I congratulate my right hon. Friend Frank Dobson on securing this opportunity to debate a matter that is of great interest to some of his constituents. I understand that he has represented Holborn and St. Pancras for more than 30 years, and is an assiduous Constituency Member. I recognise the worry and concern felt not just by his constituents but by others, as evidenced by the contribution from Mr. Field and the presence of my hon. Friend Meg Hillier. I hope that the further details that I shall give will go some way towards reassuring my right hon. Friend, the other Members who are present and the House as a whole, and, most important, the tenants of the Crown Estate.

The Crown Estate is charged with managing the property assets owned by the sovereign, whose revenue is automatically paid to the Government. Its remit is to maintain and enhance the value of the estate and the return obtained on it, but with due regard to the requirements of good management. It is charged by law to generate a commercial return from the assets that it manages, and as such it keeps its asset portfolio under review so that it can decide how to improve its return. It is currently considering the sale of 1,200 residential units, about 500 of which are in the constituency of my right hon. Friend the Member for Holborn and St. Pancras. To that effect, it is conducting a consultation exercise, asking its residents for their views about a possible sale of the freehold on which their properties are situated. I want to emphasise that no decision on whether to make a sale has taken place yet, and the Crown Estate will only make a decision once residents' views are known and fully considered.

I completely understand the concerns of my right hon. Friend and his constituents on this issue. Any possibility of change in ownership is, of course, worrying for residents. The Crown Estate is considering the sale because it believes it is likely that a specialist expert residential landlord could provide a better service. It is also clear that the capital receipts it would generate from the sale could be used profitably in other parts of its business, and it may help the House if I explain this.

The Crown Estate is prevented in law from borrowing as most private sector property companies can and do. It must generate capital for its investment and development activity from disposals of its own assets, essentially by reordering priorities. If it goes ahead, the sale of its London residential property would be one such disposal. In effect, the Crown Estate would redeploy the proceeds within the business. I want to lay to rest a couple of rumours that are floating around. The Treasury has not ordered the Crown Estate to sell off vast chunks of its portfolio to raise money for the Exchequer, and neither does the Crown Estate need to sell this part of its estate urgently because it is in desperate financial straits.

I understand, of course, that the main worry for residents is what the outcome of a possible sale may be on their tenancies, and that was the main thrust of my right hon. Friend's remarks. Therefore, in order to offer reassurance I should explain the protections that the Government have been told would be in place if the Crown Estate decided to sell. The first of them is to do with rents. My right hon. Friend set out some tenants' fears about rents and other terms, and he is especially troubled about the position of those 35 per cent. who have regulated tenancies. I hope I can alleviate some fears by telling Members that the rent officer determines their rents, and that will not change. Some tenants also benefit from a ceiling rent-the 40 to 60 per cent. referred to in my right hon. Friend's speech. These rents cannot rise above a certain percentage of the market rent, and that will not change either. That is protected by law.

It is likely that some of these residents, if not most, will be key workers, and this means that the rental framework that the Crown Estate's tenants enjoy would not change if there were a sale. Rents might, of course, change, but within the same rules that the Crown Estate operates under now. Tenants' other contractual rights would also be protected in the event of a sale. The process is not quite the same as a block transfer of housing assets by a local authority, although there are some similarities. One important right is that, as a matter of law, any new owner would have to honour existing tenancies. Another protection is that if there are enough regulated tenants who are leaseholders with long tenancies in a particular building, and they want to buy it for themselves, the Crown Estate will give them right of first refusal.

Naturally, I was disappointed to hear from my right hon. Friend that some of his constituents thought that the Crown Estate was behaving in a secretive or high-handed way. I hope that residents will express their views through the various avenues that are available. The consultation process remains open, and I understand that the Crown Estate has also provided drop-in centres so that tenants can talk over their personal positions, any aspect of the proposed sale that troubles them, or the proposal at large. Also, the chairman and chief executive of the Crown Estate plan to meet the residents' associations during the consultation process so that they can hear tenants' views at first hand.

As for the view that the Crown Estate has been secretive, I hope and believe that this might be a result of circumstance, rather than an attempt to hide from people what is going on. The Crown Estate needs to protect the commercial positions of possible purchasers, and talks with possible new owners will continue well into March. The Crown Estate will then produce a "findings" document-a summary of the responses to the consultation-which will be circulated to residents within two weeks of the end of the consultation period on 23 March. After this, the Crown Estate will consider the outcome of the consultation and the marketing exercise before making a final decision.

With the uncertainty that this period brings, I know that people will be worried, but the outcome has not been decided. The Crown Estate will decide from the content of the feedback that comes through during the consultation process. It will need to be collated, evaluated, followed up where necessary, and presented to the Crown Estate board. At the same time, the Crown Estate will need to weigh the strength of interest from marketing to potential purchasers, and how the possible new owners' proposals stack up. It has set out its requirement that it will consider a sale only to a specialist in the residential housing field. It also recognises its obligation as a good landlord to look after its tenants' interests in selecting a new owner, if indeed there is one.

I can assure the House that no decision will be made in haste; it could take several months before it is clear what will happen, and during that time the tenants will have plenty of opportunity to have their say. The Crown Estate has advised that it will keep tenants informed as the process moves forward. As the consultation process draws to a close, I plan to meet the Crown Estate commissioners to hear their conclusions on the consultation process and to find out what interest the marketing process has thrown up. I will want to assure myself that the action planned by the commissioners is in line with their statutory duties and takes full account of the wider public interest. I of course intend to raise the issue of tenants ballots at that meeting, and before that I will be more than happy to meet my right hon. Friend with some of his constituents to hear their concerns.

The Crown Estate has a very strong sense of its responsibilities as steward of public resources. It manages its property assets as a trust and is conscious of who owns the assets it manages and who receives the income. I hope that I can reassure my right hon. Friend that the question of selling this part of its asset portfolio arises out of a strategic stock take and, as I have said, for no other reason.

My right hon. Friend secured today's debate to address the concerns of some of his constituents, and I am glad that we have been able to have it. I hope that I have been able to go some way to give assurances and, as ever, I would encourage his constituents and those of other Members to play a full part in the consultation exercise, so that their concerns can be fully taken into account.

Question put and agreed to.

House adjourned.