Orders of the Day — Housing Bill

Part of the debate – in the House of Commons at 8:24 pm on 30th November 1987.

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Photo of Mr Gerald Bowden Mr Gerald Bowden , Dulwich 8:24 pm, 30th November 1987

I congratulate my hon. Friend the Member for Gloucester (Mr. French) on his thoughtful and perceptive maiden speech. The House will appreciate his generous and well deserved tribute to his predecessor, and the eloquence of his advocacy for his constituency and the interests of his constituents. We welcome the breadth of the experience and expertise which he brings to the House and look forward to hearing him contribute frequently to our deliberations.

I also warmly welcome the Bill. The Housing Act 1980 offered council tenants the right to buy their homes, but an oversight in drafting denied that right to the majority of Southwark council tenants who live in my constituency, as the Act provided that only where a council held the freehold interest could the tenant force it to sell. The unwillingness of the coucil to waive that right, which it could have done, and its insistence on standing on that technicality, meant that a large number of my constituents had to wait up to five years before having the opportunity to buy. It was only with the Housing and Building Control Act 1984 that the right was extended to tenants of councils with a leashold interest. Since then, there has been no great improvement or enthusiasm by Labour-controlled Southwark council to sell homes to tenants who wish to buy. Indeed, protestations that it is now Labour party policy to encourage this are not borne out in my constituency.

This raises the problem of delay on a technicality. A large number of my constituents are tenants of leasehold properties where the lease has only a short term to run. The position may be unique in London and in the country. The largest landowner is Alleyn's College of God's Gift. In the past, they have granted, sometimes for 99 years and sometimes for less, a ground lease on a piece of land. In some cases, the council built on that land and in others it bought properties with short-term leases. Many of my constituents are tenants of Southwark council where Southwark coucil owns a lease of less than 21 years, holding it from the estates governors of Dulwich college. They are denied the right to buy.

I understand from informal overtures to the estates governors that they would be prepared to negotiate the freehold reversionary interest which lies behind that of Southwark council, if Southwark council were willing to facilitate the opportunity for individual tenants to purchase. This Bill will ensure a wider choice of tenancy, home ownership and tenure to all. Although that is not the prime purpose of the Bill, it could with adaptation cover this issue. It is a small point nationally, but is of crucial interest to a large number of my constituents.

Another aspect of the delay worries me. It seems unfair that tenants who applied at the proper time to purchase, but where no action has been taken by the local authority, sometimes for a year, 18 months or even two years, continue to pay rent while at the same time the valuation of their property increases. Before this Bill is enacted, I hope that there will be an opportunity to provide for those tenants. When the appropriate time for action to be taken by the council on their application arrives, I hope that, from that time onwards the valuation is fixed and that any subsequent rent payment is paid to a stakeholder or a deposit holder or held in a trustee account on behalf of the tenant. Therefore, when the time comes to complete the purchase the rent paid in that interim period, with accrued interest, can be used to discharge part of the purchase payment.

It has also been argued that there are insuperable difficulties with regard to providing proper management costs broken down estate by estate. That may be a confession of failure on the part of local authorities. However, if that is an insuperable problem or one that will cause considerable delay, surely this Bill is an opportunity to bring in professional estate managers to advise and to cost the sums to which the services will amount. I believe this is a reform that should be made.

I wish to pay particular attention to the right of the council tenants, if they do not wish to buy, to choose their landlord. I have already mentioned an oversight in the drafting of the Housing Act 1980 that denied the tenants of Dulwich their right to buy. From my reading of the present Bill, I wonder whether there has been a similar oversight. In particular, I refer to clause 86, which lays down that any tenant of a freehold landlord will have the right to choose another landlord. However, a large number of Southwark tenants in Dulwich are not tenants of a freehold landlord. They are tenants of Southwark, the leasehold landlord that holds ground leases from Dulwich college. In those circumstances, does it mean that those tenants would be denied the right to change or to choose a new landlord? I believe that the Bill, as presently drafted, does just that, and I believe that that will cause great problems.

One instance of such problems is represented by the Kennolds estate on Croxted road. The ground landlord of that estate is Dulwich college and the leasehold landlord is Southwark council. Individual tenants on that estate would be unable to change their landlord within the terms of the Bill. We must pay attention to this problem before the Bill is enacted.

Another problem that exists in my constituency and perhaps nowhere else arises where Southwark council is the ground landlord and there is a head lessee, a housing association. In this instance I wish to refer to the Ruskin park housing estate. That estate was built in the 1960s by the London county council and was subsequently held by the Greater London council. In about 1972, a number of tenants wished to buy their individual flats on that estate and they clubbed together to form a housing association. The GLC granted the Ruskin park housing association a long leasehold interest of some 99 years. Therefore, the tenants who bought their flats became 99-year leaseholders.

However, those tenants of the GLC who wished to remain tenants found themselves in the position envisaged by this Bill. That is to say, the whole shooting match was granted, by way of long lease, to the Ruskin park housing association and, for those tenants who wished to remain GLC tenants, individual flats were leased back to the GLC. That arrangement was extremely successful from 1972 until almost the present day.

On the demise of the GLC, the freehold interest that lay beneath the Ruskin park housing association long lease could have been—in my opinion, it should have been— sold to that housing association by the London residuary body. However, that interest was transferred to Southwark council, which became ground landlord. Therefore, at present Southwark council is ground landlord, Ruskin park housing association is head lessee, from which some individual flats are leased on long leases by owner-occupiers, and a small proportion of flats are still occupied by what were previously GLC, now Southwark, tenants.

The unexpired term of the lease on such flats is now 70 years and that lease is a wasting asset. Owner-occupier tenants are faced with great difficulty when trying to sell on the open market, because financial organisations such as mortgage corporations and building societies are not anxious to accept security of such a short duration. Therefore, we are faced with the anomaly whereby the owner-occupiers, those who have entered into a contract of home ownership, have a wasting asset that is extremely difficult to sell. We are faced with the curious situation that might allow those who are Southwark council tenants to choose a landlord different from Southwark council. It gives a spurious sense of superiority or advantage to those council tenants who wish to exercise their right to choose their landlord in those circumstances. Therefore, it militates against those who are owner-occupiers.

I have outlined two problems where there is a delicate balance between the leasehold and the freehold interests. In years gone by, a leasehold was a versatile way of organising tenure while at the same time maintaining the cohesion of an estate. That balance has been a problem that has bedevilled my constituency in recent years. The beneficent landlord, Dulwich college, developed the practice of granting ground lease to individuals. When those leases began to come to an end, that practice caused some conflict.

Twenty years ago, my constituency predecessor—my political opponent, but personal friend—Sam Silkin, now Lord Silkin of Dulwich, played an important part in the deliberations of this House considering the introduction of the Leasehold Reform Act 1967. That Act was introduced to enable those who are long lessees of houses to have the right to enfranchise and obtain a freehold interest so that they may feel that they will not lose their capital asset at the end of the term of the lease.

That problem has arisen again now, in a slightly different form. The House should consider another estate within Dulwich, the estate on Farquah road, Grenville court and Marlow court. The tenants of that estate have made representations to me because they feel that, under the present freehold-leasehold balance, they share the same difficulties of the owner-occupiers on the Ruskin park housing estate. They have leases that have 70 years to run—originally they were for 99 years. Those leases do not represent a marketable asset. Many of the tenants in that estate are retired.

Those retired tenants have contemplated using one of the financial devices that are now available for the retired with a capital asset, such as the home income plan. However, they have discovered that financial organisations are not prepared to accept a lease that has a declining term to run when considering the anomalies that have arisen as a result of well-intentioned but incomplete legislation.