Determination of Reasonableness of Service Charges

Clause 79 – in the House of Commons at 4:15 pm on 22nd July 1996.

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Lords amendment: No. 99, in page 52, leave out lines 32 to 47 and insert— ("( ) The power to make regulations under section 74(1)(b) of the Rent Act 1977 (procedure of rent assessment committees) extends to prescribing the procedure to be followed in connection with any proceedings before a leasehold valuation tribunal under this Act.( ) Such regulations may, in particular, make provision—

  1. (a) for securing consistency where numerous applications under this Act are or may be brought in respect of the same or substantially the same matters; and
  2. (b) empowering a leasehold valuation tribunal to dismiss an application, in whole or in part, on the ground that it is frivolous or vexatious or otherwise an abuse of the process of the tribunal."")

Photo of Mr Geoffrey Lofthouse Mr Geoffrey Lofthouse , Pontefract and Castleford

With this, it will be convenient to discuss Lords amendments Nos. 100 and 101, Lords amendment No. 102, Government amendments (a) and (b) in lieu thereof and Lords amendments Nos. 103, 104 and 129.

Photo of James Clappison James Clappison Parliamentary Under-Secretary (Department of Environment)

We now come to the important subject of leasehold valuation tribunals. I shall invite the House to agree with the Lords in the amendments, save for Lords amendment No. 102, with which I shall invite the House to disagree.

The amendments make new provision for procedures to be followed by leasehold valuation tribunals when hearing service charge disputes. Lords amendment No. 99 makes provision for leasehold valuation tribunals to secure consistency in handling separate cases about the same issue. For example, if a number of tenants in a block challenge the same service charge, it may be convenient to hear the separate cases together. This mirrors procedures that are often followed in the county court and High Court. It also allows leasehold valuation tribunals to strike out frivolous or vexatious cases or those which are an abuse of process.

Lords amendment No. 101 allows leasehold valuation tribunals to apportion the reimbursement of fees, as they think appropriate to the circumstances of the case.

Lords amendment No. 103 allows the court to dispose of that part of the case which it has not remitted to a leasehold valuation tribunal, and to enforce the leasehold valuation tribunal's decision as a decision of the court.

Lords amendment No. 104 is a consequential amending definitional amendment.

Lords amendment No. 129 widens the Secretary of State's regulation-making powers to allow the possibility of having a "pre-trial review" before a single member of the tribunal, to clear the ground before the main hearing—another procedure that will be familiar to those who have used the courts, and often a way of shortening cases.

I shall now discuss Lords amendment No. 102 and Government amendments (a) and (b). I invite the House to disagree with Lords amendment No. 102 but to agree with Government amendments (a) and (b). The amendments concern the level of fees that may be charged by a leasehold valuation tribunal to an applicant under the new procedures for the resolution of service charge disputes.

It may help the House if I explain the background to the issues. The proposal to give this new jurisdiction to leasehold valuation tribunals was introduced by Government amendments to the Bill in Committee in this place. The initial provision on fees was that, taking one year with another, they should be sufficient to cover the full costs of providing this service.

The measures in the Bill to help protect leaseholders of residential properties were prompted by the bad actions of a minority of landlords who were imposing unreasonable, and in some cases outrageous, service charge demands. Any leaseholder who contested those claims was faced in some circumstances with the immediate threat of forfeiture and an action, usually in the High Court. There are measures in the Bill that deal with this abuse and provide that forfeiture proceedings can no longer be taken until the disagreement about service charges is resolved. This is a significant step to help leaseholders, an important part of our package of reforms which will materially improve the lot of leaseholders.

Leaving the problems of forfeiture to one side, leaseholders currently have the right to challenge unreasonable service charges or to seek to have a new manager appointed if they can show fault with the current manager, but these jurisdictions lie with the county court. The second stage of our proposals is therefore to switch these cases to the leasehold valuation tribunals.

This move has been widely welcomed, on the ground that the tribunal will offer leaseholders a much more effective and cheap method of taking action against the unreasonable behaviour of landlords. This is because leaseholders have found it extremely difficult to challenge freeholders' actions in the courts. Although the initial court fee may be low, leaseholders often face protracted and potentially expensive litigation, and if they lose the case they are exposed to the risk of paying the costs of both sides. Even in normal cases that last for, say, two days, the likely exposure to costs can run into thousands of pounds.

The advantages of going to leasehold valuation tribunals are considerable. They have quicker, less formal procedures, and there is no need for full legal representation. The tribunal will include a professional surveyor who is fully qualified to assess the technical arguments that are likely to arise.

The other important point is that tribunals cannot award costs, so the exposure of leaseholders to the risk of costs will be much reduced.

Those advantages to leaseholders should be kept in mind when considering the fee that should be paid for access to the tribunals. There was little discussion of the full cost recovery principle when the Bill was originally before the House. The matter arose chiefly in another place, when my noble Friend Lord Lucas explained that it was likely that the daily cost of dealing with service charge cases by a tribunal could be as much as £2,000. That does not mean that the fee for hearing any case would be that much, as a detailed fee structure has not been determined, but there was general concern that full cost recovery would lead to fees of a considerable amount that could wipe out much of the cost advantage of a tribunal compared with county courts.

Various amendments were debated that would seek to limit the amount of fees chargeable. On Third Reading in another place, the Government tabled an amendment to ensure that the fee did not exceed the cost of the service. That would have allowed a considerable element of flexibility to set the fees, either at full cost recovery or at any percentage point below 100 per cent. of costs. A similar amendment was carried in relation to the parallel and new procedures for the tribunal to deal with the appointment of a manager.

