HC Deb 08 April 1986 vol 95 cc26-8W
Mr. Wheeler

asked the Secretary of State for the Environment if he is now in a position to announce the Government's response to the report of the Nugee Committee on the management of privately owned blocks of flats.

Mr. Kenneth Baker

In 1984 the Government became concerned about increasing evidence of management problems in privately owned blocks of flats. We therefore established a committee under the chairmanship of Mr. E. G. Nugee, QC and containing representatives of tenant, landlord and legal interests to consider these problems. In its report, published last November, the committee gathered extensive evidence about this important sector of the housing market; it identified the main areas in which problems have arisen; and it made many recommendations for changes to the statutory framework within which landlords and tenants of private blocks of flats operate.

The main recommendations in the Nugee report are:

  1. (i) the development of the procedure for appointing a receiver and manager;
  2. (ii) the introduction of a "Housing assessor" to sort out disputes between landlords and tenants on management issues speedily and cheaply;
  3. (iii) a right of first refusal for the residents to give them the opportunity to buy the block if the landlord wishes to sell his interest;
  4. (iv) a procedure for varying leases if there is a major defect in them;
  5. (v) tighter control over money paid into service charge accounts and into reserve or sinking funds; and reform of the tax treatment of such funds;
  6. (vi) tighter control over the insurance of a block of flats, so that it is fully and adequately insured at reasonable cost; and
  7. (vii) further rights for residents to information about service charge accounts; and a larger role for residents' associations.

We are indebted to the committee for the excellent work which it has done on this subject. It is now clear that there are severe problems affecting the management of many blocks of flats. While the vast majority of landlords and their agents achieve high standards of management, the complaints about those who are negligent or unresponsive or who exact excessive service charges, and about the inadequacy of existing leases to secure proper management of the block are too common to be ignored.

We believe that action must be taken to tackle these problems. All residents, whether they are long leaseholders or renting tenants, have a right to expect that their homes will be properly managed and we must provide a legal framework within which that can happen. We therefore accept the main thrust of the committee's recommendations and we propose to legislate as soon as possible.

One of the committee's major recommendations on which we cannot take a view now was for the appointment of housing assessors in the county court to deal with disputes on housing matters quickly and cheaply. This touches on the issues which are already being considered in the review of civil justice which my noble and learned Friend the Lord Chancellor announced in February 1985, and will take forward in that context.

On two issues we propose to go further than the recommendations in the Nugee report. First, we consider that more should be done to involve the residents in the selection of managing agents, by giving recognised residents' associations a right to require the landlord to consult them about the appointment of agents and to consult periodically thereafter. Second, we consider that, in addition to the committee's recommendation of a collective right of first refusal where a landlord wishes to dispose of his interest, the residents of blocks which are wholly or substantially occupied by long leaseholders should have a right to purchase the landlord's interest at market price if they satisfy a court that the landlord has persistently failed in his duties.

Finally, we also propose that leaseholders of houses should have similar safeguards in relation to insurance as leaseholders of flats would have under the committee's proposals; that is, that they should have a right to challenge the level of cover provided by the policy and the reasonableness of the premium.

Our proposals will help the large number of residents of privately owned flats, especially those living in mansion blocks who are suffering because of bad management and lack of repairs.