Leasehold Reform (Amendment) Bill

Baroness Primarolo Excerpts

Friday 24th January 2014 Commons Chamber

[Brandon Lewis]

My hon. Friend makes an excellent point. I suspect people in Wales are thinking right now, in relation to their legislation, that a little bit of Nuttall in Wales would do them a whole world of good.

My hon. Friend the Member for Beckenham (Bob Stewart) queried why the change has not been made before. I appreciate that he came into the Chamber only a short time ago, but I again underline the importance of this debate as a chance for all hon. Members to put the clear intent of Parliament on the record. The requirements on signatories do not appear to have been debated during the passage of the 1993 Act, which is a good reminder of why it is sometimes important for parliamentarians to put clearly on the record why we do things, not just to assume that our intent in passing legislation is clear and obvious. It is a great testament to that point that we are doing this work this morning.

The existing restrictions perhaps aim to ensure that the individual leaseholder is fully aware of the commitment they enter into, given the significant financial liabilities that arise from serving the notices concerned. As my hon. Friend the Member for Bury North has outlined, the Bill will enable legal notices to be signed on the leaseholder’s behalf and that change will help, among others, those physically disabled, seriously ill or mentally incapacitated leaseholders who are currently unable to benefit financially and otherwise from the exercise of rights enjoyed by able-bodied leaseholders.

The Bill is clearly focused on helping a particular group of leaseholders, many of whom are likely to be elderly and vulnerable. As such, it has received warm words of support from both sides of the House, which I am sure is appreciated by my hon. Friend. That reflects my hon. Friends’ efforts in gathering support for the Bill, and in highlighting the benefits that it will enable some currently frustrated leaseholders to enjoy.

The changes made by the Bill to the 1993 Act may affect only a relatively small number of leaseholders of flats in England, but they might be very important for those leaseholders currently unable, for one reason or another, to sign the requisite legal notices in person. As my hon. Friend the Member for Kettering has rightly pointed out, the Bill applies only to England, so I hope that the devolved Assembly will look at the provision and perhaps introduce it in Wales. As I have said, those helped by this Bill will often be elderly and more vulnerable leaseholders. The removal of current restrictions will also help those who are charged with looking after the financial affairs of a leaseholder. The example of relatives acting under a power of attorney was given by my hon. Friend the Member for Worthing West.

One sad situation that was brought to a colleague’s attention concerns an elderly leaseholder living in a leasehold retirement development who, because of severe illness, unfortunately had to go into a nursing home to be cared for. I give this example because it is important to provide some colour and life on exactly how the change will make a beneficial impact to people’s lives. The leaseholder’s relatives were looking after her financial affairs under a power of attorney, and could therefore deal with almost all matters that needed taking care of. As she became more unwell, it was necessary for her leasehold property to be sold to assist in paying the care home fees. That is where her relatives reached what can only be described as a bizarre situation: they could sell the flat using the power of attorney, but they simply could not act on her behalf to extend her lease. They therefore had the frustration and sadness of being unable to make the most of their elderly relative’s assets for her benefit simply because they were not permitted to sign the vital leasehold paperwork on her behalf. Had they been able to do so, it is very likely that the flat, with the attraction of an extended lease, would have secured a higher selling price, and maximising the value of their relative’s assets in that way would have helped meet the fees of a suitable care home for her final days.

It is important to give more examples of the people who will be helped by this Bill. For instance, limbless or severely injured Army veterans face many problems. They may wish to extend the lease on their home and to enjoy the financial benefits that such action could bring, but, owing to their disability, they might no longer be able to hold a pen and to sign vital papers. As the law now stands, for that reason alone they are frustrated from exercising their important legal right as the leaseholder. There is no way that that was the intent of Parliament when the Act was passed, and it is right to get through this Bill for that reason alone.

The Bill may help leaseholders living abroad who need to sign notices. For example, work may take the leaseholder of a flat abroad for a prolonged period. Without the ability to have someone act, with the appropriate authority, on their behalf in respect of the property, it may be difficult for them to exercise their statutory rights. Again, that was clearly not Parliament’s intent.