For the procedures on service charge disputes, amendment No. 102, moved by Lord Bledisloe, was accepted. It provides that fees for these cases should be no more than the comparable fees in the county court. That would have the effect of setting a maximum of £120 for each case. Much concern was also expressed by noble Lords on both sides of the other place that our proposals for fees to be levied by tribunals offend the basic principle that there should, allegedly, be no charge for access to justice.

I emphasise that such fears are not justified—in the sense that the principle of cost recovery is already established. Indeed, Lords amendment No. 102 accepts the principle of charging fees, as it refers to fees paid in the county court.

It was suggested in another place that it would be breaking new ground to allow tribunals to charge a fee, but that is not so. For instance, if there were an appeal against a case heard by a leasehold valuation tribunal, it would be dealt with by the Lands Tribunal, which has a long-established fee—in these cases, involving a charge of about £250.

I turn next to our reasons for not accepting amendment No. 102 and for tabling amendment (a), which would allow for a maximum fee of £500. We think, given the great advantages of access to the leasehold valuation tribunal, that it is right that applicants should contribute towards the costs of the service. I fully accept that the point of the leaseholder package is to help thousands of leaseholders who have been the subject of deplorable and aggressive behaviour by their landlords. I think that our package achieves that, but we have to have regard to competing demands on the public purse. I am sure that Opposition Members will agree that it is important to strike a careful balance in that respect.

As I have said, the Government amendment moved in another place would have allowed for less than full cost recovery, but our amendment today puts an explicit limit on the face of the Bill. A fee of £500 represents a reasonable balance which will still mean that a substantial proportion of the costs will have to be borne by the taxpayer. It represents an affordable amount, particularly as it will usually be shared between a group of leaseholders in a block of flats. The amendment allows the maximum to be changed by order, but only following an affirmative resolution of both Houses, which will offer hon. Members the opportunity for debate before any changes to the limit are made. We intend to use the power in the usual way to reflect cost changes from time to time.

This does not mean that everyone will pay £500. The precise fee structure has not been worked out and will be subject to wide consultation before this section is commenced. The Bill already provides for mitigation of the fee in certain cases with respect to the financial position of the applicant. There is also a provision which allows the tribunal to require the other party to reimburse the applicant with the whole or part of the fee if that seems right in the circumstances.

Photo of Mr David Ashby Mr David Ashby , North West Leicestershire

In Committee, we all envisaged that these actions would be like any others—free. Suddenly and most unfortunately, charges are being introduced.

A fee of about £500 has been mentioned. An arbitrary sum like that is surely very odd. Is it more or less than one could expect if the case were dealt with in the county court?

Lastly, neither my hon. Friend nor I nor anyone else who served on the Committee seems to have thought of an idea that recently occurred to me—why not use magistrates courts? After all, they do licensing and matrimonial actions, so why cannot they deal with these issues too?

Photo of James Clappison James Clappison Parliamentary Under-Secretary (Department of Environment)

As I said earlier, the initial provision on fees was that, taking one year with another, they should be sufficient to cover the full costs of providing the service. As for the amount of costs in the county court, my hon. Friend will know that the fees charged for the court service always include an arbitrary element. The advantage of the leasehold valuation tribunal is that the litigant will not be exposed to the risk of costs, as he would in the county court. My hon. Friend, with his long experience of county courts, will know that I refer to the costs of not just the litigant but the other party to action in the county court. That factor weighs heavily with many litigants and acts as a deterrent to their taking action.

I note my hon. Friend's point about magistrates courts. We believe that the right forum for this type of case is the leasehold valuation tribunal. My hon. Friend will have heard me describe the presence of a qualified surveyor on the tribunal. I am sure that he will agree that it is important for the members of the tribunal to have that sort of expertise. With it, they can make a fair evaluation of the facts much more quickly—another material advantage to be borne in mind.

When designing the fee structure, we will seek to construct a scale of charges that offers a degree of certainty to the applicant before the case starts; in other words, we will not seek to charge a fee relating to the length of the case. We will also see whether it is possible to design a sliding scale of fees relating to the value of the disputed sums—although in cases of this kind that might not prove straightforward.

The discussions that have taken place on this issue, particularly in another place, have been of considerable value in focusing attention on this important issue. What the Government propose strikes the right balance of fairness and equity for all parties. It will be vital to leaseholders and, with the maximum fee set at £500, we believe that it will give them a real opportunity for effective justice at an affordable price.

Photo of Nick Raynsford Nick Raynsford , Greenwich

This is one of the most important groups of amendments to be considered this evening. It concerns justice for leaseholders and remedies against the abuse of service charges which all too many leaseholders have experienced in recent years. Throughout these debates, hon. Members have been all too well aware of the problems brought to our attention by a large number of leaseholders and their organisations, highlighting the way in which they have been exploited by far too many rogue landlords—many of whom bought the freehold for relatively little so as to be able to charge disproportionate sums in management, service and insurance charges.

In Committee, the hon. Member for North-West Leicestershire (Mr. Ashby) highlighted some of those abuses. Other Committee members highlighted similar examples of crude and blatant exploitation of leaseholders by unscrupulous freeholders or managing agents. There was general agreement, I believe, that action had to be taken that provided redress and that made it possible for leaseholders to get redress without being deterred by the cost of challenging a freeholder through a legal system which could be expensive. The idea of going to the High Court, for example, to challenge a freeholder is nonsense. It is simply not possible for leaseholders to meet the costs envisaged in such an exercise.

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There was agreement, therefore, that we wanted a framework that would enable leaseholders to get justice quickly, expeditiously and cheaply. The concept that the leasehold valuation tribunal should be given scope for sorting out such disputes commanded wide support. The hon. Member for North-West Leicestershire has asked whether a magistrates court might take on the function. Until he raised the point, I had not considered that, because the leasehold valuation tribunal seemed to be the right and appropriate body, but the important point, which undoubtedly underlies his question, is the need for justice to be quick and cheap, and for people not to be deterred by the prospect of large fees or serious costs.

