, has tabled Amendment No. 50A, which proposes that we disagree with the Commons amendment, so I shall deal with that in my speech.

Amendment No. 50 is the result of representations made rather late in the day on behalf of Railtrack plc and London Underground Limited. They discovered a flaw in the existing provisions of the Leasehold Reform, Housing and Urban Development Act 1993. Under that Act it would be possible for leaseholders living in a block of flats which was built over a railway bridge or tunnel who wished to buy their freehold to acquire, under certain circumstances, the freehold of the actual track of the operational railway. Moreover, while landlords have the right to take out 999-year leases on the commercial parts of a building when leaseholders buy their freehold, there is reason to doubt whether the right of lease-back would apply to land over which a railway runs, given that such land does not form part of the block itself.

Clearly, we need to amend the existing legislation. I think that all present would agree with the basic premise. We do not want people to start running railways as part of what they can do under this Bill or the 1993 Act. However, I know that the noble Lord, Lord Goodhart, would have preferred us to find a more sophisticated solution to the problem than that provided by a simple exemption, which is what the Commons amendment proposes in effect.

When the shortcomings of the 1993 Act were first brought to our attention we considered whether we could adequately deal with them by amending the existing commercial lease-back provisions. However, that would have created its own problems. For example, railway bridges and rafts built over railway tracks have a limited life span and many of them will require replacement or refurbishment in the not too distant future. We understand that London Underground Limited and Railtrack are always careful to ensure that any leases that they grant on property built above bridges and rafts will expire before those bridges and rafts require replacement.

If leaseholders subsequently extend their leases, Section 61 of the 1993 Act provides a process that can be used to terminate the lease at the time when it would have originally expired if it is necessary for redevelopment purposes. That would not be possible where leaseholders had enfranchised. Moreover, enfranchisement would ordinarily transfer responsibility for the maintenance of such a bridge or raft to the leaseholders. I do not need to spell out our reasons for considering that that would be undesirable. We should also have to define precisely what the freeholder would and would not have the right to lease back, which would not he straightforward.

In view of those complications and in view of the relatively short time available to us to draft and table an amendment, we decided that it would be better to opt for a relatively straightforward exemption instead. As I said, however, it is not our intention to exempt property from the right to enfranchise merely because it happens to be built over a deep-bored tunnel.

The amendment limits the exemption to premises where the freehold of the premises includes track of an operational railway". The exemption does not apply merely because a block has been built over the railway. Where tunnels have been deep bored we would expect London Underground or any other railway infrastructure operator to have only acquired rights to the subsoil through which that tunnel ran. As a result we would expect those rights to be quite independent from ownership of the freehold of the surface of the land above the tunnel. Therefore, the freehold of a block of flats built over such a tunnel would not include the track of an operational railway.

This is quite different from the situation which typically arises when property has been built on top of a bridge or over a tunnel built on a cut and cover basis. Here the railway will typically own the freehold of the land and will have leased the premises built over the operational railway to a third party, or directly to the leaseholders concerned. Therefore, an enfranchising group would become the owner of that part of the operational railway that fell beneath the block of flats as a result of the group's purchase of the freehold, which would clearly be undesirable.

Amendment No. 50 is necessary to provide a solution to the deficiencies of the 1993 Act. It may be possible to devise a more sophisticated solution, given more time to do so, and I would not rule out the possibility of making a further amendment to the 1993 Act at a later date, although noble Lords will appreciate that I am not in a position to make any promises about that now. However, I am sure that your Lordships will agree that the defect in the 1993 Act merits immediate action. We cannot allow leaseholders to compulsorily purchase parts of an operational railway.

Amendment No. 50B is a technical amendment. Amendment No. 50, as printed, would insert the new clause after Clause 141 of the Bill. That is an error; the new clause should he inserted after Clause 113. Amendment No. 50B would correct that error. I commend it to the House.

4 p.m.

50A Lord Goodhart

rose to move, as an amendment to the Motion that the House do agree with the Commons in their amendment, leave out "agree" and insert "disagree".

The noble Lord said: My Lords, Amendment No. 50 was introduced into the House of Commons on Report and has nothing in common with any of the other Commons amendments. I read that Report stage in Hansard and it is plain that it did not receive proper scrutiny in that place. Most of the debate was taken up by a speech by the Conservative Shadow Attorney-General who spoke for some four-and-a-half columns of Hansard and whose speech, frankly, appears to have been as irrelevant as it was long-winded.

I wrote to the noble and learned Lord, Lord Falconer of Thoroton, before the Easter Recess. On 28th March I received a card saying that my letter was receiving attention. On 3rd April I received a further card saying that it was receiving attention and on 4th April I received three cards saying that it was receiving further attention. So it is quite clear that the noble and learned Lord's department has given my letter a good deal of attention.

There has been no opportunity for discussion of this amendment, but I was grateful for advance sight of the speaking notes prepared for the Minister. I see that serious problems arise. The first problem I raised was the fact that this amendment had been put in the wrong chapter of Part 2 of the Bill. That has now been dealt with and I am happy that Amendment No. 50B now appears in its right place.

However, I also had problems with the substance of the amendment, though what the noble and learned Lord said has given me some comfort in that regard. The effect of the amendment is to exclude what might be described as "railway property" from the right of collective enfranchisement. That does not simply apply to rights of collective enfranchisement which arise under this Bill. The effect of this amendment will be to remove existing rights of collective enfranchisement under the Leasehold Reform, Housing and Urban Development Act 1993, though as far as I am aware no attempt has been made up until now to exercise any of those rights. However, the fact that we are taking away existing rights means that this requires further scrutiny.

The amendment removes the right of collective enfranchisement where "the premises" includes the track of the railway. In general "premises" includes not only a building, but the land beneath the building if it is in the same freehold ownership of the building itself as would normally be the case. "Track", of course, in this case expressly includes tunnels.

I am concerned with the situation in London. As the noble and learned Lord said, there are two types of tunnel; one is cut and cover and the other deep bored. I happen to live near Baker Street station. I say immediately that I do not have any personal interest to declare on this matter; my flat is not enfranchisable anyway. But Baker Street station is provided with both kinds of tunnel and there are certainly two or three large blocks of flats which are above the station or the station approaches and which will therefore be affected by this amendment.

I can see the problems with the cut and cover lines, where the lessees will not want to be saddled with the ownership of the railway track and tunnel, and the track authority will of course need access for maintenance and reconstruction. But it is unfair that a group of leaseholders should be excluded from the right of collective enfranchisement unless it is absolutely necessary. Given time, it should not be impossible to come up with a solution which would give leaseholders the right to collective enfranchisement subject to some restrictions, and would give track authorities access to the track and tunnels which they need. No problems in fact seem to have arisen since 1993 and I cannot imagine that any leaseholder would want to enfranchise if they would be saddled with the track ownership, so Amendment No. 50 is unnecessary.

Deep bored tunnels are another matter. There is no interaction between the block and the surface and the tunnel beneath in general. In London there are many blocks which must have been erected above deep-bored tunnels where the leaseholders do not know, or normally care, whether or not they are above a tunnel except perhaps from hearing the occasional rumble coming from far down below.

