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Commonhold

– in the House of Commons at 3:43 pm on 17th May 1995.

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Photo of Mr Dudley Fishburn Mr Dudley Fishburn , Kensington 3:43 pm, 17th May 1995

I begto move, That leave be given to bring in a Bill to introduce a system of commonhold property tenure; and for connected purposes. The Bill involves a new form of land tenure that will allow flat-dwellers to own their individual flats on a freehold rather than a leasehold basis. It will allow new buildings, whether commercial or residential, to bypass the leasehold system—properties could be sold as commonholds from the outset, with the new law spelling out the obligations and rights of each unit in relation to the whole.

There is nothing controversial in the proposal, which will merely bring to England and Wales a form of tenure available in every other western country—the condominium of the United States, the "strata" title of Australian flats and the system of co-propriété used throughout the continent. Millions of flat-dwellers live under that system throughout the world—some in Scotland, but none in England or Wales, where leasehold has, until now, been the only law recognised in the land for those sharing a common building.

The fact that this country has, extraordinarily, been without such a system has long worried both flat-dwellers and the property industry. At the moment, many thousands of people who own both a leasehold and a share in the underlying freehold—one of the attendants in the House is in exactly that position—have no alternative but to operate both systems in parallel. Under my proposals, that attendant would, with his neighbours, be able to adopt a commonhold tenure that would free him from those complications. It would also increase the value and the marketability of his flat. Most importantly, it would give him exactly the same tenure as for every commonhold flat in the country. Gone would be the endless variations and small print of leasehold; instead he would have full ownership of a property in which all his obligations and rights were spelt out—and spelt out in terms identical to all commonhold flats.

Changes in the property market sparked in part, but only in part, by the Leasehold Reform, Housing and Urban Development Act 1993, have led to a large increase in the number of people who own both a leasehold and a share of the underlying freehold. Many owners of residual freeholds realise that the best thing to do these days is to sell their freehold back to the leaseholders who own the major stake in the building. Yet those people are saddled with a highly complicated form of ownership, having to run a separate freehold company to administer the running of the building.

The leasehold reform Act raised many passions. In 1992 I was made radical of the year for pushing that legislation to the fore through a number of ten-minute Bills and debates, although much of the credit rested with my predecessor, the late Brandon Rhys Williams.

This legislation is more likely to earn me the title—much more difficult to attain because of the greater competition—of bore of the year because no one could possibly oppose it. The commonhold proposal has been penned in part by the Grosvenor Estate. You may recall, Madam Speaker, that the Duke of Westminster left the Conservative party in high dudgeon because of the leasehold reform Bill. Commonhold may bring him back—I hope so. It has the support of the building societies' Council of Mortgage Lenders, which sees at first hand the problems of lending money to purchase flats on the complicated leasehold-freehold system. It also has the support of the Consumers Association and the Law Commission, which first produced a working commonhold paper in 1987. A new slimline commonhold proposal is now in near final draft.

The sponsors of my Bill include many Members of Parliament from inner London constituencies who know the need for this new form of tenure well enough—for example, my right hon. Friends the Members for City of London and Westminster, South (Mr. Brooke) and for Chelsea (Sir N. Scott) and my hon. Friend the Member for Fulham (Mr. Carrington). They also include Members of Parliament who were vocal in their opposition to leasehold reform. They spoke out against the leasehold Bill because they believed that it was retrospective legislation which involved compulsory purchase and confiscation.

Critical as those hon. Members were of me then, they are happy to sponsor this Bill on the issue of commonhold. They recognise that commonhold is a voluntary system which is overdue in coming to the statute book and which contains no element of confiscation. I welcome the support of my right hon. Friend the Member for Westmorland and Lonsdale (Mr. Jopling), who was once an opponent but who is now an ally in this matter.

Things move slowly in matters of property law. On 12 July 1991 the Government announced that they would bring a system of commonhold before the House based on the 1987 Law Commission report, the 1988 draft legislation and the 1990 consultation paper that produced more than 1,000 replies. It was promised too in the Conservative party manifesto—I know, because I wrote the phrase. But nothing happened. When the leasehold Bill was announced, commonhold was left out. Why? It is because the leasehold Bill came from the Department of the Environment, while commonhold comes from the Lord Chancellor's Department—it seems that Whitehall Department shall not talk unto Whitehall Department.

Throughout the passage of the leasehold Bill, Opposition Front-Bench spokesmen criticised the Government for not introducing commonhold. I am pleased that the hon. Member for Greenwich (Mr. Raynsford), who is a Labour Front-Bench spokesman on housing, is a sponsor of my Bill. Yet the urban dweller waits while so much common agreement produces so little common action. Here is a Bill that is tailor-made for an uncontroversial Queen's Speech; there need be no Division on Second Reading. It could fit excellently into the Jellicoe procedure, by which uncontroversial Bills dealing with legal matters begin in another place.

Commonhold would be entirely voluntary. That is essential. It would be available for those who wished to use it as an alternative form of tenure. If it worked—and it would—it would gradually replace large chunks of leasehold. By gradually, I mean over a generation. A commonhold flat would become London's standard form of ownership. Good tenure would drive out bad.

A commonhold property would soon hold a premium over a leasehold property. The market would do with an invisible hand what politicians failed to do with a big stick.

Most countries recognised a generation ago the need for commonhold as a proper form of land tenure in a modern city. I hope that this modest ten-minute Bill will help bring my proposals to the statute book.

Question put and agreed to.

Bill ordered to be brought in by Mr. Dudley Fishburn, Mr. Peter Brooke, Mr. Michael Jopling, Sir Nicholas Scott, Mr. Matthew Carrington, Mr. Nigel Forman, Mr. Henry Bellingham, Mr. Gyles Brandreth and Mr. Nick Raynsford.