In Committee, therefore, we welcomed the concept of leasehold valuation tribunals performing these functions. To my knowledge—I will check Hansard carefully—no one raised the prospect of fees being charged for cases taken to the tribunals. Our assumption in Committee was that access to such tribunals would be free, in the same way as access to other tribunals has been free. It has been an important point of principle that people could take their case to a tribunal without being deterred by fees. That was certainly my understanding.

Photo of Nick Raynsford Nick Raynsford , Greenwich

The hon. Gentleman nods to show that that was his understanding too.

For that reason, it was shocking when, in Committee in another place, Lord Lucas, the Government spokesman, announced that he envisaged fees and, when pressed on the scale of fees, said that they could be between £500 and £2,000 a day. The Government justified that by saying that that was the economic cost of dealing with the cases. Frankly, that is a fairly horrifying prospect, but, irrespective of that, fees on that scale would deter any leaseholder from taking their case to a leasehold valuation tribunal, simply because they would be unable to pay such charges.

Consequently, there was a substantial debate in another place, during Committee and Report and on Third Reading only last week, about the adverse impact of fees being charged in leasehold valuation tribunals. During those debates, hon. Members from a wide range of different political parties highlighted the serious consequences of the Government's proposal to charge fees for access to the tribunals.

First, there is the obvious point about leaseholders not feeling able to take up their right to obtain justice because of a fear of the cost being prohibitive. Secondly, if the fee system were in place, there would be obvious scope for the unscrupulous landlord—we know that these measures are being introduced purely to provide redress against unscrupulous landlords—to intimidate a leaseholder by the prospect of substantial fees and costs. Thirdly—this became increasingly important in the debates in another place—there is the wider point of principle about free access to justice.

My noble Friend Lord Archer of Sandwell spoke for the whole House, I believe, when he raised the concern that this would be the thin end of wedge, saying that, if the Government got their way on charging fees for leasehold valuation tribunals, shortly, we would be hearing proposals for fees to be charged for other tribunals. Clearly, that anxiety exercised the minds of many Members of the other House.

Viscount Bledisloe, who moved amendment No. 102, which was ultimately successful, made the point that it was entirely inconsistent of the Government to suggest that, while citizens have access to other tribunals without having to pay a fee, those who wish to challenge service charges should be subject to a fee—a different treatment of leaseholders from that of other people seeking redress through tribunals.

As the House knows, the Government were defeated. As a result of amendment No. 102, which was supported across the political parties, an amendment in the Bill restricts steeply and properly the fee level that can be charged.

We have reservations about the whole concept of a fee being accepted at all, because there will still be discrimination. Leaseholders will be subject to fees when they try to get justice, whereas people seeking justice from a different tribunal will not be subject to a fee; but amendment No. 102 restricts the fee level to an amount that is similar to the one that could be charged in a county court.

There seems to be a measure of common sense behind that, despite my reservation, because a leaseholder would have the option and alternative of seeking justice in a county court instead of in a leasehold valuation tribunal. The restriction to the fee level chargeable in the county court, which I understand is about £115, is clearly a considerable improvement on the Government's original proposal.

In reaction, the Government have gradually withdrawn from their original position, which I suppose one could describe as the free market position, where the full cost of £2,000 a day could be charged. They are now seeking a limited cost of £500 for a case.

There is, however, an extraordinary inconsistency about the Government's position. Although they say that they are prepared to limit the cost to £500, they are still leaving in the Bill language that refers to the charge being no more than is necessary to cover the costs. The Minister will recognise that that phraseology still remains.

It is not only those of us who have reason to be sceptical about the Government's good intentions who will feel nervous about the fact that, while that phraseology is still there, Ministers have scope to come forward with the powers that they are giving themselves under their amendment and to say, "We need to change this figure. It may have been £500 in 1996, but in 1997 there may be a need to increase it because the cost is greater." No doubt we will be given the statistics and figures showing that the costs are higher and justifying an increase from £500. Therefore, the £500 figure, which is an arbitrary figure for which there is no logical justification, cannot be counted on as the maximum cost that a leaseholder might have to face.

There is still scope in the Bill for the Government to vary that amount by order, and there is provision in the Bill for the fees not to exceed the total cost. That link between the fee and the cost is extremely dangerous, and could lead to proposals to increase the fee. Even if it does not, £500 is a substantial sum, which would seriously deter many leaseholders on low incomes from seeking justice. We have had evidence from many organisations that represent leaseholders highlighting the extent to which people on modest incomes can be intimidated.

Photo of Mr David Ashby Mr David Ashby , North West Leicestershire

The Bill is extremely important for leaseholders on low incomes, such as pensioners, who are being intimidated. It may not matter to young yuppies earning a lot of money, with properties with 999-year leases, but it means a lot to pensioners on fixed low incomes. The fee could seem extremely high to them.

Photo of Nick Raynsford Nick Raynsford , Greenwich

The hon. Gentleman is absolutely right. It is precisely leaseholders on middle to low incomes who are most likely to be intimidated and most likely to decline to use a leasehold valuation tribunal if they know that it will cost £500, because that sum might be beyond their means.

The Minister may say that the charge relates to service charges that could involve several hundred pounds and that it is therefore worth it, but pensioners budgeting on a tight income and worried about an increase in service charges from, say, £600 to £750 might consider the possible saving of £150 not to be worth arguing about if they must pay £500 in fees to take the case to a leasehold valuation tribunal. Why should they have to pay that fee? Why should not they be able to get affordable justice, given that tribunals normally operate on the principle that people should have access to justice and should not be deterred by a lack of means?