As I say, "premises" would normally include the ground under the building if it is in the same ownership. But if the railway authority owns the freehold of the tunnel as distinct from the ownership of the land above and around the tunnel, then the tunnel is not part of the premises and there would be no problem with collective enfranchisement. I agree with the Minister that that is likely to be so in the case of many blocks. Indeed, I noted that under the Transport and Works (Model Clauses for Railways and Tramways) Order 1992, a railway authority in fact is only allowed to acquire the subsoil if the works are to be carried out at a depth of more than nine metres below the surface. But of course model clauses may not always apply; the rules may have been different in past times; and there may be problems in some cases.

Have the Government any idea how many blocks of flats are in fact affected by this amendment? How many are above cut and cover tunnels and how many above deep bored tunnels? Has any consultation been carried out with leaseholders in blocks that might be affected? It is unfortunate that this significant amendment was introduced at short notice without proper investigation of the facts or consultation with the people affected. I beg to move.

Moved, as an amendment to the Motion that the House do agree with the Commons in their amendment, leave out "agree" and insert "disagree".—(Lord Goodhart.)

The Earl of Caithness

My Lords, can the noble and learned Lord say whether there is any problem in regard to roads? If there is a cut and cover tunnel under a road—I was thinking of Hatfield where they have certainly built on cut and cover tunnels—will problems arise? My mind then turned to developments over canals which may be affected. Is this just the opening of a Pandora's Box which needs more attention, as the noble Lord, Lord Goodhart, said?

Lord Falconer of Thoroton

My Lords, first, dealing with the points raised by the noble Lord, Lord Good hart. We are grateful to him for his support for Amendment No. 50B. It was his letter that drew attention to the wrong placing in the Bill.

Subject to one matter, I do not believe that our legal or factual analysis differs. That one point of disagreement is that the noble Lord, Lord Goodhart, said that the problem that impliedly exists in the 1993 Act —that rightly identifies where the problem lies—has not yet caused any difficulty. Therefore he says that there is no need to make this amendment. The obverse of that is that by making this amendment we will avoid the right to enfranchised or managed companies getting control of the operational railway. The noble Lord acknowledges that that is the real problem. I t has not yet arisen as a difficulty and therefore making it clear that that will not be allowed to happen equally will not cause any difficulty.

We are both on slightly uncharted territory because any conclusion can be drawn, in the face of the fact that the problem has not yet caused any difficulty, as to what is the right course. I am sure everybody in the House will agree that we need to have a situation where leaseholders do not end up having control over the operational railway; any other course is not sensible. This is the most effective way of dealing with it.

The noble Lord, Lord, Lord Goodhart, did not put forward any other alternative way of dealing with the issue. We believe that we have taken the right course. As regards the questions from the noble Earl, having given the opportunity, we have received no representations from either road or canal bodies that a problem is caused to them whereas we have received representations, which we have considered, in relation to Railtrack and London Underground. We have investigated them. I cannot give answers to the questions about how many blocks of flats are on top of cut and cover tunnels and how many are on top of deep-bore tunnels. But as the noble Lord said, we can see that there are some above cut and cover tunnels, but I am unable to say what is the scale of the problem. We believe that we have taken the right and sensible course, but we shall obviously keep the matter under review.

Lord Goodhart

My Lords, I am grateful to the noble and learned Lord for what he said. I take some comfort from what was not an undertaking on his part, but he said that his department would consider whether it might look at this matter again with a view to introducing legislation next time we have another leasehold Bill to enable leaseholders in railway flats, if I may call them that, to have the right of enfranchisement or something equivalent to it. Having said that, this is obviously not a matter on which I would wish to divide the House. I beg leave to withdraw my amendment.

Amendment No. 50A, as an amendment to the Motion, by leave withdrawn.

50B Lord Falconer of Thoroton

rose to move, as an amendment to the Motion that the House do agree with the Commons in their amendment, at the end insert "and do propose the following consequential amendment to the Bill— Transpose new Clause (Premises including railway track) from after Clause 141 to after Clause 113. The noble and learned Lord said: My Lords, I spoke to this amendment earlier.

Moved, as an amendment to the Motion that the House do agree with the Commons in their amendment, at the end insert "and do propose the following consequential amendment to the Bill— Transpose new Clause (Premises including railway track) from after Clause 141 to after Clause 113.".—(Lord Falconer of Thornton.) On Question, Motion agreed to.

COMMONS AMENDMENTS 51 After Clause 147, insert the following new Clause— "Consultation about service charges For section 20 of the 1985 Act (limitation of service charges: estimates and consultation) substitute— "20 Limitation of service charges: consultation requirements (1) Where this section applies to any qualifying works or qualifying long term agreement, the relevant contributions of tenants are limited in accordance with subsection (6) or (7) (or both) unless the consultation requirements have been either—

1. (a) complied with in relation to the works or agreement, or
2. (b) dispensed with in relation to the works or agreement by (or on appeal from) a leasehold valuation tribunal.

(2) In this section "relevant contribution'", in relation to a tenant and any works or agreement, is the amount which he may be required under the terms of his lease to contribute (by the payment of service charges) to relevant costs incurred on carrying out the works or under the agreement. (3) This section applies to qualifying works if relevant costs incurred on carrying out the works exceed an appropriate amount. (4) The Secretary of State may by regulations provide that this section applies to a qualifying long term agreement-

1. (a) if relevant costs incurred under the agreement exceed an appropriate amount, or
2. (b) if relevant costs incurred under the agreement during a period prescribed by the regulations exceed an appropriate amount.

(5) An appropriate amount is an amount set by regulations made by the Secretary of State; and the regulations may make provision for either or both of the following to be an appropriate amount—

1. (a) an amount prescribed by, or determined in accordance with, the regulations, and
2. (b) an amount which results in the relevant contribution of any one or more tenants being an amount prescribed by, or determined in accordance with, the regulations.

(6) Where an appropriate amount is set by virtue of paragraph (a) of subsection (5), the amount of the relevant costs incurred on carrying out the works or under the agreement which may be taken into account in determining the relevant contributions of tenants is limited to the appropriate amount. (7) Where an appropriate amount is set by virtue of paragraph (b) of that subsection, the amount of the relevant contribution of the tenant, or each of the tenants, whose relevant contribution would otherwise exceed the amount prescribed by, or determined in accordance with, the regulations is limited to the amount so prescribed or determined. 20ZA Consultation requirements: supplementary (1) Where an application is made to a leasehold valuation tribunal for a determination to dispense with all or any of the consultation requirements in relation to any qualifying works or qualifying long term agreement, the tribunal may make the determination if satisfied that it is reasonable to dispense with the requirements. (2) In section 20 and this section— qualifying works" means works on a building or any other premises, and qualifying long term agreement" means (subject to subsection (3)) an agreement entered into, by or on behalf of the landlord or a superior landlord, for a term of more than twelve months. (3) The Secretary of State may by regulations provide that an agreement is not a qualifying long term agreement—

1. (a) if it is an agreement of a description prescribed by the regulations, or
2. (b) in any circumstances so prescribed.

