§ Mr. Fauldsasked the Secretary of State for the Environment whether, in the arrangements known as equity sharing schemes, local authorities have power to grant a lessee an option to purchase the freehold reversion of his house.
§ Mr. ShoreIn my answer today to my hon friend the Member for Houghton-690W le-Spring (Mr. Urwin) I said that I had been advised that local authorities had no power to offer options to council tenants to buy the houses in which they live. In the light of this it became necessary to consider afresh the legal position in relation to options granted in connection with equity sharing schemes. I am now advised that the legal position is essentially the same for both kinds of options, namely, that there is no general power for a local authority to grant them.
It has been my practice to give general encouragement to "equity sharing" schemes; and such schemes may have included options for the lessee to purchase the freehold reversion. To protect individuals who have in good faith entered into such schemes I am therefore taking the following steps:
First, I am immediately writing to the local authorities concerned to invite them to observe the spirit of the arrangements so far as they concern lessees' options. I would look to the authorities to sell the freehold reversions of the houses affected when the lessees wish to buy and generally to act so as to protect the lessees' interests.Secondly, I am informing the authorities that each case will; of course, be governed by the particular provisions contained in the lease but that I am advised that it is unlikely that an invalid option would invalidate the lease itself.Thirdly, I shall consult the local authority associations about further action which could be taken to safeguard the position of the individuals concerned.I should add that while it remains my policy to encourage schemes which contribute greater flexibility in tenure arrangements I must at present advise authorities against entering into further "equity sharing" arrangements if they include an option provision. In so far as other variations in tenure arrangements, not involving an option, can be adopted I hope that this will be done and will be ready to consider cases requiring my special consent. In consulting the local authority associations I will consider the action needed to deal with the difficulties now identified.