The Minister argued that the fee could be reimbursed if the leasehold valuation tribunal decided that the applicant had a meritorious case and the landlord did not. That might apply in some cases, but no one on a low income who was worried about whether he or she could afford the £500 would take the risk. If such people are worried that they cannot pay, they will not be reassured by the possibility—it is a mere possibility—that, if they are successful, the leasehold valuation tribunal may decide that the fee should be reimbursed.

The Government's proposal is extremely dangerous. It threatens the basis of what we argued for in Committee and thought the Government had accepted—that people on modest incomes should have access to justice without being deterred by the cost. Once again, it raises the spectre of leaseholders intimidated by unscrupulous rogue landlords being unable to get effective redress.

By linking the fees to those charged in a county court, Lords amendment No. 102 provides the Government with a modest fee. Although it is higher than we would want, the amendment limits it to a figure that would be, in almost every case, affordable. Moreover, it makes a proper connection between the fees charged in a leasehold valuation tribunal and those charged in a county court, so there is no possibility of inconsistency in the cost of justice between the two. The amendment passed by the House of Lords was important, as it incorporates the principle of affordable justice, and it deserves to be retained in the Bill.

The Government have been engaged in a retreat. Originally, they proposed large fees; they now propose slightly less onerous fees, but they still seek to impose fees that will deter some people from obtaining justice. They are making a dangerous move, which cuts across the principle that people should have access to justice without having to pay fees through tribunals. Their amendments should therefore be resisted, and I invite my hon. Friends to support Lords amendment No. 102, if necessary, in the Division Lobby.

Conservative Members often speak about the importance of leaseholders' rights. They must decide whether their loyalty lies with leaseholders or with the Government. Their failure to back leaseholders in the past, particularly in crucial votes on Report two months ago, led to the loss of some of the most important rights that we could have given leaseholders. It will be tragic if, tonight, leaseholders are confronted once again by a betrayal of their hopes for affordable justice because Conservative Members, who speak as though they support leaseholders, are not prepared to express that support in the Lobby. We shall press this issue and invite all those who believe that leasehold justice is important to join us in voting to retain the Lords amendment.

Photo of Mr John Hunt Mr John Hunt , Ravensbourne 5:15 pm, 22nd July 1996

The hon. Member for Greenwich (Mr. Raynsford) referred to a "Government retreat". I would prefer to describe it as a sensible concession in response to concerns expressed by hon. Members here and in another place. I suppose that the nature of compromises means that they do not and cannot fully satisfy either side, but I am reasonably happy with the solution that my hon. Friend the Minister has put forward this afternoon in the form of amendment (a).

Originally, there were great fears that fees of £2,000 a day would be imposed. That would have inhibited people from going to leasehold valuation tribunals and would have undermined the point and purpose of such tribunals, which have deservedly been given a warm welcome by leaseholders throughout the country. I welcome the fact that the Government drew back from their original intention to impose full cost-basis fees.

The Government's concession reminds us of the useful role that the other place can play in matters of this kind. Without the debate to which the hon. Member for Greenwich referred, I doubt whether the Government would have made that compromise. I am sure that the concession will be given a qualified welcome by many leaseholders who look at these matters sensibly and realistically. They will not necessarily oppose the principle of levying fees provided that they are moderate and sensible. In many cases, £500 a day would be shared by several leaseholders taking a single case to a tribunal, so the sum would not be punitive.

The concession will be given a qualified welcome by my constituents, such as those who live on the Fair Acres estate, who have been subjected to a great deal of anxiety and harassment by their landlords over the years. I shall therefore support the Government in the Lobby tonight.

Photo of Mrs Diana Maddock Mrs Diana Maddock , Christchurch

Amendment No. 102 is a classic case of giving with one hand and taking away with the other. We have seen that happen in Committee and throughout the Bill's proceedings in another place.

All hon. Members welcome the fact that leasehold valuation tribunals will assist leaseholders if they have severe problems. However, the tribunals will be of absolutely no use to many people if the cost is too high. In particular, I am concerned about elderly people. They worry about money and the hassle of going to the tribunal. If they are worried about whether they can afford to do so, they will not go to the tribunal.

The matter was extensively discussed in another place and I concur entirely with the comments of my noble Friend Baroness Hamwee on this matter. We are talking about access to justice—free access to justice. The Government have retreated on this matter: there will not be free access to justice, as we all thought at the beginning—there will be costs.

The Government's amendments give Ministers the power to change the limit, although they are trying to convince us that it is £500. That is totally unacceptable. I concur with what was decided in another place. I fully support amendment No. 102, as passed in another place.

Photo of Mr David Ashby Mr David Ashby , North West Leicestershire

The debate has reminded me of something that happened to me some years ago when I was successfully demolishing a prosecution case. The judge was getting more and more irate as he saw the case disappearing and he said to me, "Do you know how much it costs per minute to run this court?" I replied, "I agree that it costs a large amount of money, but what price justice?" Today, we are dealing with justice; we are dealing with something that the Government have recognised and acted on, to their enormous credit.

The Government have appreciated that people go to the London auction houses and see freeholds on 999-year leases being auctioned. We are not talking about the great estates or the decent people—we are talking about people who are out to make a fast buck, about the rip-off merchants. It is no good talking about the sanctity of contracts, about people agreeing that they had a 999-year lease and about people being subject to a contract that they are trying to break. We are talking about rip-off merchants who go out and buy freeholds and then see how much they and their successors can rip off the leaseholder in the following 999 years. I am fundamentally opposed to the whole system, but that is not what we are debating today.

I shall explain to my hon. Friend the Minister why I shall support him in the Lobby today, but I want him to understand what he needs to do in terms of regulation. I declare an interest because I shall talk about my personal case and what I am going to do. I want my hon. Friend to work his regulations so that I can do the best thing possible in my case. That is the best way that I can illustrate what I believe should be done.