(4) In section 20 and this section the consultation requirements" means requirements prescribed by regulations made by the Secretary of State. (5) Regulations under subsection (4) may in particular include provision requiring the landlord—

1. (a) to provide details of proposed works or agreements to tenants or the recognised tenants' association representing them,
2. (b) to obtain estimates for proposed works or agreements,
3. (c) to invite tenants or the recognised tenants' association to propose the names of persons from whom the landlord should try to obtain other estimates,
4. (d) to have regard to observations made by tenants or the recognised tenants' association in relation to proposed works or agreements and, estimates, and
5. (e) to give reasons in prescribed circumstances for carrying out works or entering into agreements.

(6) Regulations under section 20 or this section—

1. (a) may make provision generally or only in relation to specific cases, and
2. (b) may make different provision for different purposes.

(7) Regulations under section 20 or this section shall be made by statutory instrument which shall be subject to annulment in pursuance of a resolution of either House of Parliament. 52 Clause 148, leave out Clause 148.

Lord Falconer of Thoroton

My Lords, with the leave of the House, I beg to move that the House do agree with the Commons in their Amendments Nos. 51 and 52.

The new clause created by Amendment No. 51 replaces, with modifications, the existing Clause 148 of the Bill which inserts a new Section 20 into the Landlord and Tenant Act 1985. Although the revised clause looks complex, the changes made to the existing clause are relatively straightforward.

As regards long-term contracts, the existing clause introduces a new requirement of landlords to consult leaseholders before entering into any contract for the provision of works or services lasting for more than 12 months. Consultation would be required before entering into such a long-term contract regardless of its value. Furthermore, where the consultation requirements are not complied with, the landlord would be prevented from recovering any costs under that contract from the leaseholders.

Respondents to the discussion paper were firmly of the view that we should set a de minimis limit for long-term contracts so that long-term contracts for less than that limit would not have to comply with the consultation requirements. We accept that such a change is necessary to ensure that landlords do not need to consult leaseholders over long-term contracts that would have minimal cost to the leaseholder.

For example, some local authorities apportion running costs of their housing departments to leaseholders. Private sector landlords may also apportion administration costs in this way. This could mean that a landlord would have to consult leaseholders before entering into a long-term contract for the provision of stationery. The cost to the individual leaseholder would be very little and leaseholders would be very unlikely to be interested in such contracts.

The new clause therefore provides that consultation on long-term contracts will be necessary only if the cost to the leaseholder is above a prescribed amount. It follows the precedent set by the existing consultation requirements for specific works. We will of course consult on what the prescribed amount should be. Subsections (4) and (5) of the revised Section 20 are intended to provide the maximum flexibility in determining the prescribed amount.

We envisage occasions where a landlord does not consult because the estimated costs are less than the prescribed amount. However, if the cost subsequently increases above the prescribed amount, we believe it is unfair to put the whole amount of the cost incurred at risk. Therefore, the revised Section 20 provides that only the excess above the prescribed amount would be irrecoverable. Again, this is in line with the existing approach for consulting on specific work. Where the prescribed amount is based on the cost to individual service charge payers, only monies due from individuals in excess of the prescribed amount would be irrecoverable.

The existing requirement to consult leaseholders on specific works costing more than a prescribed amount would be retained. This would apply in addition to any requirement to consult under a long-term contract. As with consultation on long-term contracts, subsections (3) and (5) of the new Section 20 will provide flexibility over the way in which the amount is determined.

Existing Clause 148 provides that a leasehold valuation tribunal may, in a particular case, grant dispensation from all or any of the consultation requirements. This is intended to ensure that landlords are not penalised for technical infringements which do not disadvantage leaseholders or it is not practical in the circumstances to consult fully or at all; for example, where work needs to be carried out in an emergency. As drafted, it is arguable that Clause 148 allows such dispensation to be sought only after the event.

Concern has been expressed that where full compliance with the consultation requirement is not practical, the landlord may be placed in a difficult position; for example, for some specialised services there may be only one supplier. The consultation requirements will require that at least two estimates be obtained. If the contract is entered into or the works are carried out without full compliance with the consultation requirements, there is a risk of not being able to recover the costs if the LVT should refuse to grant a dispensation. This new clause therefore makes it clear that a landlord may apply to an LVT for a dispensation of the requirement to consult before the works are carried out.

Amendment No. 52 is consequential and deletes the existing Clause 148.

Moved, That the House do agree with the Commons in their Amendments Nos. 51 and 52. —(Lord Falconer of Thoroton.)

On Question, Motion agreed to.

4.15 p.m.

COMMONS AMENDMENT 53 Clause 149, page 72, line 44, at end insert— required to be supplied under this section.

Lord Falconer of Thoroton

My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 53. I shall speak also to Amendments Nos. 72 and 84. This is a small group of technical amendments. Amendment No. 53 is a minor consequential amendment made in the light of the new clause to be created by Amendment No. 54. Amendment No. 72 removes from the Bill subsection (2) of Clause 174. Amendment No. 84 corrects an error in the drafting of Schedule 14.

Moved, That the House do agree with the Commons in their Amendment No. 53.—(Lord Falconer of Thoroton.)

On Question, Motion agreed to.

COMMONS AMENDMENT 54 After Clause 149, insert the following new Clause— "Notice to accompany demands for service charges After section 21A of the 1985 Act (inserted by section 149) insert— "21B Notice to accompany demands for service charges (1) A demand for the payment of a service charge must be accompanied by a summary of the rights and obligations of tenants of dwellings in relation to service charges. (2) The Secretary of State may make regulations prescribing requirements as to the form and content of such summaries of rights and obligations. (3) A tenant may withhold payment of a service charge which has been demanded from him if subsection (1) is not complied with in relation to the demand. (4) Where a tenant withholds a service charge under this section, any provisions of the lease relating to non-payment or late payment of service charges do not have effect in relation to the period for which he so withholds it. (5) Regulations under subsection (2) may make different provision for different purposes. (6) Regulations under subsection (2) shall be made by statutory instrument which shall be subject to annulment in pursuance cf a resolution of either House of Parliament."

Lord Falconer of Thoroton

My Lords, I beg to move that this House do agree with the Commons in their Amendment No. 54. I should like to speak also to Amendments Nos. 63, 64, 66, 68 and 78. The amendments all relate to forfeiture and are perhaps of more interest than previous amendments about forfeiture.

The Government fully accept the widespread concerns about the forfeiture system. Forfeiture is a draconian penalty and many people feel that it is unfair that a leaseholder can lose their home, possibly for the non-payment of a relatively modest debt, while the landlord obtains a large windfall profit. It has to be stressed, however, that the courts do lean towards relief from forfeiture although we accept that this requires an application for such relief to be made.

Following the Government's consultation paper on residential leasehold reform in 1998, we announced in December 1999 in a document entitled Leasehold Reform, the Way Forward that we intended to replace forfeiture with a fairer regime. In particular, we proposed that where the landlord obtained possession, the leaseholder should be compensated for the loss of the leasehold interest after deducting moneys owed to the landlord. This remains our long-term aim.

