HC Deb 30 April 1996 vol 276 cc914-8

  1. '.—(1) The Secretary of State may give financial assistance to any person in relation to the provision by that person of general advice about—
    1. (a) any aspect of the law of landlord and tenant, so far as relating to residential tenancies, or
    2. (b) Chapter IV of Part I of the Leasehold Reform, Housing and Urban Development Act 1993 (estate management schemes in connection with enfranchisement).
  2. (2) Financial assistance under this section may be given in such form and on such terms as the Secretary of State considers appropriate.
  3. (3) The terms on which financial assistance under this section may be given may, in particular, include provision as to the circumstances in which the assistance must be repaid or otherwise made good to the Secretary of State and the manner in which that is to be done.'.—[Mr. Clappison.]

Brought up, and read the First time

Mr. Clappison

I beg to move, That the clause be read a Second time.

In Committee, a number of hon. Members paid tribute to the work of the Leasehold Enfranchisement Advisory Service. The service was established shortly after the Leasehold Reform, Housing and Urban Development Act 1993 came into force, with joint public and private sector funding. Its principal role has been to provide initial information to landlords and tenants on the legislative provisions relating to leasehold enfranchisement. Since its inception, it has dealt with approximately 8, 000 inquiries.

The Government's commitment to the service has been to provide initial funding for three years, ending in December this year. That commitment will be honoured in full. The commitment was limited to three years because it was envisaged that a growing familiarity with the provisions of the Act would develop in that time. It was thought that leaseholders would be less in need of such an advice service, as a wider range of solicitors, valuers and practitioners would gain experience in that area.

However, in practice, the progress on enfranchisement has been less rapid than our initial expectations in some respects. Leaseholders have been exercising their rights to lease extension enfranchisement, and the leasehold valuation tribunals have been hearing a number of test cases and resolving disputes between landlords and tenants.

There is still a way to go and all parties are agreed that there is a useful role for an advice service to perform beyond the end of this year. A further factor is the new package of leaseholders' rights contained in the Bill. They involve new and, in some cases, necessarily complex procedures. The Government believe that there is further scope for an impartial advice service to help in that area.

The Leasehold Enfranchisement Advisory Service has been funded for the first three years through the Department's special grants programme. Projects supported in that way are expected to generate matching private sector funding with public sector support. That funding would normally have been phased out after the initial three-year period. The purpose of the new clause is therefore to give the Secretary of State a specific power to provide financial support to an advice service dealing with landlord and tenant issues, on a more permanent footing. We shall still seek a substantial private sector contribution, but a further period of support under the special grants programme would not be appropriate.

My Department will shortly enter into detailed discussions with the Leasehold Enfranchisement Advisory Service about how it envisages the development of its longer-term role. I make no commitment that the Department will defer the funding beyond the end of 1996, but we shall consider the case of the advisory service along with the other competing claims on my Department's resources. The new clause keeps open the possibility of longer-term funding of the service.

Mr. Raynsford

As the Minister said, new clause 11 was tabled in response to a case made in Committee. I am pleased to say that in Committee we had all-party support on the issue. The right hon. Member for City of London and Westminster, South (Mr. Brooke) and the hon. Member for North-West Leicestershire (Mr. Ashby) backed my calls on behalf of the Opposition for continuing funding of the Leasehold Enfranchisement Advisory Service.

As the Minister rightly acknowledged, the service provides excellent, impartial advice to leaseholders on very complex matters relating to leasehold enfranchisement, and it receives an increasing number of requests for help on aspects that are currently outside its remit. There is, therefore, a case for not only continuous funding for the Leasehold Enfranchisement Advisory Service, but a wider remit to enable it to deal with other leasehold matters, especially disputes relating to service charges and so on, which cause a great deal of concern to leaseholders and about which requests for help are made to the service.

As the Minister acknowledged, leasehold enfranchisement has not progressed as fast as the Government initially hoped. Whatever the reasons—some of which we shall explore in later debates—there is agreement on both sides of the House that we should assist enfranchisement. The provision of expert advisory services is a very important way of doing so.

The costs involved in obtaining expert assistance from lawyers and other professionals can be a very serious deterrent to leaseholders, and the availability of a free, expert service is, in my view and that of most people who have studied the matter, essential if the process of leasehold enfranchisement is to proceed. We shall explore other essential issues in later debates.