My property was sold off to some rip-off merchants, who formed a company called Raleigh Estates, which is really run by a firm of surveyors called Wallakers— I suspect that it owns a number of properties. It purchased a 999-year lease on a small block of four flats. I am incensed by this behaviour, not because I mind—I earn enough money to pay the insurance—but because it is ripping people off. I loathe being ripped off.

I know that individual flats can be insured for about £180 a year, but that Wallakers has gone to great lengths to ensure that the insurance costs in excess of £390 a year. The terms of the lease say that Wallakers must nominate the insurers and that it is the agent. I believe that the Monopolies and Mergers Commission should look at this matter. There is a tie-up between the major insurance companies and companies such as Wallakers.

The insurance companies do not receive the money direct—they go through Wallakers, and Wallakers gets 15 per cent. I know that 15 per cent. of £180 is not very much, but 15 per cent. of £390 is a good deal more. It is in the interests of the rip-off merchants, such as Wallakers, to get the highest possible insurance they can—they rip us off so that they can get the highest possible return. We have to do something about this.

There are only four flats in my block. One of the tenants is a young computer man and he can afford it. However, one of the tenants is an old-age pensioner. We tried to buy the freehold and had an enormous number of problems. Wallakers puts in every impediment that it can—it does not reply to letters. I have instructed solicitors in this regard, and they cannot get anywhere. Time and time again, we are getting absolutely nowhere. We are all fed up.

The solution is to take the management out of the hands of Wallakers—and as quickly as possible. It will be left with £15 a year and it will have to decide whether it is worth it. We will say, "You can stuff it, Wallakers, we will carry on with the management. You can just get your £15 a year." That is what we want to do.

I want us to get the regulations right. I accept that we must have a limit of £500. The Treasury is giving Departments absolute hell, and I accept that we must have some sort of compromise. Hon. Members have to remember that, in the case that I am talking about, there are not 200 flats—if there are 200 flats, it will be only £5 or £10 a person—but only four, and it costs a lot more.

I hope that the regulations will cover not only the cost of what we are trying to do but the number of applicants. I hope that there can be a scale of fees that will take those factors into account. One should be able to go swiftly, quickly and cheaply before the tribunal. I should like the management to be in my hands—I would get three quotes from insurance companies and I would not charge 15 per cent. There are only four of us and I shall get the others to pay a direct debit to the insurance company and away we will go. There will be no problems at all and no one will be ripped off.

I want my hon. Friend to think about the scale of charges and about the limit of £500. He should also think about the bottom end and grade it according to the number and to the scale—according to what is required and what is requested. There are a number of ways of getting it right. I accept that things will change. After all, £500 is a reasonable sum of money today but, in 20 years time—especially if the Labour party gets into power and causes inflation to rise—it will seem like only £5. I accept that there will have to be some change in the years ahead to take account of inflation, if nothing else.

In keeping with everything that we have said, I am sure that my hon. Friend's Department will honour the spirit that it is £500 today and that it may have to be changed in the years ahead. We need justice that is cheap and swift. We need justice in this matter.

Photo of Mr Dudley Fishburn Mr Dudley Fishburn , Kensington

The story of leasehold reform is a strange one, and this set of amendments most perfectly typifies what is so strange about it. The push for leasehold reform has come from Conservative voters, home owners and a million people who have sunk a lot of money into their homes and found that their homes, under our leasehold system, are second-class homes.

Despite the charming words of the hon. Member for Greenwich (Mr. Raynsford), the articulateness of the leasehold reform campaign has been provided by Conservative Members, who enabled the previous three Leasehold (Reform) Acts to be passed.

Photo of Nick Raynsford Nick Raynsford , Greenwich

The hon. Gentleman argues that the case for leasehold reform has been made by Conservative Members. Perhaps he will tell the House who voted for leaseholders' right to manage and to do away with the low-rent test, and why he voted with the Government and with all his Conservative colleagues against leaseholders' interests on those two issues?

Photo of Mr Dudley Fishburn Mr Dudley Fishburn , Kensington 5:30 pm, 22nd July 1996

I did not mean to stir up this pot at this time. I divided the House on the low-rent test, and I voted with the hon. Member for Greenwich on the most recent Leasehold (Reform) Bill—which gets to the point that I should like to make. While leasehold reform is in the Conservative interest, and Conservative Members have articulated that interest, often the Government have been the slowest, most reluctant and most diluted in their approach to it.

The amendments are to be hugely welcomed, as are the concessions that have been gained. However, they should have been in an Act of two years ago. We were told then, of course, that it was completely impossible for leaseholders to have access to the right to manage, in the same way that we were told that the low-rent test was an essential part of leasehold law. Now, courtesy of the good work done by the Government, that low-rent test has been all but abolished, and leaseholders will have a right to go to a leasehold valuation tribunal to win the ability to manage. However, it is little, it is late, and it is not the last word on the subject.

What is certain is that the topics that we have been discussing as the Bill has passed through the House, and most particularly this set of amendments, will be revisited in the years ahead. That has nothing to do with the ambitions of the hon. Member for Greenwich—who, if ever he does come to the Dispatch Box, will probably come to it as an Agriculture Minister rather than as a Minister for anything to do with the Department of the Environment—but it has everything to do with the slow, reluctant and rather muddled way in which we revise property law in this country.

My guess is that the amendments will return in another Housing Bill, that the Bill is by no means the last word and that, in 2010, leaseholders will not be going to a leasehold valuation tribunal, paying their £500 and winning the right to manage.

I am delighted that the concessions have been made, that a cap has been established and that Front Benchers have—although it is little and late—done the right thing. As one more step along the path of proper leasehold reform, the measures are much to be welcomed.