Although the concept may seem a relatively simple one, legally and practically the matter is very complex. When we were drawing up our draft of this Bill we considered the issue very carefully, but reluctantly came to the conclusion that we could not resolve all the complexities without delaying the introduction of the Bill.

Instead, we decided to focus our attention on the main abuses associated with forfeiture. These include the use of forfeiture as a threat to extract payment, and also for leaseholders to challenge unreasonable charges or breaches of convenants that are unfounded. As noble Lords will know, there are a number of provisions already in the Bill which address these abuses.

In the other place the Government undertook to consider carefully the strength of feeling on this important issue and the desire for further measures in this Bill to deliver protection for leaseholders. That is why we have come forward with further safeguard; for leaseholders.

I want to explain the additional safeguards. Amendment No. 63 is intended to prevent the use of forfeiture for small amounts. Forfeiture proceedings would be prohibited unless the amount outstanding exceeded a prescribed sum or the amount, or any part of it, had been outstanding for more than a prescribed period. On the face of the Bill the prescribed sum is set at £500. The level at which it was introduced would be set by regulation, and we would consult on that, although our current thinking is that it should be introduced at a level of £350 in the first instance. We would expect to set the prescribed period at three years. That would make forfeiture unavailable for small amounts of less than £350, unless they have been outstanding more than three years.

Regulations made under the power would be subject to the affirmative procedure by virtue of Amendment No. 68. Administration charges and penalties for non-payment of an outstanding amount will not be taken into account in determining whether the prescribed sum has been exceeded. That would prevent landlords trying to evade the provision by adding further charges to push the total above the prescribed sum.

Amendment No. 64 is intended to protect vulnerable leaseholders, such as the mentally ill, who are unable to respond to the various warning notices required under existing legislation or other provisions of the Bill. We propose to require landlords to take reasonable additional or alternative steps when there is no response to demands or notices. We will consult on what steps would be appropriate, practicable and reasonable. That may include a duty to investigate the leaseholder's circumstances.

I should point out that the power would not apply in relation to properties subject to a mortgage. This is because mortgagees are normally informed of forfeiture proceedings, and have a right to seek relief— invariably they do so—to protect their security. So it is the leaseholders who do not have mortgages—for example, the elderly whose mortgages have been paid off—who would be protected by this measure. Regulations made under this power would also be subject to the affirmative procedure.

Amendment No. 54 is intended to ensure that leaseholders are aware of their rights and obligations by providing a power to require certain information to be provided with service charge demands. And it should also help to prevent forfeiture being used as a threat by unscrupulous landlords. The form and content of these notices would be prescribed. It would set out leaseholders' rights to challenge service charges which they consider to be unreasonable and the restrictions on forfeiture. But it would also point out the possible serious consequences of non-payment of service charges, the dangers of ignoring demands and suggest that leaseholders take advice.

Amendment No. 78 provides a similar power in relation to demands for administration charges.

Amendment No. 66 provides that the new clauses introduced by Amendments Nos. 63 and 64 would be binding on the Crown (the other changes already apply to the Crown by virtue of Clause 163). We believe that it will be important to improve awareness among leaseholders and landlords of their rights and obligations in this somewhat complex area. It is therefore also our intention to produce a guide that will summarise, in plain English, all the relevant provisions concerning forfeiture proceedings.

To conclude, those additional measures, together with the provisions that are already in the Bill, should go a long way towards preventing abuses associated with the existing forfeiture procedures.

Moved, That the House do agree with the Commons in their Amendment No. 54.—(Lord Falconer of Thoroton.)

Lord Goodhart

My Lords, the right of forfeiture is an archaic right. It is a draconian penalty for breach of what is, in effect, a contractual term. It requires a person against whom forfeiture is sought to seek relief from the courts. In those cases where, because relief is not sought or for any other reason, forfeiture takes effect, it can operate unfairly and can deprive the leaseholder whose interest is forfeited of an asset of considerable value that may well exceed substantially any amount that is due.

In those circumstances, I am glad that the Minister has accepted that there is wide pressure for the replacement of forfeiture altogether by a system that is less unfair and more suited to modern times. I regret that the Government did not introduce a proper replacement for the existing forfeiture system in this Bill. We welcome the amendments that have been made. They are moves in the right direction, but they do not go far enough.

The consideration of Commons amendments is not the right time to replace a forfeiture system by a new, modernised and fairer system. For that reason I have not sought to table any amendment to this group of government amendments. Nevertheless, I hope that the Government will persevere and will return as soon as possible with new legislation that will remove the remedy of forfeiture from the hands of landlords, thus preventing the abuse to which the power of forfeiture has, not infrequently, led, and that they will replace forfeiture with a more appropriate remedy.

As this is not the time or place to introduce a wholly new system, I do not oppose the amendment, but I hope that the Government will take notice and will proceed as rapidly as possible with new legislation.

Lord Jacobs

My Lords, I support my noble friend. I cannot recall there being a significant debate in the House on this subject. I recall that an amendment was tabled, but I am sure that it was not moved, to abolish forfeiture. Having read Commons Hansard thoroughly, I have seen that there was a vigorous debate in the other place on 24th January. The more one reads about it and the more one listens to the Minister today, the more one realises that we are quietly putting up with a serious injustice.

If, for example, cars were to be subject to government forfeiture in the event of non-payment of road tax, one would expect the Government to take one's car, to sell it and subsequently to recover the road tax and associated costs and return the rest of the money, which would clearly be your due. Unfortunately, as we know, that does not happen with properties. In regard to one's home, if granted by the court, not only can the landlord recoup the amount of money and associated expenses that he is due, but he can also retain the rest of the money from your home. That is obviously unfair.

The Government may have responded—they did not—by saying that in 1985 the Law Commission started to consider the matter but has not yet arrived at any definite conclusions. We could wait another year or two and the Law Commission may come up with some findings. Meanwhile, what do we do about this problem?

Earlier my noble friend raised a more complex issue about housing situated over railways. Clearly that is a technical issue to which it would be difficult to find any easy alleviation. The Government have made an attempt that, in some way, deals with it.

What can we do about this issue? I regret that we did not table an amendment, although I am not sure that it would have helped at this stage. There is one simple way in which we could alleviate the situation immediately: instead of having a footling—if one may use that word—sum as a level above which a landlord can seek forfeiture, one could have made the sum a significant one. Instead of £500, the amount could have been £5,000 or even £50,000. If that were the case, we know that for the time being at least the number of possible cases where forfeiture will be threatened—that is the important point—or sought from the courts, would be few and unlikely to trouble many people.

In this House we have failed—I accept full responsibility on my own behalf—to recognise the situation and to do something about it. It may not be possible to deal with the matter in this Bill, but I would like the Government to consider some temporary protection. I do not believe that raising the level above £500 is significant protection. I hope that the Government will consider a larger sum. If such a provision cannot be brought in at this stage, perhaps something can be done at a later date. Unfortunately I, and no doubt two million other leaseholders, recognise that there will be another commonhold and freehold Bill. It is to be hoped that that Bill will change the position on tenure, deal with forfeiture once and for all, and perhaps bring an end to the system of tenure of leasehold which, as has been said, is unsuited to the 20th century let alone the 21st century. I am sure the Government will recognise those words.