The Bill might also help an aid worker serving overseas in a remote location, where postal services are infrequent and unreliable. If they want to extend the lease on their property back home in England, they will need to receive a paper copy of a document, and they then have to sign and return it. In some parts of the world, even in today’s modern age, that can take months, involve worry and delay, and create problems about getting the work done. If the absent or incapacitated person is the sole leaseholder, even their husband or wife cannot validly sign notices on their behalf.

If an individual leaseholder who lives or works abroad is hindered in that way, it could have an unfortunate knock-on effect on other leaseholders in their block. For example—we have examples of this in this country—a group of leaseholders may want to exercise their collective right to acquire the freehold of their block, but to satisfy the qualifying criteria they may need one or more leaseholders who live or work abroad to sign the documents. Although the Bill would not make any change to leaseholders’ actual rights—we must be clear about that—it could helpfully remove a practical barrier to the efficient exercise of those rights.

Let us also consider an elderly person who is physically fit, but who for years has been accustomed to relying on their long-standing family solicitor to act for them in all legal and administrative affairs. They may decide to take part in the collective purchase of the freehold of their much-loved home, but in that case, the solicitor simply could not validly sign the documents on their behalf.

Since the 1993 Act, we have—I hope—become more aware of the challenges faced by individuals who become mentally or physically incapacitated for one reason or another. Sadly, as that Act stands, even someone acting under the direction of the Court of Protection cannot sign the requisite notices. A possible alternative could be for the leaseholder to take the major step of assigning the lease of their property to a trustee, and setting up what is known as a “bare trust”. Again, the decision on Tingay is very relevant. The counsel for the landlord states that

“it is possible to avoid difficulties of these sorts. What one could do would be to assign the lease to one or more trustees, who would hold it on a bare trust for the former tenant, who could serve a notice relying on the qualifying—”

[Madam Deputy Speaker (Dawn Primarolo)]

Order. I have been listening carefully to the Minister and to what has been said previously, and I think he is taking rather a long time to make his point. We do not need to go through all those case studies because everybody in the House is clear, and what the Bill does has been mentioned several times. I would be grateful if he would make a little progress.

[Brandon Lewis]

I appreciate your point, Madam Deputy Speaker, but I was just giving a two-line quote before summing up the debate. We must bear in mind that this Bill is before the House today because previously, Parliament was not that specific or clear about its intent, and that is what Members have been debating this morning.

Unfortunately, the creation of a bare trust is not a practical option for many people. The procedure could well be cumbersome and expensive to use, and the decisions and processes involved would place a heavy burden on a vulnerable leaseholder.

It may be helpful to the House if I—very briefly, Madam Deputy Speaker—explain the amendments made to the Bill in Committee, which are reflected in the version of the Bill before the House today. The minor and technical amendments were intended to ensure that the proposed amendment to section 99(5) of the Leasehold Reform, Housing and Urban Development Act 1993 fully achieves its aims and is appropriately drafted. In particular, a small amendment was made so that, provided it completes all its parliamentary stages and receives Royal Assent, the resultant Act will come into force two months after it is passed, as is the usual convention, rather than after only one.

It was also necessary to address the extent of the Bill. The 1993 Act applies to England and Wales, but in the 20-odd years since then much has changed, and housing is now, of course, a devolved issue in the Principality. It was therefore essential to ensure that the Bill does not affect the existing application of section 99(5) to Wales—my hon. Friend the Member for Kettering highlighted that point. In other words, the provisions in the Bill would apply only to residential leaseholders of flats in England.

The Bill will offer help and hope to some leaseholders who might otherwise face an insurmountable hurdle in seeking to exercise their rights. It will also, I hope, give greater peace of mind to the families and friends who care for them. I am pleased to give the Government’s support to the Bill. I hope it will receive Third Reading today and pass successfully through the House of Lords and receive Royal Assent.