Photo of James Clappison James Clappison Parliamentary Under-Secretary (Department of Environment)

I think that hon. Members are familiar with the background of how some tenants have suffered at the hands of certain landlords. Certainly we believe that our package of reforms will be of real assistance to many tenants who have suffered in that manner. This reform—the establishment of the leasehold valuation tribunal—will be an important part of that package.

The hon. Member for Greenwich (Mr. Raynsford) raised the issue of unscrupulous landlords who would try to exploit the provisions in the same way in which they have exploited other provisions, causing fear and trepidation for tenants. I should tell him that the provision to which I referred in my opening remarks is perhaps one that the courts will want to consider, particularly in the context of landlords' behaviour. We have set out a provision that allows a tribunal to require the other party to reimburse the applicant for all or part of the fee if it seems appropriate in the circumstances. There is no doubt that tribunals will want to examine carefully the type of behaviour by landlords that he mentioned.

The hon. Member for Greenwich, and the hon. Member for Christchurch (Mrs. Maddock), mentioned the order and the possibility of increasing the sum of £500. I respectfully draw their attention to the fact that that would require an affirmative resolution and to what I have already said about that matter—that the order will be dealt with in the normal way and that it will occasionally reflect changes in cost. It is sensible to have such a provision for change. It does not mean necessarily that change will be brought in tomorrow, but it is sensible to have such provision for it.

Various hon. Members have mentioned people on low incomes. The Bill contains provision for the tribunal to mitigate the fee if the applicant is on a low income. We have not yet decided how to implement that provision in detail, but we shall be consulting on it. I can tell the House that it is likely that we will passport the current support regime—such as income support—as a basis for the operation of that mitigation. The fee will be mitigated in full or in part if the applicant qualifies.

I am grateful to my hon. Friend the Member for Ravensbourne (Sir J. Hunt) for his expression of support—which, in his case, comes after a very careful consideration of the provisions.

I am grateful to my hon. Friend the Member for Kensington (Mr. Fishburn). It is fair to say, on any view, that he has played a most distinguished and well-documented part in the history of leasehold reform.

I listened carefully to the comments of my hon. Friend the Member for North-West Leicestershire (Mr. Ashby), who I know cares deeply about this subject. He put it admirably when he said that justice in such circumstances should come swiftly and cheaply. In response to his concern, I can tell him that the precise fee structure has not yet been worked out. We will, however, of course be guided by the type of considerations to which I have already adverted. He is as anxious as we are that we should have effective justice at an affordable price. We believe that these provisions will achieve that.

Lords amendment agreed to.

Lords amendment Nos. 100 and 101 agreed to.

Lords amendment: No. 102, in page 53, line 36, leave out from ("securing") to end of line 39 and insert ("that the amount of the fees charged is no more than would, in the opinion of the Secretary of State, be chargeable for similar proceedings in the county court.")

Motion made, and Question proposed, That this House doth disagree with the Lords in the said amendment.—[Mr. Clappison.]

Question put:

The House divided: Ayes 265, Noes 217.