4.30 p.m.

Lord Falconer of Thoroton

My Lords, I fully recognise those words. I accept that forfeiture is a draconian penalty. Many feel that it is unfair. I take the noble Lord's point that when one forfeits the lease one does not get back the value of the lease after repayment of the outstanding debt. The issue needs to be considered. It was looked at very carefully before the Bill was proposed. It is more complex to remove the right than was thought. The choice was whether to delay the Bill to deal with those points or to bring it forward as drafted. The latter choice was made. I note the point about increasing the figure in order to make it meaningful. However, the choice was made: rather than seeking to get rid of forfeiture in an indirect way, the provision ensures that the power is not used to deal with small sums.

I note what all noble Lords said. As the noble Lord, Lord Jacobs, said, it found an echo in another place when the matter was properly debated. I hope that in time a new Bill will deal with the problem head on.

Lord Jacobs

My Lords, before the noble and learned Lord sits down, perhaps I may say that if it is impossible to put an injustice right, totally and absolutely, one could at least go some way to alleviate the injustice. There is not a Member of your Lordships' House who does not believe that there is an injustice. Could not some more effective temporary remedy be given? It may be inadequate, but less justice is better than no justice.

Lord Falconer of Thoroton

My Lords, the amendments introduced in the Commons seek to do that. I realise that some may not believe that they are adequate but they are steps in the direction the noble Lord seeks.

On Question, Motion agreed to.

COMMONS AMENDMENTS 55 Clause 151, page 75, line 30, leave out from beginning to second "an 56 Page 75, line 32, leave out "or not any amount is so" and insert "a service charge is 57 Page 75, line 38, at end insert— (1A) Subsection (1) applies whether or not any payment has been made. 58 Page 76, line 13, leave out from "having" to end of line 14 and insert "Made any payment. 59 Clause 152, page 77, line 38, at end insert— (9A) Nothing in this section applies to the payee if the circumstances are such as are specified in regulations made by the Secretary of State.

Lord Falconer of Thoroton

My Lords, with the leave of the House, I beg to move that the House do agree with the Commons in their Amendments Nos. 55 to 59 en bloc. I wish also to speak to Amendments Nos. 77 and 79 to 82.

Amendments Nos. 55 to 58 and 79 to 82 are being made as a consequence of a recent Court of Appeal decision, Daejan Properties Limited v London Leasehold Valuation Tribunal, in which the court ruled that leasehold valuation tribunals have the jurisdiction only to decide the reasonableness of disputed service charges that are still unpaid except under certain very limited circumstances.

We consider this decision to be most unfortunate both from the viewpoint of leaseholders and landlords. As leaseholders become aware of its effect they may be inclined to withhold service charges until they are certain that those charges are reasonable because it may otherwise prove very difficult for them to launch any challenge.

In the light of that development, we decided to amend the Bill to make it as clear as possible that the power of leasehold valuation tribunals to determine reasonableness and liability to pay service charges includes service charges that have already been paid. Amendments Nos. 55 to 58 are the result. Moreover, exactly the same considerations also apply to administration charges and, therefore, we need to make equivalent changes to Schedule 11 to the Bill. Amendments Nos. 79 to 82 would do so.

Amendment No. 59 would create a new power to exempt managers by regulation from the requirement to use separate accounts for separate groups of service charge payers. Clause 152 of the Bill introduces a new requirement for managers to use separate accounts. We have received representations from managers who claim that this would be unduly expensive. We remain sceptical about such claims. Managers who already operate separate accounts say that the additional costs of doing so are relatively small, and certain banks have already designed packages to minimise the inconvenience involved and to avoid the necessity of, for example, keeping separate cheque books for separate accounts.

None the less, we are anxious to ensure that the costs of operating separate accounts do not outweigh the benefits. These costs will, after all, inevitably be passed on to leaseholders in the form of higher service charges. We have decided, therefore, that it would be sensible to include a power in the Bill to exempt managers from the requirement to use separate bank accounts under certain circumstances. This would allow us to respond to any changes in the services provided by financial institutions, or in their charges, which might increase the costs of maintaining separate accounts to the point where it becomes unduly expensive.

Amendment No. 77 makes a change to the way in which the Bill is drafted. Schedule 11 currently contains a definition of a fixed administration charge. However, the only place where the term "fixed administration charge" is used in the Bill is in the definition of a "variable administration charge". Therefore, this amendment would replace these definitions with a new definition of a variable service charge, thus simplifying the provision.

Moved, That the House do agree with the Commons in their Amendments No. 55 to 59.—(Lord Falconer of Thoroton.)

Baroness Gardner of Parkes

My Lords, I am delighted with Amendments Nos. 57 and 58—and, to a lesser extent, Amendment No. 59. They are practical. The points made about expense could be relevant. No doubt the regulations would cover checking fully on the reliability of anyone who was so designated. Amendments Nos. 57 and 58 are good progress.

On Question, Motion agreed to.

COMMONS AMENDMENT 60 After Clause 154, insert the following new clause— Charges under estate management schemes (1) This section applies where a scheme under—

1. (a) section 19 of the 1967 Act (estate management schemes in connection with enfranchisement under that Act),
2. (b) Chapter 4 of Part 1 of the 1993 Act (estate management schemes in connection with enfranchisement under the 1967 Act or Chapter 1 of Part 1 of the 1993 Act), or
716
3. (c) section 94(6) of the 1993 Act (corresponding schemes in relation to areas occupied under leases from Crown), includes provision imposing on persons occupying or interested in property an obligation to make payments ("estate charges").

(2) A variable estate charge is payable only to the extent that the amount of the charge is reasonable; and "variable estate charge" means an estate charge which is neither—

1. (a) specified in the scheme, nor
2. (b) calculated in accordance with a formula specified in the scheme.

(3) Any person on whom an obligation to pay an estate charge is imposed by the scheme may apply to a leasehold valuation tribunal for an order varying the scheme in such manner as is specified in the application on the grounds that—

1. (a) any estate charge specified in the scheme is unreasonable, or
2. (b) any formula specified in the scheme in accordance with which any estate charge is calculated is unreasonable.

(4) If the grounds on which the application was made are established to the satisfaction of the tribunal, it may make an order varying the scheme in such manner as is specified in the order. (5) The variation specified in the order may be—

1. (a) the variation specified in the application, or
2. (b) such other variation as the tribunal thinks fit.

(6) An application may be made to a leasehold valuation tribunal for a determination whether an estate charge is payable by a person and, if it is, as to—

1. (a) the person by whom it is payable,
2. (b) the person to whom it is payable,
3. (c) the amount which is payable,
4. (d) the date at or by which it is payable, and
5. (e) the manner in which it is payable.

(7) Subsection (6) applies whether or not any payment has been made. (8) The jurisdiction conferred on a leasehold valuation tribunal in respect of any matter by virtue of subsection (6) is in addition to any jurisdiction of a court in respect of the matter. (9) No application under subsection (6) may be made in respect of a matter which—

1. (a) has been agreed or admitted by the person concerned,
2. (b) has been, or is to be, referred to arbitration pursuant to a post-dispute arbitration agreement to which that person is a party,
3. (c) has been the subject of determination by a court, or
4. (d) has been the subject of determination by an arbitral tribunal pursuant to a post-dispute arbitration agreement.

