Lord Moylan:

Moved by Lord Moylan

49: After Clause 51, insert the following new Clause—“Right to manage: local housing authority Housing Revenue Account(1) The Commonhold and Leasehold Reform Act 2002 is amended as follows.(2) In paragraph 4(1) of Schedule 6 (premises excluded from right to manage), after “premises” insert “and the whole of the premises are held within the Housing Revenue Account of that local housing authority”.”Member's explanatory statementThis would allow the Right to Manage to be exercised where the landlord was a local housing authority but the premises were not held within that local housing authority’s Housing Revenue Account.

My Lords, this amendment relates to a very narrow point, which I will therefore try to deal with in summary form in the interests of time.

Before I do so, I will comment on Amendment 50, in the name of my noble friend Lord Bailey of Paddington. One of the most important things that we can do for leaseholders—I speak from experience—is promote the more widespread use of right to manage. This Bill goes some way in that direction but it could go further. I have no hesitation in supporting my noble friend in seeking to reduce the threshold to make this more accessible to leaseholders. It would remove many of their suspicions and anxieties—sometimes grounded and sometimes not—of abuse on the part of landlords if they could, as in my case we have, take responsibility for managing the building themselves and appoint managers who are accountable to them to scrutinise accounts and make all the important decisions.

Amendment 49 relates to an uncommon and peculiar situation whereby, in the case of a private block of flats that is acquired as an investment by a local authority—not one owned by a local authority for the purpose of social housing—the right to manage of those leaseholders is immediately extinguished because of the provisions of the Commonhold and Leasehold Reform Act 2002, which specifically exempts properties where the immediate landlord is a local housing authority. My amendment would remove that provision, except in cases where the property was held in the housing revenue account of that local authority. In other words, the leaseholders of private blocks would retain the right to manage, which the Government would surely welcome.

I am grateful to my noble friend and to my noble friend Lady Scott of Bybrook for arranging a meeting with me a few days ago at which we discussed this. However, I was no clearer at the end of that meeting what the position is, so my narrow purpose with this amendment is to seek clarity.

In Committee, my noble friend Lady Scott of Bybrook said that the Housing Act 1985, which created tenant management organisations for council estates, was available to the sort of person I am talking about—that is, private leaseholders in blocks of flats acquired by a local authority as an investment. However, at the meeting, one of her officials said that in fact that was not the case, because at least 20% of the tenants had to have secure tenancies—the type of tenancy granted by local authorities only to council tenants. Could I have a very simple response from my noble friend on the Front Bench, with absolute clarity and complete reliability? Is the Housing Act 1985 available to the class of persons I am talking about as a means of exercising the right to manage, or is it not? A very simple answer to that would dispose of this group very rapidly—or at least my part of this group, as of course there is the amendment in the name of my noble friend as well. I beg to move.

My Amendment 50 seeks to bring down the onerous 50% participation threshold to 35%, so that many more leaseholders can take back control of their homes, their money and their lives. As my noble friend Lord Moylan said, it would remove much of the suspicion around whether your freeholder is fleecing you, for want of a better word. I believe the Government support a revolution in the right to manage, so I will be interested in the comments from my noble friend the Minister as to why this cannot be supported. This would be a great step for people in many communities where buying property is a lifelong dream that they could then achieve. It leaves that footprint firmly in their community, and gives them more control of the investment they have actually made.

I thank my noble friend Lord Moylan for Amendment 49 on the right to manage and local authorities. In taking forward this Bill, we have prioritised the most impactful of the Law Commission’s recommendations on enfranchisement and the right to manage. That includes allowing more leaseholders in mixed-use buildings to collectively acquire the freehold of their building, or to exercise their right to manage their building, by increasing the non-residential limit from 25% to 50% non-residential floorspace. The Law Commission did not make any recommendations on local authority householders, but we recognise that the right to manage is not available to leaseholders with local authority landlords where there are no secure tenants in the block. We will continue to review changes to improve the right to manage. I hope that, following these reassurances, my noble friend will withdraw his amendment.

If I may interrupt, I simply asked my noble friend for clarity. Is he now saying that the class of persons I referred to does not have access to the right to manage—he seems to have said those words—even by way of the Housing Act 1985, contrary to what was said in Committee, or would he maintain that that route is still available to them? Is it or is it not the Government’s position that the Housing Act 1985 is available?

As ever, I am grateful for the points my noble friend has made. I think it is as I have described previously: namely, that the Law Commission did not make any recommendations on local authority leaseholders. We recognise that the right to manage is not available for leaseholders with local authority landlords, where there are no secure tenants in the block. It is not available where there are only leaseholders.

I now turn to Amendment 50, tabled by my noble friend Lord Bailey of Paddington. We recognise that the participation requirement can cause difficulties if leaseholders cannot reach the threshold. But a participation requirement of one-half of the residential units is proportionate, ensuring that a minority of leaseholders are prevented from exercising the right to manage, which may be against the wishes of the majority of leaseholders in a building.

Reducing the participation requirement to 35% is disproportionate and could lead to undesirable outcomes, such as an increase in disputes. It would risk a situation where competing groups of minority leaseholders could make repeated claims against each other. The Government accept the Law Commission’s recommendation to keep the participation threshold as it is. For these reasons, I ask that my noble friend does not press his amendment.

My Lords, there is no better illustration of the sheer folly of trying to deal with this complex issue in wash-up. We have discussed a point that was raised and discussed in Committee, during which one answer was given by a Minister. It was discussed in a meeting at which officials were present. I have not tabled my amendments late; some of my amendments have been down for some time. It is a point that Minsters knew was likely to come up on Report, but they have not been able to give clarity.

There are two possible routes. Is one of them available? Is what the Minister said in Committee correct or not? I am still really no clearer about the whole subject unless I construe the Minister’s words, as opposed to having them stated plainly for me. It is simply an illustration of why we should not be progressing this Bill in this fashion and in this way. With that comment, I beg leave to withdraw my amendment.

Amendment 49 withdrawn.

Amendment 50 not moved.

Clause 57: Enforcement of duties relating to service charges

Amendment 51 not moved.

Amendment 52 not moved.

Clause 61: Limits on rights of landlords to claim litigation costs from tenants