Division No. 207][5.36 pm
AYES
Ainsworth, Peter (E Surrey)Chapman, Sir Sydney
Alison, Michael (Selby)Clappison, James
Allason, Rupert (Torbay)Clark, Dr Michael (Rochf'd)
Amess, DavidClarke, Kenneth (Rushcliffe)
Arbuthnot, JamesClifton-Brown, Geoffrey
Arnold, Jacques (Gravesham)Coe, Sebastian
Ashby, DavidCongdon, David
Atkins, RobertCoombs, Anthony (Wyre F)
Atkinson, Peter (Hexham)Coombs, Simon (Swindon)
Baker, Nicholas (N Dorset)Cope, Sir John
Baldry, TonyCormack, Sir Patrick
Banks, Matthew (Southport)Couchman, James
Banks, Robert (Harrogate)Cran, James
Bates, MichaelCurrie, Mrs Edwina
Batiste, SpencerCurry, David
Bellingham, HenryDavies, Quentin (Stamf'd)
Bendall, VivianDeva, Nirj Joseph
Beresford, Sir PaulDevlin, Tim
Biffen, JohnDorrell, Stephen
Body, Sir RichardDouglas-Hamilton, Lord James
Bonsor, Sir NicholasDover, Den
Booth, HartleyDuncan, Alan
Boswell, TimDuncan Smith, lain
Bottomley, Peter (Eltham)Dunn, Bob
Bowden, Sir AndrewDurant, Sir Anthony
Bowis, JohnDykes, Hugh
Boyson, Sir RhodesElletson, Harold
Brandreth, GylesEvans, Nigel (Ribble V)
Brazier, JulianEvans, Roger (Monmouth)
Bright, Sir GrahamEvennett, David
Brooke, PeterFabricant, Michael
Brown, Michael (Brigg Cl'thorpes)Fenner, Dame Peggy
Browning, Mrs AngelaField, Barry (Isle of Wight)
Bruce, Ian (S Dorset)Fishburn, Dudley
Bums, SimonForman, Nigel
Burt, AlistairForsyth, Michael (Stirling)
Butcher, JohnForth, Eric
Butler, PeterFowler, Sir Norman
Carlisle, John (Luton N)Fox, Dr Liam (Woodspring)
Carlisle, Sir Kenneth (Linc'n)Fox, Sir Marcus (Shipley)
Carrington, MatthewFreeman, Roger
Carttiss, MichaelFrench, Douglas
Cash, WilliamFry, Sir Peter
Channon, PaulGale, Roger
Gallie, PhilMarshall, Sir Michael (Arundel)
Gardiner, Sir GeorgeMartin, David (Portsmouth S)
Garnier, EdwardMawhinney, Dr Brian
Gill, ChristopherMerchant, Piers
Gillan, Mrs CherylMills, lain
Goodlad, AlastairMitchell, Andrew (Gedling)
Goodson-Wickes, Dr CharlesMitchell, Sir David (NW Hants)
Gorman, Mrs TeresaMoate, Sir Roger
Gorst, Sir JohnMonro, Sir Hector
Grant, Sir Anthony (SW Cambs)Montgomery, Sir Fergus
Greenway, Harry (Ealing N)Needham, Richard
Greenway, John (Ryedale)Nelson, Anthony
Griffiths, Peter (Portsmouth N)Newton, Tony
Gummer, JohnNicholls, Patrick
Hamilton, Sir ArchibaldNorris, Steve
Hamilton, Neil (Tatton)Oppenheim, Phillip
Hampson, Dr KeithOttaway, Richard
Hanley, JeremyPaice, James
Hannam, Sir JohnPatnick, Sir Irvine
Hargreaves, AndrewPatten, John
Haselhurst, Sir AlanPattie, Sir Geoffrey
Hawkins, NickPawsey, James
Hawksley, WarrenPeacock, Mrs Elizabeth
Hayes, JerryPickles, Eric
Heald, OliverPorter, David (Waveney)
Heathcoat-Amory, DavidPortillo, Michael
Hendry, CharlesPowell, William (Corby)
Heseltine, MichaelRathbone, Tim
Higgins, Sir TerenceRedwood, John
Hill, Sir James (Southampton Test)Riddick, Graham
Horam, JohnRifkind, Malcolm
Hordem, Sir PeterRobathan, Andrew
Howard, MichaelRoberts, Sir Wyn
Howell, Sir Ralph (N Norfolk)Robertson, Raymond S (Ab'd'n S)
Hughes, Robert G (Harrow W)Robinson, Mark (Somerton)
Hunt, David (Winal W)Roe, Mrs Marion
Hunt, Sir John (Ravensb'ne)Rowe, Andrew
Hunter, AndrewRumbold, Dame Angela
Hurd, DouglasSackville, Tom
Jack, MichaelSainsbury, Sir Timothy
Jackson, Robert (Wantage)Scott, Sir Nicholas
Jenkin, Bernard (Colchester N)Shaw, David (Dover)
Jessel, TobyShaw, Sir Giles (Pudsey)
Johnson Smith, Sir GeoffreyShephard, Gillian
Jones, Gwilym (Cardiff N)Shepherd, Sir Colin (Heref'd)
Jones, Robert B (W Herts)Shersby, Sir Michael
Jopling, MichaelSims, Sir Roger
Key, RobertSkeet, Sir Trevor
King, TomSmith, Tim (Beaconsf'ld)
Knight, Mrs Angela (Erewash)Soames, Nicholas
Knight, Greg (Derby N)Speed, Sir Keith
Knight, Dame Jill (Edgbaston)Spencer, Sir Derek
Knox, Sir DavidSpicer, Sir Jim (W Dorset)
Kynoch, GeorgeSpteer, Sir Michael (S Worcs)
Lait, Mrs JacquiSpink, Dr Robert
Lang, IanSpring, Richard
Lawrence, Sir IvanSproat, Iain
Legg, BarrySquire, Robin (Hornchurch)
Lennox—Boyd, Sir MarkStanley, Sir John
Lester, Sir Jim (Broxtowe)Steen, Anthony
Lidington, DavidStephen, Michael
Lilley, PeterStewart, Allan
Lloyd, Sir Peter (Fareham)Streeter, Gary
Lord, MichaelSumberg, David
Luff, PeterSweeney, Walter
Lyell, Sir NicholasSykes, John
MacGregor, JohnTapsell, Sir Peter
MacKay, AndrewTaylor, Ian (Esher)
Maclean, DavidTaylor, John M (Solihull)
Madel, Sir DavidTaylor, Sir Teddy
Maitland, Lady OlgaThomason, Roy
Malone, GeraldThompson, Sir Donald (Calder V)
Mans, KeithThompson, Patrick (Norwich N)
Marland, PaulThumham, Peter
Marlow, TonyTownend, John (Bridlington)
Marshall, John (Hendon S)Townsend, Cyril D (Bexl'yh'th)
Tracey, RichardWhitney, Ray
Tredinnick, DavidWhittingdale, John
Trend, MichaelWiddecombe, Miss Ann
Twinn, Dr IanWiggin, Sir Jerry
Vaughan, Sir GerardWilkinson, John
Waldegrave, WilliamWilletts, David
Walden, GeorgeWilshire, David
Walker, Bill (N Tayside)Wolfson, Mark
Waller, GaryWood, Timothy
Ward, JohnYeo.Tim
Wardle, Charles (Bexhill)Young, Sir George