(10) But the person is not to be taken to have agreed or admitted any matter by reason only of having made any payment. (11) An agreement (other than a post-dispute arbitration agreement) is void in so far as it purports to provide for a determination—

1. (a) in a particular manner, or
2. (b) on particular evidence, of any question which may be the subject matter of an application under subsection (6).

(12) In this section— post-dispute arbitration agreement", in relation to any matter, means an arbitration agreement made after a dispute about the matter has arisen, and "arbitration agreement" and "arbitral tribunal" have the same meanings as in Part 1 of the Arbitration Act 1996 (c. 23).

Lord Falconer of Thoroton

My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 60.

Moved, That the House do agree with the Commons in their Amendment No. 60.—(Lord Falconer of Thoroton.)

On Question, Motion agreed to.

COMMONS AMENDMENT 61 After Clause 158, insert the following new clause— "INSURANCE OTHERWISE THAN WITH LANDLORD'S INSURER (1) This section applies where a long lease of a house requires the tenant to insure the house with an insurer nominated or approved by the landlord ("the landlord's insurer"). (2) The tenant is not required to effect the insurance with the landlord's insurer if—

1. (a) the house is insured under a policy of insurance issued by an authorised insurer,
2. (b) the policy covers the interests of both the landlord and the tenant,
3. (c) the policy covers all the risks which the lease requires be covered by insurance provided by the landlord's insurer,
4. (d) the amount of the cover is not less than that which the lease requires to be provided by such insurance, and

15 (e) the tenant satisfies subsection (3). (3) To satisfy this subsection the tenant—

1. (a) must have given a notice of cover to the landlord before the end of the period of fourteen days beginning with the relevant date, and
2. (b) if (after that date) he has been requested to do so by a new landlord, must have given a notice of cover to him within the period of fourteen days beginning with the day on which the request was given.

(4) For the purposes of subsection (3)—

1. (a) if the policy has not been renewed the relevant date is the day on which it took effect and if it has been renewed it is the day from which it was last renewed, and
2. (b) a person is a new landlord on any day if he acquired the interest of the previous landlord under the lease on a disposal made by him during the period of one month ending with that day.

(5) A notice of cover is a notice specifying—

1. (a) the name of the insurer,
2. (b) the risks covered by the policy,
3. (c) the amount and period of the cover, and
4. (d) such further information as may be prescribed.

(6) A notice of cover—

1. (a) must be in the prescribed form, and
2. (b) may be sent by post.

(7) If a notice of cover is sent by post, it may be addressed to the landlord at the address specified in subsection (8). (8) That address is—

1. (a) the address last furnished to the tenant as the landlord's address for service in accordance with section 48 of the 1987 Act (notification of address for service of notices on landlord), or
2. (b) if no such address has been so furnished, the address last furnished to the tenant as the landlord's address in accordance with section 47 of the 1987 Act (landlord's name and address to be contained in demands for rent).

51 (9) But the tenant may not give a notice of cover to the landlord at the address specified in subsection (8) if he has been notified by the landlord of a different address in England and Wales at which he wishes to be given any such notice. (10) In this section— authorised insurer", in relation to a policy of insurance, means a person who may carry on in the United Kingdom the business of effecting or carrying out contracts of insurance of the sort provided under the policy without contravening the prohibition imposed by section 19 of the Financial Services and Markets Act 2000 (c. 8), house" has the same meaning as for the purposes of Part I of the 1967 Act, landlord" and "tenant" have the same meanings as in Chapter 1 of this Part, long lease" has the meaning given by sections 74 and 75 of this Act, and prescribed" means prescribed by regulations made by the appropriate national authority.

Lord Falconer of Thoroton

My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 61. I wish to speak also to Amendment No. 65

Amendment No. 61 is intended to deal with the problem of provisions in leases of houses which require the leaseholder to insure the property with an insurer nominated by the landlord. This problem was raised by many Members in the other place. The noble Baroness, Lady Hanham, tabled an amendment during the first Committee stage on 22nd March 2001 on nominated insurers, an amendment which was supported by the noble Lord, Lord Goodhart, and others. My noble friend Lord Whitty undertook to consider the matter further. I am pleased to inform the House that we have been able to deal with this problem.

We believe that it is wrong for landlords to exploit a monopoly over the provision of insurance in order to gain higher commission. At the same time we recognise that landlords have a legitimate interest in ensuring that leasehold property is insured. The new clause will allow leaseholders the opportunity to shop around for the best deal while providing protection for the landlord's interest.

It provides that any clause in a lease requiring the leaseholder to insure with an insurer nominated by the landlord will be deemed to be satisfied if certain conditions are met. In short, these conditions are that the leaseholder must insure the property with an insurer authorised to carry on business in the UK. The policy must note the interests of both the landlord and the leaseholder. It must cover the risks that are required to be covered in the lease and the amount of cover must not be less than that required by the lease. The leaseholder must provide the landlord with evidence of cover or renewal within 14 days of insurance being taken out or renewed. This should provide an effective remedy to the widespread abuses Amendment No. 62 is a technical amendment intended to strengthen these provisions.

Amendment No. 65 will ensure that the new clause created by Amendment No. 61 on nominated insurers applies to Crown land.

Moved, That the House do agree with the Commons in their Amendment No. 61.—(Lord Falconer of Thoroton.)

AS AN AMENDMENT TO COMMONS AMENDMENT NO. 61 61A Line 16, at end of inserted subsection (2)(e) insert "or (9A)".

Lord Kingsland

My Lords, I beg to move Amendment No. 61A, as an amendment to Commons Amendment No. 61, and speak also to Amendment No. 61B. As the noble and learned Lord, Lord Falconer, indicated, on 22nd March 2001 my noble friend Lady Hanham introduced an amendment giving the freedom to long lessees of dwellinghouses to insure with a company of their choice. It was withdrawn despite attracting much cross-party support. In Committee in another place, the Government introduced a like amendment for which we are grateful.

However, both our amendment and the Government's failed to deal with the situation, to which their attention was drawn in another place, in which a lessor covenants to insure a dwellinghouse and then recovers the cost from the lessee through additional ground rent or other means—in effect obliging the lessee to insure with the lessor's nominated company.

In another place, the Minister was unprepared to accept that addition because where houses are on an estate with communal parts there may be advantages in having a single insurance policy. That may be so, or not so. Where it is so there is nothing to prevent lessees clubbing together to that effect. But there is no logical reason why such an arrangement should always be desirable. In circumstances where it is not, house owners should be free to make their own insurance arrangements. I beg to move.

Moved, That Amendment No. 61A, as an amendment to Commons Amendment No. 61, be agreed to.—(Lord Kingsland.)

