Leasehold Reform (Amendment) Bill

Lord McKenzie of Luton Excerpts

Friday 7th February 2014 Lords Chamber

[Lord McKenzie of Luton (Lab)]

My Lords, I start by drawing attention to my interests in the register and making clear, as did my noble friend Lord Beecham, that we support the Bill and do not seek to amend it. We congratulate the noble Baroness, Lady Williams of Trafford, on taking up this measure and, we hope, seeing it through to a successful conclusion. We also congratulate David Nuttall on piloting the Bill through another place. It is, as we have heard, a narrow measure, although the noble Baroness, Lady Gardner of Parkes, and my noble friend Lord Beecham could not resist the temptation to widen the debate. I hope noble Lords will forgive me if I do not follow suit as I think that is a debate for another day.

The Bill touches on two important rights of leaseholders: the right of collective enfranchisement—that is, the right to compel the sale of the freehold—and the right to require an extension to an existing long lease. We support these rights and consider it important that they can be effectively taken up. As we have heard, a key part of progressing these rights is the giving of notice to a landlord. That is the tenant’s notice in the case of a lease extension and the initial notice in the case of collective enfranchisement. In both cases, these kick-start the process.

We accept that the courts have clearly stated that the provisions of Section 99 of the 1993 Act require the tenant themselves—the leaseholder themselves—to actually sign the Section 42 and Section 13 notices. Mr Justice Lloyd was cited by Mr Nuttall at Third Reading in the Commons, at col. 561 of Commons Hansard of 24 January 2014, as distinguishing the method of signature of notices required under these sections and other notices required under the Act. As the debate in the other place highlighted, we would be advantaged if we could better understand why Parliament chose to make this distinction, but it seems—I have not revisited the debates—that the limited scrutiny at the time does not throw any light on the matter. I do not know whether the Minister can help us further on that today.

As we have heard, the purpose of the Bill is to redress for England the suggested disadvantage that arises from the requirements of a personal signature. I have given the Minister notice of my next question: what is the position when there are joint leaseholders? Are they both required to sign or is either one of them sufficient? It is suggested that this affects broadly two groups: those who delegate some or all of their leaseholder responsibilities either generally or specifically for one of the processes under consideration to a lawyer, management company or valuer, for example, and may themselves be abroad; and those whose mental or physical impairment means that they appoint someone to act on their behalf, under, say, a power of attorney or, as we have heard, the Court of Protection. That is, the first set of circumstances are entered into by choice, the second are effectively unavoidable.

As regards lease extensions, as the Leasehold Advisory Service booklet makes clear, the process is not just a matter of signing a request; there is preparatory work before notice on the landlord is given as well as a prescribed route once the notice has been given. The leaseholder is responsible for the landlord’s reasonable costs from the date of receipt of the notice. Service of the notice will trigger a timeframe within which the landlord can require evidence, and the tenants must respond. The landlord can require a deposit and serve a counter-notice, and there is a timeframe attached to a route to the leasehold valuation tribunal.

However, the leaseholder is very much in control, especially at the start of the process, and it might be argued that there is no compelling reason to change the law for those who choose to delegate the functions, because it should be perfectly possible, even for those living abroad, to factor in the personal signing of a notice. However, the provisions concerning collective enfranchisement and the giving of a Section 13 initial notice potentially have wider implications if it is not just a single tenant who is pursuing an individual benefit. If a potentially qualifying tenant can be successfully challenged, this could presumably undermine the action of the remaining tenants, due to the threshold requirements. It is not so readily under the control of each individual tenant, and reaching people abroad on a timely basis is potentially more important.

We therefore believe that that is a strong argument for the change in the law that the Bill provides. An even stronger imperative in the case of both notices is that when, because of incapacity, someone has to rely on a third party to sign notices and execute transactions, it is through necessity, not choice. I wonder whether the status quo could anyway be challenged under human rights or equalities legislation, because the personal signature requirement could clearly be discriminatory to some disabled people in some circumstances.

However, the Bill rectifies the matter for England but leaves the position open in Wales. The Minister may wish to comment on that. Indeed, what should be the advice to someone in Wales who has entered into a power of attorney? Should they nevertheless individually sign? Is the notice capable of being challenged by the landlord?

The rationale for the Bill has been admirably summed up by its promoter at col. 562 of Commons Hansard of 24 January. We agree with that summary, and the Bill has our support.