Waterson, NigelTellers for the Ayes:
Watts, JohnMr. Derek Conway and Mr. Patrick McLoughlin.
Wells, Bowen
NOES
Abbott, Ms DianeDavis, Terry (B'ham Hodge H)
Ainger, NickDewar, Donald
Ainsworth, Robert (Cov'try NE)Dixon, Don
Allen, GrahamDobson, Frank
Alton, DavidDowd, Jim
Anderson, Donald (Swansea E)Dunwoody, Mrs Gwyneth
Anderson, Ms Janet (Ros'dale)Eagle, Ms Angela
Armstrong, Ms HilaryEastham, Ken
Ashton, JosephEtherington, Bill
Austin-Walker, JohnEvans, John (St Helens N)
Barnes, HarryFatchett, Derek
Barron, KevinFaulds, Andrew
Battle, JohnField, Frank (Birkenhead)
Beckett, MargaretFisher, Mark
Berth, A JFlynn, Paul
Bell, StuartFoster, Derek
Benn, TonyFoster, Don (Bath)
Bennett, Andrew FFoulkes, George
Benton, JoeFraser, John
Bermingham, GeraldFyfe, Mrs Maria
Berry, RogerGalloway, George
Betts, CliveGapes, Mike
Blair, TonyGarrett, John
Bradley, KeithGilbert, Dr John
Bray, Dr JeremyGodman, Dr Norman A
Brown, Gordon (Dunfermline E)Godsiff, Roger
Brown, Nicholas (Newcastle E)Golding, Mrs Lin
Bruce, Malcolm (Gordon)Gordon, Ms Mildred
Byers, StephenGrant, Bemie (Tottenham)
Caborn, RichardGriffiths, Win (Bridgend)
Callaghan, JimGrocott, Bruce
Campbell, Mrs Anne (C'bridge)Hall, Mike
Campbell, Menzies (Fife NE)Hanson, David
Campbell, Ronnie (Blyth V)Hardy, Peter
Campbell-Savours, D NHarman, Ms Harriet
Canavan, DennisHarvey, Nick
Cann, JamieHattersley, Roy
Chisholm, MalcolmHenderson, Doug
Church, Ms JudithHeppell, John
Clapham, MichaelHill, Keith (Streatham)
Clark, Dr David (S Shields)Hinchliffe, David
Clarke, Tom (Monklands W)Hoey, Miss Kate
Clelland, DavidHoon, Geoffrey
Clwyd, Mrs AnnHowarth, Alan (Stratf'd-on-A)
Coffey, Ms AnnHowarth, George (Knowsley N)
Cohen, HarryHowells, Dr Kim
Connarty, MichaelHoyle, Doug
Cook, Frank (Stockton N)Hughes, Kevin (Doncaster N)
Cook, Robin (Livingston)Hughes, Robert (Ab'd'n N)
Corbyn, JeremyHutton, John
Corston, Ms JeanJackson, Ms Glenda (Hampst'd)
Cousins, JimJackson, Mrs Helen (Hillsborough)
Cox, TomJamieson, David
Cunningham, Jim (Cov'try SE)Jenkins, Brian (SE Staffs)
Cunningham, Dr JohnJohnston, Sir Russell
Dafis, CynogJones, Barry (Alyn & D'side)
Dalyell, TamJones, Nigel (Cheltenham)
Darling, AlistairJowell, Ms Tessa
Davies, Denzil (Uanelli)Kaufman, Gerald
Keen, AlanPrescott, John
Kennedy, Mrs Jane (Broadgreen)Primarolo, Ms Dawn
Khabra, Piara SQuin, Ms Joyce
Kilfoyle, PeterRadice, Giles
Kirkwood, ArchyRandall, Stuart
Lestor, Miss Joan (Eccles)Raynsford, Nick
Livingstone, KenReid, Dr John
Lloyd, Tony (Stretf'd)Rendel, David
Lynne, Ms LizRobertson, George (Hamilton)
McAllion, JohnRoche, Mrs Barbara
McAvoy, ThomasRogers, Allan
McCartney, Ian (Makerf'ld)Rooker, Jeff
Macdonald, CalumRooney, Terry
McFall, JohnRoss, Emie (Dundee W)
McKelvey, WilliamRuddock, Ms Joan
Mackinlay, AndrewSedgemore, Brian
McLeish, HenrySheerman, Barry
McMaster, GordonShore, Peter
McNamara, KevinShort, Ms Clare
MacShane, DenisSkinner, Dennis
Madden, MaxSmith, Andrew (Oxford E)
Maddock, Mrs DianaSmith, Llew (Blaenau Gwent)
Mahon, Mrs AliceSmyth, Rev Martin (Belfast S)
Marshall, David (Shettleston)Spearing, Nigel
Martin, Michael J (Springbum)Spellar, John
Meacher, MichaelSteinberg, Gerry
Meale, AlanStevenson, George
Michael, AlunStott, Roger
Michie, Bill (Shef'ld Heeley)Strang, Dr Gavin
Miller, AndrewStraw, Jack
Mitchell, Austin (Gt Grimsby)Sutcliffe, Gerry
Molyneaux, Sir JamesTaylor, Mrs Ann (Dewsbury)
Moonie, Dr LewisTaylor, Matthew (Truro)
Morgan, RhodriThompson, Jack (Wansbeck)
Morris, Alfred (Wy'nshawe)Timms, Stephen
Morris, Ms Estelle (B'ham Yardley)Tipping, Paddy
Mowlam, Ms MarjorieTouhig, Don
Mudie, GeorgeTrickett, Jon
Mullin, ChrisTyler, Paul
Murphy, PaulVaz, Keith
Nicholson, Miss Emma (W Devon)Walker, Sir Harold
O'Brien, William (Normanton)Wareing, Robert N
Olner, BillWatson, Mike
Orme, StanleyWicks, Malcolm
Pearson, IanWilliams, Alan (Swansea W)
Pendry, TomWilliams, Alan W (Carmarthen)
Pickthall, ColinWinnick, David
Pike, Peter LWise, Mrs Audrey
Pope, GregTellers for the Noes:
Prentice, Mrs B (Lewisham E)Mr. Eric Clarke and Mr. Eric Martlew.
Prentice, Gordon (Pendle)

Question accordingly agreed to.

Amendments made in lieu of the Lords amendment: (a), in page 53, line 35, leave out from first 'order' to end of line 39 and insert— 'subject to this limit, that the fees payable in respect of any one application or reference by the court together with any proceedings before the tribunal arising out of that application or reference shall not exceed £500 or such other amount as may be specified by order of the Secretary of State.'.

(b), in page 54, line 6, leave out 'which, unless the order' and insert— '( )No order altering the limit under subsection (3) shall be made unless a draft of the order has been laid before and approved by a resolution of each House of Parliament.( ) Any other order under this section, unless it'.—[Mr. Brandreth.]

Lords amendments Nos. 103 and 104 agreed to.