Lord Goodhart

My Lords, I support the amendment. It raises an almost identical problem to that where the lessee is required to insure with a nominated or approved insurer. I express my gratitude to a Birmingham solicitor, Mr David Henson, who has been highly active in raising the issue, as the noble and learned Lord will know. It is not uncommon practice to find leases in that form.

The problem is that a landlord who requires a lessee to insure with a particular insurer effectively deprives the lessee of the opportunity to look for a cheaper insurance policy. He is also in a position to derive a substantial benefit from commission from the insurer. The same situation arises where the landlord insures but is entitled to recover the cost from the lessee.

It is highly desirable that the lessee should insure under the lease and that lessees wanting to take over responsibility for insurance from the landlord should be entitled on giving notice to do so. It is obviously not appropriate for blocks of flats where the landlord has a substantial interest in insuring the structure, particularly as in many cases it is his responsibility to maintain that structure.

I hope that the Government will look at the issue and deal with it to enable lessees who have to reimburse their landlords for insurance to obtain the same benefits available to lessees under obligation to insure the house themselves.

4.45 p.m.

Lord Falconer of Thoroton

My Lords, that is an important point. It deals with where the lease requires the landlord to insure a house and recover the costs through service charges. The amendments attempt to provide the transfer of responsibility for insurance to the leaseholder. What underlies the argument is that this could be a way of getting around the matter dealt with in the previous amendments.

I have sympathy for the motive behind the amendments, but it would not be right to make such changes without properly consulting those who may be affected. In any event, there are problems with the amendment, which the noble Lord, Lord Goodhart, touched on. It is our understanding that most house leases place the duty to insure on the leaseholders. While there are exceptions, there are usually good reasons for them. For example, where houses on an estate are interdependent structures with communal parts there may be advantages—as the noble Lord, Lord Goodhart, acknowledged and as in the case of blocks of flats—in having a single policy covering the whole complex. Failure to insure properly by one lessee may have knock-on effects for other parts of the estate.

In such cases, we would not want arrangements whereby a landlord or residents' management company insured the whole complex to be disrupted. The noble Lord, Lord Kingsland, referred to tenants clubbing together on a voluntary basis. That is fine so long as everyone agrees. But what if one person does not?

On a more practical level, the application of the amendment to such a situation is unlikely to work or achieve the desired result as the lessee could not simply replace the lessor in an insurer covenant which covered the whole estate. The amendments effectively seek to insert the word "lessee" for the word "lessor". That will not work where the obligation covers the whole estate. That illustrates another difficulty with the amendments. We cannot anticipate the type of insurer covenants in a lease, and the simple replacement of "lessor" for "lessee" while retaining the terms of the covenant may not be practical or effective in every case.

Lord Goodhart

My Lords, I am grateful to the noble and learned Lord. Surely such a situation arises anyway when there is an enfranchisement of a house under the Leasehold Reform Act 1967? In such a case the lessee acquires the freehold. Unless there is an estate management scheme under which the insurance remains the responsibility of the landlord, surely the former lessee, now the freeholder, will be in a position to decide with whom he will insure and what insurance is needed?

Lord Falconer of Thoroton

My Lords, there is an existing remedy. It is open to the lessee to apply for a variation of a lease. The existing lessee can apply to vary the lease and replace "lessor" with the word "lessee" in the hypothesis advanced by noble Lords supporting the application. The Bill will simplify and extend the arrangements for such variations. The proposal may cause difficulties and may not be in the interests of the lessee.

More fundamentally, as I said, we do not feel that it would be right to transfer responsibilities under a lease from one party to another without properly consulting those who would be affected and, at this stage in the proceedings, we would not want to delay the passage of this important Bill while we undertook such consultation.

Where a lease provides for the landlord to insure, leaseholders can challenge the reasonableness of the insurance premium at a leasehold valuation tribunal under the provisions of the Landlord and Tenant Act 1985 relating to service charges. Leaseholders' rights in relation to service charges have been strengthened by other parts of the Bill and it is our intention to reduce the minimum fee for LVT applications to make it more cost-effective to challenge small amounts.

There appears to be a difficulty that the amendment may, in part, solve; but it may also cause other problems. However, just as there are other matters left over from the Bill, this is another issue that we should take note of and consider carefully because it is a legitimate point. In those circumstances, I invite the noble Lord to withdraw his amendment.

Lord Kingsland

My Lords, I shall certainly not press the amendment. I am grateful to the Minister for his ingenious response to my remarks. I accept that the amendment could be improved. I also accept that there are certain circumstances in which the problem may be overcome by different routes; for example, by applications for variation.

Nevertheless, there remains a real possibility that the current situation could lead to unfairness. I hope that the Minister and his team will keep the matter under close supervision in the years that intervene between this Bill being enacted and the next amending legislation—which may not be so very far away. I beg leave to withdraw my amendment.

Amendment No. 61A, as an amendment to Commons Amendment No. 61, by leave, withdrawn.

[Amendment No. 61B, as an amendment to Commons Amendment No. 61, not moved.]

On Question, Motion agreed to.

COMMONS AMENDMENTS 62 After Clause 158, insert the following new clause— "Extension of right to challenge landlord's choice of insurer (1) Paragraph 8 of the Schedule to the 1985 Act (right to challenge landlord's nomination of insurer) is amended as follows. In sub-paragraphs (1) and (2), after "nominated" insert "or approved". (3) In sub-paragraph (4), after "nominate" (in both places) insert "or approve". 63 Before Clause 160, insert the following new clause— "Failure to pay small amount for short period (1) A landlord under a long lease of a dwelling may not exercise a fight of re-entry or forfeiture for failure by a tenant to pay ail amount consisting of rent, service charges or administration charges (or a combination of them) ("the unpaid amount") unless the unpaid amount—

1. (a) exceeds the prescribed sum, or
2. (b) consists of or includes an amount which has been payable for more than a prescribed period.

(2) The sum prescribed under subsection (1)(a) must not exceed £500. (3) If the unpaid amount includes a default charge, it is to be treated for the purposes of subsection (1)(a) as reduced by the amount of the charge; and for this purpose "default charge" means an administration charge payable in respect of the tentant's failure to pay any part of the unpaid amount. (4) In this section "long lease of a dwelling" does not include

1. (a) a tenancy to which Part 2 of the Landlord and Tenant Act 1954 (c. 56) (business tenancies) applies,
2. (c) a tenancy of an agricultural holding within the meaning of the Agricultural Holdings Act 1986 (c. 5) in relation to which that Act applies, or
3. (d) a farm business tenancy within the meaning of the Agricultural Tenancies Act 1995 (c. 8).