For all those reasons, we very much welcome the Government's decision to table the new clause. The Minister was cautious in what he said about how it may be applied. I understand that he cannot give a cast-iron commitment, but he is aware that, under current arrangements, the Leasehold Enfranchisement Advisory Service does not have funding beyond the end of this year—a period of only eight months.

It is unreasonable for such a service, which provides valuable expertise to numerous leaseholders, to be unable to guarantee its continued operation more than eight months ahead. I hope that the Minister will move swiftly to enter the discussions that he described.

Mr. David Ashby (North-West Leicestershire)

The hon. Gentleman will appreciate that later amendments relate to further enfranchisement, about which more advice will be required. That makes the service even more important.

Mr. Raynsford

The hon. Gentleman makes a valid point. Not only is financial uncertainty hanging over the Leasehold Enfranchisement Advisory Service, but the service is likely to have rather more work if, as a result of our considerations today, we substantially advance the opportunities for enfranchisement.

For all those reasons, I urge the Minister to enter into discussions urgently with all the parties, to try to ensure that the Leasehold Enfranchisement Advisory Service has the necessary financial resources to maintain its service in the immediately foreseeable future and build on a stronger financial footing for the long term.

Mr. Peter Brooke (City of London and Westminster, South)

I shall be brief. My constituents enter on both sides of the equation, as advisers and advisees. I declared a tangential and anticipatory interest in Committee, and I declare the same interest now.

I thank my hon. Friend the Minister for the speed with which the Government have reacted. I only serve quiet notice that we shall maintain vigilance on the conduct of and developments in the conversations.

Mrs. Diana Maddock (Christchurch)

I welcome the Minister's commitment to examining the problem. In Committee, we expressed our appreciation of the valuable work done by the Leasehold Enfranchisement Advisory Service. I am only disappointed that the question whether and when it will definitely be funded remains open-ended. I hope that the Minister will consider the matter and come back to us as soon as possible. There is all-party support, and he is aware that people need advice desperately.

Hon. Members have pointed out that more advice will be sought in the future. As the costs and difficulties associated with often very complicated legal matters increase, people will need a proper advice service. I urge the Minister not to let the matter slide—although I am sure that hon. Members will ensure that he does not.

Government new schedule 2—Low rent test: extension of rights—

Right to enfranchisement

1. In the Leasehold Reform Act 1967, after section 1A there shall be inserted— Additional right to enfranchisement only in case of houses whose4 rent exceeds applicable limit under section 4.

1AA.—(1) Where—

  1. (a) section 1(1) above would apply in the case of the tenant of a house but for the fact that the tenancy is not a tenancy at a low rent, and
  2. (b) the tenancy falls within subsection (2) below and is not an excluded tenancy,
this Part of this Act shall have effect to confer on the tenant the same right to acquire the freehold of the house and premises as would be conferred by section 1(1) above if it were a tenancy at a low rent.

(2) A tenancy falls within this subsection if—

  1. (a) it is granted for a term of years certain exceeding fifty years, whether or not it is (or may become) terminable before the end of that term by notice given by or to the tenant or by re-entry, forfeiture or otherwise,
  2. (b) it is for a term fixed by law under a grant with a covenant or obligation for perpetual renewal, unless it is a tenancy by sub-demise from one which is not a tenancy which falls within this subsection,
  3. (c) it is a tenancy taking effect under section 149(6) of the Law of Property Act 1925 (leases terminable after a death or marriage), or
  4. (d) it is a tenancy which—
  1. (i) is or has been granted for a term of years certain not exceeding fifty years, but with a covenant or obligation for renewal without payment of a premium (but not for perpetual renewal), and
  2. (ii) is or has been once or more renewed so as to bring to more than fifty years the total of the terms granted (including any interval between the end of a tenancy and the grant of a renewal).

(3) A tenancy is an excluded tenancy for the purposes of subsection (1) above if—

  1. (a) the house which the tenant occupies under the tenancy is in an area designated for the purposes of this provision as a rural area by order made by the Secretary of State,
  2. (b) the freehold of that house is owned together with adjoining land which is not occupied for residential purposes, and
  3. (c) the tenancy was granted on or before the day on which section [Low rent test: extension of rights] of the Housing Act 1996 comes into force.

Question put and agreed to.

Clause read a Second time, and added to the Bill.

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