(5) In this section— administration charge" has the same meaning as in Part 1 of Schedule 11, dwelling" has the same meaning as in the 1985 Act, landlord" and "tenant" have the same meaning as in Chapter 1 of this Part, long lease" has the meaning given by sections 74 and 75 of this Act, except that a shared ownership lease is a long lease whatever the tenant's total share, prescribed" means prescribed by regulations made by the appropriate national authority, and service charge" has the meaning given by section 18(1) of the 1985 Act. 64 After Clause 162, insert the following new clause— Power to prescribe additional or different requirements (1) The appropriate national authority may by regulations prescribe requirements which must be met before a right of re-entry or forfeiture may be exercised in relation to a breach of a covenant or condition in a long lease of an unmortgaged dwelling. (2) The regulations may specify that the requirements are to be in addition to, or instead of, requirements imposed otherwise than by the regulations. (3) In this section long lease of a dwelling" does not include—

1. (a) a tenancy to which Part 2 of the Landlord and Tenant Act 1954 (c. 56) (business tenancies) applies,
2. (e) a tenancy of an agricultural holding within the meaning of the Agricultural Holdings Act 1986 (c. 5) in relation to which that Act applies, or
3. (f) a farm business tenancy within the meaning of the Agricultural Tenancies Act 1995 (c. 8).

(4) For the purposes of this section a dwelling is unmortgaged if it is not subject to a mortgage, charge or lien. (5) In this section— dwelling" has the same meaning as in the 1985 Act, and long lease" has the meaning given by sections 74 and 75 of this Act, except that a shared ownership lease is a long lease whatever the tenant's total share. 65 Clause 163, page 85, line 4, leave out "159" and insert "(Insurance otherwise than with landlord's insurer) 66 Clause 163, page 85, line 4, at end insert "and sections (Failure to pay small amount for short period) and (Power to prescribe additional or different requirements)

Lord Falconer of Thoroton

My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 62 to 66.

Moved, That the House do agree with the Commons in their Amendments Nos. 62 to 66.— (Lord Falconer of Thoroton.)

On Question, Motion agreed to.

COMMONS AMENDMENT 67 Clause 166, page 86, line 9, at end insert— (5A) The Lands Tribunal may not order a party to the appeal to pay costs incurred by another party in connection with the appeal unless he has, in the opinion of the Lands Tribunal, acted frivolously, vexatiously, abusively, disruptively or otherwise unreasonably in connection with the appeal. (5B) In such a case the amount he may be ordered to pay shall not exceed the maximum amount which a party to proceedings before a leasehold valuation tribunal may be ordered to pay in the proceedings under or by virtue of paragraph 10(3) of Schedule 12.

Lord Falconer of Thoroton

My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 67. In doing so, I shall speak also to Amendment No. 83. Both amendments are linked to the award of costs. Amendment No. 67 would limit the power of the Lands Tribunal to award costs. When the Bill was previously before the House, the noble Baroness, Lady Gardner of Parkes, who, unfortunately, is not now in her place, argued most persuasively that the Lands Tribunal's unlimited power to award costs could discourage leaseholders from exercising their rights. We promised then that we would explore the scope for amending the Bill in the other place in order to address the concerns expressed by the noble Baroness. Amendment No. 67 is a result of that exploration.

Where a case involves an appeal against a decision made by a leasehold valuation tribunal, the Lands Tribunal cannot award costs unless a party has acted frivolously, vexatiously, abusively, disruptively, or otherwise unreasonably, in connection with the appeal. Moreover the maximum costs will be limited to £500, or such other amount as may be specified in regulation. This will provide leaseholders with far greater certainty and, thus, encourage them to exercise the rights that Parliament has granted to them. I see that the noble Baroness, Lady Gardner of Parkes, has just returned to the Chamber. I hope that she will agree that this amendment meets her concerns.

Amendment No. 83 is a technical amendment, which makes it clear that the £500 limitation on the ward of costs applies only to costs awarded under paragraph 10 of Schedule 12.

Moved, That the House do agree with the Commons in their Amendment No. 67.— (Lord Falconer of Thoroton.)

Baroness Gardner of Parkes

My Lords, I should just like to express my thanks to the Minister. I received a message on my pager regarding an urgent phone call; otherwise I should have been present to hear the Minister's opening remarks. I shall, of course, read his introduction in Hansard.

On Question, Motion agreed to.

COMMONS AMENDMENT 68 Clause 169, page 86, line 36, after "under" insert "section (Failure to pay small amount for short period) or (Power to prescribe additional or different requirements) or

Lord Falconer of Thoroton

My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 68.

Moved, That the House do agree with the Commons in their Amendment No. 68.—(Lord Falconer of Thoroton.)

On Question, Motion agreed to.

COMMONS AMENDMENTS 69 Clause 172, page 87, line 19, at beginning insert "Apart from section 102 and sections 168 to 170, 70 Page 87, line 27, after "1" insert "or section 171 and Schedule 14 so far as relating to section 102 71 Page 87, line 28, after "14" insert "so far as otherwise relating

Lord Falconer of Thoroton

My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 69 to 71. I should like to speak also to Amendment No. 85. This group of technical amendments is intended to bring about the early commencement of Clause 102 and Clauses 168, 169 and 170, and subsequently to provide for the repeal of Clause 102.

Moved, That the House do agree with the Commons in their Amendments Nos. 69 to 71.—(Lord Falconer of Thoroton.)

On Question, Motion agreed to.

COMMONS AMENDMENTS 72 Clause 174, page 87, line 35, leave out subsection (2) 73 Schedule 5, page 95, line 6, leave out "(1) and (2) 74 Page 96, line 25, leave out "section 21" and insert "Sections 21 and 22 75 Page 96, leave out lines 27 to 32 76 Schedule 8, page 112, line 13, leave out from "tenants" to end of line 14 and insert ", as" substitute "persons who are participating members of the RTE company immediately before a binding contract is entered into in pursuance of the initial notice, as". and (b) for "participating tenants, once" substitute "those participating members, once". 77 Schedule 11, page 121, line 23, leave out from "Schedule" to end of line 28 and insert ""variable administration charge" means an administration charge payable by a tenant which is neither—

1. (a) specified in his lease, nor
725
2. (b) calculated in accordance with a formula specified in his lease."

78 Page 122, line 12, at end insert—

"Notice in connection with demands for administration charges 3A (1) A demand for the payment of an administration charge must be accompanied by a summary of the rights and obligations of tenants of dwellings in relation to administration charges. The appropriate national authority may make regulations prescribing requirements as to the form and content of such summaries of rights and obligations. (3) A tenant may withhold payment of an administration charge which has been demanded from him if sub-paragraph (1) is not complied with in relation to the demand. Where a tenant withholds an administration charge under this paragraph, any provisions of the lease relating to non-payment or late payment of administration charges do not have effect in relation to the period for which he so withholds it. 79 Page 122, leave out line 14 80 Page 122, line 16, leave out "or not any amount is so" and insert "an administration charge is 81 Page 122, line 21, at end insert— (1A) Sub-paragraph (1) applies whether or not any payment has been made. 82 Page 122, line 34, leave out from "having" to end of line 35 and insert "made any payment. 83 Schedule 12, page 126, line 21, after "proceedings" insert "by a determination under this paragraph 84 Schedule 14, page 131, line 18, leave out first "and 85 Page 134, line 39, at end insert— Commonhold and Leasehold Reform Act 2002 Section 102".

Lord Falconer of Thoroton

My Lords, I beg to move that the House to agree with the Commons in their Amendments Nos. 72 to 85.

Moved, That the House do agree with the Commons in their Amendments Nos. 72 to 85.—(Lord Falconer of Thoroton.)

On Question, Motion agreed to.